Overview

For the quarter ended December 31, 2025, Triad Business Bank (the “Bank”) reported net income of $497,000 compared to a loss of $2.8 million for the same period a year ago. Net income totaled $0.06 per share in the fourth quarter of 2025 compared to a loss of $0.35 per share in the fourth quarter of 2024. For the year ended December 31, 2025, the Bank reported a $5.7 million improvement in net income with a $1.4 million profit compared to a loss of $4.3 million in the prior year. Net income per share was $0.17 for the year ended December 31, 2025 compared to a loss of $0.58 per share for the year ended December 31, 2024.

Ramsey Hamadi, Chief Executive Officer, commented, “The Bank’s fourth quarter core operating results improved $228,000 over the prior year period. For the year ended December 31, 2025, the Bank’s core operating results improved $1.7 million over the previous year. The improvements were due primarily to an increase in the Bank’s net interest margin. The net interest margin increased 42 basis points to 2.69% in the fourth quarter of 2025 compared to 2.27% in the fourth quarter of 2024. For the year ended December 31, 2025, the Bank’s net interest margin increased 28 basis points to 2.46% from 2.18% for the previous year. The increases were primarily due to a lower cost of funds. Net interest income increased $561,000 to $3.5 million in the fourth quarter of 2025 and increased $1.5 million to $12.7 million for the full year compared to the same periods in 2024. 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.”

Fourth Quarter Income Statement Comparison

The Bank’s net income totaled $497,000 for the quarter ended December 31, 2025 compared to a net loss of $2.8 million for the quarter ended December 31, 2024. Core operating results, a non-GAAP measurement which excludes the provision for credit losses and taxes, reflected earnings of $528,000 for the fourth quarter of 2025 compared to $300,000 for the same quarter in the prior year.

Net interest income increased $561,000 to $3.5 million for the fourth quarter of 2025 from $3.0 million for the fourth quarter of 2024. The Bank’s net interest margin for the fourth quarter increased 42 basis points to 2.69% compared to the prior year period.

Interest income was $7.0 million in both the fourth quarter of 2025 and the fourth quarter of 2024. Stasis 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 $21.4 million to $394.3 million during the fourth quarter of 2025 compared to the fourth quarter of 2024. The weighted average yield on average loans increased 2 basis points to 6.07% in the fourth quarter of 2025 from 6.05% in the prior year period. The weighted average rate on interest-bearing liabilities decreased 73 basis points to 3.64% in the fourth quarter of 2025 compared to 4.37% in the same quarter of 2024.

During the fourth quarter of 2025, there was a provision for credit losses of $41,000 compared to a provision for credit losses of $3.1 million during the fourth quarter of 2024.

Noninterest income decreased $99,000 to $235,000 in the fourth quarter of 2025 compared to $334,000 in the prior year period. In the prior year quarter, the Bank received a one-time bonus dividend on a small business investment company (“SBIC”) investment of $92,000.

Noninterest expense increased $233,000 in the fourth quarter of 2025 compared to the prior year quarter. Salaries and benefits expense increased $208,000 in the fourth quarter of 2025 compared to the fourth quarter of 2024. This increase was primarily due to compensation adjustments effective July 1, 2025 and an increase in performance-related compensation. The Bank had 54 employees at the end of December 2025 compared to 56 employees at the end of December 2024. Premises and equipment expense increased $24,000 in the fourth quarter of 2025 compared to the prior year period due primarily to increased lease expense.

Annual Income Statement Comparison

The Bank’s net income totaled $1.4 million for the year ended December 31, 2025 compared to a net loss of $4.3 million for the year ended December 31, 2024. Core operating results were earnings of $1.2 million for 2025 compared to a loss of $510,000 for the prior year.

Net interest income increased $1.5 million to $12.7 million for the year ended December 31, 2025 from $11.2 million for the year ended December 31, 2024. The Bank’s net interest margin for 2025 increased 28 basis points to 2.46% compared to the prior year.

Interest income decreased $267,000, or 1%, to $27.6 million for the year ended December 31, 2025 compared to $27.9 million for the year ended December 31, 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 $21.4 million to $384.6 million during the year ended December 31, 2025 compared to the prior year. The weighted average yield on average loans decreased 3 basis points to 6.06% for the year 2025 compared to 6.09% for the year 2024. The weighted average rate on interest-bearing liabilities decreased 49 basis points to 3.96% for the year 2025 compared to 4.45% for the prior year.

For the year ended December 31, 2025, there was a reversal of provision for credit losses of $194,000 compared to a provision for credit losses of $3.8 million for the prior year.

Noninterest income decreased $152,000 to $915,000 for the year ended December 31, 2025 compared to $1.1 million for the prior year. The principal drivers of the decrease were interest rate swap fee income of $83,000 and a one-time bonus dividend on a SBIC investment of $92,000 in 2024.

Noninterest expense decreased $372,000 for the year ended December 31, 2025 compared to the year ended December 31, 2024 resulting predominantly from the operating expense reduction initiative implemented in the second quarter of 2024. Salaries and benefits expense decreased $136,000, or 2%, for 2025 compared to 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. The Bank had 54 employees at the end of December 2025 compared to 56 employees at the end of December 2024 and 62 employees at the beginning of 2024. Premises and equipment expense increased $69,000 for the year ended December 31, 2025 compared to the prior year due primarily to increased lease expense. Other noninterest expenses decreased $280,000 for the year 2025 over the year 2024, primarily due to decreases in FDIC insurance assessment expense and director compensation expense.

Annual Balance Sheet Comparison

Total assets increased $5.7 million to $530.9 million at December 31, 2025 from $525.2 million at December 31, 2024. During the year ended December 31, 2025, loans increased $26.8 million while securities decreased $14.1 million and cash decreased $6.2 million. Deposits increased $12.2 million during 2025 to $467.6 million. Other borrowings decreased $15.0 million to $9.0 million at December 31, 2025 from $24.0 million at December 31, 2024.

Shareholders’ equity increased $8.3 million year over year to $50.6 million at December 31, 2025. Accumulated other comprehensive income/loss (“AOCI”) improved by $6.8 million year over year to an unrealized loss of $8.1 million from an unrealized loss of $14.9 million at December 31, 2024. The AOCI loss is expected to reverse, assuming no further credit impairments, 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 December 31, 2025:

Capital and Capital Ratios

Loans

The Bank’s outstanding loans increased $26.8 million, or 7%, to $400.5 million at December 31, 2025 compared to $373.7 million at December 31, 2024. While not included in loans outstanding, the Bank also had unfunded loan commitments of $143.2 million, bringing total loans outstanding and unfunded commitments to $543.7 million at December 31, 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 December 31, 2025, approximately 50% 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 $2.2 million in nonaccrual loans relating to two credit relationships at December 31, 2025 compared to no nonaccrual loans at December 31, 2024.

During the fourth quarter of 2025, there was a provision for credit losses of $41,000 compared to a provision for credit losses of $3.1 million during the fourth quarter of 2024. For fourth quarter 2025, the components of this item were a provision for credit losses on loans of $192,000, a provision for credit losses on unfunded loan commitments of $13,000, and a reversal of provision for credit losses on corporate bonds sold of $164,000 compared to fourth quarter 2024 components of a provision for credit losses on loans of $524,000, a reversal of provision for credit losses on unfunded loan commitments of $40,000, and a provision for credit losses on available-for-sale corporate bonds of $2.7 million.

For the year ended December 31, 2025, there was a reversal of provision for credit losses of $194,000 compared to a provision for credit losses of $3.8 million for the prior year. For 2025, the components of this item were a reversal of provision for credit losses on loans of $107,000, a reversal of provision for credit losses on unfunded loan commitments of $82,000, and a reversal of provision for credit losses on corporate bonds sold of $5,000 compared to 2024 components of a provision for credit losses on loans of $1.3 million, a reversal of provision for credit losses on unfunded loan commitments of $220,000, and a provision for credit losses on available-for-sale corporate bonds of $2.7 million.

The allowance for credit losses on loans was $3.4 million at December 31, 2025 compared to $4.1 million at December 31, 2024, or 0.86% and 1.09% of outstanding loans, respectively. There were $423,000 in loan charge-offs in the fourth quarter of 2025 and a total of $537,000 for the year ended December 31, 2025 compared to $998,000 in loan charge-offs in the fourth quarter of and for the full year 2024. The allowance for credit losses on unfunded loan commitments, recorded as a liability on the balance sheet, was $376,000, or 0.26% of unfunded loan commitments at December 31, 2025, compared to $458,000, or 0.34%, at December 31, 2024. There was no allowance for credit losses on available-for-sale securities at December 31, 2025 compared to $3.0 million at December 31, 2024. Due to security sales during 2025, $2.9 million was charged off against the allowance.

Deferred Tax Asset and AOCI (Non-GAAP Measures)

The Bank’s GAAP tangible book value per share was $6.28 at December 31, 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 $7.66 at December 31, 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 $3.0 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 December 31, 2025, the Bank had an aggregate AOCI loss of $8.1 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, coupled with a further modest decline in the cost of funds.

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.