10q10k10q10k.net

What changed in Triumph Financial, Inc.'s 10-K — 2023 vs 2024

vs

Paragraph-level year-over-year comparison of Triumph Financial, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+519 added−507 removedSource: 10-K (2025-02-11) vs 10-K (2024-02-13)

Top changes in Triumph Financial, Inc.'s 2024 10-K

519 paragraphs added · 507 removed · 404 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

80 edited+24 added−6 removed167 unchanged
Biggest changeUnder a rebuttable presumption established by the Federal Reserve, the acquisition of 10% or more of a class of voting stock of a bank holding company with a class of securities registered under Section 12 of the Exchange Act, such as the Company, would, under the circumstances set forth in the presumption, constitute acquisition of control of the Company. 9 Table of Contents In addition, the BHC Act prohibits any entity from acquiring 25% (the BHC Act has a lower limit for acquirers that are existing bank holding companies) or more of a bank holding company’s or bank’s voting securities, or otherwise obtaining control or a controlling influence over a bank holding company or bank without the approval of the Federal Reserve.
Biggest changeIn addition, the BHC Act prohibits any entity from acquiring 25% (the BHC Act has a lower limit for acquirers that are existing bank holding companies) or more of a bank holding company’s or bank’s voting securities, or otherwise obtaining control or a controlling influence over a bank holding company or bank without the approval of the Federal Reserve.
We originate a full suite of commercial and retail loans including commercial real estate loans, construction and development loans, residential real estate loans, commercial agriculture, general commercial loans, and consumer loans primarily focused on customers in and around our community banking markets. These loan types include the following: Commercial Real Estate Loans .
We originate a full suite of commercial and retail loans including commercial real estate loans, construction and development loans, residential real estate loans, commercial agriculture loans, general commercial loans, and consumer loans primarily focused on customers in and around our community banking markets. These loan types include the following: Commercial Real Estate Loans .
Our transportation factoring clients include small owner-operator trucking companies (one-to-four trucks), mid-sized fleets (5-to-50 trucks), large fleets (more than 50 trucks), and freight broker relationships whereby we manage all Carrier payments on behalf of a Broker client.
Our transportation factoring clients include small owner-operator trucking companies (one-to-four trucks), mid-sized fleets (5-to-50 trucks), large fleets (more than 50 trucks), and freight broker relationships whereby we manage Carrier payments on behalf of a Broker client.
At December 31, 2023, maximum aggregate outstanding purchases ranged in size from $20 million to $300 million. Typical covenants include minimum tangible net worth, maximum leverage and minimum liquidity. As loans age, the Company requires loan curtailments to reduce our risk involving loans that are not purchased by investors on a timely basis.
At December 31, 2024, maximum aggregate outstanding purchases ranged in size from $20 million to $300 million. Typical covenants include minimum tangible net worth, maximum leverage and minimum liquidity. As loans age, the Company requires loan curtailments to reduce our risk involving loans that are not purchased by investors on a timely basis.
As of December 31, 2023, the Company’s subsidiary bank exceeded the capital levels required to be deemed “well capitalized.” Additionally, FDICIA requires bank regulators to take prompt corrective action to resolve problems associated with insured depository institutions. In the event an institution becomes undercapitalized, it must submit a capital restoration plan.
As of December 31, 2024, the Company’s subsidiary bank exceeded the capital levels required to be deemed “well capitalized.” Additionally, FDICIA requires bank regulators to take prompt corrective action to resolve problems associated with insured depository institutions. In the event an institution becomes undercapitalized, it must submit a capital restoration plan.
For our TriumphPay Broker and Shipper clients, for whom we are originating quick pay transactions, we conduct quarterly reviews of the company’s financial statements to monitor the financial condition and performance relative to established guidelines and covenants. 5 Table of Contents Marketing We market our payments services, loans, and other products and services through a variety of channels.
For our TriumphPay Broker and Shipper clients, for whom we are originating quick pay transactions, we conduct quarterly reviews of the company’s financial statements to monitor the financial condition and performance relative to established guidelines and covenants. 6 Table of Contents Marketing We market our payments services, loans, and other products and services through a variety of channels.
Payments 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 December 31, 2023.
Payments 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 December 31, 2024.
Additionally, we offer mortgage warehouse and purchase liquid credit lending products on a nationwide basis to provide further asset base diversification. Our mortgage warehouse program also offers stable deposits. Our Banking products and services share basic processes and have similar economic characteristics.
Additionally, we offer mortgage warehouse lending and purchase liquid credit lending products on a nationwide basis to provide further asset base diversification. Our mortgage warehouse program also generates stable deposits. Our Banking products and services share basic processes and have similar economic characteristics.
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.
Our payments platform for Brokers and Shippers, 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.
For this purpose, a bank is placed in one of the following five categories based on the bank’s capital: • well-capitalized (at least 5% leverage capital, 6.5% common equity Tier 1 risk-based capital, 8% Tier 1 risk-based capital and 10% total risk-based capital); • adequately capitalized (at least 4% leverage capital, 4.5% common equity Tier 1 risk-based capital, 6% Tier 1 risk-based capital and 8% total risk-based capital); • undercapitalized (less than 4% leverage capital, 4.5% common equity Tier 1 risk-based capital, 6% Tier 1 risk-based capital and 8% total risk-based capital); • significantly undercapitalized (less than 3% leverage capital, 3% common equity Tier 1 risk-based capital, 4% Tier 1 risk-based capital and 6% total risk-based capital); and • critically undercapitalized (less than 2% tangible capital).
For this purpose, a bank is placed in one of the following five categories based on the bank’s capital: • well-capitalized (at least 5% leverage capital, 6.5% common equity Tier 1 risk-based capital, 8% Tier 1 risk-based capital and 10% total risk-based capital); • adequately capitalized (at least 4% leverage capital, 4.5% common equity Tier 1 risk-based capital, 6% Tier 1 risk-based capital and 8% total risk-based capital); 11 Table of Contents • undercapitalized (less than 4% leverage capital, 4.5% common equity Tier 1 risk-based capital, 6% Tier 1 risk-based capital and 8% total risk-based capital); • significantly undercapitalized (less than 3% leverage capital, 3% common equity Tier 1 risk-based capital, 4% Tier 1 risk-based capital and 6% total risk-based capital); and • critically undercapitalized (less than 2% tangible capital).
We originate these loans both in our community banking markets and on a nationwide basis. Commercial Construction, Land and Land Development Loans . We offer loans to small-to-mid-sized businesses to construct owner-occupied properties, as well as loans to developers of commercial real estate investment properties and residential developments.
We originate these loans both in our community banking markets and on a nationwide basis. 2 Table of Contents Commercial Construction, Land and Land Development Loans . We offer loans to small-to-mid-sized businesses to construct owner-occupied properties, as well as loans to developers of commercial real estate investment properties and residential developments.
This includes doing good in the areas of greatest need – in your community and around the world. • People Make The Difference – In any situation the most important criteria for success are the quality of people and quality of their thinking. • Humility – Model humility in all that you do.
This includes doing good in the areas of greatest need – in your community and around the world. 14 Table of Contents • People Make The Difference – In any situation the most important criteria for success are the quality of people and quality of their thinking. • Humility – Model humility in all that you do.
They are responsible for connecting our diversity and inclusion activities with our broader business strategies. Additionally, we created a Leader of Diversity & Inclusion position to provide direction and leadership as we build processes and initiatives aimed at diversity and inclusion. We are proud of the diversity of our leadership team.
They are responsible for connecting our diversity and inclusion activities with our broader business strategies. Additionally, we created a Leader of Diversity & Inclusion position to provide direction and leadership as we build processes and initiatives aimed at diversity and inclusion. 15 Table of Contents We are proud of the diversity of our leadership team.
Our equipment loans are typically fully amortizing, fixed rate loans secured by the underlying collateral with a term of three to five years. Equipment lending to transportation clients constituted approximately 86% of our total equipment lending portfolio as of December 31, 2023. Equipment loans are reported within commercial loans in the notes to our consolidated financial statements. Asset-Based Loans .
Our equipment loans are typically fully amortizing, fixed rate loans secured by the underlying collateral with a term of three to five years. Equipment lending to transportation clients constituted approximately 95% of our total equipment lending portfolio as of December 31, 2024. Equipment loans are reported within commercial loans in the notes to our consolidated financial statements. Asset-Based Loans .
ITEM 1. BUSINESS. Overview Triumph Financial, Inc. (“we”, “Triumph Financial” or the “Company”) is a financial holding company headquartered in Dallas, Texas and registered under the Bank Holding Company Act of 1956, as amended (the “BHC Act”). We offer a diversified line of payments, factoring and banking services.
ITEM 1. BUSINESS. Overview Triumph Financial, Inc. (“we,” “Triumph Financial” or the “Company”) is a financial holding company headquartered in Dallas, Texas and registered under the Bank Holding Company Act of 1956, as amended (the “BHC Act”). We offer a diversified line of banking, factoring, payments, and intelligence services.
Factoring for transportation businesses constituted approximately 96% of our total factoring portfolio at December 31, 2023, calculated based on the gross receivables from the purchase of invoices from such trucking businesses compared to our total gross receivables in the purchase of factored receivables as of such date. The features and pricing of our transportation factoring relationships vary by client type.
Factoring for transportation businesses constituted approximately 97% of our total factoring portfolio at December 31, 2024, calculated based on the gross receivables from the purchase of invoices from such trucking businesses compared to our total gross receivables in the purchase of factored receivables as of such date. The features and pricing of our transportation factoring relationships vary by client type.
We do this through enterprise wide recycling programs, the implementation of LED lighting in our workplaces, and working to reduce our reliance on disposable products. As we renovate or build new facilities, we try to leverage renewable sources for power and HVAC through the employment of solar panels and heat pumps.
We do this through the implementation of LED lighting in our workplaces and working to reduce our reliance on disposable products. As we renovate or build new facilities, we try to leverage renewable sources for power and HVAC through the employment of solar panels and heat pumps.
Liquid credit loans are reported within commercial loans in the notes to our consolidated financial statements. 3 Table of Contents Factoring We offer factoring services to our customers across a variety of industries, with a focus in transportation factoring.
Liquid credit loans are reported within commercial loans in the notes to our consolidated financial statements. Factoring We offer factoring services to our customers across a variety of industries, with a focus in transportation factoring.
Based on current census data and team member demographics, females represent 63% of the Company’s employee base, 64% of our management structure through vice president, and 33% of management, senior vice president and above. This compares to 50% female representation in the related communities in which our businesses reside.
Based on current census data and team member demographics, females represent 61% of the Company’s employee base, 65% of our management structure through vice president, and 33% of management, senior vice president and above. This compares to 50% female representation in the related communities in which our businesses reside.
Following such acquisition, the TriumphPay strategy shifted from a capital-intensive on-balance sheet product with a greater focus on interest income to a payments network for the trucking industry with a focus on fee revenue.
Following this 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 a focus on fee revenue.
TBK Bank cannot guarantee that it will have the financial ability to pay dividends to Triumph, or if dividends are paid, that they will be sufficient for Triumph Financial to make distributions to stockholders.
TBK Bank cannot guarantee that it will have the financial ability to pay dividends to Triumph, or if dividends are paid, that they will be sufficient for Triumph Financial to make distributions to stockholders. TBK Bank is not obligated to pay dividends.
These documents are also available on the SEC’s website at www.sec.gov . 16 Table of Contents
These documents are also available on the SEC’s website at www.sec.gov . 17 Table of Contents
The descriptions are qualified in their entirety by reference to the specific statutes and regulations discussed. Bank Holding Company Regulation The Company is a financial holding company registered under the BHC Act and is subject to supervision and regulation by the Federal Reserve.
The descriptions are qualified in their entirety by reference to the specific statutes and regulations discussed. 7 Table of Contents Bank Holding Company Regulation The Company is a financial holding company registered under the BHC Act and is subject to supervision and regulation by the Federal Reserve.
The average mortgage loan being purchased by the Company reflects a blend of both Conforming and Government loan characteristics, including an average loan to value ratio ("LTV") of 77%, an average credit score of 711 and an average loan size of $267 thousand. These characteristics illustrate the low risk profile of loans purchased under the mortgage warehouse arrangements.
The average mortgage loan being purchased by the Company reflects a blend of both Conforming and Government loan characteristics, including an average loan to value ratio ("LTV") of 69%, an average credit score of 727 and an average loan size of $292 thousand. These characteristics illustrate the low risk profile of loans purchased under the mortgage warehouse arrangements.
As for ethnic minority representation across the Company, ethnic minorities represent 43% of our employee base, 33% of our management structure through vice president, and 11% of our management structure between senior vice president and executive.
As for ethnic minority representation across the Company, ethnic minorities represent 43% of our employee base, 31% of our management structure through vice president, and 12% of our management structure between senior vice president and executive.
Other Regulations Interest and other charges that our subsidiary bank collects or contracts for are subject to state usury laws and federal laws concerning interest rates. 12 Table of Contents Our bank’s loan operations are also subject to federal laws applicable to credit transactions, such as: • the federal Truth-In-Lending Act, governing disclosures of credit terms to consumer borrowers; • the Home Mortgage Disclosure Act, requiring financial institutions to provide information to enable the public and public officials to determine whether a financial institution is fulfilling its obligation to help meet the housing needs of the community it serves; • the Equal Credit Opportunity Act, prohibiting discrimination on the basis of race, creed or other prohibited factors in extending credit; • the Fair Credit Reporting Act, governing the use and provision of information to credit reporting agencies; • the Fair Debt Collection Act, governing the manner in which consumer debts may be collected by collection agencies; and • the rules and regulations of the various governmental agencies charged with the responsibility of implementing these federal laws.
Our bank’s loan operations are also subject to federal laws applicable to credit transactions, such as: • the federal Truth-In-Lending Act, governing disclosures of credit terms to consumer borrowers; • the Home Mortgage Disclosure Act, requiring financial institutions to provide information to enable the public and public officials to determine whether a financial institution is fulfilling its obligation to help meet the housing needs of the community it serves; • the Equal Credit Opportunity Act, prohibiting discrimination on the basis of race, creed or other prohibited factors in extending credit; • the Fair Credit Reporting Act, governing the use and provision of information to credit reporting agencies; • the Fair Debt Collection Act, governing the manner in which consumer debts may be collected by collection agencies; and • the rules and regulations of the various governmental agencies charged with the responsibility of implementing these federal laws.
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, and we act as capital provider to the Carrier industry through our factoring subsidiary, Triumph Financial Services.
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, and we act as capital provider to the Carrier industry through our factoring subsidiary, Triumph Financial Services. We have begun to offer data services through our Intelligence offerings.
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. Our Payments products and services share basic processes and have similar economic characteristics.
We also offer supply chain finance to Brokers, allowing them to pay their Carriers faster and drive Carrier loyalty. We provide tools and services to increase automation, mitigate fraud, create back-office efficiency and improve the payment experience. Our Payments products and services share basic processes and have similar economic characteristics.
Human Capital Corporate Values As of December 31, 2023, we had 1,468.0 full-time equivalent employees. We are focused on “Helping People Triumph”. It’s our brand purpose and our core values align with that purpose. We believe that our customers, team members, communities and shareholders benefit from it.
Human Capital Corporate Values As of December 31, 2024, we had 1,553.0 full-time equivalent employees. We are focused on “Helping People Triumph.” It’s our brand purpose and our core values align with that purpose. We believe that our customers, team members, communities and shareholders benefit from it.
Our non-owner occupied commercial real estate loans are generally secured by income producing property with adequate margins, supported by a history of profitable operations and cash flows and proven operating stability in the case of commercial loans.
Our non-owner occupied commercial real estate loans are generally secured by income producing property with adequate margins, supported by a history of profitable operations and cash flows and proven operating stability in the case of commercial loans. Our commercial real estate loans and commercial loans are often supported by personal guarantees from the principals of the borrower.
Imposition of Liability for Undercapitalized Subsidiaries The Federal Deposit Insurance Corporation Improvement Act of 1991 (“FDICIA”) required each federal banking agency to revise its risk-based capital standards to ensure that those standards take adequate account of interest rate risk, concentration of credit risk and the risks of nontraditional activities, as well as reflect the actual performance and expected risk of loss on multifamily mortgages.
The elected option did not have a material impact on our capital ratios. 9 Table of Contents Imposition of Liability for Undercapitalized Subsidiaries The Federal Deposit Insurance Corporation Improvement Act of 1991 (“FDICIA”) required each federal banking agency to revise its risk-based capital standards to ensure that those standards take adequate account of interest rate risk, concentration of credit risk and the risks of nontraditional activities, as well as reflect the actual performance and expected risk of loss on multifamily mortgages.
This expense reflects our commitment to enhanced investment in the development of our team members year after year. Recruiting and placement expense for the year ended December 31, 2023 was $0.8 million compared to $1.6 million for the year ended December 31, 2022.
Expense related to education, training, and executive development was $1.8 million for the year ended December 31, 2024 compared to $1.6 million for the year ended December 31, 2023. This expense reflects our commitment to enhanced investment in the development of our team members year after year.
Notably, the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (“FIRREA”) provides that the Federal Reserve can assess civil money penalties for such practices or violations which can be as high as $1 million per day.
Notably, the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (“FIRREA”) provides that the Federal Reserve can assess civil money penalties for such practices or violations which can be as high as $1 million per day. FIRREA contains expansive provisions regarding the scope of individuals and entities against which such penalties may be assessed.
For the year ended December 31, 2023, our Banking segment generated 60% of our total revenue (comprised of interest and noninterest income), our Factoring segment generated 32% of our total revenue, our Payments segment generated 7% of our total revenue, and our Corporate segment generated less than 1% of our total revenue.
For the year ended December 31, 2024, our Banking segment generated 60% of our total revenue (comprised of interest and noninterest income), our Factoring segment generated 30% of our total revenue, our Payments segment generated 10% of our total revenue, and our Intelligence segment generated less than 1% of our total revenue.
Under the rules, we elected to make the one-time permanent election to continue to exclude AOCI from capital. 8 Table of Contents As permitted by the interim final rule issued on March 27, 2020, by the federal banking regulatory agencies, we have elected the option to delay the estimated impact on regulatory capital of ASU 2016-13, "Financial Instruments - Credit Loses (Topic 326): Measurement of Credit Losses on Financial Instruments", which was effective January 1, 2020.
As permitted by the interim final rule issued on March 27, 2020, by the federal banking regulatory agencies, we have elected the option to delay the estimated impact on regulatory capital of ASU 2016-13, "Financial Instruments - Credit Loses (Topic 326): Measurement of Credit Losses on Financial Instruments", which was effective January 1, 2020.
As a result, how we do business is as important to us as what is achieved through our efforts. That belief forms the basis of the core values our team members honor.
As a result, how we do business is as important to us as what is achieved through our efforts. That belief forms the basis of the core values our team members honor. They carry those values into the communities where they live and work.
We are committed to sustainable finance, balancing environmental stewardship with responsible business operations, and complying with all applicable laws. We recognize that we have a responsibility to conduct our operations in a sustainable, responsible manner.
Environmental Matters Triumph recognizes that our activities may have an impact on our planet. We are committed to sustainable finance, balancing environmental stewardship with responsible business operations, and complying with all applicable laws. We recognize that we have a responsibility to conduct our operations in a sustainable, responsible manner.
Competitors The bank and non-bank financial services industries in our markets and the surrounding areas are highly competitive. We compete with a wide range of regional and national banks located in our market areas as well as non-bank commercial finance and factoring companies on a nationwide basis.
We compete with a wide range of regional and national banks located in our market areas as well as non-bank commercial finance and factoring companies on a nationwide basis.
Any future increases in FDIC insurance premiums may have a material and adverse effect on our earnings. 11 Table of Contents Consumer Financial Protection Bureau The Consumer Financial Protection Bureau (“CFPB”) is granted broad rulemaking, supervisory and enforcement powers under various federal consumer financial protection laws, including the Equal Credit Opportunity Act, Truth in Lending Act, Real Estate Settlement Procedures Act, Fair Credit Reporting Act, Fair Debt Collection Act, the Consumer Financial Privacy provisions of the Gramm-Leach-Bliley Act and certain other statutes.
Consumer Financial Protection Bureau The Consumer Financial Protection Bureau (“CFPB”) is granted broad rulemaking, supervisory and enforcement powers under various federal consumer financial protection laws, including the Equal Credit Opportunity Act, Truth in Lending Act, Real Estate Settlement Procedures Act, Fair Credit Reporting Act, Fair Debt Collection Act, the Consumer Financial Privacy provisions of the Gramm-Leach-Bliley Act and certain other statutes.
In addition, our subsidiary bank’s deposit operations are subject to the Electronic Funds Transfer Act and Regulation E issued by the Federal Reserve to implement that act, which govern automatic deposits to and withdrawals from deposit accounts and customers’ rights and liabilities arising from the use of automated teller machines and other electronic banking services.
In addition, our subsidiary bank’s deposit operations are subject to the Electronic Funds Transfer Act and Regulation E issued by the Federal Reserve to implement that act, which govern automatic deposits to and withdrawals from deposit accounts and customers’ rights and liabilities arising from the use of automated teller machines and other electronic banking services. 13 Table of Contents Concentrated Commercial Real Estate Lending Regulations The Federal Reserve and other federal banking regulatory agencies promulgated guidance governing financial institutions with concentrations in commercial real estate lending.
Our transportation payments products (i.e., factoring and TriumphPay) require specialized underwriting processes. For each factoring transaction, in addition to a credit evaluation of our client, we also evaluate the creditworthiness of underlying account debtors, because account debtors represent the substantive underlying credit risk.
For each factoring transaction, in addition to a credit evaluation of our client, we also evaluate the creditworthiness of underlying account debtors, because account debtors represent the substantive underlying credit risk.
At December 31, 2023, the Company had 13 mortgage banking company customers with a maximum aggregate exposure of $1.325 billion and an actual aggregate outstanding balance of $728.8 million.
At December 31, 2024, the Company had 14 mortgage banking company customers with a maximum aggregate exposure of $1.835 billion and an actual aggregate outstanding balance of $1.023 billion.
Having the "right people" on our team means that we maintain an awareness of diversity, equity and inclusion ("DEI"). Doing so makes us a better company, a better employer, a better neighbor and a better investment. Building a better tomorrow includes celebrating the uniqueness of our team members, customers, partners, and communities while promoting a culture of understanding and acceptance.
Doing so makes us a better company, a better employer, a better neighbor and a better investment. Building a better tomorrow includes celebrating the uniqueness of our team members, customers, partners, and communities while promoting a culture of understanding and acceptance.
If there are additional bank or financial institution failures or if the FDIC otherwise determines to increase assessment rates, TBK Bank may be required to pay higher FDIC insurance premiums.
If there are additional bank or financial institution failures or if the FDIC otherwise determines to increase assessment rates, TBK Bank may be required to pay higher FDIC insurance premiums. Any future increases in FDIC insurance premiums may have a material and adverse effect on our earnings.
Principal Products and Services Banking Our banking products and services include a variety of traditional banking services offered through our bank subsidiary, TBK Bank. These products and services focus on serving the local communities in which we operate and creating full banking relationships with both personal and commercial clients.
These products and services focus on serving the local communities in which we operate and creating full banking relationships with both personal and commercial clients.
Our commercial real estate loans and commercial loans are often supported by personal guarantees from the principals of the borrower. 4 Table of Contents With respect to our asset-based loans, in addition to an overall evaluation of the borrower and the transaction considering the applicable criteria set forth above, we also engage in an evaluation of the assets comprising the borrowing base for such loans, to confirm that such assets are readily recoverable and recoverable at rates in excess of the advance rate for such loans.
With respect to our asset-based loans, in addition to an overall evaluation of the borrower and the transaction considering the applicable criteria set forth above, we also engage in an evaluation of the assets comprising the borrowing base for such loans, to confirm that such assets are readily recoverable and recoverable at rates in excess of the advance rate for such loans. 5 Table of Contents Our transportation payments products (i.e., factoring and TriumphPay) require specialized underwriting processes.
These loans include general commercial and industrial loans, loans to purchase capital equipment and business loans for working capital and operational purposes. 2 Table of Contents We also offer commercial loans that focus on serving clients requiring more specialized financial products and services on a national basis and across a variety of industries, with a particular focus on clients in the transportation industry.
We also offer commercial loans that focus on serving clients requiring more specialized financial products and services on a national basis and across a variety of industries, with a particular focus on clients in the transportation industry.
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. 1 Table of Contents We believe our integrated business model distinguishes us from other banks and non-bank financial services companies in the markets in which we operate.
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.
Expenses related to education, training, executive development, recruiting, and placement are recorded in other noninterest expense. Expense related to education, training, and executive development was $1.6 million for the year ended December 31, 2023 compared to $1.7 million for the year ended December 31, 2022.
For the year ended December 31, 2024, salaries and employee benefits expense was $219.6 million compared to $210.6 million during the same period a year ago. Expenses related to education, training, executive development, recruiting, and placement are recorded in other noninterest expense.
We are committed to providing our team members with applicable rights and certain freedoms, such as good working conditions, open communication, reasonable job security, personal growth opportunities, training and education, and communication of job expectations. 14 Table of Contents Diversity and Inclusion We believe that the right people, in the right roles, with the right skills, immersed in the right culture will lead to our collective success.
We are committed to providing our team members with applicable rights and certain freedoms, such as good working conditions, open communication, reasonable job security, personal growth opportunities, training and education, and communication of job expectations.
In some instances, the Bank requires funds be set aside for site remediation in order to move forward on a transaction. Available Information The Company’s internet address is www.tfin.com .
Potential environmental concerns related to a property and/or the business operating within the property materially impact the Bank’s deal structure and willingness to provide financing. In some instances, the Bank requires funds be set aside for site remediation in order to move forward on a transaction. Available Information The Company’s internet address is www.tfin.com .
Success that endures is built upon a long-term perspective. • Unique Is Good – Be aware of following the crowd. Being unique can be difficult, but if it were easy, everyone would do it. • Mission Is More Than Money – Make everything you’re involved in better.
Being unique can be difficult, but if it were easy, everyone would do it. • Mission Is More Than Money – Make everything you’re involved in better.
The mortgage banking company customer closes mortgage loans consistent with underwriting standards established by the Agencies (FNMA, FHLMC and GNMA) and approved investors and, once all pertinent documents are received, the mortgage note is delivered by the Company to the investor selected by the originator.
The mortgage banking company customer closes mortgage loans consistent with underwriting standards established by the Agencies (FNMA, FHLMC and GNMA) and approved investors and, once all pertinent documents are received, the mortgage note is delivered by the Company or Custodian to the investor selected by the originator. 3 Table of Contents The mortgage warehouse customers are located across the U.S. and originate loans primarily through traditional retail, wholesale and correspondent business models.
Rules on Regulatory Capital Regulatory capital rules pursuant to the Basel III requirements, released in July 2013, implemented higher minimum capital requirements for bank holding companies and banks.
The Company is also subject to reporting and disclosure requirements under state and federal securities laws. 8 Table of Contents Rules on Regulatory Capital Regulatory capital rules pursuant to the Basel III requirements, released in July 2013, implemented higher minimum capital requirements for bank holding companies and banks.
We seek to understand issues related to Boards, shareholders, principals and management, including factors that would speak to character and/or ethical concerns. These factors impact our risk grading and our overall willingness to enter into relationship with Borrowers. For certain types of credits, environmental issues or potential issues are also considered.
When considering credit, we take into account social and governance issues as we evaluate individual businesses. We seek to understand issues related to Boards, shareholders, principals and management, including factors that would speak to character and/or ethical concerns. These factors impact our risk grading and our overall willingness to enter into relationship with Borrowers.
In addition, required deposit balances associated with our commercial loan arrangements and treasury management relationships maintained by our commercial lending clients provide an additional source of deposits. In our community banking markets, we have a network of 62 deposit-taking branch offices. We also maintain a branch office in Dallas, Texas, dedicated to deposit generation activities.
In addition, required deposit balances associated with our commercial loan arrangements and treasury management relationships maintained by our commercial lending clients provide an additional source of deposits. In our community banking markets, we have a network of 63 deposit-taking branch offices. Competitors The bank and non-bank financial services industries in our markets and the surrounding areas are highly competitive.
In general, we evaluate each credit or transaction on its individual merits, with larger deals receiving more attention and deeper analysis. Our underwriting process regularly looks at governance issues and seeks to incorporate relevant industry risks.
In general, we evaluate each credit or transaction on its individual merits, with larger deals receiving more attention and deeper analysis.
Accordingly, our success depends in large part on the performance of our key personnel, as well as on our ability to attract, motivate and retain highly qualified senior and middle management.
Accordingly, our success depends in large part on the performance of our key personnel, as well as on our ability to attract, motivate and retain highly qualified senior and middle management. We believe that the work environment described above contributes to employee satisfaction and retention; however, we also have succession plans in place for key personnel.
The mortgage warehouse customers are located across the U.S. and originate loans primarily through traditional retail, wholesale and correspondent business models. These customers are strategically targeted for their experienced management teams and thoroughly analyzed to ensure long-term and profitable business models.
These customers are strategically targeted for their experienced management teams and thoroughly analyzed to ensure long-term and profitable business models.
Anti-Tying Restrictions Bank holding companies and their affiliates are prohibited from tying the provision of certain services, such as extensions of credit, to other services offered by a holding company or its affiliates.
Under the final rule, investors can hold up to 24.9% of the voting securities and up to 33% of the total equity of a company without necessarily having a controlling influence. 10 Table of Contents Anti-Tying Restrictions Bank holding companies and their affiliates are prohibited from tying the provision of certain services, such as extensions of credit, to other services offered by a holding company or its affiliates.
TBK Bank is not obligated to pay dividends. 10 Table of Contents Restrictions on Transactions with Affiliates Section 23A of the Federal Reserve Act imposes quantitative and qualitative limits on transactions between a bank and any affiliate and requires certain levels of collateral for such loans.
Restrictions on Transactions with Affiliates Section 23A of the Federal Reserve Act imposes quantitative and qualitative limits on transactions between a bank and any affiliate and requires certain levels of collateral for such loans. It also limits the amount of advances to third parties which are collateralized by the securities or obligations of the Company.
Customers generally may prevent financial institutions from sharing personal financial information with nonaffiliated third parties except for third parties that market the institutions’ own products and services. Additionally, financial institutions generally may not disclose consumer account numbers to any nonaffiliated third-party for use in telemarketing, direct mail marketing or other marketing through electronic mail to consumers.
Customers generally may prevent financial institutions from sharing personal financial information with nonaffiliated third parties except for third parties that market the institutions’ own products and services.
At December 31, 2023, 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.
Effective January, 1, 2025, we merged Triumph Financial Services LLC, the entity though which we previously conducted all of our factoring operations, with and into TBK Bank, SSB. At December 31, 2024, 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.
We commenced these operations in 2012 through the acquisition of our factoring subsidiary, Triumph Financial Services, LLC ("Triumph Financial Services"). We have grown this business from approximately $49.3 million in net funds employed at Triumph Financial Services upon our acquisition of such entity in 2012 to $854.8 million as of December 31, 2023.
We commenced these operations as part of an acquisition in 2012 and have grown this business from approximately $49.3 million in net funds employed at the time of such acquisition to $925.1 million as of December 31, 2024. In 2024, our factoring business also launched its Factoring as a Service ("FaaS") product.
The Federal Reserve may examine a bank holding company or any of its subsidiaries and charge the bank holding company for the cost of such an examination. The Company is also subject to reporting and disclosure requirements under state and federal securities laws.
Annual Reporting and Examinations The Company is required to file annual and quarterly reports with the Federal Reserve and such additional information as the Federal Reserve may require pursuant to the BHC Act. The Federal Reserve may examine a bank holding company or any of its subsidiaries and charge the bank holding company for the cost of such an examination.
We offer commercial loans to small-to-mid-sized businesses across a variety of industries.
We offer commercial loans to small-to-mid-sized businesses across a variety of industries. These loans include general commercial and industrial loans, loans to purchase capital equipment and business loans for working capital and operational purposes.
Open communication is the foundation of strong relationships. • Respect – Treat others as you want to be treated. Put the needs of others and the needs of the team before promoting your own agenda. • Invest For The Future – Do not allow the immediate to crowd out the important.
Put the needs of others and the needs of the team before promoting your own agenda. • Invest For The Future – Do not allow the immediate to crowd out the important. Success that endures is built upon a long-term perspective. • Unique Is Good – Be aware of following the crowd.
The Bank has set certain formal limits on concentrations of certain types of lending or industries and, even informally, stays aware of industries to which we seek to limit our exposure. We have strong capabilities to report on industry concentrations as we see changing or evolving trends which would require attention.
Our underwriting process regularly looks at governance issues and seeks to incorporate relevant industry risks. 16 Table of Contents The Bank has set certain formal limits on concentrations of certain types of lending or industries and, even informally, stays aware of industries to which we seek to limit our exposure.
The USA PATRIOT Act, International Money Laundering Abatement and Financial Anti-Terrorism Act and Bank Secrecy Act A major focus of governmental policy on financial institutions has been aimed at combating money laundering and terrorist financing.
Additionally, financial institutions generally may not disclose consumer account numbers to any nonaffiliated third-party for use in telemarketing, direct mail marketing or other marketing through electronic mail to consumers. 12 Table of Contents The USA PATRIOT Act, International Money Laundering Abatement and Financial Anti-Terrorism Act and Bank Secrecy Act A major focus of governmental policy on financial institutions has been aimed at combating money laundering and terrorist financing.
As stated in our Board approved Code of Business Conduct & Ethics, we expect these same standards apply to all stakeholders, to our interactions with customers, vendors and independent contractors. TFIN expects these values to be applied globally and by those we do business with. T-R-I-U-M-P-H • Transparency – Communicate the truth consistently, directly and professionally.
TFIN expects these values to be applied globally and by those we do business with. T-R-I-U-M-P-H • Transparency – Communicate the truth consistently, directly and professionally. Open communication is the foundation of strong relationships. • Respect – Treat others as you want to be treated.
For example, on real estate deals, we require environmental due diligence in accordance with our policy to understand the environmental risks associated with the transaction. Potential environmental concerns related to a property and/or the business operating within the property materially impact the Bank’s deal structure and willingness to provide financing.
For certain types of credits, environmental issues or potential issues are also considered. For example, on real estate deals, we require environmental due diligence in accordance with our policy to understand the environmental risks associated with the transaction.
The decrease in this expense was primarily driven by an increased focus on the use of internal recruiting resources to address staffing demands to support the growth of the organization and a more competitive macro labor market. Environmental Matters Triumph recognizes that our activities may have an impact on our planet.
Recruiting and placement expense was $0.8 million for the years ended December 31, 2024 and 2023. In recent years, we have put an increased focus on the use of internal recruiting resources to address staffing demands to support the growth of the organization and a more competitive macro labor market.
We cannot predict whether or in what form any proposed regulation or statute will be adopted or the extent to which any of our businesses may be affected by any new regulation or statute. 6 Table of Contents The following is an attempt to summarize some of the relevant laws, rules and regulations governing banks and bank holding companies, but does not purport to be a complete summary of all applicable laws, rules and regulations governing banks.
We cannot predict whether or in what form any proposed regulation or statute will be adopted or the extent to which any of our businesses may be affected by any new regulation or statute.
The Bank’s lending and credit areas are governed by several policies, including, but not limited to: the Commercial Loan Policy, the Environmental Risk and Liability Policy, and the Fair Lending Policy. When considering credit, we take into account social and governance issues as we evaluate individual businesses.
We have strong capabilities to report on industry concentrations as we see changing or evolving trends which would require attention. The Bank’s lending and credit areas are governed by several policies, including, but not limited to: the Commercial Loan Policy, the Environmental Risk and Liability Policy, and the Fair Lending Policy.
For the year ended December 31, 2023, TriumphPay processed 19,528,864 invoices paying a total of $21.518 billion. Credit Risk Management We mitigate credit risk through disciplined underwriting of each transaction we originate, as well as active credit management processes and procedures to manage risk and minimize loss throughout the life of a transaction.
Going forward, Intelligence will operate in a highly specialized niche with unique processes and key performance indicators. Credit Risk Management We mitigate credit risk through disciplined underwriting of each transaction we originate, as well as active credit management processes and procedures to manage risk and minimize loss throughout the life of a transaction.
Triumph Financial Services operates in a highly specialized niche and earns substantially higher yields on its factored accounts receivable portfolio than our other lending products described above. Given its acquisition, this business has a legacy and structure as a standalone company. Our Factoring products and services share basic processes and have similar economic characteristics.
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. 1 Table of Contents Payments Our payments business provides payment, audit, and other banking services for the over the road trucking industry.
These indicia of control include nonvoting equity ownership, director representation, management interlocks, business relationship and restrictive contractual covenants. Under the final rule, investors can hold up to 24.9% of the voting securities and up to 33% of the total equity of a company without necessarily having a controlling influence.
These indicia of control include nonvoting equity ownership, director representation, management interlocks, business relationship and restrictive contractual covenants.
They carry those values into the communities where they live and work. 13 Table of Contents We are committed to maintaining a work environment where every team member is treated with dignity and respect, free from the threat of discrimination or harassment.
We are committed to maintaining a work environment where every team member is treated with dignity and respect, free from the threat of discrimination or harassment. As stated in our Board approved Code of Business Conduct & Ethics, we expect these same standards apply to all stakeholders, to our interactions with customers, vendors and independent contractors.
Our transportation factoring business tends to be weaker in the first quarter of the year; consistent with trends in over the road trucking. Our non-transportation factoring business targets small businesses with annual sales between $1 million and $50 million in industries such as manufacturing, distribution, and staffing. Payments Our TriumphPay platform is a payments network for the over-the-road trucking industry.
Our transportation factoring business tends to be weaker in the first quarter of the year; consistent with trends in over the road trucking. In 2024, our factoring business also launched its Factoring as a Service ("FaaS") product.
As of December 31, 2023, we had consolidated total assets of $5.347 billion, total loans held for investment of $4.163 billion, total deposits of $3.977 billion and total stockholders’ equity of $864.4 million. Our business is conducted through four reportable segments (Banking, Factoring, Payments, and Corporate).
We believe our integrated business model distinguishes us from other banks and non-bank financial services companies in the markets in which we operate. As of December 31, 2024, we had consolidated total assets of $5.949 billion, total loans held for investment of $4.547 billion, total deposits of $4.821 billion and total stockholders’ equity of $890.9 million.

… 30 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

111 edited+14 added−9 removed366 unchanged
Biggest changeThese risks and challenges include, but are not limited to, our ability to: • accurately forecast our revenue and plan our operating expenses; • increase the number of and retain existing customers using our platform; • successfully compete with current and future competitors; • successfully expand our business in existing markets and enter new markets and geographies; • anticipate and respond to macroeconomic changes and changes in the markets in which we operate; • maintain and enhance the value of our reputation and brand; • comply with regulatory requirements in highly regulated markets; • adapt to rapidly evolving trends in the ways customers interact with technology; • develop a scalable, high-performance technology infrastructure that can efficiently and reliably handle significant surges of usage by our customers as compared to historic levels and increased usage generally, as well as the deployment of new features and services; • maintain and effectively manage our internal infrastructure systems, such as information strategy and sharing and interconnectivity between systems; • hire, integrate, and retain talented technology, sales, customer service, and other personnel; • effectively manage rapid growth in our personnel and operations; and • effectively manage our costs. 27 Table of Contents Further, because we have limited historical financial data for our Payments operations relevant to our current scale and operations and operate in a rapidly evolving market, any predictions about our future revenue and expenses may not be as accurate as they would be if we had a longer operating history or operated in a more predictable market.
Biggest changeThese risks and challenges include, but are not limited to, our ability to: • accurately forecast our revenue and plan our operating expenses; • increase the number of and retain existing customers using our platform; • successfully compete with current and future competitors; • successfully expand our business in existing markets and enter new markets and geographies; • anticipate and respond to macroeconomic changes and changes in the markets in which we operate; • maintain and enhance the value of our reputation and brand; • comply with regulatory requirements in highly regulated markets; • adapt to rapidly evolving trends in the ways customers interact with technology; • integrate new technologies on our platform, including artificial intelligence tools; • develop a scalable, high-performance technology infrastructure that can efficiently and reliably handle significant surges of usage by our customers as compared to historic levels and increased usage generally, as well as the deployment of new features and services; 27 Table of Contents • maintain and effectively manage our internal infrastructure systems, such as information strategy and sharing and interconnectivity between systems; • hire, integrate, and retain talented technology, sales, customer service, and other personnel; • effectively manage rapid growth in our personnel and operations; and • effectively manage our costs.
If we fail to manage our growth effectively, we may be unable to execute our business plan, maintain high levels of service and customer satisfaction, or adequately address competitive challenges. Historically, we have experienced periods of significant growth in our Factoring and Payments operations businesses, which puts a strain on our business, operations, and employees.
If we fail to manage our growth effectively, we may be unable to execute our business plan, maintain high levels of service and customer satisfaction, or adequately address competitive challenges. Historically, we have experienced periods of significant growth in our Factoring and Payments businesses, which puts a strain on our business, operations, and employees.
Any failure to maintain high-quality customer support, or a market perception that we do not maintain high-quality customer support, could adversely affect our reputation and brand, our ability to benefit from referrals by existing customers, our ability to sell our Payments platform to existing and prospective customers, and our business, financial condition, or results of operations.
Any failure to maintain high-quality customer support, or a market perception that we do not maintain high-quality customer support, could adversely affect our reputation and brand, our ability to benefit from referrals by existing customers, our ability to sell our platform to existing and prospective customers, and our business, financial condition, or results of operations.
Interruptions or performance problems associated with our technology and infrastructure may adversely affect our Payments business and operating results. Our continued growth depends in part on the ability of our existing and potential Payments customers to access our Payments platform at any time and within an acceptable amount of time.
Interruptions or performance problems associated with our network technology and infrastructure may adversely affect our business and operating results. Our continued growth depends in part on the ability of our existing and potential customers to access our network and payments platform at any time and within an acceptable amount of time.
If new or existing customers believe that our platform does not provide adequate security for the storage of personal or sensitive information or its transmission over the Internet, they may not adopt our Payments platform or may choose not to renew their use of our platform, which could harm our business.
If new or existing customers believe that our platform does not provide adequate security for the storage of personal or sensitive information or its transmission over the Internet, they may not adopt our platform or may choose not to renew their use of our platform, which could harm our business.
We expect the competitive landscape in the transportation technology industry will continue to change in a variety of ways, including: • rapid and significant changes in technology, resulting in new and innovative payment methods and programs, that could place us at a competitive disadvantage and reduce the use of our platform and services; • competitors, including third-party processors and integrated payment providers, customers, governments, and/or other industry participants may develop products and services that compete with or replace our platform and services; 32 Table of Contents • competitors may also elect to focus exclusively on one segment of the transportation industry and develop product offerings uniquely tailored to that segment, which could impact our addressable market and reduce the use of our platform and services; • participants in the financial services, payments, and payment technology industries may merge, create joint ventures, or form other business alliances that may strengthen their existing business services or create new payment services that compete with our platform and services; and • new services and technologies that we develop may be impacted by industry-wide solutions and standards related to migration to chip technology, tokenization, and other safety and security technologies.
We expect the competitive landscape in the transportation technology industry will continue to change in a variety of ways, including: • rapid and significant changes in technology, resulting in new and innovative payment methods and programs, that could place us at a competitive disadvantage and reduce the use of our platform and services; • competitors, including third-party processors and integrated payment providers, customers, governments, and/or other industry participants may develop products and services that compete with or replace our platform and services; • competitors may also elect to focus exclusively on one segment of the transportation industry and develop product offerings uniquely tailored to that segment, which could impact our addressable market and reduce the use of our platform and services; • participants in the financial services, payments, and payment technology industries may merge, create joint ventures, or form other business alliances that may strengthen their existing business services or create new payment services that compete with our platform and services; and • new services and technologies that we develop may be impacted by industry-wide solutions and standards related to migration to chip technology, tokenization, and other safety and security technologies.
In deploying and using our Payments platform, our customers depend on our support team to resolve complex technical and operational issues, including ensuring that our Payments platform is implemented in a manner that integrates with a variety of third-party platforms.
In deploying and using our network platform, our customers depend on our support team to resolve complex technical and operational issues, including ensuring that our payments platform is implemented in a manner that integrates with a variety of third-party platforms.
Our growth prospects and strategic outlook depend in significant part on adoption of the full TriumphPay functionality to conduct end to end integrated payments transactions that create benefit for the other parties to the payment transaction on the platform.
Our growth prospects and strategic outlook depend in part on adoption of the full TriumphPay functionality to conduct end to end integrated payments transactions that create benefit for the other parties to the payment transaction on the platform.
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 that it separately paid to our customer, a vendor to the USPS who hauls 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”).
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, net of customer reserves, totaling approximately $19.4 million that it separately paid to our customer, a vendor to the USPS who hauls 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”).
At December 31, 2023 we had issued and outstanding 45,000 shares of 7.125% Series C Fixed-Rate Non-Cumulative Perpetual Preferred Stock, with an aggregate liquidation preference of $45 million (the “Series C Preferred Stock”), which is held by investors in through 1,800,000 depositary shares, each representing a 1/40th ownership interest in a share of the Series C Preferred Stock.
At December 31, 2024 we had issued and outstanding 45,000 shares of 7.125% Series C Fixed-Rate Non-Cumulative Perpetual Preferred Stock, with an aggregate liquidation preference of $45 million (the “Series C Preferred Stock”), which is held by investors in through 1,800,000 depositary shares, each representing a 1/40th ownership interest in a share of the Series C Preferred Stock.
Any failure to offer high-quality customer support may adversely affect our relationships with our Payments customers and could adversely affect our business, financial condition, and results of operations.
Any failure to offer high-quality customer support may adversely affect our relationships with our customers and could adversely affect our business, financial condition, and results of operations.
Based on our commercial real estate concentration as of December 31, 2023, we believe that we are operating within the guidelines. However, increases in our commercial real estate lending could subject us to additional supervisory analysis. We cannot guarantee that any risk management practices we implement will be effective to prevent losses relating to our commercial real estate portfolio.
Based on our commercial real estate concentration as of December 31, 2024, we believe that we are operating within the guidelines. However, increases in our commercial real estate lending could subject us to additional supervisory analysis. We cannot guarantee that any risk management practices we implement will be effective to prevent losses relating to our commercial real estate portfolio.
We have implemented and may continue to implement new lines of business, offer new products and services within our existing lines of business or shift the focus to our asset mix. There are substantial risks and uncertainties associated with these efforts, particularly in instances where such product lines are not fully mature.
We have implemented a new segment and may continue to implement new lines of business, offer new products and services within our existing lines of business or shift the focus to our asset mix. There are substantial risks and uncertainties associated with these efforts, particularly in instances where such product lines are not fully mature.
We did not hold any CLO warehouse investments as of December 31, 2023. 37 Table of Contents Risks Relating to the Regulation of Our Industry Our business, financial condition, results of operations and future prospects could be adversely affected by the highly regulated environment in which we operate.
We did not hold any CLO warehouse investments as of December 31, 2024. 37 Table of Contents Risks Relating to the Regulation of Our Industry Our business, financial condition, results of operations and future prospects could be adversely affected by the highly regulated environment in which we operate.
Summary Our risk factors can be broadly summarized by the following categories: • Economic Risks • Credit and Interest Rate Risks • Strategic Risks • Transportation Concentration Risks • Risks Relating to our Payments Business • Operational Risks • Risks Relating to the Regulation of Our Industry • Risks Relating to the Company’s Common Stock • General Risks While not an exhaustive list, our risk factors are generally designed to address the following factors: • business and economic conditions generally and in the bank and non-bank financial services industries, nationally and within our local market areas; • our ability to mitigate our risk exposures; • our ability to maintain our historical earnings trends; • changes in management personnel; • interest rate risk; • concentration of our products and services in the transportation industry; • risks related to our Payments business and the associated growth in such product line; • credit risk associated with our loan portfolio; • lack of seasoning in our Payments business; • 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; 17 Table of Contents • 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 and failures to maintain our information technology infrastructure; • cybersecurity risk, including 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; • 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; • increases in our capital requirements; and • the impact of al global pandemic on our business The foregoing factors should not be construed as exhaustive.
Summary Our risk factors can be broadly summarized by the following categories: • Economic Risks • Credit and Interest Rate Risks • Strategic Risks • Transportation Concentration Risks • Risks Relating to our Payments Business • Operational Risks • Risks Relating to the Regulation of Our Industry • Risks Relating to the Company’s Common Stock • General Risks While not an exhaustive list, our risk factors are generally designed to address the following factors: • business and economic conditions generally and in the bank and non-bank financial services industries, nationally and within our local market areas; • our ability to mitigate our risk exposures; • our ability to maintain our historical earnings trends; • changes in management personnel; • interest rate risk; • concentration of our products and services in the transportation industry; • risks related to our Payments, Intelligence, and Factoring business and the associated growth in such product line; • credit risk associated with our loan portfolio; • lack of seasoning in our Payments business; • 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; 18 Table of Contents • 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 and failures to maintain our information technology infrastructure; • cybersecurity risk, including 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 including tariffs; • changes in the scope and cost of FDIC, insurance and other coverages; • failure to receive regulatory approval for future acquisitions; • increases in our capital requirements; and • the impact of a global pandemic on our business The foregoing factors should not be construed as exhaustive.
The success of these and any other enhancements to our Payments platform depends on several factors, including timely completion, adequate quality testing and sufficient demand, and the accuracy of our estimates regarding the total addressable market for new products and/or enhancements and the portion of such total addressable market that we expect to capture for such new products and/or enhancements.
The success of these and any other enhancements to our network platform depends on several factors, including timely completion, adequate quality testing and sufficient demand, and the accuracy of our estimates regarding the total addressable market for new products and/or enhancements and the portion of such total addressable market that we expect to capture for such new products and/or enhancements.
We are responsible for transmitting a high volume of sensitive information through our Payments platform and our success depends upon the security of this platform. Any actual or perceived breach of our system that would result in disclosure of such information could materially impact our business.
We are responsible for transmitting a high volume of sensitive information through our network platform, and our success depends upon the security of this platform. Any actual or perceived breach of our system that would result in disclosure of such information could materially impact our business.
We have registered domain names that we use in, or are related to, our banking, factoring, and payments businesses.
We have registered domain names that we use in, or are related to, our banking, factoring, intelligence, and payments businesses.
As a result, unauthorized access to, security breaches of, or denial-of-service attacks against our Payments platform could result in the unauthorized access to or use of, and/or loss of, such data, as well as loss of intellectual property, customer information, employee data, trade secrets, or other confidential or proprietary information.
As a result, unauthorized access to, security breaches of, or denial-of-service attacks against our network platform could result in the unauthorized access to or use of, and/or loss of, such data, as well as loss of intellectual property, customer information, employee data, trade secrets, or other confidential or proprietary information.
Further, because data security is a critical competitive factor in our industry, we may make statements in our privacy statements and notices and in our marketing materials describing the security of our Payments platform, including descriptions of certain security measures we employ or security features embedded within our products.
Further, because data security is a critical competitive factor in our industry, we may make statements in our privacy statements and notices and in our marketing materials describing the security of our network platform, including descriptions of certain security measures we employ or security features embedded within our products.
Developing and launching enhancements to our Payments platform and new services on our platform may involve significant technical risks and upfront capital investments that may not generate return on investment. For example, we may use new technologies ineffectively, or we may fail to adapt to emerging industry standards.
Developing and launching enhancements to our network platform and new services on our platform may involve significant technical risks and upfront capital investments that may not generate return on investment. For example, we may use new technologies ineffectively, or we may fail to adapt to emerging industry standards.
We have experienced, and may in the future experience, disruptions, outages, and other performance problems related to our platform due to a variety of factors, including infrastructure changes, introductions of new functionality, human or software errors, delays in scaling our technical infrastructure if we do not maintain enough excess capacity and accurately predict our infrastructure requirements, capacity constraints due to an overwhelming number of users accessing our platform simultaneously, denial-of-service attacks, human error, actions or inactions attributable to third parties, earthquakes, hurricanes, floods, fires, natural disasters, power losses, disruptions in telecommunications services, fraud, military or political conflicts, terrorist attacks and other geopolitical unrest, computer viruses, ransomware, malware, or other events.
We have experienced, and may in the future experience, disruptions, outages, and other performance problems related to our platform due to a variety of factors, including infrastructure changes, introductions of new functionality (including functionality that incorporates artificial intelligence tools), human or software errors, delays in scaling our technical infrastructure if we do not maintain enough excess capacity and accurately predict our infrastructure requirements, capacity constraints due to an overwhelming number of users accessing our platform simultaneously, denial-of-service attacks, human error, actions or inactions attributable to third parties, earthquakes, hurricanes, floods, fires, natural disasters, power losses, disruptions in telecommunications services, fraud, military or political conflicts, terrorist attacks and other geopolitical unrest, computer viruses, ransomware, malware, or other events.
Our success depends upon our ability to continually enhance the performance, reliability, and features of our Payments platform. The markets in which we compete are characterized by constant change and innovation, and we expect them to continue to evolve rapidly.
Our success depends upon our ability to continually enhance the performance, reliability, and features of our network platform. The markets in which we compete are characterized by constant change and innovation, and we expect them to continue to evolve rapidly.
The existence of credit and market risk associated with any derivative instruments we enter into could adversely affect our net interest income and, therefore, could have an adverse effect on our business, financial condition and results of operations. 22 Table of Contents Strategic Risks We rely heavily on our management team and could be adversely affected by the unexpected loss of key officers.
The existence of credit and market risk associated with any derivative instruments we enter into could adversely affect our net interest income and, therefore, could have an adverse effect on our business, financial condition and results of operations. Strategic Risks We rely heavily on our management team and could be adversely affected by the unexpected loss of key officers.
As the market for our platform matures, or as competitors introduce new products or services that compete with ours, we may be unable to attract new customers at the same price or based on the same pricing models that we have used historically. 28 Table of Contents Our Payments business is exposed to risks associated with the handling of customer funds.
As the market for our platform matures, or as competitors introduce new products or services that compete with ours, we may be unable to attract new customers at the same price or based on the same pricing models that we have used historically. Our Payments business is exposed to risks associated with the handling of customer funds.
Furthermore, the public perception that a cyberattack on our systems has been successful, whether or not this perception is correct, may damage our reputation with customers and third parties with whom it does business. Hacking of personal information and identity theft risks, in particular, could cause serious reputational harm.
Furthermore, the public perception that a cyberattack on our systems has been successful, whether or not this perception is correct, may damage our reputation with customers and third parties with whom it does business. Unauthorized access of personal information and identity theft risks, in particular, could cause serious reputational harm.
In the event of a breakdown in the internal control system, improper operation of systems or improper employee actions, we could suffer financial loss, face regulatory action and suffer damage to our reputation. We may invest in CLO securities or CLO warehouse financing structures, which may expose us to losses in connection with such investments.
In the event of a breakdown in the internal control system, improper operation of systems or improper employee actions, we could suffer financial loss, face regulatory action and suffer damage to our reputation. We may invest in collateralized loan obligation ("CLO") securities or CLO warehouse financing structures, which may expose us to losses in connection with such investments.
If delinquencies and defaults increase, we may be required to increase our provision for loan losses, which could have an adverse effect on our business, financial condition and results of operations. 20 Table of Contents We may not be able to adequately measure and limit the credit risk associated with our loan portfolio, our business and financial condition, which could adversely affect profitability.
If delinquencies and defaults increase, we may be required to increase our provision for loan losses, which could have an adverse effect on our business, financial condition and results of operations. We may not be able to adequately measure and limit the credit risk associated with our loan portfolio, our business and financial condition, which could adversely affect profitability.
For example, reductions in economic activity reducing the volume of goods in commerce, changes in the spot rate market for transportation, and other factors impacting Carriers in the over the road transportation business, such as the cost of insurance, may influence both the size of invoices we are able to purchase in our transportation business (both in traditional factoring as well as factoring transactions being originated through TriumphPay) as well as the number of Carriers engaged in this business and their utilization of available capacity.
For example, reductions in economic activity reducing the volume of goods in commerce, changes in the spot rate market for transportation, the impact of any imposed tariffs, and other factors impacting Carriers in the over the road transportation business, such as the cost of insurance, may influence both the size of invoices we are able to purchase in our transportation business (both in traditional factoring as well as factoring transactions being originated through TriumphPay) as well as the number of Carriers engaged in this business and their utilization of available capacity.
Further, our business and/or network interruption insurance may not be sufficient to cover all of our losses that may result from interruptions in our service as a result of systems failures and similar events. From time to time we may experience limited periods of server downtime due to server failure or other technical difficulties.
Further, our business and/or network interruption insurance may not be sufficient to cover all of our losses that may result from interruptions in our service as a result of systems failures and similar events. 30 Table of Contents From time to time we may experience limited periods of server downtime due to server failure or other technical difficulties.
Such effects may be particularly pronounced in a market of reduced real estate values and excess inventory. 21 Table of Contents Our Allowance for Credit Loss ("ACL") may prove to be insufficient to absorb life-time losses in our loan portfolio, which may adversely affect our business, financial condition and results of operations.
Such effects may be particularly pronounced in a market of reduced real estate values and excess inventory. Our Allowance for Credit Loss ("ACL") may prove to be insufficient to absorb life-time losses in our loan portfolio, which may adversely affect our business, financial condition and results of operations.
We also rely on third parties to provide some support services, and our ability to provide effective support is partially dependent on our ability to attract and retain qualified and capable third-party service providers. As we continue to grow our Payments business and improve our offerings, we will face challenges related to providing high-quality support services at scale.
We also rely on third parties to provide some support services, and our ability to provide effective support is partially dependent on our ability to attract and retain qualified and capable third-party service providers. As we continue to grow our Payments and Intelligence businesses and improve our offerings, we will face challenges related to providing high-quality support services at scale.
Any failure to timely and effectively resolve any such errors, defects, or vulnerabilities could adversely affect our business, reputation, brand, financial condition, and results of operations. 31 Table of Contents Our risk management strategies may not be fully effective in mitigating our risk exposure in all market environments or against all types of risk.
Any failure to timely and effectively resolve any such errors, defects, or vulnerabilities could adversely affect our business, reputation, brand, financial condition, and results of operations. Our risk management strategies may not be fully effective in mitigating our risk exposure in all market environments or against all types of risk.
Economic downturns and other events that negatively impact our market areas could cause us to incur substantial credit losses that could have an adverse effect on our business, financial condition and results of operations. Our concentration of large loans to certain borrowers may increase our credit risk.
Economic downturns and other events that negatively impact our market areas could cause us to incur substantial credit losses that could have an adverse effect on our business, financial condition and results of operations. 21 Table of Contents Our concentration of large loans to certain borrowers may increase our credit risk.
If our assumptions regarding these risks and uncertainties, which we use to plan and operate our business, are incorrect or change, or if we do not address these risks successfully, our results of operations could differ materially from our expectations and our business, financial condition, and results of operations could be adversely affecte d.
If our assumptions regarding these risks and uncertainties, which we use to plan and operate our business, are incorrect or change, or if we do not address these risks successfully, our results of operations could differ materially from our expectations and our business, financial condition, and results of operations could be adversely affected .
These investments, along with the other competitive advantages discussed above, may allow our competitors to lower their prices and fees, or increase the incentives, discounts, and promotions they offer and thereby compete more effectively against us. Additionally, our competitors may be able to respond more quickly and effectively than us to new or changing opportunities, technologies, standards, or customer requirements.
These investments, along with the other competitive advantages discussed above, may allow our competitors to lower their prices and fees, or increase the incentives, discounts, and promotions they offer and thereby compete more effectively against us. 32 Table of Contents Additionally, our competitors may be able to respond more quickly and effectively than us to new or changing opportunities, technologies, standards, or customer requirements.
Our previous acquisitions may make it more difficult for investors to evaluate historical trends in our financial results and operating performance, as the impact of such acquisitions make it more difficult to identify organic trends that would be reflected absent such acquisitions.
We may engage in acquisitions in the future. Our previous acquisitions may make it more difficult for investors to evaluate historical trends in our financial results and operating performance, as the impact of such acquisitions make it more difficult to identify organic trends that would be reflected absent such acquisitions.
With the introduction of new technologies and new market entrants, we expect competition to intensify in the future. For example, our competitors may adopt certain of our platform features or may adopt innovations that customers value more highly than ours, which would render our platform less attractive and reduce our ability to differentiate our platform.
With the introduction of new technologies (like automated intelligence tools) and new market entrants, we expect competition to intensify in the future. For example, our competitors may adopt certain of our platform features or may adopt innovations that customers value more highly than ours, which would render our platform less attractive and reduce our ability to differentiate our platform.
We have a limited operating history in an evolving payments industry, which makes it difficult to evaluate our future prospects and may increase the risk that we will not be successful. Our Payments operations have grown significantly in recent periods both organically and through acquisition, and have a limited operating history, particularly at our current scale.
We have a limited operating history in rapidly evolving industries, which makes it difficult to evaluate our future prospects and may increase the risk that we will not be successful. Our Payments operations have grown significantly in recent periods both organically and through acquisition, and have a limited operating history, particularly at our current scale.
Thus, any predictions or forecasts about our future operations may not be as accurate as they would be if we were to grow purely on an organic basis. 24 Table of Contents We face significant competition to attract and retain customers, which could adversely affect our growth and profitability.
Thus, any predictions or forecasts about our future operations may not be as accurate as they would be if we were to grow purely on an organic basis. We face significant competition to attract and retain customers, which could adversely affect our growth and profitability.
Many factors impact interest rates, including governmental monetary policies, inflation, recession, changes in unemployment, the money supply and international disorder and instability in domestic and foreign financial markets. 19 Table of Contents Interest rate increases often result in larger payment requirements for our borrowers, which increases the potential for default.
Many factors impact interest rates, including governmental monetary policies, inflation, recession, changes in unemployment, the money supply and international disorder and instability in domestic and foreign financial markets. Interest rate increases often result in larger payment requirements for our borrowers, which increases the potential for default.
Any of these results could harm our business, financial condition, and results of operations. Operational Risks Cybersecurity events could subject us to increased operating costs as well as litigation and other potential losses.
Any of these results could harm our business, financial condition, and results of operations. 34 Table of Contents Operational Risks Cybersecurity events could subject us to increased operating costs as well as litigation and other potential losses.
In addition, these incidents can originate on our vendors’ websites or systems, which can then be leveraged to access our website or systems, further preventing our ability to successfully identify and mitigate the attack.
In addition, these incidents can originate on our vendors’ websites or systems, which can then be leveraged to access our website or systems, hampering our ability to successfully identify and mitigate the attack.
Adverse economic conditions and government policy responses to such conditions could have an adverse effect on our business, financial condition and results of operations. 18 Table of Contents We may be adversely affected by the soundness of other financial institutions.
Adverse economic conditions and government policy responses to such conditions (including tariffs) could have an adverse effect on our business, financial condition and results of operations. 19 Table of Contents We may be adversely affected by the soundness of other financial institutions.
We have concluded that, based on the level of positive evidence, it is more likely than not that at December 31, 2023 all but $0.3 million which is recorded as a valuation allowance of the deferred tax asset will be realized. At December 31, 2023, net deferred tax assets were approximately $8.8 million.
We have concluded that, based on the level of positive evidence, it is more likely than not that at December 31, 2024 all but $0.3 million which is recorded as a valuation allowance of the deferred tax asset will be realized. At December 31, 2024, net deferred tax assets were approximately $13.6 million.
Uncertainty about the federal fiscal policymaking process (including the looming debt ceiling), the medium and long-term fiscal outlook of the federal and state governments (including possible ratings downgrades) and future tax rates (or other amendments to the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”) or to state tax laws) is a concern for businesses, consumers and investors in the United States.
Uncertainty about the federal fiscal and domestic policymaking process (including the debt ceiling), the impact of any imposed tariffs, the medium and long-term fiscal outlook of the federal and state governments (including possible ratings downgrades) and future tax rates (or other amendments to the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”) or to state tax laws) is a concern for businesses, consumers and investors in the United States.
If our management is unable to effectively manage our growth, our expenses may increase more than expected, our revenue may not increase or may grow more slowly than expected, and we may be unable to implement our business strategy . 23 Table of Contents Acquisitions may disrupt our business and dilute stockholder value.
If our management is unable to effectively manage our growth, our expenses may increase more than expected, our revenue may not increase or may grow more slowly than expected, and we may be unable to implement our business strategy . Acquisitions may disrupt our business and dilute stockholder value.
For the year ended December 31, 2023, we estimate that approximately 49% percent of our revenues were derived from the transportation industry, and as of December 31, 2023, 97% of our period end factored receivables portfolio consisted of invoices purchased from transportation clients.
For the year ended December 31, 2024, we estimate that approximately 48% percent of our revenues were derived from the transportation industry, and as of December 31, 2024, 97% of our period end factored receivables portfolio consisted of invoices purchased from transportation clients.
Additionally, rising interest rates on our adjustable rate loans could make it more difficult for our borrower's to repay their loans potentially leading to increased delinquencies, increased volume of loan modifications, and financial losses for the Company.
Additionally, elevated interest rates on our adjustable rate loans could make it more difficult for our borrowers to repay their loans, potentially leading to increased delinquencies, increased volume of loan modifications, and financial losses for the Company.
In the event that we conclude that all or a portion of our intangible assets may be impaired, a non-cash charge for the amount of such impairment would be recorded to earnings. Such a charge would have no impact on tangible capital. At December 31, 2023, we had intangible assets of $23.6 million, representing approximately 3% of total equity.
In the event that we conclude that all or a portion of our intangible assets may be impaired, a non-cash charge for the amount of such impairment would be recorded to earnings. Such a charge would have no impact on tangible capital. At December 31, 2024, we had intangible assets of $16.3 million, representing approximately 2% of total equity.
In the event that we conclude that all or a portion of our goodwill may be impaired, a non-cash charge for the amount of such impairment would be recorded to earnings. Such a charge would have no impact on tangible capital. At December 31, 2023, we had goodwill of $233.7 million, representing approximately 27% of total equity.
In the event that we conclude that all or a portion of our goodwill may be impaired, a non-cash charge for the amount of such impairment would be recorded to earnings. Such a charge would have no impact on tangible capital. At December 31, 2024, we had goodwill of $241.9 million, representing approximately 27% of total equity.
The initial integration of many of our Payments services with our customers often involve significant resource commitments by our customers, particularly those with larger operational scale. Potential customers generally commit significant resources to an evaluation of available services and may require us to expend substantial time, effort, and money educating them as to the value of our services.
The initial integration of many of our customers into our network involves significant resource commitments by our customers, particularly those with larger operational scale. Potential customers generally commit significant resources to an evaluation of available services and may require us to expend substantial time, effort, and money educating them as to the value of our services.
Accordingly, our future success will depend in part on our ability to respond to new product offerings by competitors, technological advances, and emerging industry standards and practices in a cost-effective and timely manner in order to retain existing customers and attract new customers.
Accordingly, our future success will depend in part on our ability to respond to new product offerings by competitors, technological advances, including automated technologies like artificial intelligence, and emerging industry standards and practices in a cost-effective and timely manner in order to retain existing customers and attract new customers.
As of December 31, 2023, we had investments with a net carrying amount of $3.0 million in the subordinated notes of three CLOs. In addition, we have historically, and may in the future, invest in the subordinated notes or preference shares of CLO warehouse financing structures.
As of December 31, 2024, we had investments with a net carrying amount of $1.9 million in the subordinated notes of three CLOs. In addition, we have historically, and may in the future, invest in the subordinated notes or preference shares of CLO warehouse financing structures.
In either event, if market interest rates should move contrary to our position, this “gap” will negatively impact our earnings. The impact on earnings is more adverse when the slope of the yield curve flattens, that is, when short-term interest rates increase more than long-term interest rates or when long-term interest rates decrease more than short-term interest rates.
In either event, if market interest rates should move contrary to our position, this “gap” will negatively impact our earnings. The impact on earnings is more adverse when short-term interest rates increase more than long-term interest rates or when long-term interest rates decrease more than short-term interest rates.
We intend to continue to pursue growth within each of our target customer markets (Broker, Shipper and Factor) and to seek to convert customers using only a portion of the TriumphPay functionality (payments or audit), to use the other services on the TriumphPay platform to conduct end to end integrated payments transactions that create benefit for the other parties to the payment transaction on the platform.
We intend to continue to pursue growth within each of our target customer markets (Broker, Shipper and Factor) and to seek to convert customers using only a portion of the TriumphPay functionality (payments or audit), to use the other services on the TriumphPay platform to conduct end to end integrated payments transactions that create benefit for the other parties to the payment transaction on the platform, and to continue exploring the use and deployment of artificial intelligence as well as other new technology tools on the platform.
We have exposure to different industries and counterparties and through transactions with counterparties in the bank and non-bank financial services industries, including brokers and dealers, commercial banks, investment banks and other institutional clients.
Through our transactions in the bank and non-bank financial services industries, we have exposure to a variety of industries and different counterparties, including brokers and dealers, commercial banks, investment banks and other institutional clients.
At December 31, 2023, the amount of OREO we held totaled $37 thousand. In the event the amount of OREO should increase due to an increase in defaults on bank loans, our losses and the costs and expenses to maintain the real estate, likewise would increase.
At December 31, 2024, we held no OREO. In the event the amount of OREO should increase due to an increase in defaults on bank loans, our losses and the costs and expenses to maintain the real estate, likewise would increase.
The current economic environment is characterized an elevated interest rate environment that hasn't been experienced in several years and our ability to retain or grow our deposit base could be hindered by higher market interest rates in the future.
The current economic environment is characterized by an elevated interest rate environment, and our ability to retain or grow our deposit base could be hindered by higher market interest rates in the future.
We operate in a rapidly changing industry. Accordingly, our risk management strategies may not be fully effective to identify, monitor, and manage all risks that our payment business encounters.
We operate in a rapidly changing industry and face complex and constantly evolving regulatory requirements. Accordingly, our risk management strategies may not be fully effective to identify, monitor, and manage all risks that our payment business encounters.
Our ability to attract additional customers will depend on a number of factors, including the effectiveness of our sales team, the success of our marketing efforts, our levels of investment in expanding our sales and marketing teams, success in developing and rolling out additional features and functionality on the platform, and the availability of competitive transportation payments technology platforms.
Our ability to attract additional customers will depend on a number of factors, including the effectiveness of our sales team, the success of our marketing efforts, our levels of investment in expanding our sales and marketing teams, success in developing and rolling out additional features and functionality on the platform (including integration of artificial intelligence tools and the development of products and services for our Intelligence business), and the availability of competitive transportation payments technology platforms.
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 1B. UNRESOLVED STAFF COMMENTS. None.
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.
As of December 31, 2023, approximately $1.326 billion, or 33.3%, of our deposits consisted of interest-bearing demand deposits and money market accounts. Based on past experience, we believe that our deposit accounts are a relatively stable sources of funds.
As of December 31, 2024, approximately $1.328 billion, or 27.5%, of our deposits consisted of interest-bearing demand deposits and money market accounts. Based on past experience, we believe that our deposit accounts are a relatively stable sources of funds.
We have devoted significant resources to develop our risk management policies and procedures and expect to continue to do so in the future. Nonetheless, our risk management strategies may not be fully effective in mitigating our risk exposure in all market environments or against all types of risk, including risks that are unidentified or unanticipated.
Our risk management strategies may not be fully effective in mitigating our risk exposures in all market environments or against all types of risk. We have devoted significant resources to develop our risk management policies and procedures and expect to continue to do so in the future.
Such effects may be particularly pronounced in a market of reduced real estate values and excess inventory, which may make the disposition of OREO properties more difficult, increase maintenance costs and expenses and may reduce our ultimate realization from any OREO sales, which could have an adverse effect on our business, financial condition and results of operations. 35 Table of Contents Nonperforming assets take significant time and resources to resolve and adversely affect our results of operations and financial condition.
Such effects may be particularly pronounced in a market of reduced real estate values and excess inventory, which may make the disposition of OREO properties more difficult, increase maintenance costs and expenses and may reduce our ultimate realization from any OREO sales, which could have an adverse effect on our business, financial condition and results of operations.
Such an occurrence could impact the returns we realize on our factoring activity or result in a decrease in the overall amount of our factoring activity and could have an adverse effect on our business, financial condition and results of operations. Risks Relating to our Payments Business Our growth prospects depend significantly on the success of our Payments business.
Such an occurrence could impact the returns we realize on our factoring activity or result in a decrease in the overall amount of our factoring activity and could have an adverse effect on our business, financial condition and results of operations.
Cyberattacks could include computer viruses, malicious or destructive code, phishing attacks, denial of service or information, ransomware, improper access by employees or vendors, attacks on personal email of employees, ransom demands to not expose security vulnerabilities in our systems or the systems of third parties, or other security breaches, and could result in the destruction or exfiltration of data and systems.
Cyberattacks could include computer viruses, malicious or destructive code, phishing attacks, denial of service or information, ransomware, or other security breaches, terrorist activities, improper access by employees or vendors, attacks on personal email of employees and could result in the destruction or exfiltration of data and systems.
Our future Payments revenue will depend in part on our ability to expand the financial technology services we offer to our customers and increase adoption of those services. We offer our Payments customers a variety of financial technology products and services, and we intend to make available additional financial technology products and services to our customers in the future.
Our future Payments and Intelligence revenue will depend in part on our ability to expand the financial technology services we offer to our customers and increase adoption of those services.
The steps we take to protect our intellectual property may be inadequate. We will not be able to protect our intellectual property if we are unable to enforce our rights or if we do not detect unauthorized use of our intellectual property.
The success our network platform is dependent, in part, upon protecting our intellectual property rights. The steps we take to protect our intellectual property may be inadequate. We will not be able to protect our intellectual property if we are unable to enforce our rights or if we do not detect unauthorized use of our intellectual property.
Further, future cyberattacks may not be detected in a timely manner. Cyberattacks or other information or security breaches, whether directed at us or third parties, may result in a material loss or have material consequences.
Cyberattacks or other information or security breaches, whether directed at us or third parties, may result in a material loss or have material consequences.
The ACL may be zero if the fair value of the collateral at the measurement date exceeds the amortized cost basis of the financial asset. As of December 31, 2023, our ACL as a percentage of total loans was 0.85% and as a percentage of total nonperforming loans was 51.15%.
The ACL may be zero if the fair value of the collateral at the measurement date exceeds the amortized cost basis of the financial asset. 22 Table of Contents As of December 31, 2024, our ACL as a percentage of total loans was 0.90% and as a percentage of total nonperforming loans was 35.93%.
As cyber threats continue to evolve, we may be required to expend significant additional resources to continue to modify or enhance its protective measures or to investigate and remediate any information security vulnerabilities or incidents.
As cyber threats continue to evolve, we may be required to expend significant additional resources to continue to modify or enhance protective measures or to investigate and remediate any information security vulnerabilities or incidents. Further, future cyberattacks may not be detected in a timely manner.
The amount of our nonperforming assets may increase significantly, which could result in additional losses and costs that will negatively affect our operations. At December 31, 2023, we had a total of approximately $75.8 million of nonperforming assets or approximately 1.42% of total assets.
The amount of our nonperforming assets may increase significantly, which could result in additional losses and costs that will negatively affect our operations. At December 31, 2024, we had a total of approximately $120.3 million of nonperforming assets, constituting approximately 2.02% of total assets.
Credit and Interest Rate Risks We are subject to interest rate risk, which could adversely affect our financial condition and profitability. The majority of our banking assets and liabilities are monetary in nature and subject to risk from changes in interest rates.
These losses or defaults could have an adverse effect on our business, financial condition and results of operations. Credit and Interest Rate Risks We are subject to interest rate risk, which could adversely affect our financial condition and profitability. The majority of our banking assets and liabilities are monetary in nature and subject to risk from changes in interest rates.
As of December 31, 2023, the carrying value of our investment securities portfolio was as follows: (Dollars in thousands) Debt securities - available for sale $ 299,644 Debt securities - held to maturity, net 2,977 Equity securities with readily determinable fair values 4,488 Equity securities without readily determinable fair values 75,977 $ 383,086 44 Table of Contents Factors beyond our control can significantly influence the fair value of securities in our portfolio and can cause potential adverse changes to the fair value of these securities.
As of December 31, 2024, the carrying value of our investment securities portfolio was as follows: (Dollars in thousands) Debt securities - available for sale $ 381,561 Debt securities - held to maturity, net 1,876 Equity securities with readily determinable fair values 4,445 Equity securities without readily determinable fair values 81,970 $ 469,852 44 Table of Contents Factors beyond our control can significantly influence the fair value of securities in our portfolio and can cause potential adverse changes to the fair value of these securities.
Nonperforming assets adversely affect our net income in various ways. We generally do not record interest income on nonperforming loans or OREO, thereby adversely affecting our income and increasing loan administration costs.
Nonperforming assets take significant time and resources to resolve and adversely affect our results of operations and financial condition. Nonperforming assets adversely affect our net income in various ways. We generally do not record interest income on nonperforming loans or OREO, thereby adversely affecting our income and increasing loan administration costs.
Our commercial finance clients, particularly with respect to our factoring and asset-based lending product lines, may lack the operating history, cash flows or balance sheet necessary to support other financing options and may expose us to additional credit risk, especially if our additional controls for such products are ineffective in mitigating such additional risks.
Losses from such fraudulent activity could have a material impact on our business, financial condition and results of operations. 20 Table of Contents Our commercial finance clients, particularly with respect to our factoring business and asset-based lending product lines, may lack the operating history, cash flows or balance sheet necessary to support other financing options and may expose us to additional credit risk, especially if our additional controls for such products are ineffective in mitigating such additional risks.
These losses or defaults could have an adverse effect on our business, financial condition and results of operations. A global pandemic and measures intended to prevent its spread could have a material adverse effect on our business, results of operations and financial condition which could be highly uncertain and difficult to predict.
A global pandemic and measures intended to prevent its spread could have a material adverse effect on our business, results of operations and financial condition which could be highly uncertain and difficult to predict. A global pandemic could adversely impact our workforce and operations and the operations of our borrowers, customers and business partners.
Although we do not believe any of such events have resulted in any material losses or other material consequences to date, there can be no guarantee that such losses or consequences will not occur in the future. In addition, future cyberattacks could be more disruptive and damaging, and we may not be able to anticipate or prevent all such attacks.
Although we do not believe any of such events have resulted in any material losses or other material consequences to date, there can be no guarantee that such losses or consequences will not occur in the future.
If we are unable to successfully develop new products or services, enhance the functionality, performance, reliability, design, security, and scalability of our platform in a manner that responds to our customers’ evolving needs, or gain market acceptance or our new products and services, or if our estimates regarding the total addressable market and the portion of such total addressable market which we expect to capture for new products and/or enhancements prove inaccurate, our business and operating results will be harmed.
If we are unable to successfully develop new products or services, enhance the functionality, performance, reliability, design, security, and scalability of our platform in a manner that responds to our customers’ evolving needs, or gain market acceptance or our new products and services, or if our estimates regarding the total addressable market and the portion of such total addressable market which we expect to capture for new products and/or enhancements prove inaccurate, our business and operating results will be harmed. 31 Table of Contents Defects, errors, or vulnerabilities in our applications, backend systems, or other technology systems and those of third-party technology providers could harm our reputation and brand and adversely impact our business, financial condition, and results of operations.

… 54 more changes not shown on this page.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

6 edited+6 added−5 removed2 unchanged
Biggest changeThe Company’s Chief Information Security Officer (“CISO”) is primarily responsible for developing, monitoring, and implementing our Information Security Program (the “ISP”). Our CISO has over twenty-five years of experience managing information security programs across banking and technology companies.
Biggest changeOur CISO, who has over twenty-five years of experience managing information security programs across banking and technology companies, is responsible for the Company's ISP and reports to our Chief Information Officer.
Our ISP team is organized around six key functions: (1) security operations and incident response, (2) security engineering and architecture, (3) threat and vulnerability management, (4) Information Technology/Information Security – governance, risk and controls, (5) security awareness and training, and (6) identity and access management.
Our program is organized around six key functions: (1) security operations and incident response, (2) security engineering and architecture, (3) threat and vulnerability management, (4) information technology/information security – governance, risk and controls, (5) security awareness and training, and (6) identity and access management.
Our CISO reports monthly on cybersecurity matters to the Board and The Risk and Compliance Committee in addition to full quarterly reports and an annual report.
Our CISO provides quarterly reports and an annual report to the Board and the Risk and Compliance Committee on cybersecurity matters.
ITEM 1C. CYBERSECURITY. We use people, process, and technology controls to manage and mitigate cybersecurity risk. The Risk and Compliance Committee, in consultation with and regular reporting to our full Board of Directors (the “Board”), has been delegated oversight for enterprise technology and its associated risks including cybersecurity.
“Risk Factors” for a discussion of cybersecurity risks. Governance The Risk and Compliance Committee of our Board of Directors (the “Board”), in consultation with and regular reporting to our full Board, oversees enterprise technology and its associated risks including cybersecurity.
Ongoing and regular monitoring of our third parties is also managed through our ISP team’s protocols in partnership with the vendor management, enterprise risk management, and internal audit departments. Notwithstanding the focus we place on cybersecurity, we may not be successful in preventing or mitigating a cybersecurity incident that could have a material adverse effect on the Company.
Ongoing and regular monitoring of our third parties is also managed through our ISP team’s protocols in partnership with the vendor management, enterprise risk management, and internal audit departments. Cybersecurity incidents are managed as part of our ISP.
As a financial services and technology company, we face a range of cybersecurity risks that are inherent in our industry. Cybersecurity risk has been integrated into the Company’s overall Enterprise Risk Management framework as well as our Internal Audit plan.
ITEM 1C. CYBERSECURITY. Risk Management and Strategy We use a variety of processes to assess, identify, manage, and mitigate material risks from cybersecurity threats. Our cybersecurity risk management process has been integrated into the Company’s overall Enterprise Risk Management framework as well as our Internal Audit plan.
Removed
These functions are integrated into each of our business lines through coordination with a dedicated security business partner. 47 Table of Contents Our ISP operates as an enterprise-wide function that monitors external and internal threats to assess cybersecurity risk and drives risk-based remediation across all departments.
Added
Our cybersecurity program regularly monitors external and internal threats to assess cybersecurity risk and engages in risk-based remediation. Our program is aligned to the Federal Financial Institutions Examination Council and other applicable industry standards. We conduct regular security awareness training, phishing exercises, and other security awareness programs to keep employees engaged and informed on ways to mitigate cybersecurity risk.
Removed
The Company’s ISP is aligned to the Federal Financial Institutions Examination Council standards and is built on recognized best practices and standards for cybersecurity and information technology. We identify vulnerabilities and remediate based on risk and priority.
Added
The Company’s Chief Information Security Officer (“CISO”) is primarily responsible for developing, monitoring, and implementing our Information Security Program (the “ISP”) and coordinating with relevant parts of our business.
Removed
Our ISP team conducts annual security awareness training, regular phishing exercises, sponsors Company-wide security awareness programs, and provides regular updates across the Company to keep employees engaged and informed on ways to mitigate cybersecurity risk. The ISP also has a documented Information Security Incident Response Plan (the “ISIRP) to manage any high severity security incidents that may arise.
Added
Notwithstanding the focus we place on cybersecurity, we may not be successful in preventing or mitigating a cybersecurity incident that could have a material adverse effect on the Company.
Removed
The ISIRP establishes a framework for our information security team to escalate, contain, investigate, and remediate a potential cybersecurity event. The ISIRP is reviewed no less than annually and is integrated into the Company’s overall Crisis Management Plan, which is reviewed, led, and tested regularly by senior management.
Added
The Board and Risk and Compliance Committee regularly reviews the measures implemented by the Company to identify and mitigate risks from cybersecurity threats on an annual basis. We have protocols by which certain cybersecurity incidents are escalated within the Company and, where appropriate, are reported to the Board and Risk and Compliance Committee in a timely manner.
Removed
“Risk Factors” for a discussion of cybersecurity risks.
Added
As noted above, the Company's cybersecurity risk management process is integrated into our overall Enterprise Risk Management framework, which is overseen at the management level by senior leaders of the Company.
Added
The CISO receives reports on cybersecurity threats from a number of experienced information security officers responsible for various parts of the business on an ongoing basis and in conjunction with senior management, regularly reviews risk management measures implemented by the Company to identify and mitigate data protection and cybersecurity risks.

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−1 removed1 unchanged
Biggest changeAs of December 31, 2022, TBK Bank operates ten branches in the Quad Cities Metropolitan Area of Iowa and Illinois and eight branches throughout northern and central Illinois in our Midwest division, seven branches in Colorado and three branches in New Mexico in our Mountain Division, thirty-one branches in Colorado and two branches in western Kansas in our Western division, TBK Bank operates retail branch networks in three geographic markets, (i) a mid-western division consisting of ten branches in the Quad Cities Metropolitan Area of Iowa and Illinois, together with seven other branches throughout central and northwestern Illinois and one branch in northeastern Illinois, (ii) a western division consisting of thirty-eight branches located throughout Colorado, two branches in far western Kansas and three branches in New Mexico and (iii) a Dallas, Texas division consisting of two locations, one in which we maintain our corporate office facility and a branch office dedicated to deposit gathering activities and one full-service branch.
Biggest changeOur corporate office is located at 12700 Park Central Drive, Suite 1700, Dallas, Texas 75251. 48 Table of Contents TBK Bank operates retail branch networks in three geographic markets, (i) a mid-western division consisting of ten branches in the Quad Cities Metropolitan Area of Iowa and Illinois, together with seven other branches throughout central and northwestern Illinois and one branch in northeastern Illinois, (ii) a western division consisting of thirty-eight branches located throughout Colorado, two branches in far western Kansas and three branches in New Mexico and (iii) a Dallas, Texas division consisting of two locations, one in which we maintain our corporate office facility and a full-service branch and one full-service branch.
Triumph Financial Services operates from a leased facility within a larger business park located in Coppell, Texas as well as leased facilities in El Paso, Texas, Chicago, Illinois and San Diego, California.
Factoring operates from a leased facility within a larger business park located in Coppell, Texas as well as leased facilities in El Paso, Texas, Chicago, Illinois and San Diego, California. On March 20, 2024, we purchased a building in Dallas, TX that will be the future headquarters for Triumph Financial.
Removed
ITEM 2. PROPERTIES. Our corporate office is located at 12700 Park Central Drive, Suite 1700, Dallas, Texas 75251.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

2 edited+1 added−4 removed4 unchanged
Biggest changeConsequently, 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. 48 Table of Contents The Company, through its direct and indirect wholly owned subsidiaries, has purchased and received payments on accounts receivable payable to Surge Transportation, Inc.
Biggest changeConsequently, 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.
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 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”).
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”).
Removed
("Surge"), a licensed freight broker, as part of factoring services provided to such entity. On July 24, 2023, Surge filed for Chapter 11 Bankruptcy in the US Bankruptcy Court in the Middle District of Florida.
Added
With respect to administrative or judicial proceedings involving the environment, we have determined that we will disclose any such proceeding if we reasonably believe such proceeding will result in monetary sanctions, exclusive of interest and costs, at or in excess of $1 million. ITEM 4. MINE SAFETY DISCLOSURES. Not applicable. 49 Table of Contents PART II
Removed
In connection with the bankruptcy proceedings, certain claimants comprised of motor carriers, contingency collection agents, and factoring companies have filed complaints alleging that such entities have an ownership interest in, or other rights to, amounts paid to the Company in respect of such purchased accounts receivable. The Court has not yet ruled on such complaints.
Removed
In the event of an adverse ruling with respect to such complaints, Triumph may be required to disgorge or pay to such claimants all or a portion of the amounts it has collected on such receivables.
Removed
Due to the uncertainty of the existence of or extent of any loss exposure, Triumph is unable to calculate any reserve loss at this time. ITEM 4. MINE SAFETY DISCLOSURES. Not applicable. 49 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

2 edited+1 added−1 removed11 unchanged
Biggest changePerformance Graph The following Performance Graph and related discussion are being furnished solely to accompany this Annual Report on Form 10-K pursuant to Item 201(e) of Regulation S-K and shall not be deemed to be “soliciting materials” or to be “filed” with the SEC (other than as provided in Item 201) nor shall this information be incorporated by reference into any future filing under the Securities Act or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language contained therein, except to the extent that the Company specifically incorporates it by reference into a filing. 50 Table of Contents The following Performance Graph compares the cumulative total shareholder return on the Company’s common stock for the period beginning at the close of trading on December 31, 2018 through December 31, 2023, with the cumulative total return of the NASDAQ Global Select Market Index and the NASDAQ Bank Index for the same period.
Biggest changePerformance Graph The following Performance Graph and related discussion are being furnished solely to accompany this Annual Report on Form 10-K pursuant to Item 201(e) of Regulation S-K and shall not be deemed to be “soliciting materials” or to be “filed” with the SEC (other than as provided in Item 201) nor shall this information be incorporated by reference into any future filing under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language contained therein, except to the extent that the Company specifically incorporates it by reference into a filing. 50 Table of Contents The following Performance Graph compares the cumulative total shareholder return on the Company’s common stock for the period beginning at the close of trading on December 31, 2019 through December 31, 2024, with the cumulative total return of the NASDAQ Global Select Market Index and the NASDAQ Bank Index for the same period.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. Market Information and Common Equity Holders Our common stock is listed on the NASDAQ Global Select Market under the symbol “TFIN.” At February 9, 2024, there were 23,329,596 shares outstanding and 227 stockholders of record for the Company’s common stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. Market Information and Common Equity Holders Our common stock is listed on the NASDAQ Global Select Market under the symbol “TFIN.” At February 7, 2025, there were 23,420,261 shares outstanding and 191 stockholders of record for the Company’s common stock.
Removed
December 31, 2018 December 31, 2019 December 31, 2020 December 31, 2021 December 31, 2022 December 31, 2023 Triumph Financial, Inc. $ 100.00 $ 128.01 $ 163.47 $ 400.94 $ 164.55 $ 269.97 Nasdaq Global Select Market Index 100.00 135.60 193.97 238.82 160.92 233.41 Nasdaq Bank Index 100.00 121.23 108.34 151.34 123.55 115.31 Recent sales of unregistered equity securities None.
Added
December 31, 2019 December 31, 2020 December 31, 2021 December 31, 2022 December 31, 2023 December 31, 2024 Triumph Financial, Inc. $ 100.00 $ 127.70 $ 313.20 $ 128.54 $ 210.89 $ 239.03 Nasdaq Global Select Market Index 100.00 143.04 176.11 118.67 172.13 222.62 Nasdaq Bank Index 100.00 89.37 124.84 101.92 95.12 111.03 Recent sales of unregistered equity securities None.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

199 edited+69 added−77 removed91 unchanged
Biggest changeTaxes are paid on a consolidated basis and are not allocated for segment purposes. 70 Table of Contents The following tables present our primary operating results for our operating segments: (Dollars in thousands) Year Ended December 31, 2023 Banking Factoring Payments Corporate Consolidated Total interest income $ 261,639 $ 144,217 $ 16,390 $ 175 $ 422,421 Intersegment interest allocations 31,450 (38,157) 6,707 — — Total interest expense 44,640 — — 9,702 54,342 Net interest income (expense) 248,449 106,060 23,097 (9,527) 368,079 Credit loss expense (benefit) 8,498 2,900 60 745 12,203 Net interest income after credit loss expense 239,951 103,160 23,037 (10,272) 355,876 Noninterest income 23,964 7,829 18,087 293 50,173 Noninterest expense 127,713 79,612 61,695 84,214 353,234 Net intersegment noninterest income (expense) (1) — 123 (123) — — Net income (loss) before income tax expense $ 136,202 $ 31,500 $ (20,694) $ (94,193) $ 52,815 (Dollars in thousands) Year Ended December 31, 2022 Banking Factoring Payments Corporate Consolidated Total interest income $ 195,871 $ 207,114 $ 16,079 $ 175 $ 419,239 Intersegment interest allocations 19,912 (19,382) (530) — — Total interest expense 10,874 — — 7,873 18,747 Net interest income (expense) 204,909 187,732 15,549 (7,698) 400,492 Credit loss expense (benefit) 2,753 2,895 218 1,059 6,925 Net interest income after credit loss expense 202,156 184,837 15,331 (8,757) 393,567 Noninterest income 40,984 22,272 20,620 192 84,068 Noninterest expense 121,916 91,673 63,231 63,811 340,631 Net intersegment noninterest income (expense) — — — — — Net income (loss) before income tax expense $ 121,224 $ 115,436 $ (27,280) $ (72,376) $ 137,004 (Dollars in thousands) Year Ended December 31, 2021 Banking Factoring Payments Corporate Consolidated Total interest income $ 189,621 $ 185,741 $ 12,093 $ 100 $ 387,555 Intersegment interest allocations 1,132 (1,057) (75) — — Total interest expense 10,205 — — 8,220 18,425 Net interest income (expense) 180,548 184,684 12,018 (8,120) 369,130 Credit loss expense (benefit) (19,016) 9,691 438 57 (8,830) Net interest income after credit loss expense 199,564 174,993 11,580 (8,177) 377,960 Noninterest income 33,374 13,005 7,451 671 54,501 Noninterest expense 121,325 74,928 39,768 51,486 287,507 Net intersegment noninterest income (expense) — — — — — Net income (loss) before income tax expense $ 111,613 $ 113,070 $ (20,737) $ (58,992) $ 144,954 (1) Net intersegment noninterest income (expense) includes: (Dollars in thousands) Factoring Payments Year Ended December 31, 2023 Factoring revenue received from Payments $ 1,190 $ (1,190) Payments revenue received from Factoring (1,067) 1,067 Net intersegment noninterest income (expense) $ 123 $ (123) 71 Table of Contents (Dollars in thousands) December 31, 2023 Banking Factoring Payments Corporate Eliminations Consolidated Total assets $ 4,918,527 $ 1,077,367 $ 546,985 $ 1,056,646 $ (2,252,191) $ 5,347,334 Gross loans $ 3,595,527 $ 941,926 $ 174,728 $ — $ (549,081) $ 4,163,100 (Dollars in thousands) December 31, 2022 Banking Factoring Payments Corporate Eliminations Consolidated Total assets $ 4,910,628 $ 1,260,209 $ 371,948 $ 1,061,662 $ (2,270,664) $ 5,333,783 Gross loans $ 3,572,716 $ 1,151,727 $ 85,722 $ — $ (689,874) $ 4,120,291 Banking (Dollars in thousands) Years Ended December 31, 2023 Compared to 2022 2022 Compared to 2021 Banking 2023 2022 2021 $ Change % Change $ Change % Change Total interest income $ 261,639 $ 195,871 $ 189,621 $ 65,768 33.6 % $ 6,250 3.3 % Intersegment interest allocations 31,450 19,912 1,132 11,538 57.9 % 18,780 1,659.0 % Total interest expense 44,640 10,874 10,205 33,766 310.5 % 669 6.6 % Net interest income (expense) 248,449 204,909 180,548 43,540 21.2 % 24,361 13.5 % Credit loss expense (benefit) 8,498 2,753 (19,016) 5,745 208.7 % 21,769 114.5 % Net interest income (expense) after credit loss expense 239,951 202,156 199,564 37,795 18.7 % 2,592 1.3 % Noninterest income 23,964 40,984 33,374 (17,020) (41.5) % 7,610 22.8 % Noninterest expense 127,713 121,916 121,325 5,797 4.8 % 591 0.5 % Net intersegment noninterest income (expense) — — — — — % — — % Net income (loss) before income tax expense $ 136,202 $ 121,224 $ 111,613 $ 14,978 12.4 % $ 9,611 8.6 % Our Banking segment’s operating income increased $15.0 million, or 12.4%.
Biggest changeTaxes are paid on a consolidated basis and are not allocated for segment purposes. 68 Table of Contents The following tables present our primary operating results for our operating segments: (Dollars in thousands) Total Corporate Year Ended December 31, 2024 Banking Factoring Payments Intelligence Segments and Other (1) Consolidated Total interest income $ 262,326 $ 137,718 $ 22,168 $ — $ 422,212 $ 303 $ 422,515 Intersegment interest allocations 26,416 (35,886) 9,470 — — — — Total interest expense 62,712 — — — 62,712 9,347 72,059 Net interest income (expense) 226,030 101,832 31,638 — 359,500 (9,044) 350,456 Credit loss expense (benefit) 13,636 4,773 57 — 18,466 301 18,767 Net interest income after credit loss expense 212,394 97,059 31,581 — 341,034 (9,345) 331,689 Noninterest income 28,167 8,683 24,080 184 61,114 4,300 65,414 Noninterest expense: Salaries and employee benefits 66,476 49,885 36,160 1,457 153,978 65,602 219,580 Depreciation 6,850 2,099 1,003 4 9,956 5,554 15,510 Other occupancy, furniture and equipment 8,801 2,138 649 3 11,591 5,913 17,504 FDIC insurance and other regulatory assessments 2,717 — — — 2,717 — 2,717 Professional fees 4,285 5,333 2,338 328 12,284 5,555 17,839 Amortization of intangible assets 2,372 1,490 6,763 — 10,625 1,367 11,992 Advertising and promotion 2,033 873 1,479 2 4,387 1,796 6,183 Communications and technology 20,853 10,131 9,440 42 40,466 10,456 50,922 Software amortization 194 2,277 2,899 1 5,371 475 5,846 Travel and entertainment 995 829 1,659 36 3,519 1,909 5,428 Other 10,979 3,588 3,583 7 18,157 4,957 23,114 Total noninterest expense 126,555 78,643 65,973 1,880 273,051 103,584 376,635 Net intersegment noninterest income (expense) (2) 535 1,628 (2,163) — — — — Net income (loss) before income tax expense $ 114,541 $ 28,727 $ (12,475) $ (1,696) $ 129,097 $ (108,629) $ 20,468 (Dollars in thousands) Total Corporate Year Ended December 31, 2023 Banking Factoring Payments Intelligence Segments and Other (1) Consolidated Total interest income $ 261,639 $ 144,217 $ 16,390 $ — $ 422,246 $ 175 $ 422,421 Intersegment interest allocations 31,450 (38,157) 6,707 — — — — Total interest expense 44,640 — — — 44,640 9,702 54,342 Net interest income (expense) 248,449 106,060 23,097 — 377,606 (9,527) 368,079 Credit loss expense (benefit) 8,498 2,900 60 — 11,458 745 12,203 Net interest income after credit loss expense 239,951 103,160 23,037 — 366,148 (10,272) 355,876 Noninterest income 23,964 7,829 18,087 — 49,880 293 50,173 Noninterest expense: Salaries and employee benefits 71,050 49,873 35,089 — 156,012 54,595 210,607 Depreciation 6,817 2,040 648 — 9,505 4,296 13,801 Other occupancy, furniture and equipment 8,592 2,219 681 — 11,492 3,592 15,084 FDIC insurance and other regulatory assessments 2,624 — — — 2,624 — 2,624 Professional fees 2,611 3,130 2,448 — 8,189 4,988 13,177 Amortization of intangible assets 2,950 1,821 6,683 — 11,454 — 11,454 Advertising and promotion 2,614 1,046 1,311 — 4,971 1,769 6,740 Communications and technology 17,524 11,289 7,992 — 36,805 8,874 45,679 Software amortization 169 3,060 965 — 4,194 259 4,453 Travel and entertainment 1,263 909 2,479 — 4,651 1,455 6,106 Other 11,499 4,225 3,399 — 19,123 4,386 23,509 Total noninterest expense 127,713 79,612 61,695 — 269,020 84,214 353,234 Net intersegment noninterest income (expense) (2) — 123 (123) — — — — Net income (loss) before income tax expense $ 136,202 $ 31,500 $ (20,694) $ — $ 147,008 $ (94,193) $ 52,815 69 Table of Contents (Dollars in thousands) Total Corporate Year Ended December 31, 2022 Banking Factoring Payments Intelligence Segments and Other (1) Consolidated Total interest income $ 195,871 $ 207,114 $ 16,079 $ — $ 419,064 $ 175 $ 419,239 Intersegment interest allocations 19,912 (19,382) (530) — — — — Total interest expense 10,874 — — — 10,874 7,873 18,747 Net interest income (expense) 204,909 187,732 15,549 — 408,190 (7,698) 400,492 Credit loss expense (benefit) 2,753 2,895 218 — 5,866 1,059 6,925 Net interest income after credit loss expense 202,156 184,837 15,331 — 402,324 (8,757) 393,567 Noninterest income 40,984 22,272 20,620 — 83,876 192 84,068 Noninterest expense: Salaries and employee benefits 69,133 55,593 37,676 — 162,402 39,085 201,487 Depreciation 6,725 2,647 19 — 9,391 3,911 13,302 Other occupancy, furniture and equipment 8,688 1,893 633 — 11,214 2,258 13,472 FDIC insurance and other regulatory assessments 1,815 — — — 1,815 — 1,815 Professional fees 2,585 3,779 4,537 — 10,901 4,743 15,644 Amortization of intangible assets 3,761 2,293 5,868 — 11,922 — 11,922 Advertising and promotion 3,345 1,290 1,626 — 6,261 1,499 7,760 Communications and technology 14,015 14,903 6,600 — 35,518 6,565 42,083 Software amortization 264 2,832 490 — 3,586 477 4,063 Travel and entertainment 1,687 833 1,900 — 4,420 1,331 5,751 Other 9,898 5,610 3,882 — 19,390 3,942 23,332 Total noninterest expense 121,916 91,673 63,231 — 276,820 63,811 340,631 Net intersegment noninterest income (expense) — — — — — — — Net income (loss) before income tax expense $ 121,224 $ 115,436 $ (27,280) $ — $ 209,380 $ (72,376) $ 137,004 (1) Includes revenue and expense from the Company’s holding company, which does not meet the definition of an operating segment.
The Factoring segment includes the operations of Triumph Financial Services with revenue derived from factoring services. The Payments segment includes the operations of the TBK Bank's TriumphPay division, which provides a presentment, audit, and payment solution to Shipper, Broker, and Factor clients in the trucking industry.
The Factoring segment includes the operations of Triumph Financial Services with revenue derived 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 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.
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.
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 current interest rate environment. Generally, the impact of these assumed prepayment speeds is lesser in magnitude than the aforementioned loss driver assumptions.
These assumed prepayment speeds are based upon our historical prepayment speeds by loan type adjusted for the expected impact of the current interest rate environment. Generally, the impact of these assumed prepayment speeds is lesser in magnitude than the aforementioned loss driver assumptions.
For percentage change in national retail sales, the Company projected a small increase in the first two projected quarters followed by a decline to negative levels over the last two projected quarters to a level below recent actual periods.
For percentage change in national retail sales, the Company projected a small increase in the first two projected quarters followed by a decline to negative levels over the last two projected quarters to a level below recent actual periods.
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.
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.
Refer to “Allowance for Credit Losses” above, Note 1 – Summary of Significant Accounting Policies, and Note 4 - Loans in the accompanying notes to the consolidated financial statements elsewhere in this report for further discussion of our estimation process and methodology related to the allowance for credit losses.
Refer to “Allowance for Credit Losses” above, Note 1 – Summary of Significant Accounting Policies, and Note 4 – Loans and Allowance for Credit Losses in the accompanying notes to the consolidated financial statements elsewhere in this report for further discussion of our estimation process and methodology related to the allowance for credit losses.
Additionally, we offer mortgage warehouse and 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.
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.
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 not limited to, the following: • business and economic conditions generally and in the bank and non-bank financial services industries, nationally and within our local market areas; • our ability to mitigate our risk exposures; • our ability to maintain our historical earnings trends; • changes in management personnel; • interest rate risk; • concentration of our products and services in the transportation industry; • credit risk associated with our loan portfolio; • lack of seasoning in our loan portfolio; • deteriorating asset quality and higher loan charge-offs; • time and effort necessary to resolve nonperforming assets; • inaccuracy of the assumptions and estimates we make in establishing reserves for probable loan losses and other estimates; • risks related to the integration of acquired businesses 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; 52 Table of Contents • 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; • 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.
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 not limited to, the following: • business and economic conditions generally and in the bank and non-bank financial services industries, nationally and within our local market areas; • our ability to mitigate our risk exposures; • our ability to maintain our historical earnings trends; • changes in management personnel; • interest rate risk; • concentration of our products and services in the transportation industry; • credit risk associated with our loan portfolio; • lack of seasoning in our loan portfolio; • deteriorating asset quality and higher loan charge-offs; • time and effort necessary to resolve nonperforming assets; • inaccuracy of the assumptions and estimates we make in establishing reserves for probable loan losses and other estimates; • risks related to the integration of acquired businesses 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; 52 Table of Contents • 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 Company’s methodologies for estimating the allowance for credit losses consider available relevant information about the collectability of cash flows, including information about past events, current conditions, and reasonable and supportable forecasts. 90 Table of Contents 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.
The Company’s methodologies for estimating the allowance for credit losses consider available relevant information about the collectability of cash flows, including information about past events, current conditions, and reasonable and supportable forecasts. 92 Table of Contents 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.
Further, we have not experienced any physical effects of climate change on our operations and results. 58 Table of Contents We recognize that, while not material to our operations to-date, indirect consequences of climate-related regulation could exist that might be associated with our lending to certain types of customers who engage in activity that some could deem potentially harmful to the environment.
Further, we have not experienced any physical effects of climate change on our operations and results. 57 Table of Contents We recognize that, while not material to our operations to-date, indirect consequences of climate-related regulation could exist that might be associated with our lending to certain types of customers who engage in activity that some could deem potentially harmful to the environment.
For all DCF models at December 31, 2023, 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.
For all DCF models at December 31, 2024, 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.
For all DCF models at December 31, 2023, 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.
For all DCF models at December 31, 2024, 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.
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 Corporate.
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.
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 December 31, 2023.
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 December 31, 2024.
While the Company has not yet experienced any material adverse effects, the prolonged impact of such conflicts, or other global economic events, 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 December 31, 2023.
While the Company has not yet experienced any material adverse effects, the prolonged impact of such conflicts, or other global economic events, 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 December 31, 2024.
Therefore, the Company carried no ACL at those respective dates and there was no credit loss expense recognized by the Company during the years ended December 31, 2023 and 2022. The ACL on held to maturity securities is estimated at each measurement date on a collective basis by major security type.
Therefore, the Company carried no ACL at those respective dates and there was no credit loss expense recognized by the Company during the years ended December 31, 2024 and 2023. The ACL on held to maturity securities is estimated at each measurement date on a collective basis by major security type.
Variances in these balances are attributable to normal customer behavior and seasonal factors affecting their liquidity positions. 86 Table of Contents FHLB Advances As part of our overall funding and liquidity management program, from time to time we borrow from the Federal Home Loan Bank.
Variances in these balances are attributable to normal customer behavior and seasonal factors affecting their liquidity positions. 88 Table of Contents FHLB Advances As part of our overall funding and liquidity management program, from time to time we borrow from the Federal Home Loan Bank.
Adoption of New Accounting Standards See Note 1 – Summary of Significant Accounting Policies in the accompanying notes to the consolidated financial statements included elsewhere in this report for details of recently issued accounting pronouncements and their expected impact on our consolidated financial statements. 91 Table of Contents
Adoption of New Accounting Standards See Note 1 – Summary of Significant Accounting Policies in the accompanying notes to the consolidated financial statements included elsewhere in this report for details of recently issued accounting pronouncements and their expected impact on our consolidated financial statements. 93 Table of Contents
In terms of our borrowers' repayment of loans, we experienced some of these effects during 2023 particularly in our commercial real estate and equipment finance portfolios. This resulted in an increase in the volume of loan modifications during the year including modifications made to troubled borrowers.
In terms of our borrowers' repayment of loans, we experienced some of these effects during 2023 and 2024, particularly in our commercial real estate and equipment finance portfolios. This resulted in an increase in the volume of loan modifications, including modifications made to troubled borrowers.
We manage liquidity at the holding company level as well as that of our bank subsidiary. The management of liquidity at both levels is important, 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 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.
As of December 31, 2023 , 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 December 31, 2023 .
As of December 31, 2024 , 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 December 31, 2024 .
At December 31, 2023 and 2022, the Company’s held to maturity securities consisted of three 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 December 31, 2024 and 2023, the Company’s held to maturity ("HTM") securities consisted of three 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.
We did not experience such adverse effects during the year ended December 31, 2023. Supply chain disruptions most prominently impact our trucking transportation and factoring operations discussed in terms of trucking volume in the following section.
We did not experience such adverse effects during the year ended December 31, 2024. Supply chain disruptions most prominently impact our trucking transportation and factoring operations discussed in terms of trucking volume in the following section.
At December 31, 2023 and 2022, 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.
At December 31, 2024 and 2023, 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.
As of December 31, 2022, interest bearing demand deposits, noninterest bearing deposits, money market deposits, other brokered deposits, and savings deposits accounted for 88% of our total deposits, while individual retirement accounts, certificates of deposit, and brokered time deposits made up 12% of total deposits.
As of December 31, 2023, interest bearing demand deposits, noninterest bearing deposits, money market deposits, other brokered deposits, and savings deposits accounted for 88% of our total deposits, while individual retirement accounts, certificates of deposit, and brokered time deposits made up 12% of total deposits.
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.
The management of liquidity at both levels is important, 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.
The ASR is part of our previously announced plan to repurchase up to $100.0 million of our common stock and is within the remaining amount authorized by our Board of Directors pursuant to such plan.
The ASR was part of our previously announced plan to repurchase up to $100.0 million of our common stock and was within the remaining amount authorized by our Board of Directors pursuant to such plan.
The discount on the debentures will continue to be amortized through maturity and recognized as a component of interest expense. 88 Table of Contents 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.
The discount 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.
The full amount of such receivable is reflected in non-performing and past due factored receivables as of December 31, 2023 in accordance with our policy.
The full amount of such receivable is reflected in non-performing and past due factored receivables as of December 31, 2024 in accordance with our policy.
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 December 31, 2023, we held securities classified as held to maturity with an amortized cost, net of ACL, of $3.0 million, a decrease of $1.1 million from $4.1 million at December 31, 2022.
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 December 31, 2024, we held securities classified as held to maturity with an amortized cost, net of ACL, of $1.9 million, a decrease of $1.1 million from $3.0 million at December 31, 2023.
Following such acquisition, the TriumphPay strategy shifted from a capital-intensive on-balance sheet product with a greater focus on interest income to a payments network for the trucking industry with a focus on fee revenue.
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.
The ACL on these balances was $3.2 million at December 31, 2023 and $2.4 million at December 31, 2022 and we recognized credit loss expense of $0.7 million and $0.4 million during the years ended December 31, 2023 and 2022, respectively. None of the overcollateralization triggers tied to the CLO securities were tripped as of December 31, 2023.
The ACL on these balances was $3.5 million at December 31, 2024 and $3.2 million at December 31, 2023 and we recognized credit loss expense of $0.3 million and $0.7 million during the years ended December 31, 2024 and 2023, respectively. None of the overcollateralization triggers tied to the CLO securities were tripped as of December 31, 2024.
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. Climate Change Refer to Item 1.
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.
While economic conditions in foreign countries, including impacts related to the war in Ukraine and conflict in the Middle East, could affect the stability of global financial markets, which could hinder U.S. economic growth, we did not experience a financial impact due to such conditions during the year ended December 31, 2023.
While economic conditions in foreign countries, including impacts related to the war in Ukraine, conflict in the Middle East, and tensions in U.S.-China relations, could affect the stability of global financial markets, which could hinder U.S. economic growth, we did not experience a financial impact due to such conditions during the year ended December 31, 2024.
See the “Cautionary Note Regarding Forward-Looking Statements” section above. Overview We are a financial holding company headquartered in Dallas, Texas and registered under the Bank Holding Company Act, offering a diversified line of payments, factoring and banking services.
See the “Cautionary Note Regarding Forward-Looking Statements” section above. 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.
At December 31, 2023, the carrying value of the acquired over-formula advances was $3.2 million, the total reserve on acquired over-formula advances was $3.2 million and the balance of our indemnification asset, the value of the payment that would be due to us from Covenant in the event that these over-advances are charged off, was $1.5 million. 55 Table of Contents As of December 31, 2023 we carry a separate $19.4 million receivable (the “Misdirected Payments”) payable by the United States Postal Service (“USPS”) arising from accounts factored to the largest over-formula advance carrier.
At December 31, 2024, the carrying value of the acquired over-formula advances was $1.4 million, the total reserve on acquired over-formula advances was $1.4 million and the balance of our indemnification asset, the value of the payment that would be due to us from Covenant in the event that these over-advances are charged off, was $0.7 million. 55 Table of Contents As of December 31, 2024, 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.
While the Company has not yet experienced any material adverse effects, the prolonged impact of supply chain disruptions 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 December 31, 2023.
While the Company has not yet experienced any material adverse effects, the prolonged impact or increased intensity of supply chain disruptions 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 December 31, 2024.
At December 31, 2023 and 2022, the Company carried $6.2 million and $6.5 million of these HTM securities at amortized cost, respectively.
At December 31, 2024 and 2023, the Company carried $5.4 million and $6.2 million of these HTM securities at amortized cost, respectively.
As a result of the activity previously described and the change in period end total loans period over period, the ratio of nonperforming loans to total loans held for investment increased to 1.65% at December 31, 2023 from 1.17% December 31, 2022.
As a result of the activity previously described and the change in period end total loans period over period, the ratio of nonperforming loans to total loans held for investment increased to 2.49% at December 31, 2024 from 1.65% at December 31, 2023.
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 segment.
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.
If the freight market remains weak, interest rates decline, and we invest in strategic initiatives, it will put pressure on earnings for our Payments segment and the enterprise as a whole. Despite one quarter of positive EBITDA during 2023, it is possible that the Payments Segment could fall back below EBITDA breakeven in future periods.
If the freight market remains weak, interest rates decline, and we invest in strategic initiatives, it will put pressure on earnings for our Payments segment and the enterprise as a whole. It is possible that the Payments segment could fall back below EBITDA breakeven in future periods.
The confluence of these circumstances resulted in a steady decline in invoice prices and costs of new and used equipment during the first half of 2023. Such invoice prices and costs of new and used equipment remained consistently below recent years throughout the latter half of 2023.
The confluence of these circumstances has resulted in a steady decline in invoice prices and costs of new and used equipment. Such invoice prices and costs of new and used equipment remained consistently below recent years throughout the latter half of 2023 and all of 2024.
Changes to projected loss drivers and prepayment speeds that the Company forecasted over the reasonable and supportable forecast period to calculate expected losses resulted in credit loss expense of $2.0 million for the year ended December 31, 2023 compared to credit loss expense of $1.8 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 $3.2 million during the year ended December 31, 2024 compared to credit loss expense of $2.0 million during the same period a year ago.
The 2023 effective tax rate was impacted by the performance based performance stock units windfall that was recorded during the year as those related shares vested during the period. 69 Table of Contents Operating Segment Results Our reportable segments are Banking, Factoring, Payments, and Corporate, which have been determined based upon their business processes and economic characteristics.
The effective tax rate for the year ended December 31, 2023 was impacted by a performance based performance stock units windfall that was recorded during the period as those related shares vested during the period. 67 Table of Contents Operating Segment Results Our reportable segments are Banking, Factoring, Payments, and Intelligence, which have been determined based upon their business processes and economic characteristics.
The following table provides a summary of our FHLB borrowings as of and for the years ended December 31, 2023, 2022, and 2021: (Dollars in thousands) December 31, 2023 December 31, 2022 December 31, 2021 Amount outstanding at end of the year $ 255,000 $ 30,000 $ 180,000 Weighted average interest rate at end of the year 5.65 % 4.25 % 0.15 % Average daily balance during the year $ 194,795 $ 69,658 $ 37,671 Weighted average interest rate during the year 5.30 % 1.19 % 0.24 % Maximum month-end balance during the year $ 530,000 $ 230,000 $ 180,000 Our FHLB advances are collateralized by assets, including a blanket pledge of certain loans.
The following table provides a summary of our FHLB borrowings as of and for the years ended December 31, 2024, 2023, and 2022: (Dollars in thousands) December 31, 2024 December 31, 2023 December 31, 2022 Amount outstanding at end of the year $ 30,000 $ 255,000 $ 30,000 Weighted average interest rate at end of the year 4.79 % 5.65 % 4.25 % Average daily balance during the year $ 120,369 $ 194,795 $ 69,658 Weighted average interest rate during the year 5.38 % 5.30 % 1.19 % Maximum month-end balance during the year $ 280,000 $ 530,000 $ 230,000 Our FHLB advances are collateralized by assets, including a blanket pledge of certain loans.
In accordance with the Agreement reached with Covenant, Covenant reimbursed the Company for $35.6 million of the $41.3 million charge-off. (2) Non-interest income for the year ended December 31, 2022 includes $14.2 million of gains on sale of a portfolio of factored receivables, which contributed 1.09% to the yield on average net funds employed for the period.
In accordance with the agreement reached with Covenant, Covenant has reimbursed us for $1.7 million of this charge-off. (2) Non-interest income for the year ended December 31, 2022 includes $14.2 million of gains on sale of a portfolio of factored receivables, which contributed 1.09% to the yield on average net funds employed for the period.
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 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.
Beginning January 1, 2023, payment network fees are paid by the Factoring segment to the Payments segment for use of the payments network. Beginning prospectively on June 1, 2023, factoring transactions with freight broker clients were transferred from our Factoring segment to our Payments segment to align with TriumphPay's supply chain finance product offerings.
Beginning prospectively on June 1, 2023, factoring transactions with freight broker clients were transferred from our Factoring segment to our 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.
Given the nature of the Company's operations, supply chain disruptions do not have a direct impact on the Company; however, such disruptions could make it more difficult for our borrowers to repay their loans potentially leading to increased delinquencies, increased volume of loan modifications, and financial losses for the Company.
Given the nature of the Company's operations, supply chain disruptions, whether caused by tariffs, the wildfires in California, or otherwise, do not have a direct impact on the Company; however, such disruptions could make it more difficult for our borrowers to repay their loans, potentially leading to increased delinquencies, increased volume of loan modifications, and financial losses for the Company.
For the year ended December 31, 2023, our average interest bearing deposits decreased compared to the year ended December 31, 2022; however, our use of higher-cost brokered time deposits increased significantly. For additional information regarding our operating, investing and financing cash flows, see the Consolidated Statements of Cash Flows provided in our consolidated financial statements.
For the year ended December 31, 2024, our average interest bearing deposits increased compared to the year ended December 31, 2023 including an increase in our use of higher-cost brokered time deposits. For additional information regarding our operating, investing and financing cash flows, see the Consolidated Statements of Cash Flows provided in our consolidated financial statements.
As of December 31, 2023, TBK Bank had $569.9 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 December 31, 2023, we had $587.0 million in unused and available advances from the FHLB.
As of December 31, 2024, TBK Bank had $546.4 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 December 31, 2024, we had $819.1 million in unused and available advances from the FHLB.
At December 31, 2022, the states of Texas (23%), Colorado (11%), Illinois (11%) and Iowa (6%) made up 51% of the Company’s gross loans, excluding factored receivables. Further, a majority (97%) of our factored receivables, representing approximately 26% of our total loan portfolio as of December 31, 2023, are transportation receivables.
At December 31, 2023, the states of Texas (17%), Colorado (15%), Illinois (12%) and Iowa (6%) made up 50% of the Company’s gross loans, excluding factored receivables. Further, a majority (97%) of our factored receivables, representing approximately 26% of our total loan portfolio as of December 31, 2024, are transportation receivables.
Through our wholly owned bank subsidiary, TBK Bank, 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.
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.
Overall average net funds employed (“NFE”) decreased 29.1% during the year ended December 31, 2023 compared to the same period in 2022. The decrease in average NFE was the result of decreased invoice purchase volume and decreased average invoice sizes. Those, in turn, resulted from a softening transportation market. See further discussion under the Trucking Transportation and Factoring section.
Overall average net funds employed (“NFE”) decreased 3.9% during the year ended December 31, 2024 compared to the same period in 2023. The decrease in average NFE was the result of decreased invoice purchase volume and decreased average invoice sizes. Those, in turn, resulted from a soft transportation market. See further discussion under the Recent Developments: Trucking Transportation section.
Income tax expense decreased $23.0 million, or 66.2%, from $34.7 million for the year ended December 31, 2022 to $11.7 million for the year ended December 31, 2023. The decrease in income tax expense period over period was commensurate with a decrease in our pretax net income and also driven by a decrease in our effective tax rate.
Income tax expense decreased $7.4 million, or 62.7%, from $11.7 million for the year ended December 31, 2023 to $4.4 million for the year ended December 31, 2024. The decrease in income tax expense period over period was commensurate with a decrease in our pretax net income and also driven by a decrease in our effective tax rate.
At December 31, 2022, 96% of our factored receivables, representing approximately 29% of our total loan portfolio, were transportation receivables. 80 Table of Contents Nonperforming Assets We have established procedures to assist us in maintaining the overall quality of our loan portfolio.
At December 31, 2023, 97% of our factored receivables, representing approximately 26% of our total loan portfolio, were transportation receivables. 82 Table of Contents Nonperforming Assets We have established procedures to assist us in maintaining the overall quality of our loan portfolio.
At period end, our entire remaining Over-Formula Advance position was down from $8.2 million at December 31, 2022 to $3.2 million at December 31, 2023, and the entire balance at December 31, 2023 was fully reserved. At December 31, 2023, the Misdirected Payments amount was $19.4 million.
At period end, our entire remaining Over-Formula Advance position was down from $3.2 million at December 31, 2023 to $1.4 million at December 31, 2024, and the entire balance at December 31, 2024 was fully reserved. At December 31, 2024, the Misdirected Payments amount, net of customer reserves, was $19.4 million.
The states of Texas (17%), Colorado (15%), Illinois (12%), and Iowa (6%) make up 50% 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.
The states of Texas (22%), Illinois (12%), Colorado (10%), 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.
Our transportation factoring balances, which generate a higher yield than our non-transportation factoring balances, increased as a percentage of the overall factoring portfolio to 97% at December 31, 2023 compared to 96% at December 31, 2022. Additionally, Banking and Payments yields increased period over period.
Our transportation factoring balances, which generate a higher yield than our non-transportation factoring balances, were flat as a percentage of the overall factoring portfolio to 97% at December 31, 2024 compared to 97% at December 31, 2023. Banking yield decreased slightly and Payments yield increased slightly period over period. Non-loan yields increased period over period.
Of the FHLB borrowings outstanding as of December 31, 2023, $225.0 million were short-term borrowings maturing within one year and $30.0 million were long term borrowings maturing after three but within four years. As of December 31, 2023 and 2022, we had $587.0 million and $646.3 million, respectively, in unused and available advances from the FHLB.
Of the FHLB borrowings outstanding as of December 31, 2024, none were short-term borrowings maturing within one year and $30.0 million were long term borrowings maturing after two but within three years. As of December 31, 2024 and 2023, we had $819.1 million and $587.0 million, respectively, in unused and available advances from the FHLB.
For percentage change in national home price index, the Company projected a positive 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.
For percentage change in national home price index, the Company projected a positive 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 home price index, the Company projected a positive 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.
For percentage change in national home price index, the Company projected a positive 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.
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 December 31, 2023.
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.
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 $0.5 million, or 6.1%, due to paydowns in excess of new loan origination activity during the period. Mortgage Warehouse.
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 $0.3 million, or 3.9%, due to paydowns that outpaced modest origination activity. Mortgage Warehouse.
The following table provides information on the maturity distribution of the time deposits exceeding the $250,000 FDIC insurance limit as of December 31, 2023: (Dollars in thousands) Over $250,000 Maturity 3 months or less $ 19,119 Over 3 through 6 months 10,463 Over 6 through 12 months 23,812 Over 12 months 5,028 $ 58,422 Other Borrowings Customer Repurchase Agreements The following table provides a summary of our customer repurchase agreements as of and for the years ended December 31, 2023, 2022, and 2021: (Dollars in thousands) December 31, 2023 December 31, 2022 December 31, 2021 Amount outstanding at end of period $ — $ 340 $ 2,103 Weighted average interest rate at end of period — % 0.03 % 0.03 % Average daily balance during the period $ 723 $ 6,701 $ 5,985 Weighted average interest rate during the period 0.03 % 0.03 % 0.03 % Maximum month-end balance during the period $ 3,208 $ 13,463 $ 12,405 Our customer repurchase agreements generally have overnight maturities.
The following table provides information on the maturity distribution of the time deposits exceeding the $250,000 FDIC insurance limit as of December 31, 2024: (Dollars in thousands) Over $250,000 Maturity 3 months or less $ 22,535 Over 3 through 6 months 19,581 Over 6 through 12 months 13,659 Over 12 months 1,415 $ 57,190 Other Borrowings Customer Repurchase Agreements The following table provides a summary of our customer repurchase agreements as of and for the years ended December 31, 2024, 2023, and 2022: (Dollars in thousands) December 31, 2024 December 31, 2023 December 31, 2022 Amount outstanding at end of period $ — $ — $ 340 Weighted average interest rate at end of period — % — % 0.03 % Average daily balance during the period $ — $ 723 $ 6,701 Weighted average interest rate during the period — % 0.03 % 0.03 % Maximum month-end balance during the period $ — $ 3,208 $ 13,463 Our customer repurchase agreements generally have overnight maturities.
Our mortgage warehouse facilities increased $70.0 million, or 10.6%, due to increased utilization. Client utilization of mortgage warehouse facilities may experience significant fluctuation on a day-to-day basis given mortgage origination market conditions.
Our mortgage warehouse facilities increased $294.5 million, or 40.4%, due to increased utilization. Client utilization of mortgage warehouse facilities may experience significant fluctuation on a day-to-day basis given mortgage origination market conditions.
Financial Highlights The following table shows selected financial data for each of the years in the three year period ended December 31, 2023: As of and for the years ended December 31, (Dollars in thousands, except per share amounts) 2023 2022 2021 Income Statement Data: Interest income $ 422,421 $ 419,239 $ 387,555 Interest expense 54,342 18,747 18,425 Net interest income 368,079 400,492 369,130 Credit loss expense (benefit) 12,203 6,925 (8,830) Net interest income after provision 355,876 393,567 377,960 Noninterest income 50,173 84,068 54,501 Noninterest expense 353,234 340,631 287,507 Net income before income taxes 52,815 137,004 144,954 Income tax expense 11,734 34,693 31,980 Net income 41,081 102,311 112,974 Dividends on preferred stock (3,206) (3,206) (3,206) Net income available to common stockholders $ 37,875 $ 99,105 $ 109,768 Balance Sheet Data: Total assets $ 5,347,334 $ 5,333,783 $ 5,956,250 Cash and cash equivalents 286,635 408,182 383,178 Investment securities 307,109 263,772 192,877 Loans held for sale 1,236 5,641 7,330 Loans held for investment, net 4,127,881 4,077,484 4,825,359 Total liabilities 4,482,934 4,444,812 5,097,386 Noninterest-bearing deposits 1,632,022 1,756,680 1,925,370 Interest-bearing deposits 2,345,456 2,414,656 2,721,309 FHLB advances 255,000 30,000 180,000 Paycheck Protection Program Liquidity Facility — — 27,144 Subordinated notes 108,678 107,800 106,957 Junior subordinated debentures 41,740 41,158 40,602 Total stockholders’ equity 864,400 888,971 858,864 Preferred stockholders' equity 45,000 45,000 45,000 Common stockholders' equity (1) 819,400 843,971 813,864 59 Table of Contents As of and for the years ended December 31, 2023 2022 2021 Per Share Data: Basic earnings per common share $ 1.63 $ 4.06 $ 4.44 Diluted earnings per common share $ 1.61 $ 3.96 $ 4.35 Book value per share $ 35.16 $ 35.09 $ 32.35 Tangible book value per share (1) $ 24.12 $ 24.04 $ 21.34 Shares outstanding end of period 23,302,414 24,053,585 25,158,879 Weighted average shares outstanding - basic 23,208,086 24,393,954 24,736,713 Weighted average shares outstanding - diluted 23,562,377 25,023,568 25,252,052 Adjusted Per Share Data (1) : Adjusted diluted earnings per common share $ 1.61 $ 3.96 $ 4.44 Performance ratios: Return on average assets 0.76 % 1.79 % 1.87 % Return on average total equity 4.80 % 11.46 % 14.10 % Return on average common equity 4.67 % 11.69 % 14.52 % Return on average tangible common equity (1) 6.91 % 17.16 % 21.42 % Yield on loans (2) 9.20 % 8.88 % 7.91 % Cost of interest -bearing deposits 1.37 % 0.38 % 0.32 % Cost of total deposits 0.83 % 0.22 % 0.20 % Cost of total funds 1.21 % 0.39 % 0.36 % Net interest margin (2) 7.67 % 7.82 % 6.72 % Efficiency ratio 84.45 % 70.30 % 67.87 % Adjusted efficiency ratio (1) 84.45 % 70.30 % 67.16 % Net noninterest expense to average assets 5.58 % 4.48 % 3.87 % Adjusted net noninterest expense to average total assets (1) 5.58 % 4.48 % 3.82 % Asset Quality ratios (3) : Past due to total loans 2.00 % 2.53 % 2.86 % Nonperforming loans to total loans 1.65 % 1.17 % 0.95 % Nonperforming assets to total assets 1.42 % 1.02 % 0.92 % ACL to nonperforming loans 51.15 % 88.76 % 91.20 % ACL to total loans 0.85 % 1.04 % 0.87 % Net charge-offs to average loans 0.47 % 0.14 % 0.95 % Capital ratios: Tier 1 capital to average assets 12.64 % 13.00 % 11.11 % Tier 1 capital to risk-weighted assets 13.74 % 14.57 % 11.51 % Common equity Tier 1 capital to risk-weighted assets 11.94 % 12.73 % 9.94 % Total capital to risk-weighted assets 16.75 % 17.66 % 14.10 % Total stockholders' equity to total assets 16.17 % 16.67 % 14.42 % Tangible common stockholders' equity ratio (1) 11.04 % 11.41 % 9.46 % (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.
Financial Highlights The following table shows selected financial data for each of the years in the three year period ended December 31, 2024: As of and for the years ended December 31, (Dollars in thousands, except per share amounts) 2024 2023 2022 Income Statement Data: Interest income $ 422,515 $ 422,421 $ 419,239 Interest expense 72,059 54,342 18,747 Net interest income 350,456 368,079 400,492 Credit loss expense (benefit) 18,767 12,203 6,925 Net interest income after provision 331,689 355,876 393,567 Noninterest income 65,414 50,173 84,068 Noninterest expense 376,635 353,234 340,631 Net income before income taxes 20,468 52,815 137,004 Income tax expense 4,378 11,734 34,693 Net income 16,090 41,081 102,311 Dividends on preferred stock (3,206) (3,206) (3,206) Net income available to common stockholders $ 12,884 $ 37,875 $ 99,105 Balance Sheet Data: Total assets $ 5,948,975 $ 5,347,334 $ 5,333,783 Cash and cash equivalents 330,117 286,635 408,182 Investment securities 387,882 307,109 263,772 Loans held for sale 1,172 1,236 5,641 Loans held for investment, net 4,506,246 4,127,881 4,077,484 Total liabilities 5,058,056 4,482,934 4,444,812 Noninterest-bearing deposits 1,964,457 1,632,022 1,756,680 Interest-bearing deposits 2,856,363 2,345,456 2,414,656 FHLB advances 30,000 255,000 30,000 Subordinated notes 69,662 108,678 107,800 Junior subordinated debentures 42,352 41,740 41,158 Total stockholders’ equity 890,919 864,400 888,971 Preferred stockholders' equity 45,000 45,000 45,000 Common stockholders' equity (1) 845,919 819,400 843,971 58 Table of Contents As of and for the years ended December 31, 2024 2023 2022 Per Share Data: Basic earnings per common share $ 0.55 $ 1.63 $ 4.06 Diluted earnings per common share $ 0.54 $ 1.61 $ 3.96 Book value per share $ 36.16 $ 35.16 $ 35.09 Tangible book value per share (1) $ 25.13 $ 24.12 $ 24.04 Shares outstanding end of period 23,391,411 23,302,414 24,053,585 Weighted average shares outstanding - basic 23,286,675 23,208,086 24,393,954 Weighted average shares outstanding - diluted 23,779,392 23,562,377 25,023,568 Performance ratios: Return on average assets 0.28 % 0.76 % 1.79 % Return on average total equity 1.81 % 4.80 % 11.46 % Return on average common equity 1.53 % 4.67 % 11.69 % Return on average tangible common equity (1) 2.20 % 6.91 % 17.16 % Yield on loans (2) 8.87 % 9.20 % 8.88 % Cost of interest -bearing deposits 2.18 % 1.37 % 0.38 % Cost of total deposits 1.25 % 0.83 % 0.22 % Cost of total funds 1.51 % 1.21 % 0.39 % Net interest margin (2) 6.95 % 7.67 % 7.82 % Net noninterest expense to average assets 5.43 % 5.58 % 4.48 % Asset Quality ratios (3) : Past due to total loans 3.27 % 2.00 % 2.53 % Nonperforming loans to total loans 2.49 % 1.65 % 1.17 % Nonperforming assets to total assets 2.02 % 1.42 % 1.02 % ACL to nonperforming loans 35.93 % 51.15 % 88.76 % ACL to total loans 0.90 % 0.85 % 1.04 % Net charge-offs to average loans 0.31 % 0.47 % 0.14 % Capital ratios: Tier 1 capital to average assets 12.03 % 12.64 % 13.00 % Tier 1 capital to risk-weighted assets 13.06 % 13.74 % 14.57 % Common equity Tier 1 capital to risk-weighted assets 11.40 % 11.94 % 12.73 % Total capital to risk-weighted assets 15.23 % 16.75 % 17.66 % Total stockholders' equity to total assets 14.98 % 16.17 % 16.67 % Tangible common stockholders' equity ratio (1) 10.33 % 11.04 % 11.41 % (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.
For the year ended December 31, 2023, our Banking segment generated 60% of our total revenue (comprised of interest and noninterest income), our Factoring segment generated 32% of our total revenue, our Payments segment generated 7% of our total revenue, and our Corporate segment generated less than 1% of our total revenue. 2023 Overview Net income available to common stockholders for the year ended December 31, 2023 was $37.9 million, or $1.61 per diluted share, compared to net income available to common stockholders for the year ended December 31, 2022 of $99.1 million, or $3.96 per diluted share.
For the year ended December 31, 2024, 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. 2024 Overview Net income available to common stockholders for the year ended December 31, 2024 was $12.9 million, or $0.54 per diluted share, compared to net income available to common stockholders for the year ended December 31, 2023 of $37.9 million, or $1.61 per diluted share.
We may, at our option, beginning on the respective first repricing date and on any scheduled interest payment date thereafter, redeem the Subordinated Notes, in whole or in part, at a redemption price equal to the outstanding principal amount of the Subordinated Notes to be redeemed plus accrued and unpaid interest to, but excluding, the date of redemption.
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.
For the year ended December 31, 2023, our return on average common equity was 4.67% and our return on average assets was 0.76%. At December 31, 2023, we had total assets of $5.347 billion, including gross loans of $4.163 billion, compared to $5.334 billion of total assets and $4.120 billion of gross loans at December 31, 2022.
For the year ended December 31, 2024, our return on average common equity was 1.53% and our return on average assets was 0.28%. At December 31, 2024, we had total assets of $5.949 billion, including gross loans of $4.547 billion, compared to $5.347 billion of total assets and $4.163 billion of gross loans at December 31, 2023.
Junior Subordinated Debentures The following provides a summary of our junior subordinated debentures as of December 31, 2023: (Dollars in thousands) Face Value Carrying Value Maturity Date Variable Interest Rate Interest Rate At December 31, 2023 National Bancshares Capital Trust II $ 15,464 $ 13,632 September 2033 Three Month SOFR + 3.26% 8.65% National Bancshares Capital Trust III 17,526 13,640 July 2036 Three Month SOFR + 1.64% 7.30% ColoEast Capital Trust I 5,155 3,838 September 2035 Three Month SOFR + 1.86% 7.19% ColoEast Capital Trust II 6,700 4,958 March 2037 Three Month SOFR + 2.05% 7.38% Valley Bancorp Statutory Trust I 3,093 2,921 September 2032 Three Month SOFR + 3.66% 9.02% Valley Bancorp Statutory Trust II 3,093 2,751 July 2034 Three Month SOFR + 3.01% 8.39% $ 51,031 $ 41,740 These debentures are unsecured obligations and were issued to trusts that are unconsolidated subsidiaries.
Junior Subordinated Debentures The following provides a summary of our junior subordinated debentures as of December 31, 2024: (Dollars in thousands) Face Value Carrying Value Maturity Date Variable Interest Rate Interest Rate At December 31, 2024 National Bancshares Capital Trust II $ 15,464 $ 13,784 September 2033 Three Month SOFR + 3.26% 7.62% National Bancshares Capital Trust III 17,526 13,881 July 2036 Three Month SOFR + 1.64% 6.56% ColoEast Capital Trust I 5,155 3,922 September 2035 Three Month SOFR + 1.86% 6.19% ColoEast Capital Trust II 6,700 5,052 March 2037 Three Month SOFR + 2.05% 6.38% Valley Bancorp Statutory Trust I 3,093 2,937 September 2032 Three Month SOFR + 3.66% 7.99% Valley Bancorp Statutory Trust II 3,093 2,776 July 2034 Three Month SOFR + 3.01% 7.36% $ 51,031 $ 42,352 These debentures are unsecured obligations and were issued to trusts that are unconsolidated subsidiaries.
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. • “ Adjusted efficiency ratio ” is defined as noninterest expenses divided by our operating revenue, which is equal to net interest income plus noninterest income.
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. 59 Table of Contents • “ Return on average tangible common equity ” is defined as net income available to common stockholders divided by average tangible common stockholders’ equity.
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.
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.
The following table presents the major categories of credit loss expense (benefit): December 31, 2023 Compared to 2022 2022 Compared to 2021 (Dollars in thousands) 2023 2022 2021 $ Change % Change $ Change % Change Credit loss expense (benefit) on: Loans $ 12,226 $ 7,039 $ (7,964) $ 5,187 73.7 % $ 15,003 188.4 % Off balance sheet credit exposures (769) (476) (922) (293) (61.6) % 446 48.4 % Held to maturity securities 746 362 56 384 106.1 % 306 546.4 % Available for sale securities — — — — — % — — % Total credit loss expense (benefit) $ 12,203 $ 6,925 $ (8,830) $ 5,278 76.2 % $ 15,755 (178.4) % 66 Table of Contents Regarding 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.
The following table presents the major categories of credit loss expense (benefit): December 31, 2024 Compared to 2023 2023 Compared to 2022 (Dollars in thousands) 2024 2023 2022 $ Change % Change $ Change % Change Credit loss expense (benefit) on: Loans $ 18,603 $ 12,226 $ 7,039 $ 6,377 52.2 % $ 5,187 73.7 % Off balance sheet credit exposures (137) (769) (476) 632 82.2 % (293) (61.6) % Held to maturity securities 301 746 362 (445) (59.7) % 384 106.1 % Available for sale securities — — — — — % — — % Total credit loss expense (benefit) $ 18,767 $ 12,203 $ 6,925 $ 6,564 53.8 % $ 5,278 76.2 % 64 Table of Contents Regarding 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.
Credit loss expense related to loans was $9.3 million for the year ended December 31, 2023 compared to credit loss expense on loans of $3.2 million for the year ended December 31, 2022.
Credit loss expense related to loans was $13.8 million for the year ended December 31, 2024 compared to $9.3 million for the year ended December 31, 2023.
The 2016 Notes initially bear interest at 6.50% per annum, payable semi-annually in arrears, to, but excluding, September 30, 2021, 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 three-month LIBOR as determined for the applicable quarterly period, plus 5.345%.
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%.
Our ACL on loans was $35.2 million as of December 31, 2023, compared to $42.8 million as of December 31, 2022, representing an ACL to total loans ratio of 0.85% and 1.04% respectively. Our credit loss expense on loans increased $5.2 million, or 73.7%, for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Our ACL on loans was $40.7 million as of December 31, 2024, compared to $35.2 million as of December 31, 2023, representing an ACL to total loans ratio of 0.90% and 0.85% respectively. Our credit loss expense on loans increased $6.4 million, or 52.2%, for the year ended December 31, 2024 compared to the year ended December 31, 2023.
Capital ratios remained strong with Tier 1 capital and total capital to risk weighted assets ratios of 13.74% and 16.75%, respectively, at December 31, 2023. 54 Table of Contents The total dollar value of invoices purchased by Triumph Financial Services during the year ended December 31, 2023 was $10.837 billion with an average invoice size of $1,862.
Capital ratios remained strong with Tier 1 capital and total capital to risk weighted assets ratios of 13.06% and 15.23%, respectively, at December 31, 2024. The total dollar value of invoices purchased by Triumph Financial Services during the year ended December 31, 2024 was $10.370 billion with an average invoice size of $1,786.

… 265 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

2 edited+0 added−0 removed13 unchanged
Biggest changeThe following tables summarizes simulated change in net interest income versus unchanged rates: December 31, 2023 Following 12 Months Months 13-24 +400 basis points 17.0 % 19.2 % +300 basis points 12.8 % 14.3 % +200 basis points 8.5 % 9.5 % +100 basis points 4.3 % 4.8 % Flat rates 0.0 % 0.0 % -100 basis points (4.7 %) (5.7 %) -200 basis points (9.4 %) (11.4 %) -300basis points (14.3 %) (17.7 %) -400 basis points (18.0 %) (22.7 %) December 31, 2022 Following 12 Months Months 13-24 +400 basis points 19.4 % 24.9 % +300 basis points 14.5 % 18.5 % +200 basis points 9.7 % 12.2 % +100 basis points 4.8 % 6.1 % Flat rates 0.0 % 0.0 % -100 basis points (5.0 %) (6.2 %) -200 basis points (10.4 %) (13.0 %) 92 Table of Contents The following tables present the change in our economic value of equity, assuming immediate parallel shifts in interest rates: December 31, 2023 Economic Value of Equity at Risk (%) +400 basis points 18.3 % +300 basis points 14.6 % +200 basis points 10.5 % +100 basis points 5.9 % Flat rates 0.0 % -100 basis points (6.7 %) -200 basis points (13.9 %) -300basis points (21.5 %) -400 basis points (28.8 %) December 31, 2022 Economic Value of Equity at Risk (%) +400 basis points 20.0 % +300 basis points 15.7 % +200 basis points 10.9 % +100 basis points 5.8 % Flat rates 0.0 % -100 basis points (6.4 %) -200 basis points (13.7 %) Many assumptions are used to calculate the impact of interest rate fluctuations.
Biggest changeThe following tables summarizes simulated change in net interest income versus unchanged rates: December 31, 2024 December 31, 2023 Following 12 Months Months 13-24 Following 12 Months Months 13-24 +400 basis points 10.1 % 13.2 % 17.0 % 19.2 % +300 basis points 7.6 % 9.9 % 12.8 % 14.3 % +200 basis points 5.1 % 6.6 % 8.5 % 9.5 % +100 basis points 2.6 % 3.3 % 4.3 % 4.8 % Flat rates 0.0 % 0.0 % 0.0 % 0.0 % -100 basis points (2.6 %) (3.7 %) (4.7 %) (5.7 %) -200 basis points (5.4 %) (7.5 %) (9.4 %) (11.4 %) -300 basis points (8.2 %) (11.8 %) (14.3 %) (17.7 %) -400 basis points (11.0 %) (16.0 %) (18.0 %) (22.7 %) 94 Table of Contents The following tables present the change in our economic value of equity, assuming immediate parallel shifts in interest rates: Economic Value of Equity at Risk (%) December 31, 2024 December 31, 2023 +400 basis points 9.3 % 18.3 % +300 basis points 7.3 % 14.6 % +200 basis points 5.2 % 10.5 % +100 basis points 2.6 % 5.9 % Flat rates 0.0 % 0.0 % -100 basis points (5.6 %) (6.7 %) -200 basis points (11.5 %) (13.9 %) -300basis points (17.7 %) (21.5 %) -400 basis points (24.2 %) (28.8 %) Many assumptions are used to calculate the impact of interest rate fluctuations.
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. 93 Table of Contents
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. 95 Table of Contents

Other TFIN 10-K year-over-year comparisons