Overview

For the three-month period ending September 30, 2025, Triad Business Bank (the “Bank”) reported net income of $483,000 compared to a loss of $748,000 for the same period a year ago. Net income totaled $0.06 per share in the third quarter of 2025 compared to a loss of $0.09 per share in the third quarter of 2024. For the nine-month period ending September 30, 2025, the Bank reported a $2.4 million improvement in net income with a $897,000 profit in 2025 compared to a loss of $1.5 million in the prior year period.

Ramsey Hamadi, Chief Executive Officer, commented, “The Bank’s third quarter core earnings improved $166,000 over the prior year period due primarily to an increase in the Bank’s net interest margin. The Bank’s net interest margin increased 31 basis points from 2.24% in the third quarter of 2024 to 2.55% in the third quarter of 2025 primarily due to a lower cost of funds. Net interest income increased $383,000 to $3.3 million in the third quarter of 2025 compared to the same period a year ago. Looking forward, the Bank intends to maintain disciplined expense control practices while the Bank’s net interest margin is expected to further improve throughout 2026 and 2027.”

Income Statement Comparison

For the Quarter

The Bank’s net income totaled $483,000 for the quarter ended September 30, 2025 compared to a net loss of $748,000 for the quarter ended September 30, 2024. Core operating results, a non-GAAP measurement which excludes the provision for credit losses and taxes, reflected core earnings of $402,000 for the third quarter of 2025 compared to $236,000 for the same quarter in the prior year.

Net interest income increased $383,000 to $3.3 million for the third quarter of 2025 from $2.9 million for the third quarter of 2024. The Bank’s net interest margin for the third quarter increased 31 basis points to 2.55% compared to the prior year period.

Interest income decreased $103,000, or 1%, to $7.1 million in the third quarter of 2025 compared to $7.2 million in the same quarter of 2024. The decline in interest income year over year was due to changes in the value of interest rate swaps, declines in market interest rates and declines in average investment securities and interest-earning cash balances. Average loans increased $18.2 million to $387.3 million during the third quarter of 2025 compared to the third quarter of 2024. The weighted average yield on average loans was steady at 6.17% in the third quarter of 2025, unchanged from the prior year period. The weighted average rate on interest-bearing liabilities decreased 60 basis points to 3.97% in the third quarter of 2025 compared to 4.57% in the same quarter of 2024.

Noninterest income decreased $106,000 to $219,000 in the third quarter of 2025 compared to $325,000 in the prior year period. In the prior year quarter, the Bank received interest rate swap fee income of $83,000. There was a net loss of $8,000 on securities in the third quarter of 2025 compared to a gain of $13,000 in the same quarter last year.

Noninterest expense increased $110,000 in the third quarter of 2025 compared to the prior year quarter. Salaries and benefits expense increased $149,000 in the third quarter of 2025 compared to the third quarter of 2024. This was primarily due to compensation adjustments effective July 1, 2025. The Bank had 55 employees at the end of September 2025 compared to 56 employees at the end of September 2024. Premises and equipment expense increased $35,000 in the third quarter of 2025 compared to the prior year period due primarily to increased lease expense. Other noninterest expenses decreased $74,000 for the third quarter of 2025 over the same quarter in 2024, primarily due to decreases in FDIC insurance assessment expense and director compensation expense.

For the Nine Months

The Bank’s net income totaled $897,000 for the nine months ended September 30, 2025 compared to a net loss of $1.5 million for the nine months ended September 30, 2024. Core operating results, a non-GAAP measurement which excludes the provision for credit losses and taxes, reflected core earnings of $673,000 for the first nine months of 2025 compared to a loss of $810,000 for the prior year period.

Net interest income increased $930,000 to $9.2 million for the first nine months of 2025 from $8.3 million for the same period of 2024. The Bank’s net interest margin for the first nine months of 2025 increased 24 basis points to 2.38% compared to the prior year period.

Interest income decreased $280,000, or 1%, to $20.7 million in the first nine months of 2025 compared to $20.9 million in the same period of 2024. The decline in interest income year over year was largely due to changes in the value of interest rate swaps. There was also some impact due to declines in market interest rates and declines in average investment securities and interest-earning cash balances. Average loans increased $21.4 million to $381.4 million during the first nine months of 2025 compared to the first nine months of 2024. The weighted average yield on average loans decreased 5 basis points to 6.06% in the first nine months of 2025 compared to 6.11% in the same period of 2024. The weighted average rate on interest-bearing liabilities decreased 40 basis points to 4.07% in the first nine months of 2025 compared to 4.47% in the same period of 2024.

Noninterest income decreased $92,000 to $641,000 in the first nine months of 2025 compared to $733,000 in the prior year period. The principal driver of the decrease was the interest rate swap fee income of $83,000 in the first nine months of 2024.

Noninterest expense decreased $645,000 in the first nine months of 2025 compared to the same period of 2024 resulting predominantly from the operating expense reduction initiative implemented in the second quarter of 2024. Salaries and benefits expense decreased $335,000, or 5%, in the first nine months of 2025 compared to the same period of 2024 due to an increase in deferred loan costs on greater loan production and a reduction in personnel. In connection with the Bank’s expense reduction initiative, there was a one-time severance expense of $87,000 in the prior year nine-month period. The Bank had 55 employees at the end of September 2025 compared to 56 employees at the end of September 2024 and 62 employees at the beginning of 2024. Premises and equipment expense increased $45,000 in the first nine months of 2025 compared to the prior year period due primarily to increased lease expense. Other noninterest expenses decreased $268,000 for the first nine months of 2025 over the same period in 2024, primarily due to decreases in FDIC insurance assessment expense and director compensation expense.

Balance Sheet Comparison

Total assets decreased $10.1 million to $525.1 million at September 30, 2025 from $535.2 million at September 30, 2024. Loans increased $23.0 million while securities decreased $16.0 million and cash decreased $17.7 million over the same period. Deposits decreased $24.1 million year over year to $453.2 million. Other borrowings increased $10.0 million to $19.0 million at September 30, 2025 from $9.0 million at September 30, 2024.

Shareholders’ equity increased $4.3 million year over year to $49.3 million at September 30, 2025. Accumulated other comprehensive income/loss (“AOCI”) improved by $6.0 million year over year to an unrealized loss of $8.8 million from an unrealized loss of $14.8 million at September 30, 2024. This change included a net $2.8 million in allowance for credit losses established on corporate bonds. The AOCI loss is expected to reverse as the bond portfolio shortens in life and is assumed to mature at par value.

Regulatory Capital

Total risk-based capital consists of tier 1 capital and tier 2 capital. The Bank’s tier 1 capital is largely a measure of shareholders’ equity as calculated under GAAP but eliminates certain volatile elements such as AOCI loss. Tier 2 capital is primarily the allowance for credit losses on funded and unfunded loan commitments. Tier 1 and tier 2 capital ratios are measured against total assets and risk-weighted assets.

The following is a summary presentation of the Bank’s total regulatory capital to risk-weighted assets, tier 1 capital to risk-weighted assets and tier 1 capital to average assets in comparison with the regulatory guidelines at September 30, 2025:

Capital and Capital Ratios

The Bank continues to be “well-capitalized” for regulatory purposes.

Loans

The Bank’s outstanding loans increased $23.0 million, or 6%, to $394.6 million at September 30, 2025 compared to $371.6 million at September 30, 2024. While not included in loans outstanding, the Bank also had unfunded loan commitments of $140.3 million, bringing total loans outstanding and unfunded commitments to $534.9 million at September 30, 2025. For internal monitoring purposes, the Bank considers owner-occupied real estate loans to be part of commercial and industrial (“C&I”) loans. As of September 30, 2025, approximately 51% of the Bank’s outstanding loan portfolio was composed of C&I loans:

Loan Diversification

Credit Risk and Allowance for Credit Losses

The Bank had $2.5 million in nonaccrual loans relating to one credit relationship at September 30, 2025 compared to $1.5 million in nonaccrual loans relating to another credit relationship at September 30, 2024. During the third quarter of 2025, there was a reversal of provision for credit losses of $90,000 compared to a provision for credit losses of $984,000 during the third quarter of 2024. For 2025, the components of this item were a provision for credit losses on loans of $110,000, a reversal of provision for credit losses on unfunded loan commitments of $9,000, and a reversal of provision for credit losses on corporate bonds sold in 2025 of $191,000 compared to 2024 components of a provision for credit losses on loans of $852,000 and on unfunded loan commitments of $132,000.

The allowance for credit losses on loans was $3.7 million at September 30, 2025 compared to $4.6 million at September 30, 2024, or 0.93% and 1.23% of outstanding loans, respectively. The change in allowance for credit losses was principally due to a $998,000 loan charge-off in the fourth quarter of 2024. The allowance for credit losses on unfunded loan commitments, recorded as a liability on the balance sheet, was $363,000, or 0.26% of unfunded commitments at September 30, 2025, compared to $499,000, or 0.36%, at September 30, 2024. The allowance for credit losses on available-for-sale securities was $2.9 million at September 30, 2025 compared to $300,000 at September 30, 2024. Due to a security sale during the third quarter of 2025, $165,000 was charged off against the allowance.

Deferred Tax Asset and AOCI (Non-GAAP Measures)

The Bank’s GAAP tangible book value per share was $6.12 at September 30, 2025. On a non-GAAP basis, excluding the AOCI loss and the impairment on the Bank’s deferred tax asset (two reductions in capital the Bank anticipates it will recover over time), adjusted tangible book value per share was $7.60 at September 30, 2025.

The organization and startup costs incurred during the Bank’s organizational period and net operating losses from the beginning of operations created a deferred tax asset of $3.1 million. This asset is currently fully impaired and will be carried at $0 until sufficient, verifiable evidence exists (generally, sustained profitability) to demonstrate that the deferred tax asset will more likely than not be realized. At that time, the valuation allowance will be reversed.

The change in fair value, excluding any credit impairment, of the Bank’s investment securities that are available for sale is recorded in AOCI as a gain or loss, based on current circumstances, and constitutes an unrealized component of equity. At September 30, 2025, the Bank had an aggregate AOCI loss of $8.8 million. Assuming the underlying investment securities are held to maturity and there are no future credit impairments, the value of the securities will return to their face values at maturity. As a non-GAAP measure, the Bank eliminates its current AOCI loss to reflect an adjusted tangible book value.

Outlook

Although there could be some compression in the net interest margin in the near term if the Federal Reserve makes additional reductions in the federal funds target rate, we expect the Bank’s net interest margin to increase throughout 2026 and 2027 as lower yielding loans and investments mature and are replaced by those with higher yields.

About Triad Business Bank

With three co-equal offices located in Winston-Salem, High Point and Greensboro, Triad Business Bank focuses on meeting the needs of small to midsize businesses and their owners by providing loans, treasury management and private banking, all with a high level of personal attention and best-in-class technology. For more information, visit www.triadbusinessbank.com.

Non-GAAP Financial Measures

This release contains financial information determined by methods other than in accordance with generally accepted accounting principles in the United States (“GAAP”). The management of Triad Business Bank uses these non-GAAP financial measures in its analysis of the Bank’s performance. These measures typically adjust GAAP performance measures to exclude the effects of the provision for credit losses, income tax, deferred tax asset, and AOCI. Management believes presentations of these non-GAAP financial measures provide useful supplemental information that is essential to a proper understanding of the operating results of the Bank. These non-GAAP disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.

Forward Looking Language

This release contains certain forward-looking statements with respect to the financial condition, results of operations and business of Triad Business Bank. These forward-looking statements involve risks and uncertainties and are based on the beliefs and assumptions of management of Triad Business Bank and on the information available to management at the time that these disclosures were prepared. These statements can be identified by the use of words like “expect,” “anticipate,” “estimate” and “believe,” variations of these words and other similar expressions. Readers should not place undue reliance on forward-looking statements as a number of important factors could cause actual results to differ materially from those in the forward-looking statements. Triad Business Bank undertakes no obligation to update any forward-looking statements.