Triumph Financial, Inc. — Call Transcript 2026

Good morning. It's 9:30 A.M. in Dallas, and cold and icy, but we all made it. We're looking forward to visiting with you this morning. Thanks for your interest in Triumph, and thanks for joining us this morning to discuss our fourth quarter 2025 results. With that, let's get to business. Aaron's letter last evening highlighted our progress on our stated goals, revenue growth, and our focus on lean operations. Aside from the core business improvements, there were a few non-recurring items that went our way also. This demonstrates two things. First, our focus gives us the ability to hold non-core elements of our operations loosely and execute on capital-creating opportunities when they arise. Second, our results this quarter demonstrate metrics moving in the right direction for our long-term goals and that we are keeping the main things the main things. The quarterly shareholder letter published last evening and our quarterly results will form the basis of our call today. However, before we get started, I would like to remind you that this conversation may include forward-looking statements. Those statements are subject to risks and uncertainties that could cause actual and anticipated results to differ. The company undertakes no obligation to publicly revise any forward-looking statement. For details, please refer to the Safe Harbor statement in our shareholder letter published last evening. All comments made during today's call are subject to that Safe Harbor statement. With that, I'd like to turn the call over to Aaron for a welcome and to kick off our Q&A. Aaron? Good morning. Thank you for joining us. As Luke mentioned, the conditions outside are not stellar, but we all made it for the call. Before I do some opening remarks, I want to welcome David Vielehr to the table, President of LoadPay. Since he was the new guy, we made him wear a tie for this call, but going forward, we'll see. Maybe he can take the tie off. But welcome, David. Glad you're here. And we're glad to do this. And as usual, we're going to jump into Q&A quickly. But I did want to make one or two brief comments before I turn the call over for questions. I know that different investors have different perspectives. Some of you are focused on growth, some are focused on efficiency, and some are focused on balance sheet strength and credit quality. All three of those, we know, are important. As a management team, our goal is first and foremost to help the industry transact confidently. That means strengthening our network so that people can more efficiently and securely transmit data and payments. The pursuit of that goal over the last five years has generated volume and revenue growth, even as the trucking industry has been mired in a historically bad recession. We believe in the value proposition of what we're doing, as do 8 now of the largest 10 freight logistics companies in the country. To that end, we were excited to recently welcome J.B. Hunt to our network. The second thing, as I alluded to earlier, that is important to investors is to translate our vision of a secure network into profits for our enterprise and investors. We are on that trajectory. Growing revenue and holding expenses in check is a sure path to greater profitability. That is what I expect to continue to do this year. For just one example, our core payments business will trend above its 30% EBITDA margin currently in 2026 and on its way to our ultimate goal of 50% or greater. If you look out over the longer term, LoadPay should contribute in that segment at even more accretive and capital-efficient margins so that in the end, our payments segment should have all the financial metrics of the most successful financial technology companies. Underlying that, the industrial logic of directly connecting the payor and the payee across the payment rails of our bank is very clear to us, and it is becoming increasingly clear to the market. Finally, we want to build the network and improve our margins and profitability with a balance sheet that is strong enough to withstand unforeseen cycles. We have done that to date, and going forward, we will continue to do the same even as we work through legacy assets and narrow our fairway for credit exposure going forward. In doing that, we will always maintain enough capital to persevere through a rainy day or many rainy days. That is our plan. We will now turn the call over for questions. We will now move to our question and answer session. If you have joined via the webinar, please use the raise hand icon, which can be found at the bottom of your webinar application. When you are called upon, please unmute your line and ask your question. We will pause now for a moment to assemble the queue. The first question is from Joe Yanchunis from Raymond James. Please unmute yourself and begin with your question. Good morning. Morning, Joe. I was hoping to start with expenses here. In your shareholder letter, you reiterated your 4Q26 expense outlook. Was the sale of the building and airplane and the subsequent $6 million savings baked into that initial guide, or are those expenses being redeployed to other areas? It'll be a combination, Joe. We've got so many moving pieces coming in and out, but you're always going to see a jump in expenses a little bit in the first quarter of any year, just given the natural resets that happen. That's going to require us to find additional efficiency as we go throughout the year. Yes, that building and the plane, the savings from that, about that $6 million a year, that is baked into the first quarter estimate, and it will be part of the run rate going forward. Yeah, I appreciate that. Then kind of shifting over to LoadPay. So maybe David, you could help with this. So LoadPay exited the quarter with annualized revenue of $1.5 million. You guided to tripling this amount in 2026. So I know you're working on some enhancements to the product that could increase the revenue per account. To triple LoadPay revenue in 2026, what are the underlying assumptions around account growth versus increasing revenue per account? Yeah, so it's going to be a combination of the two things in 2026. So first and foremost, right, we're expecting to open between 7,000 and 12,000 accounts over the course of the year, building off the momentum from last year. And second, what we really look for is being able to link and fund the accounts, right? So account opening is our first step in the process, but then getting high levels of utilization. So as we talk about in the letter, we still forecast that we'll be at about $750 per account on a revenue basis. But if we look at the total portfolio, our customers are very different in the way that they use the accounts. And so some, we haven't had linked and funded. However, our top 10 accounts are all tracking to over $5,000 a year in revenue. In that mix is how we're going to get to 750. The goal, the team, as we look at improvements throughout the course of 2026, is really about how do you drive that linked and funded percentage higher. The next question is from Tim Switzer at KBW. Please unmute yourself and begin with your question. Hey, good morning. Thanks for taking my questions. Morning, Tim. My first question, Aaron, is on the outlook you provided in your letter, specifically on the LoadPay team's growth and factoring. How much of that is driven by Factoring as a Service, if it contributes a lot at all? And what does that assume in terms of the freight recovery? And what's the potential upside if we get a true recovery in the industry? Sure. If I answered that second question, Kim, who's sitting next to me, would start punching me. So I'm going to be circumspect in how I answer that. But on the first part, Factoring as a Service as a percentage of that load team's growth is immaterial. It is growing way faster than everything else, but you're talking about growth off of a very low revenue base versus the rest of the business. Secondly, for the projections of next year, we just assumed the market stayed as it finished Q4. Now, remember, and remember this from an earnings perspective, in Q1, you will see, I very much expect you will see a decline over where we ended the year because of normal seasonality in our business. So we assumed a flat freight market for the course of the year, which just means that as we work, as the team is growing our factoring business organically, we're widening the amount of customers we serve. We're going deeper with those customers. Kim has the difficult job of both serving the very largest end of the market. We serve some extremely large customers in our factoring business. And then we also serve thousands of small carriers who also use us for LoadPay. And so the assumption is that we will organically grow that penetration, and that's where the underlying Load team's revenue growth comes from. Interesting. Okay, that's helpful. And then another thing in your letter you talked about was only 22% of your customers are using both payments and audit within TPay. But now that you've reached agreements with, it sounds like most of the legacy contract customers, how does that change over the rest of the year? I assume a lot of them are now going to be on NextGen Audit, will probably be using payments and audit. Yeah, just curious how that moves, and I assume that helps revenue quite a bit. Certainly. So when we talk about the fact that we have not cross-sold payments and audit to the extent that we would have liked, a lot of that goes back to the legacy of how we built the network and the acquisitions that we made. So a lot of the audit clients came over with the HubTran acquisition, whereas the payments network was built basically on our own, bringing clients on to payments one after another. The intersection there obviously has a lot of room to improve. And as we get through repricing of the payments business, keep in mind that the audit business is always charged a per invoice fee, you'll see more and more overlap, more and more opportunity for us to be able to leverage one part of the relationship for the other. Okay, gotcha. I think historically you guys have disclosed in the letter the percentage of payments for which you charged a fee, I think it was 31% last quarter. Are you guys able to update us on where that was in Q4? Sure. So for fourth quarter as a whole, it moved up to 35%. In December, it was 38%. And January 1st was another key date where more of the new contracts went into effect. So you'll see significant increases in the first quarter. Wow, very impressive. All right, thank you. Next question is from Matthew Olney at Stephens. Please unmute yourself and begin with your question. Hey, thanks. Good morning, everybody. I want to go back to the factoring discussion. And I think that pre-tax margin of factoring was around 33% in the fourth quarter, a really good improvement over last year. Can you talk more about the drivers of that improvement? And then looking forward, that pre-tax margin within factoring, what does the guidance imply as you exit 2026 and then longer term? What do you expect that pre-tax margin to approach? Yeah, so the margin expansion is really from our focus in technology and automation, and also a reduction in headcount through the back end of 2025. And so our focus is to continue to drive all of our automation in our back office. And so you'll continue to see that margin expand through 2026 and 2027. Yeah. And Matt, on the long term, I think what you would expect, and first of all, just backing up to set the context for a few things. Number one, there was a season of time in the building of the network where growth in factoring was not prioritized. And I think it was last quarter we made it clear that we now see that the opportunity to grow is very real, and connecting factored customers to LoadPay accounts back to the network is a very real thing, even while we serve network factors, right? Those two things can both be true. And so that being said, you're seeing us now, and you will see, I expect, over the course of this year, us to grow customers in a way that we haven't in the past. The second thing is just understand, at least as it relates to last year, we held a higher staffing base as we were trying to understand what the volume of growth in factoring as a service would be, which was not coming out of the gates quite as fast as we thought. And so we've normalized that base. And then finally, the addition of technology, the use of artificial intelligence, machine learning that sits on top of these massive piles of proprietary data that we've built up that allows us to do things well. If you extrapolate that into the future, I believe that our core operating margin in factoring will eventually be over 40%. Will it be there this year? I don't think so. But as we go forward, that would be our target. Of course, in certain windows of time, and if invoices spike, that will push up margin a lot. One of the fantastic things that I think Kim and team have done in that business is the margin improvement of where we sit now didn't just come from invoice size growth. It came from getting more efficient. Those efforts are not done. I'm very excited about where it's headed. The next question is from Gary Tenner at D.A. Davidson. Please unmute yourself and begin with your question. Thanks. Good morning, everybody. Morning, Gary. Hey, I wanted to ask, in terms of the transportation growth, I'd love the 25% in the payments revenue specifically for 2026. I think that's the overall mix of revenue growth for this year is kind of similar to what you kind of suggested in October. Obviously, I guess I would suggest that J.B. Hunt and any revenue impact from that relationship is already embedded in the guide as you're looking at the 2026. That's correct. Would you be any more specific about what type of revenue contribution or benefit you'd expect from that relationship over the course of the year? Yeah, we can't talk to the specifics of pricing or revenue associated with any individual client. I would just say that generally it's consistent with the guidance that we've provided in the past about how we intend to price relationships. Okay. And then the follow-up, in terms of the, I think you got into some EBITDA margin of 30% or better in the first quarter in the payments segment. Can you give a sense of kind of the TPay or payment-specific expense run rate you'd expect for the first quarter? Just trying to kind of get a sense of how that moves relative to your more consolidated guide on expenses for the first quarter. Certainly, yeah. So within the core payments business, that's the business where we reported the 29.5% EBITDA margin for last quarter. We're going to see continued revenue growth associated with the repricing, associated with the new names that are coming on board. And we're going to hold expenses relatively flat. They're not going to be completely flat, but they won't grow anywhere near as fast as the revenue is growing. And so that's what's going to drive that EBITDA margin higher. Okay. And that core payments, sorry, Aaron. Well, I just want to make it clear, hopefully for you and for investors listening, when we describe, I mean, we have a payment segment. And the payment segment, by the way I view the world, you have payors, which are generally brokers and shippers, and you have payees, which are generally carriers and their factoring companies. And I think based on feedback from analysts and investors, they want to understand what the core business has done. That's the business we announced back in 2021. Although I'm not sure it really is the business we've announced back in 2021 because so many changes, we've learned so much. It shocks me how little we knew when we set off on this journey as I look at it now in hindsight. But that business is generating a 30% EBITDA margin and is trending higher. You already heard Todd talk about the number, the percentage of invoices that we are monetizing continues to grow because the value has grown. But when we say that, I think it's important for the long-term thinkers to understand that doesn't mean LoadPay is not core to payments. LoadPay is once again a drag on earnings, right? Just like back in the day, core payments was a drag on earnings. But LoadPay over the long term and all that connectivity and the source and the type of revenue is really exciting. And so when you look at a 16% EBITDA margin for that segment, just know that there's a lot of investment in LoadPay. Obviously, we believe in that investment. We think we can triple revenue next year. But I just want to say that we'll continue to describe "core payments" so that people can see what has happened to this business we began in 2021 and mark our progress. Totally understand, want to be accountable for that. But please don't ever view that what payments is doing and LoadPay's part of that as anything other than part of the core long-term strategy. And together, those businesses, I believe, will generate 50% EBITDA margin or better. You will see it continue to progress. And the type of revenue in that segment is extremely attractive. So sorry to riff on that. I just think it's helpful, and I want you to understand how we think about it so investors can understand internally how we view those two lines of business working together in a single segment. Very good. Thank you. The next question is from Joe Yanchunis from Raymond James. Please unmute yourself and begin with your question. Thanks for answering a couple more for me here. I was hoping we could pivot to the intelligence segment. So segment revenue was relatively flat, but in your shareholder letter, you noted you contracted $1 million of incremental annualized revenue. So when should that begin to show up in reported results? And then additionally, what is the expected revenue contribution from the Trusted Freight Exchange with Highway, excuse me, embedded in your 2026 outlook? And kind of a little more on that, how should we think about the potential intermediate-term revenue opportunity from the Freight Exchange? Yeah, thank you for the question. So that bookings from Q4 were generally 30 days, right, from booking to billing. So that has already started to show up in the Q1 numbers, and that will continue to do so. As for TFX, the contribution, TFX is still very new. While we are counting on it as a driver for revenue growth for this year, it is not the largest opportunity that we see. We believe the largest opportunity is actually the cross-selling opportunity with our audit and payment customers. For example, only 14% of our current audit and payment customers are also using our intelligence solution. So that's really where we see the largest opportunity. And Todd and I are both already working very closely with our sales and commercial team to ensure that that happens in 2026. Great. That was very helpful. And just with the interquarter announcements of J.B. Hunt, as you mentioned earlier, 8 of the 10 brokers are now in your payments network. I understand TriumphPay's business model has evolved since inception. Success really isn't reliant on the adoption from competing factoring companies. But at what point do factorers feel pressure from the brokers to adopt your payments network? I'm curious to hear your opinion on that potential catalyst. Yeah, that's a great question. The answer is, Joe, I don't exactly know. If you think about how the network actually works and how factors work, I mean, factors are very technologically forward businesses, way more, I think, than people expect. And so what they are trying to consume in the network is information about the transaction to make a pre-purchase decision. And I'm going to let Kim come clean up anything I say afterwards because she knows this stuff so much more deeply than I do. But we have 60-70 network factors, and we serve those factors. We try to make their processes easier. Obviously, we're pushing data to them. So I don't know if ultimately the "pressure" comes from the brokerage industry. I think at some point, factors will just decide, have they updated their own technological stack to be able to ingest the data we can give them in a way that makes their business easier? More than it's brokers forcing them to do something they don't want to do. Kim, add on to that. Yeah. So what I would say is I think the payments network really helps factors become more efficient in being able to transact through payments rather than directly with the broker. And so you have one place to go for many rather than contacting many brokers for just a single invoice. Okay. Perfect. I appreciate you. Just one last thing. I mean, it's a great observation. I think we owe it to you to admit we can celebrate what we got right, but we should also own what we got wrong. I thought the way this would work for factors would turn out differently than it has. The network has grown in ways I didn't foresee. The ability of other factoring companies to come in and use this has had some success. The majority of the top 100 use it, but for the largest, they don't consume it in quite the same way I foresaw. So look, that's what happens when you set off to do something that hasn't been done before. You get some things right, and you get some things wrong. I totally understand that and completely fair. But with the current business model, if a top 10 factor were to opt in, you're going to see those conforming or network transactions go up in general for the network. But is there enough volume right now where a factoring company could derive savings from lower headcount from joining the network? Yeah, I would absolutely think so. I mean, if you're talking about a top 10 factor, you're talking about a lot of invoices that are being processed. And so you're not looking at just pre-purchase decisions. You're also looking at payment statuses. So I do think that they're going to get front-loaded and back-loaded efficiencies through the network. It sounds like the biggest we're still at the carrot phase of getting factors to join versus the stick phase. Is that fair? Yeah. And I don't think you build the best business models doing anything with a stick. That's just not in our DNA. It's not how we operate. We have a value proposition we've offered to shippers, brokers, carriers, and other factors. And when we tell you what the value is going to be, we're going to do our dead level best to deliver it. And if that works for you and the way you run your business, because not every factor runs their business the same way, not every factor uses the same technological stack, technology stack, then I think that they can trust our brand reputation to do what we say we will do. But if they built their business a different way, then I think they'll continue to operate it a different way. And ultimately, Joe, I think we talked a lot about network transactions. We still report it as a KPI. I'm not sure it's the greatest KPI as important as it once was. Since we gave it to you, we want to continue to give it to you. I think things that I focus on is what Todd disclosed earlier, which we need to put in the letter going forward, which is the percentage of actual payments that we are charging a fee on because that demonstrates in black and white that the network has gotten more valuable. So in the end, the way the network is delivering value and is being monetized is not exactly what we thought it would be five years ago, but the long-term prospects are at least as rosy as we thought it was going to be five years ago. Understood. Thanks for taking my thoughts. For sure. The final question is from Donald Broughton at Broughton Capital LLC. Please unmute yourself and begin with the question. Ladies and gentlemen, one more esoteric. Oh, no. I thought that was going to be an extremely interesting question. Oh, heavens. Well, we can work it into one. It sounds a little bit like the qualified versus unqualified opinion by an auditor, right? I read it a couple of times. I'm like, "I think I know what it means." But indulge me. What does that mean? Okay. I am so sorry, but first of all, what we saw on our side was a picture of two very attractive dogs when you started the question. Dogs and white flag horses. Yeah. And then it went blank. The audio went down for a second. Sorry. Indulge you about what does what mean. Oh, it's one of those things that's kind of like a qualified or unqualified opinion by auditors. I know it's counterintuitive. I sat there and read it a couple of times. The negative credit loss expense and that benefit. Go ahead. A negative credit loss expense just implies that we had greater recoveries than we did new provisions or charge-offs. It was recoveries of prior period expense that we took. Oh, okay. That would have been my guess, but it was like, "I really don't know." And don't feel special. There are plenty of companies out there, GE and others who had all kinds of issues with, say, these kinds of things. Can you explain a little bit more about the risk in that business? Is it duration matching what you're borrowing and what you're lending at? Is it improperly assessing the creditworthiness of the person you're lending? Is it the assets underlying? Where is the risk exactly? So if you're referring to our credit loss expense in aggregate, I would say it's the second of those things. It's understanding the risks associated with the underlying borrowers. We lend in a lot of different ways to a lot of different clients. Looking specifically at those clients within each of those businesses is the most important thing that we do. It's not really about duration. Duration plays to our advantage because we have very, very short duration on average, specifically in our factoring business and the mortgage warehouse. So as we think about how we manage credit risk going forward, we're focused on things, first of all, that are aligned with our transportation strategy. Those are areas where we're going to tend to lend more and more over time. We will continue to lend in other areas that provide other strategic benefits to us. So if you take the community bank, for example, that is the source of our low-cost deposits, which really is valuable to the enterprise as a whole. Other lending businesses may contribute to the business, but it's very important for those businesses to have very tight credit policies and discipline to avoid creating any noise or distraction for management or for investors. And so that's how we look at those businesses. The ABL business, I would think that that would be not necessarily what you want to be pursuing the most, but isn't it just kind of a complementary business to the other things you're doing? If I'm using you to factor freight bills, then I own trucks and trailers, and those are assets you obviously understand. Sure. The ABL business, we did expect to have strategic benefit to transportation. You can think of other offerings, ABL, light, ledger lines, things like that, that might work with clients that no longer need factoring or for which those offerings would be a better solution than factoring. In practice, that hasn't really played out. We haven't seen that really take off. And so we've been left in the ABL business with non-transportation-related exposure. And so, yeah. Okay. That makes a lot more sense. I would have thought it would have been something complementary to your business, but like many businesses, you think that's going to be a great thing, and you're walking into it, and then you spend a little time and you go, "Well, not quite what I planned." But anyway, congrats on a good quarter. Thanks for answering the questions. Of course. There are no more questions at this time. I would now like to turn the call over to management for closing remarks. Thank you all for joining us. Stay warm, and we'll see you next time.

Speaker 7: Good morning. It's 9:30 A.M. in Dallas, and cold and icy, but we all made it. We're looking forward to visiting with you this morning. Thanks for your interest in Triumph, and thanks for joining us this morning to discuss our fourth quarter 2025 results. With that, let's get to business. Aaron's letter last evening highlighted our progress on our stated goals, revenue growth, and our focus on lean operations. Aside from the core business improvements, there were a few non-recurring items that went our way also. This demonstrates two things. First, our focus gives us the ability to hold non-core elements of our operations loosely and execute on capital-creating opportunities when they arise. Second, our results this quarter demonstrate metrics moving in the right direction for our long-term goals and that we are keeping the main things the main things. Good morning. good morning It's 9:30 A.M. in Dallas, and cold and icy, but we all made it. it's 9:30 a.m in dallas and cold and icy but we all made it We're looking forward to visiting with you this morning. we're looking forward to visiting with you this morning Thanks for your interest in Triumph, and thanks for joining us this morning to discuss our fourth quarter 2025 results. thanks for your interest in triumph and thanks for joining us this morning to discuss our fourth quarter 2025 results With that, let's get to business. with that let's get to business Aaron's letter last evening highlighted our progress on our stated goals, revenue growth, and our focus on lean operations. aaron's letter last evening highlighted our progress on our stated goals revenue growth and our focus on lean operations Aside from the core business improvements, there were a few non-recurring items that went our way also. aside from the core business improvements there were a few non-recurring items that went our way also This demonstrates two things. this demonstrates two things First, our focus gives us the ability to hold non-core elements of our operations loosely and execute on capital-creating opportunities when they arise. first our focus gives us the ability to hold non-core elements of our operations loosely and execute on capital-creating opportunities when they arise Second, our results this quarter demonstrate metrics moving in the right direction for our long-term goals and that we are keeping the main things the main things. second our results this quarter demonstrate metrics moving in the right direction for our long-term goals and that we are keeping the main things the main things The quarterly shareholder letter published last evening and our quarterly results will form the basis of our call today. However, before we get started, I would like to remind you that this conversation may include forward-looking statements. Those statements are subject to risks and uncertainties that could cause actual and anticipated results to differ. The company undertakes no obligation to publicly revise any forward-looking statement. For details, please refer to the Safe Harbor statement in our shareholder letter published last evening. All comments made during today's call are subject to that Safe Harbor statement. With that, I'd like to turn the call over to Aaron for a welcome and to kick off our Q&A. Aaron? The quarterly shareholder letter published last evening and our quarterly results will form the basis of our call today. the quarterly shareholder letter published last evening and our quarterly results will form the basis of our call today However, before we get started, I would like to remind you that this conversation may include forward-looking statements. however before we get started i would like to remind you that this conversation may include forward-looking statements Those statements are subject to risks and uncertainties that could cause actual and anticipated results to differ. those statements are subject to risks and uncertainties that could cause actual and anticipated results to differ The company undertakes no obligation to publicly revise any forward-looking statement. the company undertakes no obligation to publicly revise any forward-looking statement For details, please refer to the Safe Harbor statement in our shareholder letter published last evening. for details please refer to the safe harbor statement in our shareholder letter published last evening All comments made during today's call are subject to that Safe Harbor statement. all comments made during today's call are subject to that safe harbor statement With that, I'd like to turn the call over to Aaron for a welcome and to kick off our Q&A. with that i'd like to turn the call over to aaron for a welcome and to kick off our q&a Aaron? aaron

Speaker 1: Good morning. Thank you for joining us. As Luke mentioned, the conditions outside are not stellar, but we all made it for the call. Before I do some opening remarks, I want to welcome David Vielehr to the table, President of LoadPay. Since he was the new guy, we made him wear a tie for this call, but going forward, we'll see. Maybe he can take the tie off. But welcome, David. Glad you're here. And we're glad to do this. And as usual, we're going to jump into Q&A quickly. But I did want to make one or two brief comments before I turn the call over for questions. I know that different investors have different perspectives. Some of you are focused on growth, some are focused on efficiency, and some are focused on balance sheet strength and credit quality. All three of those, we know, are important. Good morning. good morning Thank you for joining us. thank you for joining us As Luke mentioned, the conditions outside are not stellar, but we all made it for the call. as luke mentioned the conditions outside are not stellar but we all made it for the call Before I do some opening remarks, I want to welcome David Vielehr to the table, President of LoadPay. before i do some opening remarks i want to welcome david vielehr to the table president of loadpay Since he was the new guy, we made him wear a tie for this call, but going forward, we'll see. since he was the new guy we made him wear a tie for this call but going forward we'll see Maybe he can take the tie off. maybe he can take the tie off But welcome, David. but welcome david Glad you're here. glad you're here And we're glad to do this. and we're glad to do this And as usual, we're going to jump into Q&A quickly. and as usual we're going to jump into q&a quickly But I did want to make one or two brief comments before I turn the call over for questions. but i did want to make one or two brief comments before i turn the call over for questions I know that different investors have different perspectives. i know that different investors have different perspectives Some of you are focused on growth, some are focused on efficiency, and some are focused on balance sheet strength and credit quality. some of you are focused on growth some are focused on efficiency and some are focused on balance sheet strength and credit quality All three of those, we know, are important. all three of those we know are important As a management team, our goal is first and foremost to help the industry transact confidently. That means strengthening our network so that people can more efficiently and securely transmit data and payments. The pursuit of that goal over the last five years has generated volume and revenue growth, even as the trucking industry has been mired in a historically bad recession. We believe in the value proposition of what we're doing, as do 8 now of the largest 10 freight logistics companies in the country. To that end, we were excited to recently welcome J.B. Hunt to our network. The second thing, as I alluded to earlier, that is important to investors is to translate our vision of a secure network into profits for our enterprise and investors. We are on that trajectory. Growing revenue and holding expenses in check is a sure path to greater profitability. As a management team, our goal is first and foremost to help the industry transact confidently. as a management team our goal is first and foremost to help the industry transact confidently That means strengthening our network so that people can more efficiently and securely transmit data and payments. that means strengthening our network so that people can more efficiently and securely transmit data and payments The pursuit of that goal over the last five years has generated volume and revenue growth, even as the trucking industry has been mired in a historically bad recession. the pursuit of that goal over the last five years has generated volume and revenue growth even as the trucking industry has been mired in a historically bad recession We believe in the value proposition of what we're doing, as do 8 now of the largest 10 freight logistics companies in the country. we believe in the value proposition of what we're doing as do 8 now of the largest 10 freight logistics companies in the country To that end, we were excited to recently welcome J.B. to that end we were excited to recently welcome j.b Hunt to our network. hunt to our network The second thing, as I alluded to earlier, that is important to investors is to translate our vision of a secure network into profits for our enterprise and investors. the second thing as i alluded to earlier that is important to investors is to translate our vision of a secure network into profits for our enterprise and investors We are on that trajectory. we are on that trajectory Growing revenue and holding expenses in check is a sure path to greater profitability. growing revenue and holding expenses in check is a sure path to greater profitability That is what I expect to continue to do this year. For just one example, our core payments business will trend above its 30% EBITDA margin currently in 2026 and on its way to our ultimate goal of 50% or greater. If you look out over the longer term, LoadPay should contribute in that segment at even more accretive and capital-efficient margins so that in the end, our payments segment should have all the financial metrics of the most successful financial technology companies. Underlying that, the industrial logic of directly connecting the payor and the payee across the payment rails of our bank is very clear to us, and it is becoming increasingly clear to the market. Finally, we want to build the network and improve our margins and profitability with a balance sheet that is strong enough to withstand unforeseen cycles. That is what I expect to continue to do this year. that is what i expect to continue to do this year For just one example, our core payments business will trend above its 30% EBITDA margin currently in 2026 and on its way to our ultimate goal of 50% or greater. for just one example our core payments business will trend above its 30% ebitda margin currently in 2026 and on its way to our ultimate goal of 50% or greater If you look out over the longer term, LoadPay should contribute in that segment at even more accretive and capital-efficient margins so that in the end, our payments segment should have all the financial metrics of the most successful financial technology companies. if you look out over the longer term loadpay should contribute in that segment at even more accretive and capital-efficient margins so that in the end our payments segment should have all the financial metrics of the most successful financial technology companies Underlying that, the industrial logic of directly connecting the payor and the payee across the payment rails of our bank is very clear to us, and it is becoming increasingly clear to the market. underlying that the industrial logic of directly connecting the payor and the payee across the payment rails of our bank is very clear to us and it is becoming increasingly clear to the market Finally, we want to build the network and improve our margins and profitability with a balance sheet that is strong enough to withstand unforeseen cycles. finally we want to build the network and improve our margins and profitability with a balance sheet that is strong enough to withstand unforeseen cycles We have done that to date, and going forward, we will continue to do the same even as we work through legacy assets and narrow our fairway for credit exposure going forward. In doing that, we will always maintain enough capital to persevere through a rainy day or many rainy days. That is our plan. We will now turn the call over for questions. We have done that to date, and going forward, we will continue to do the same even as we work through legacy assets and narrow our fairway for credit exposure going forward. we have done that to date and going forward we will continue to do the same even as we work through legacy assets and narrow our fairway for credit exposure going forward In doing that, we will always maintain enough capital to persevere through a rainy day or many rainy days. in doing that we will always maintain enough capital to persevere through a rainy day or many rainy days That is our plan. that is our plan We will now turn the call over for questions. we will now turn the call over for questions

Speaker 9: We will now move to our question and answer session. If you have joined via the webinar, please use the raise hand icon, which can be found at the bottom of your webinar application. When you are called upon, please unmute your line and ask your question. We will pause now for a moment to assemble the queue. The first question is from Joe Yanchunis from Raymond James. Please unmute yourself and begin with your question. We will now move to our question and answer session. we will now move to our question and answer session If you have joined via the webinar, please use the raise hand icon, which can be found at the bottom of your webinar application. if you have joined via the webinar please use the raise hand icon which can be found at the bottom of your webinar application When you are called upon, please unmute your line and ask your question. when you are called upon please unmute your line and ask your question We will pause now for a moment to assemble the queue. we will pause now for a moment to assemble the queue The first question is from Joe Yanchunis from Raymond James. the first question is from joe yanchunis from raymond james Please unmute yourself and begin with your question. please unmute yourself and begin with your question

Speaker 5: Good morning. Good morning. good morning

Speaker 1: Morning, Joe. Morning, Joe. morning joe

Speaker 5: I was hoping to start with expenses here. In your shareholder letter, you reiterated your 4Q26 expense outlook. Was the sale of the building and airplane and the subsequent $6 million savings baked into that initial guide, or are those expenses being redeployed to other areas? I was hoping to start with expenses here. i was hoping to start with expenses here In your shareholder letter, you reiterated your 4Q26 expense outlook. in your shareholder letter you reiterated your 4q26 expense outlook Was the sale of the building and airplane and the subsequent $6 million savings baked into that initial guide, or are those expenses being redeployed to other areas? was the sale of the building and airplane and the subsequent $6 million savings baked into that initial guide or are those expenses being redeployed to other areas

Speaker 1: It'll be a combination, Joe. We've got so many moving pieces coming in and out, but you're always going to see a jump in expenses a little bit in the first quarter of any year, just given the natural resets that happen. That's going to require us to find additional efficiency as we go throughout the year. Yes, that building and the plane, the savings from that, about that $6 million a year, that is baked into the first quarter estimate, and it will be part of the run rate going forward. It'll be a combination, Joe. it'll be a combination joe We've got so many moving pieces coming in and out, but you're always going to see a jump in expenses a little bit in the first quarter of any year, just given the natural resets that happen. we've got so many moving pieces coming in and out but you're always going to see a jump in expenses a little bit in the first quarter of any year just given the natural resets that happen That's going to require us to find additional efficiency as we go throughout the year. that's going to require us to find additional efficiency as we go throughout the year Yes, that building and the plane, the savings from that, about that $6 million a year, that is baked into the first quarter estimate, and it will be part of the run rate going forward. yes that building and the plane the savings from that about that $6 million a year that is baked into the first quarter estimate and it will be part of the run rate going forward

Speaker 5: Yeah, I appreciate that. Then kind of shifting over to LoadPay. So maybe David, you could help with this. So LoadPay exited the quarter with annualized revenue of $1.5 million. You guided to tripling this amount in 2026. So I know you're working on some enhancements to the product that could increase the revenue per account. To triple LoadPay revenue in 2026, what are the underlying assumptions around account growth versus increasing revenue per account? Yeah, I appreciate that. yeah i appreciate that Then kind of shifting over to LoadPay. then kind of shifting over to loadpay So maybe David, you could help with this. so maybe david you could help with this So LoadPay exited the quarter with annualized revenue of $1.5 million. so loadpay exited the quarter with annualized revenue of $1.5 million You guided to tripling this amount in 2026. you guided to tripling this amount in 2026 So I know you're working on some enhancements to the product that could increase the revenue per account. so i know you're working on some enhancements to the product that could increase the revenue per account To triple LoadPay revenue in 2026, what are the underlying assumptions around account growth versus increasing revenue per account? to triple loadpay revenue in 2026 what are the underlying assumptions around account growth versus increasing revenue per account

Speaker 2: Yeah, so it's going to be a combination of the two things in 2026. So first and foremost, right, we're expecting to open between 7,000 and 12,000 accounts over the course of the year, building off the momentum from last year. And second, what we really look for is being able to link and fund the accounts, right? So account opening is our first step in the process, but then getting high levels of utilization. So as we talk about in the letter, we still forecast that we'll be at about $750 per account on a revenue basis. But if we look at the total portfolio, our customers are very different in the way that they use the accounts. And so some, we haven't had linked and funded. However, our top 10 accounts are all tracking to over $5,000 a year in revenue. Yeah, so it's going to be a combination of the two things in 2026. yeah so it's going to be a combination of the two things in 2026 So first and foremost, right, we're expecting to open between 7,000 and 12,000 accounts over the course of the year, building off the momentum from last year. so first and foremost right we're expecting to open between 7,000 and 12,000 accounts over the course of the year building off the momentum from last year And second, what we really look for is being able to link and fund the accounts, right? and second what we really look for is being able to link and fund the accounts right So account opening is our first step in the process, but then getting high levels of utilization. so account opening is our first step in the process but then getting high levels of utilization So as we talk about in the letter, we still forecast that we'll be at about $750 per account on a revenue basis. so as we talk about in the letter we still forecast that we'll be at about $750 per account on a revenue basis But if we look at the total portfolio, our customers are very different in the way that they use the accounts. but if we look at the total portfolio our customers are very different in the way that they use the accounts And so some, we haven't had linked and funded. and so some we haven't had linked and funded However, our top 10 accounts are all tracking to over $5,000 a year in revenue. however our top 10 accounts are all tracking to over $5,000 a year in revenue In that mix is how we're going to get to 750. The goal, the team, as we look at improvements throughout the course of 2026, is really about how do you drive that linked and funded percentage higher. In that mix is how we're going to get to 750. in that mix is how we're going to get to 750 The goal, the team, as we look at improvements throughout the course of 2026, is really about how do you drive that linked and funded percentage higher. the goal the team as we look at improvements throughout the course of 2026 is really about how do you drive that linked and funded percentage higher

Speaker 9: The next question is from Tim Switzer at KBW. Please unmute yourself and begin with your question. The next question is from Tim Switzer at KBW. the next question is from tim switzer at kbw Please unmute yourself and begin with your question. please unmute yourself and begin with your question

Speaker 10: Hey, good morning. Thanks for taking my questions. Hey, good morning. hey good morning Thanks for taking my questions. thanks for taking my questions

Speaker 1: Morning, Tim. Morning, Tim. morning tim

Speaker 10: My first question, Aaron, is on the outlook you provided in your letter, specifically on the LoadPay team's growth and factoring. How much of that is driven by Factoring as a Service, if it contributes a lot at all? And what does that assume in terms of the freight recovery? And what's the potential upside if we get a true recovery in the industry? My first question, Aaron, is on the outlook you provided in your letter, specifically on the LoadPay team's growth and factoring. my first question aaron is on the outlook you provided in your letter specifically on the loadpay team's growth and factoring How much of that is driven by Factoring as a Service, if it contributes a lot at all? how much of that is driven by factoring as a service if it contributes a lot at all And what does that assume in terms of the freight recovery? and what does that assume in terms of the freight recovery And what's the potential upside if we get a true recovery in the industry? and what's the potential upside if we get a true recovery in the industry

Speaker 1: Sure. If I answered that second question, Kim, who's sitting next to me, would start punching me. So I'm going to be circumspect in how I answer that. But on the first part, Factoring as a Service as a percentage of that load team's growth is immaterial. It is growing way faster than everything else, but you're talking about growth off of a very low revenue base versus the rest of the business. Secondly, for the projections of next year, we just assumed the market stayed as it finished Q4. Now, remember, and remember this from an earnings perspective, in Q1, you will see, I very much expect you will see a decline over where we ended the year because of normal seasonality in our business. Sure. sure If I answered that second question, Kim, who's sitting next to me, would start punching me. if i answered that second question kim who's sitting next to me would start punching me So I'm going to be circumspect in how I answer that. so i'm going to be circumspect in how i answer that But on the first part, Factoring as a Service as a percentage of that load team's growth is immaterial. but on the first part factoring as a service as a percentage of that load team's growth is immaterial It is growing way faster than everything else, but you're talking about growth off of a very low revenue base versus the rest of the business. it is growing way faster than everything else but you're talking about growth off of a very low revenue base versus the rest of the business Secondly, for the projections of next year, we just assumed the market stayed as it finished Q4. secondly for the projections of next year we just assumed the market stayed as it finished q4 Now, remember, and remember this from an earnings perspective, in Q1, you will see, I very much expect you will see a decline over where we ended the year because of normal seasonality in our business. now remember and remember this from an earnings perspective in q1 you will see i very much expect you will see a decline over where we ended the year because of normal seasonality in our business So we assumed a flat freight market for the course of the year, which just means that as we work, as the team is growing our factoring business organically, we're widening the amount of customers we serve. We're going deeper with those customers. Kim has the difficult job of both serving the very largest end of the market. We serve some extremely large customers in our factoring business. And then we also serve thousands of small carriers who also use us for LoadPay. And so the assumption is that we will organically grow that penetration, and that's where the underlying Load team's revenue growth comes from. So we assumed a flat freight market for the course of the year, which just means that as we work, as the team is growing our factoring business organically, we're widening the amount of customers we serve. so we assumed a flat freight market for the course of the year which just means that as we work as the team is growing our factoring business organically we're widening the amount of customers we serve We're going deeper with those customers. we're going deeper with those customers Kim has the difficult job of both serving the very largest end of the market. kim has the difficult job of both serving the very largest end of the market We serve some extremely large customers in our factoring business. we serve some extremely large customers in our factoring business And then we also serve thousands of small carriers who also use us for LoadPay. and then we also serve thousands of small carriers who also use us for loadpay And so the assumption is that we will organically grow that penetration, and that's where the underlying Load team's revenue growth comes from. and so the assumption is that we will organically grow that penetration and that's where the underlying load team's revenue growth comes from

Speaker 10: Interesting. Okay, that's helpful. And then another thing in your letter you talked about was only 22% of your customers are using both payments and audit within TPay. But now that you've reached agreements with, it sounds like most of the legacy contract customers, how does that change over the rest of the year? I assume a lot of them are now going to be on NextGen Audit, will probably be using payments and audit. Yeah, just curious how that moves, and I assume that helps revenue quite a bit. Interesting. interesting Okay, that's helpful. okay that's helpful And then another thing in your letter you talked about was only 22% of your customers are using both payments and audit within TPay. and then another thing in your letter you talked about was only 22% of your customers are using both payments and audit within tpay But now that you've reached agreements with, it sounds like most of the legacy contract customers, how does that change over the rest of the year? but now that you've reached agreements with it sounds like most of the legacy contract customers how does that change over the rest of the year I assume a lot of them are now going to be on NextGen Audit, will probably be using payments and audit. i assume a lot of them are now going to be on nextgen audit will probably be using payments and audit Yeah, just curious how that moves, and I assume that helps revenue quite a bit. yeah just curious how that moves and i assume that helps revenue quite a bit

Speaker 2: Certainly. So when we talk about the fact that we have not cross-sold payments and audit to the extent that we would have liked, a lot of that goes back to the legacy of how we built the network and the acquisitions that we made. So a lot of the audit clients came over with the HubTran acquisition, whereas the payments network was built basically on our own, bringing clients on to payments one after another. The intersection there obviously has a lot of room to improve. And as we get through repricing of the payments business, keep in mind that the audit business is always charged a per invoice fee, you'll see more and more overlap, more and more opportunity for us to be able to leverage one part of the relationship for the other. Certainly. certainly So when we talk about the fact that we have not cross-sold payments and audit to the extent that we would have liked, a lot of that goes back to the legacy of how we built the network and the acquisitions that we made. so when we talk about the fact that we have not cross-sold payments and audit to the extent that we would have liked a lot of that goes back to the legacy of how we built the network and the acquisitions that we made So a lot of the audit clients came over with the HubTran acquisition, whereas the payments network was built basically on our own, bringing clients on to payments one after another. so a lot of the audit clients came over with the hubtran acquisition whereas the payments network was built basically on our own bringing clients on to payments one after another The intersection there obviously has a lot of room to improve. the intersection there obviously has a lot of room to improve And as we get through repricing of the payments business, keep in mind that the audit business is always charged a per invoice fee, you'll see more and more overlap, more and more opportunity for us to be able to leverage one part of the relationship for the other. and as we get through repricing of the payments business keep in mind that the audit business is always charged a per invoice fee you'll see more and more overlap more and more opportunity for us to be able to leverage one part of the relationship for the other

Speaker 10: Okay, gotcha. I think historically you guys have disclosed in the letter the percentage of payments for which you charged a fee, I think it was 31% last quarter. Are you guys able to update us on where that was in Q4? Okay, gotcha. okay gotcha I think historically you guys have disclosed in the letter the percentage of payments for which you charged a fee, I think it was 31% last quarter. i think historically you guys have disclosed in the letter the percentage of payments for which you charged a fee i think it was 31% last quarter Are you guys able to update us on where that was in Q4? are you guys able to update us on where that was in q4

Speaker 2: Sure. So for fourth quarter as a whole, it moved up to 35%. In December, it was 38%. And January 1st was another key date where more of the new contracts went into effect. So you'll see significant increases in the first quarter. Sure. sure So for fourth quarter as a whole, it moved up to 35%. so for fourth quarter as a whole it moved up to 35% In December, it was 38%. in december it was 38% And January 1st was another key date where more of the new contracts went into effect. and january 1st was another key date where more of the new contracts went into effect So you'll see significant increases in the first quarter. so you'll see significant increases in the first quarter

Speaker 10: Wow, very impressive. All right, thank you. Wow, very impressive. wow very impressive All right, thank you. all right thank you

Speaker 9: Next question is from Matthew Olney at Stephens. Please unmute yourself and begin with your question. Next question is from Matthew Olney at Stephens. next question is from matthew olney at stephens Please unmute yourself and begin with your question. please unmute yourself and begin with your question

Speaker 8: Hey, thanks. Good morning, everybody. I want to go back to the factoring discussion. And I think that pre-tax margin of factoring was around 33% in the fourth quarter, a really good improvement over last year. Can you talk more about the drivers of that improvement? And then looking forward, that pre-tax margin within factoring, what does the guidance imply as you exit 2026 and then longer term? What do you expect that pre-tax margin to approach? Hey, thanks. hey thanks Good morning, everybody. good morning everybody I want to go back to the factoring discussion. i want to go back to the factoring discussion And I think that pre-tax margin of factoring was around 33% in the fourth quarter, a really good improvement over last year. and i think that pre-tax margin of factoring was around 33% in the fourth quarter a really good improvement over last year Can you talk more about the drivers of that improvement? can you talk more about the drivers of that improvement And then looking forward, that pre-tax margin within factoring, what does the guidance imply as you exit 2026 and then longer term? and then looking forward that pre-tax margin within factoring what does the guidance imply as you exit 2026 and then longer term What do you expect that pre-tax margin to approach? what do you expect that pre-tax margin to approach

Speaker 6: Yeah, so the margin expansion is really from our focus in technology and automation, and also a reduction in headcount through the back end of 2025. And so our focus is to continue to drive all of our automation in our back office. And so you'll continue to see that margin expand through 2026 and 2027. Yeah, so the margin expansion is really from our focus in technology and automation, and also a reduction in headcount through the back end of 2025. yeah so the margin expansion is really from our focus in technology and automation and also a reduction in headcount through the back end of 2025 And so our focus is to continue to drive all of our automation in our back office. and so our focus is to continue to drive all of our automation in our back office And so you'll continue to see that margin expand through 2026 and 2027. and so you'll continue to see that margin expand through 2026 and 2027

Speaker 1: Yeah. And Matt, on the long term, I think what you would expect, and first of all, just backing up to set the context for a few things. Number one, there was a season of time in the building of the network where growth in factoring was not prioritized. And I think it was last quarter we made it clear that we now see that the opportunity to grow is very real, and connecting factored customers to LoadPay accounts back to the network is a very real thing, even while we serve network factors, right? Those two things can both be true. And so that being said, you're seeing us now, and you will see, I expect, over the course of this year, us to grow customers in a way that we haven't in the past. Yeah. yeah And Matt, on the long term, I think what you would expect, and first of all, just backing up to set the context for a few things. and matt on the long term i think what you would expect and first of all just backing up to set the context for a few things Number one, there was a season of time in the building of the network where growth in factoring was not prioritized. number one there was a season of time in the building of the network where growth in factoring was not prioritized And I think it was last quarter we made it clear that we now see that the opportunity to grow is very real, and connecting factored customers to LoadPay accounts back to the network is a very real thing, even while we serve network factors, right? and i think it was last quarter we made it clear that we now see that the opportunity to grow is very real and connecting factored customers to loadpay accounts back to the network is a very real thing even while we serve network factors right Those two things can both be true. those two things can both be true And so that being said, you're seeing us now, and you will see, I expect, over the course of this year, us to grow customers in a way that we haven't in the past. and so that being said you're seeing us now and you will see i expect over the course of this year us to grow customers in a way that we haven't in the past The second thing is just understand, at least as it relates to last year, we held a higher staffing base as we were trying to understand what the volume of growth in factoring as a service would be, which was not coming out of the gates quite as fast as we thought. And so we've normalized that base. And then finally, the addition of technology, the use of artificial intelligence, machine learning that sits on top of these massive piles of proprietary data that we've built up that allows us to do things well. If you extrapolate that into the future, I believe that our core operating margin in factoring will eventually be over 40%. Will it be there this year? I don't think so. But as we go forward, that would be our target. The second thing is just understand, at least as it relates to last year, we held a higher staffing base as we were trying to understand what the volume of growth in factoring as a service would be, which was not coming out of the gates quite as fast as we thought. the second thing is just understand at least as it relates to last year we held a higher staffing base as we were trying to understand what the volume of growth in factoring as a service would be which was not coming out of the gates quite as fast as we thought And so we've normalized that base. and so we've normalized that base And then finally, the addition of technology, the use of artificial intelligence, machine learning that sits on top of these massive piles of proprietary data that we've built up that allows us to do things well. and then finally the addition of technology the use of artificial intelligence machine learning that sits on top of these massive piles of proprietary data that we've built up that allows us to do things well If you extrapolate that into the future, I believe that our core operating margin in factoring will eventually be over 40%. if you extrapolate that into the future i believe that our core operating margin in factoring will eventually be over 40% Will it be there this year? will it be there this year I don't think so. i don't think so But as we go forward, that would be our target. but as we go forward that would be our target Of course, in certain windows of time, and if invoices spike, that will push up margin a lot. One of the fantastic things that I think Kim and team have done in that business is the margin improvement of where we sit now didn't just come from invoice size growth. It came from getting more efficient. Those efforts are not done. I'm very excited about where it's headed. Of course, in certain windows of time, and if invoices spike, that will push up margin a lot. of course in certain windows of time and if invoices spike that will push up margin a lot One of the fantastic things that I think Kim and team have done in that business is the margin improvement of where we sit now didn't just come from invoice size growth. one of the fantastic things that i think kim and team have done in that business is the margin improvement of where we sit now didn't just come from invoice size growth It came from getting more efficient. it came from getting more efficient Those efforts are not done. those efforts are not done I'm very excited about where it's headed. i'm very excited about where it's headed

Speaker 9: The next question is from Gary Tenner at D.A. Davidson. Please unmute yourself and begin with your question. The next question is from Gary Tenner at D.A. the next question is from gary tenner at d.a Davidson. davidson Please unmute yourself and begin with your question. please unmute yourself and begin with your question

Speaker 4: Thanks. Good morning, everybody. Thanks. thanks Good morning, everybody. good morning everybody

Speaker 1: Morning, Gary. Morning, Gary. morning gary

Speaker 4: Hey, I wanted to ask, in terms of the transportation growth, I'd love the 25% in the payments revenue specifically for 2026. I think that's the overall mix of revenue growth for this year is kind of similar to what you kind of suggested in October. Obviously, I guess I would suggest that J.B. Hunt and any revenue impact from that relationship is already embedded in the guide as you're looking at the 2026. Hey, I wanted to ask, in terms of the transportation growth, I'd love the 25% in the payments revenue specifically for 2026. hey i wanted to ask in terms of the transportation growth i'd love the 25% in the payments revenue specifically for 2026 I think that's the overall mix of revenue growth for this year is kind of similar to what you kind of suggested in October. i think that's the overall mix of revenue growth for this year is kind of similar to what you kind of suggested in october Obviously, I guess I would suggest that J.B. obviously i guess i would suggest that j.b Hunt and any revenue impact from that relationship is already embedded in the guide as you're looking at the 2026. hunt and any revenue impact from that relationship is already embedded in the guide as you're looking at the 2026

Speaker 1: That's correct. That's correct. that's correct

Speaker 4: Would you be any more specific about what type of revenue contribution or benefit you'd expect from that relationship over the course of the year? Would you be any more specific about what type of revenue contribution or benefit you'd expect from that relationship over the course of the year? would you be any more specific about what type of revenue contribution or benefit you'd expect from that relationship over the course of the year

Speaker 11: Yeah, we can't talk to the specifics of pricing or revenue associated with any individual client. I would just say that generally it's consistent with the guidance that we've provided in the past about how we intend to price relationships. Yeah, we can't talk to the specifics of pricing or revenue associated with any individual client. yeah we can't talk to the specifics of pricing or revenue associated with any individual client I would just say that generally it's consistent with the guidance that we've provided in the past about how we intend to price relationships. i would just say that generally it's consistent with the guidance that we've provided in the past about how we intend to price relationships

Speaker 4: Okay. And then the follow-up, in terms of the, I think you got into some EBITDA margin of 30% or better in the first quarter in the payments segment. Can you give a sense of kind of the TPay or payment-specific expense run rate you'd expect for the first quarter? Just trying to kind of get a sense of how that moves relative to your more consolidated guide on expenses for the first quarter. Okay. okay And then the follow-up, in terms of the, I think you got into some EBITDA margin of 30% or better in the first quarter in the payments segment. and then the follow-up in terms of the i think you got into some ebitda margin of 30% or better in the first quarter in the payments segment Can you give a sense of kind of the TPay or payment-specific expense run rate you'd expect for the first quarter? can you give a sense of kind of the tpay or payment-specific expense run rate you'd expect for the first quarter Just trying to kind of get a sense of how that moves relative to your more consolidated guide on expenses for the first quarter. just trying to kind of get a sense of how that moves relative to your more consolidated guide on expenses for the first quarter

Speaker 11: Certainly, yeah. So within the core payments business, that's the business where we reported the 29.5% EBITDA margin for last quarter. We're going to see continued revenue growth associated with the repricing, associated with the new names that are coming on board. And we're going to hold expenses relatively flat. They're not going to be completely flat, but they won't grow anywhere near as fast as the revenue is growing. And so that's what's going to drive that EBITDA margin higher. Certainly, yeah. certainly yeah So within the core payments business, that's the business where we reported the 29.5% EBITDA margin for last quarter. so within the core payments business that's the business where we reported the 29.5% ebitda margin for last quarter We're going to see continued revenue growth associated with the repricing, associated with the new names that are coming on board. we're going to see continued revenue growth associated with the repricing associated with the new names that are coming on board And we're going to hold expenses relatively flat. and we're going to hold expenses relatively flat They're not going to be completely flat, but they won't grow anywhere near as fast as the revenue is growing. they're not going to be completely flat but they won't grow anywhere near as fast as the revenue is growing And so that's what's going to drive that EBITDA margin higher. and so that's what's going to drive that ebitda margin higher

Speaker 4: Okay. And that core payments, sorry, Aaron. Okay. okay And that core payments, sorry, Aaron. and that core payments sorry aaron

Speaker 1: Well, I just want to make it clear, hopefully for you and for investors listening, when we describe, I mean, we have a payment segment. And the payment segment, by the way I view the world, you have payors, which are generally brokers and shippers, and you have payees, which are generally carriers and their factoring companies. And I think based on feedback from analysts and investors, they want to understand what the core business has done. That's the business we announced back in 2021. Although I'm not sure it really is the business we've announced back in 2021 because so many changes, we've learned so much. It shocks me how little we knew when we set off on this journey as I look at it now in hindsight. But that business is generating a 30% EBITDA margin and is trending higher. Well, I just want to make it clear, hopefully for you and for investors listening, when we describe, I mean, we have a payment segment. well i just want to make it clear hopefully for you and for investors listening when we describe i mean we have a payment segment And the payment segment, by the way I view the world, you have payors, which are generally brokers and shippers, and you have payees, which are generally carriers and their factoring companies. and the payment segment by the way i view the world you have payors which are generally brokers and shippers and you have payees which are generally carriers and their factoring companies And I think based on feedback from analysts and investors, they want to understand what the core business has done. and i think based on feedback from analysts and investors they want to understand what the core business has done That's the business we announced back in 2021. that's the business we announced back in 2021 Although I'm not sure it really is the business we've announced back in 2021 because so many changes, we've learned so much. although i'm not sure it really is the business we've announced back in 2021 because so many changes we've learned so much It shocks me how little we knew when we set off on this journey as I look at it now in hindsight. it shocks me how little we knew when we set off on this journey as i look at it now in hindsight But that business is generating a 30% EBITDA margin and is trending higher. but that business is generating a 30% ebitda margin and is trending higher You already heard Todd talk about the number, the percentage of invoices that we are monetizing continues to grow because the value has grown. But when we say that, I think it's important for the long-term thinkers to understand that doesn't mean LoadPay is not core to payments. LoadPay is once again a drag on earnings, right? Just like back in the day, core payments was a drag on earnings. But LoadPay over the long term and all that connectivity and the source and the type of revenue is really exciting. And so when you look at a 16% EBITDA margin for that segment, just know that there's a lot of investment in LoadPay. Obviously, we believe in that investment. We think we can triple revenue next year. You already heard Todd talk about the number, the percentage of invoices that we are monetizing continues to grow because the value has grown. you already heard todd talk about the number the percentage of invoices that we are monetizing continues to grow because the value has grown But when we say that, I think it's important for the long-term thinkers to understand that doesn't mean LoadPay is not core to payments. but when we say that i think it's important for the long-term thinkers to understand that doesn't mean loadpay is not core to payments LoadPay is once again a drag on earnings, right? loadpay is once again a drag on earnings right Just like back in the day, core payments was a drag on earnings. just like back in the day core payments was a drag on earnings But LoadPay over the long term and all that connectivity and the source and the type of revenue is really exciting. but loadpay over the long term and all that connectivity and the source and the type of revenue is really exciting And so when you look at a 16% EBITDA margin for that segment, just know that there's a lot of investment in LoadPay. and so when you look at a 16% ebitda margin for that segment just know that there's a lot of investment in loadpay Obviously, we believe in that investment. obviously we believe in that investment We think we can triple revenue next year. we think we can triple revenue next year But I just want to say that we'll continue to describe "core payments" so that people can see what has happened to this business we began in 2021 and mark our progress. Totally understand, want to be accountable for that. But please don't ever view that what payments is doing and LoadPay's part of that as anything other than part of the core long-term strategy. And together, those businesses, I believe, will generate 50% EBITDA margin or better. You will see it continue to progress. And the type of revenue in that segment is extremely attractive. So sorry to riff on that. I just think it's helpful, and I want you to understand how we think about it so investors can understand internally how we view those two lines of business working together in a single segment. But I just want to say that we'll continue to describe "core payments" so that people can see what has happened to this business we began in 2021 and mark our progress. but i just want to say that we'll continue to describe "core payments" so that people can see what has happened to this business we began in 2021 and mark our progress Totally understand, want to be accountable for that. totally understand want to be accountable for that But please don't ever view that what payments is doing and LoadPay's part of that as anything other than part of the core long-term strategy. but please don't ever view that what payments is doing and loadpay's part of that as anything other than part of the core long-term strategy And together, those businesses, I believe, will generate 50% EBITDA margin or better. and together those businesses i believe will generate 50% ebitda margin or better You will see it continue to progress. you will see it continue to progress And the type of revenue in that segment is extremely attractive. and the type of revenue in that segment is extremely attractive So sorry to riff on that. so sorry to riff on that I just think it's helpful, and I want you to understand how we think about it so investors can understand internally how we view those two lines of business working together in a single segment. i just think it's helpful and i want you to understand how we think about it so investors can understand internally how we view those two lines of business working together in a single segment

Speaker 4: Very good. Thank you. Very good. very good Thank you. thank you

Speaker 9: The next question is from Joe Yanchunis from Raymond James. Please unmute yourself and begin with your question. The next question is from Joe Yanchunis from Raymond James. the next question is from joe yanchunis from raymond james Please unmute yourself and begin with your question. please unmute yourself and begin with your question

Speaker 5: Thanks for answering a couple more for me here. I was hoping we could pivot to the intelligence segment. So segment revenue was relatively flat, but in your shareholder letter, you noted you contracted $1 million of incremental annualized revenue. So when should that begin to show up in reported results? And then additionally, what is the expected revenue contribution from the Trusted Freight Exchange with Highway, excuse me, embedded in your 2026 outlook? And kind of a little more on that, how should we think about the potential intermediate-term revenue opportunity from the Freight Exchange? Thanks for answering a couple more for me here. thanks for answering a couple more for me here I was hoping we could pivot to the intelligence segment. i was hoping we could pivot to the intelligence segment So segment revenue was relatively flat, but in your shareholder letter, you noted you contracted $1 million of incremental annualized revenue. so segment revenue was relatively flat but in your shareholder letter you noted you contracted $1 million of incremental annualized revenue So when should that begin to show up in reported results? so when should that begin to show up in reported results And then additionally, what is the expected revenue contribution from the Trusted Freight Exchange with Highway, excuse me, embedded in your 2026 outlook? and then additionally what is the expected revenue contribution from the trusted freight exchange with highway excuse me embedded in your 2026 outlook And kind of a little more on that, how should we think about the potential intermediate-term revenue opportunity from the Freight Exchange? and kind of a little more on that how should we think about the potential intermediate-term revenue opportunity from the freight exchange

Speaker 6: Yeah, thank you for the question. So that bookings from Q4 were generally 30 days, right, from booking to billing. So that has already started to show up in the Q1 numbers, and that will continue to do so. As for TFX, the contribution, TFX is still very new. While we are counting on it as a driver for revenue growth for this year, it is not the largest opportunity that we see. We believe the largest opportunity is actually the cross-selling opportunity with our audit and payment customers. For example, only 14% of our current audit and payment customers are also using our intelligence solution. So that's really where we see the largest opportunity. And Todd and I are both already working very closely with our sales and commercial team to ensure that that happens in 2026. Yeah, thank you for the question. yeah thank you for the question So that bookings from Q4 were generally 30 days, right, from booking to billing. so that bookings from q4 were generally 30 days right from booking to billing So that has already started to show up in the Q1 numbers, and that will continue to do so. so that has already started to show up in the q1 numbers and that will continue to do so As for TFX, the contribution, TFX is still very new. as for tfx the contribution tfx is still very new While we are counting on it as a driver for revenue growth for this year, it is not the largest opportunity that we see. while we are counting on it as a driver for revenue growth for this year it is not the largest opportunity that we see We believe the largest opportunity is actually the cross-selling opportunity with our audit and payment customers. we believe the largest opportunity is actually the cross-selling opportunity with our audit and payment customers For example, only 14% of our current audit and payment customers are also using our intelligence solution. for example only 14% of our current audit and payment customers are also using our intelligence solution So that's really where we see the largest opportunity. so that's really where we see the largest opportunity And Todd and I are both already working very closely with our sales and commercial team to ensure that that happens in 2026. and todd and i are both already working very closely with our sales and commercial team to ensure that that happens in 2026

Speaker 5: Great. That was very helpful. And just with the interquarter announcements of J.B. Hunt, as you mentioned earlier, 8 of the 10 brokers are now in your payments network. I understand TriumphPay's business model has evolved since inception. Success really isn't reliant on the adoption from competing factoring companies. But at what point do factorers feel pressure from the brokers to adopt your payments network? I'm curious to hear your opinion on that potential catalyst. Great. great That was very helpful. that was very helpful And just with the interquarter announcements of J.B. and just with the interquarter announcements of j.b Hunt, as you mentioned earlier, 8 of the 10 brokers are now in your payments network. hunt as you mentioned earlier 8 of the 10 brokers are now in your payments network I understand TriumphPay's business model has evolved since inception. i understand triumphpay's business model has evolved since inception Success really isn't reliant on the adoption from competing factoring companies. success really isn't reliant on the adoption from competing factoring companies But at what point do factorers feel pressure from the brokers to adopt your payments network? but at what point do factorers feel pressure from the brokers to adopt your payments network I'm curious to hear your opinion on that potential catalyst. i'm curious to hear your opinion on that potential catalyst

Speaker 1: Yeah, that's a great question. The answer is, Joe, I don't exactly know. If you think about how the network actually works and how factors work, I mean, factors are very technologically forward businesses, way more, I think, than people expect. And so what they are trying to consume in the network is information about the transaction to make a pre-purchase decision. And I'm going to let Kim come clean up anything I say afterwards because she knows this stuff so much more deeply than I do. But we have 60-70 network factors, and we serve those factors. We try to make their processes easier. Obviously, we're pushing data to them. So I don't know if ultimately the "pressure" comes from the brokerage industry. Yeah, that's a great question. yeah that's a great question The answer is, Joe, I don't exactly know. the answer is joe i don't exactly know If you think about how the network actually works and how factors work, I mean, factors are very technologically forward businesses, way more, I think, than people expect. if you think about how the network actually works and how factors work i mean factors are very technologically forward businesses way more i think than people expect And so what they are trying to consume in the network is information about the transaction to make a pre-purchase decision. and so what they are trying to consume in the network is information about the transaction to make a pre-purchase decision And I'm going to let Kim come clean up anything I say afterwards because she knows this stuff so much more deeply than I do. and i'm going to let kim come clean up anything i say afterwards because she knows this stuff so much more deeply than i do But we have 60-70 network factors, and we serve those factors. but we have 60-70 network factors and we serve those factors We try to make their processes easier. we try to make their processes easier Obviously, we're pushing data to them. obviously we're pushing data to them So I don't know if ultimately the "pressure" comes from the brokerage industry. so i don't know if ultimately the "pressure" comes from the brokerage industry I think at some point, factors will just decide, have they updated their own technological stack to be able to ingest the data we can give them in a way that makes their business easier? More than it's brokers forcing them to do something they don't want to do. Kim, add on to that. I think at some point, factors will just decide, have they updated their own technological stack to be able to ingest the data we can give them in a way that makes their business easier? i think at some point factors will just decide have they updated their own technological stack to be able to ingest the data we can give them in a way that makes their business easier More than it's brokers forcing them to do something they don't want to do. more than it's brokers forcing them to do something they don't want to do Kim, add on to that. kim add on to that

Speaker 6: Yeah. So what I would say is I think the payments network really helps factors become more efficient in being able to transact through payments rather than directly with the broker. And so you have one place to go for many rather than contacting many brokers for just a single invoice. Yeah. yeah So what I would say is I think the payments network really helps factors become more efficient in being able to transact through payments rather than directly with the broker. so what i would say is i think the payments network really helps factors become more efficient in being able to transact through payments rather than directly with the broker And so you have one place to go for many rather than contacting many brokers for just a single invoice. and so you have one place to go for many rather than contacting many brokers for just a single invoice

Speaker 5: Okay. Perfect. I appreciate you. Okay. okay Perfect. perfect I appreciate you. i appreciate you

Speaker 1: Just one last thing. I mean, it's a great observation. I think we owe it to you to admit we can celebrate what we got right, but we should also own what we got wrong. I thought the way this would work for factors would turn out differently than it has. The network has grown in ways I didn't foresee. The ability of other factoring companies to come in and use this has had some success. The majority of the top 100 use it, but for the largest, they don't consume it in quite the same way I foresaw. So look, that's what happens when you set off to do something that hasn't been done before. You get some things right, and you get some things wrong. Just one last thing. just one last thing I mean, it's a great observation. i mean it's a great observation I think we owe it to you to admit we can celebrate what we got right, but we should also own what we got wrong. i think we owe it to you to admit we can celebrate what we got right but we should also own what we got wrong I thought the way this would work for factors would turn out differently than it has. i thought the way this would work for factors would turn out differently than it has The network has grown in ways I didn't foresee. the network has grown in ways i didn't foresee The ability of other factoring companies to come in and use this has had some success. the ability of other factoring companies to come in and use this has had some success The majority of the top 100 use it, but for the largest, they don't consume it in quite the same way I foresaw. the majority of the top 100 use it but for the largest they don't consume it in quite the same way i foresaw So look, that's what happens when you set off to do something that hasn't been done before. so look that's what happens when you set off to do something that hasn't been done before You get some things right, and you get some things wrong. you get some things right and you get some things wrong

Speaker 5: I totally understand that and completely fair. But with the current business model, if a top 10 factor were to opt in, you're going to see those conforming or network transactions go up in general for the network. But is there enough volume right now where a factoring company could derive savings from lower headcount from joining the network? I totally understand that and completely fair. i totally understand that and completely fair But with the current business model, if a top 10 factor were to opt in, you're going to see those conforming or network transactions go up in general for the network. but with the current business model if a top 10 factor were to opt in you're going to see those conforming or network transactions go up in general for the network But is there enough volume right now where a factoring company could derive savings from lower headcount from joining the network? but is there enough volume right now where a factoring company could derive savings from lower headcount from joining the network

Speaker 6: Yeah, I would absolutely think so. I mean, if you're talking about a top 10 factor, you're talking about a lot of invoices that are being processed. And so you're not looking at just pre-purchase decisions. You're also looking at payment statuses. So I do think that they're going to get front-loaded and back-loaded efficiencies through the network. Yeah, I would absolutely think so. yeah i would absolutely think so I mean, if you're talking about a top 10 factor, you're talking about a lot of invoices that are being processed. i mean if you're talking about a top 10 factor you're talking about a lot of invoices that are being processed And so you're not looking at just pre-purchase decisions. and so you're not looking at just pre-purchase decisions You're also looking at payment statuses. you're also looking at payment statuses So I do think that they're going to get front-loaded and back-loaded efficiencies through the network. so i do think that they're going to get front-loaded and back-loaded efficiencies through the network

Speaker 5: It sounds like the biggest we're still at the carrot phase of getting factors to join versus the stick phase. Is that fair? It sounds like the biggest we're still at the carrot phase of getting factors to join versus the stick phase. it sounds like the biggest we're still at the carrot phase of getting factors to join versus the stick phase Is that fair? is that fair

Speaker 1: Yeah. And I don't think you build the best business models doing anything with a stick. That's just not in our DNA. It's not how we operate. We have a value proposition we've offered to shippers, brokers, carriers, and other factors. And when we tell you what the value is going to be, we're going to do our dead level best to deliver it. And if that works for you and the way you run your business, because not every factor runs their business the same way, not every factor uses the same technological stack, technology stack, then I think that they can trust our brand reputation to do what we say we will do. But if they built their business a different way, then I think they'll continue to operate it a different way. And ultimately, Joe, I think we talked a lot about network transactions. Yeah. yeah And I don't think you build the best business models doing anything with a stick. and i don't think you build the best business models doing anything with a stick That's just not in our DNA. that's just not in our dna It's not how we operate. it's not how we operate We have a value proposition we've offered to shippers, brokers, carriers, and other factors. we have a value proposition we've offered to shippers brokers carriers and other factors And when we tell you what the value is going to be, we're going to do our dead level best to deliver it. and when we tell you what the value is going to be we're going to do our dead level best to deliver it And if that works for you and the way you run your business, because not every factor runs their business the same way, not every factor uses the same technological stack, technology stack, then I think that they can trust our brand reputation to do what we say we will do. and if that works for you and the way you run your business because not every factor runs their business the same way not every factor uses the same technological stack technology stack then i think that they can trust our brand reputation to do what we say we will do But if they built their business a different way, then I think they'll continue to operate it a different way. but if they built their business a different way then i think they'll continue to operate it a different way And ultimately, Joe, I think we talked a lot about network transactions. and ultimately joe i think we talked a lot about network transactions We still report it as a KPI. I'm not sure it's the greatest KPI as important as it once was. Since we gave it to you, we want to continue to give it to you. I think things that I focus on is what Todd disclosed earlier, which we need to put in the letter going forward, which is the percentage of actual payments that we are charging a fee on because that demonstrates in black and white that the network has gotten more valuable. So in the end, the way the network is delivering value and is being monetized is not exactly what we thought it would be five years ago, but the long-term prospects are at least as rosy as we thought it was going to be five years ago. We still report it as a KPI. we still report it as a kpi I'm not sure it's the greatest KPI as important as it once was. i'm not sure it's the greatest kpi as important as it once was Since we gave it to you, we want to continue to give it to you. since we gave it to you we want to continue to give it to you I think things that I focus on is what Todd disclosed earlier, which we need to put in the letter going forward, which is the percentage of actual payments that we are charging a fee on because that demonstrates in black and white that the network has gotten more valuable. i think things that i focus on is what todd disclosed earlier which we need to put in the letter going forward which is the percentage of actual payments that we are charging a fee on because that demonstrates in black and white that the network has gotten more valuable So in the end, the way the network is delivering value and is being monetized is not exactly what we thought it would be five years ago, but the long-term prospects are at least as rosy as we thought it was going to be five years ago. so in the end the way the network is delivering value and is being monetized is not exactly what we thought it would be five years ago but the long-term prospects are at least as rosy as we thought it was going to be five years ago

Speaker 5: Understood. Thanks for taking my thoughts. Understood. understood Thanks for taking my thoughts. thanks for taking my thoughts

Speaker 1: For sure. For sure. for sure

Speaker 9: The final question is from Donald Broughton at Broughton Capital LLC. Please unmute yourself and begin with the question. The final question is from Donald Broughton at Broughton Capital LLC. the final question is from donald broughton at broughton capital llc Please unmute yourself and begin with the question. please unmute yourself and begin with the question

Speaker 3: Ladies and gentlemen, one more esoteric. Ladies and gentlemen, one more esoteric. ladies and gentlemen one more esoteric

Speaker 1: Oh, no. I thought that was going to be an extremely interesting question. Oh, no. oh no I thought that was going to be an extremely interesting question. i thought that was going to be an extremely interesting question

Speaker 3: Oh, heavens. Well, we can work it into one. It sounds a little bit like the qualified versus unqualified opinion by an auditor, right? I read it a couple of times. I'm like, "I think I know what it means." But indulge me. What does that mean? Oh, heavens. oh heavens Well, we can work it into one. well we can work it into one It sounds a little bit like the qualified versus unqualified opinion by an auditor, right? it sounds a little bit like the qualified versus unqualified opinion by an auditor right I read it a couple of times. i read it a couple of times I'm like, "I think I know what it means." But indulge me. i'm like "i think i know what it means." but indulge me What does that mean? what does that mean

Speaker 1: Okay. I am so sorry, but first of all, what we saw on our side was a picture of two very attractive dogs when you started the question. Okay. okay I am so sorry, but first of all, what we saw on our side was a picture of two very attractive dogs when you started the question. i am so sorry but first of all what we saw on our side was a picture of two very attractive dogs when you started the question

Speaker 3: Dogs and white flag horses. Dogs and white flag horses. dogs and white flag horses

Speaker 1: Yeah. And then it went blank. The audio went down for a second. Sorry. Indulge you about what does what mean. Yeah. yeah And then it went blank. and then it went blank The audio went down for a second. the audio went down for a second Sorry. sorry Indulge you about what does what mean. indulge you about what does what mean

Speaker 3: Oh, it's one of those things that's kind of like a qualified or unqualified opinion by auditors. I know it's counterintuitive. I sat there and read it a couple of times. The negative credit loss expense and that benefit. Oh, it's one of those things that's kind of like a qualified or unqualified opinion by auditors. oh it's one of those things that's kind of like a qualified or unqualified opinion by auditors I know it's counterintuitive. i know it's counterintuitive I sat there and read it a couple of times. i sat there and read it a couple of times The negative credit loss expense and that benefit. the negative credit loss expense and that benefit

Speaker 1: Go ahead. A negative credit loss expense just implies that we had greater recoveries than we did new provisions or charge-offs. It was recoveries of prior period expense that we took. Go ahead. go ahead A negative credit loss expense just implies that we had greater recoveries than we did new provisions or charge-offs. a negative credit loss expense just implies that we had greater recoveries than we did new provisions or charge-offs It was recoveries of prior period expense that we took. it was recoveries of prior period expense that we took

Speaker 3: Oh, okay. That would have been my guess, but it was like, "I really don't know." And don't feel special. There are plenty of companies out there, GE and others who had all kinds of issues with, say, these kinds of things. Can you explain a little bit more about the risk in that business? Is it duration matching what you're borrowing and what you're lending at? Is it improperly assessing the creditworthiness of the person you're lending? Is it the assets underlying? Where is the risk exactly? Oh, okay. oh okay That would have been my guess, but it was like, "I really don't know." And don't feel special. There are plenty of companies out there, GE and others who had all kinds of issues with, say, these kinds of things. that would have been my guess but it was like "i really don't know." and don't feel special. there are plenty of companies out there ge and others who had all kinds of issues with say these kinds of things Can you explain a little bit more about the risk in that business? can you explain a little bit more about the risk in that business Is it duration matching what you're borrowing and what you're lending at? is it duration matching what you're borrowing and what you're lending at Is it improperly assessing the creditworthiness of the person you're lending? is it improperly assessing the creditworthiness of the person you're lending Is it the assets underlying? is it the assets underlying Where is the risk exactly? where is the risk exactly

Speaker 11: So if you're referring to our credit loss expense in aggregate, I would say it's the second of those things. It's understanding the risks associated with the underlying borrowers. We lend in a lot of different ways to a lot of different clients. Looking specifically at those clients within each of those businesses is the most important thing that we do. It's not really about duration. Duration plays to our advantage because we have very, very short duration on average, specifically in our factoring business and the mortgage warehouse. So as we think about how we manage credit risk going forward, we're focused on things, first of all, that are aligned with our transportation strategy. Those are areas where we're going to tend to lend more and more over time. We will continue to lend in other areas that provide other strategic benefits to us. So if you're referring to our credit loss expense in aggregate, I would say it's the second of those things. so if you're referring to our credit loss expense in aggregate i would say it's the second of those things It's understanding the risks associated with the underlying borrowers. it's understanding the risks associated with the underlying borrowers We lend in a lot of different ways to a lot of different clients. we lend in a lot of different ways to a lot of different clients Looking specifically at those clients within each of those businesses is the most important thing that we do. looking specifically at those clients within each of those businesses is the most important thing that we do It's not really about duration. it's not really about duration Duration plays to our advantage because we have very, very short duration on average, specifically in our factoring business and the mortgage warehouse. duration plays to our advantage because we have very very short duration on average specifically in our factoring business and the mortgage warehouse So as we think about how we manage credit risk going forward, we're focused on things, first of all, that are aligned with our transportation strategy. so as we think about how we manage credit risk going forward we're focused on things first of all that are aligned with our transportation strategy Those are areas where we're going to tend to lend more and more over time. those are areas where we're going to tend to lend more and more over time We will continue to lend in other areas that provide other strategic benefits to us. we will continue to lend in other areas that provide other strategic benefits to us So if you take the community bank, for example, that is the source of our low-cost deposits, which really is valuable to the enterprise as a whole. Other lending businesses may contribute to the business, but it's very important for those businesses to have very tight credit policies and discipline to avoid creating any noise or distraction for management or for investors. And so that's how we look at those businesses. So if you take the community bank, for example, that is the source of our low-cost deposits, which really is valuable to the enterprise as a whole. so if you take the community bank for example that is the source of our low-cost deposits which really is valuable to the enterprise as a whole Other lending businesses may contribute to the business, but it's very important for those businesses to have very tight credit policies and discipline to avoid creating any noise or distraction for management or for investors. other lending businesses may contribute to the business but it's very important for those businesses to have very tight credit policies and discipline to avoid creating any noise or distraction for management or for investors And so that's how we look at those businesses. and so that's how we look at those businesses

Speaker 3: The ABL business, I would think that that would be not necessarily what you want to be pursuing the most, but isn't it just kind of a complementary business to the other things you're doing? If I'm using you to factor freight bills, then I own trucks and trailers, and those are assets you obviously understand. The ABL business, I would think that that would be not necessarily what you want to be pursuing the most, but isn't it just kind of a complementary business to the other things you're doing? the abl business i would think that that would be not necessarily what you want to be pursuing the most but isn't it just kind of a complementary business to the other things you're doing If I'm using you to factor freight bills, then I own trucks and trailers, and those are assets you obviously understand. if i'm using you to factor freight bills then i own trucks and trailers and those are assets you obviously understand

Speaker 11: Sure. The ABL business, we did expect to have strategic benefit to transportation. You can think of other offerings, ABL, light, ledger lines, things like that, that might work with clients that no longer need factoring or for which those offerings would be a better solution than factoring. In practice, that hasn't really played out. We haven't seen that really take off. And so we've been left in the ABL business with non-transportation-related exposure. And so, yeah. Sure. sure The ABL business, we did expect to have strategic benefit to transportation. the abl business we did expect to have strategic benefit to transportation You can think of other offerings, ABL, light, ledger lines, things like that, that might work with clients that no longer need factoring or for which those offerings would be a better solution than factoring. you can think of other offerings abl light ledger lines things like that that might work with clients that no longer need factoring or for which those offerings would be a better solution than factoring In practice, that hasn't really played out. in practice that hasn't really played out We haven't seen that really take off. we haven't seen that really take off And so we've been left in the ABL business with non-transportation-related exposure. and so we've been left in the abl business with non-transportation-related exposure And so, yeah. and so yeah

Speaker 3: Okay. That makes a lot more sense. I would have thought it would have been something complementary to your business, but like many businesses, you think that's going to be a great thing, and you're walking into it, and then you spend a little time and you go, "Well, not quite what I planned." But anyway, congrats on a good quarter. Thanks for answering the questions. Okay. okay That makes a lot more sense. that makes a lot more sense I would have thought it would have been something complementary to your business, but like many businesses, you think that's going to be a great thing, and you're walking into it, and then you spend a little time and you go, "Well, not quite what I planned." But anyway, congrats on a good quarter. i would have thought it would have been something complementary to your business but like many businesses you think that's going to be a great thing and you're walking into it and then you spend a little time and you go "well not quite what i planned." but anyway congrats on a good quarter Thanks for answering the questions. thanks for answering the questions

Speaker 11: Of course. Of course. of course

Speaker 9: There are no more questions at this time. I would now like to turn the call over to management for closing remarks. There are no more questions at this time. there are no more questions at this time I would now like to turn the call over to management for closing remarks. i would now like to turn the call over to management for closing remarks

Speaker 1: Thank you all for joining us. Stay warm, and we'll see you next time. Thank you all for joining us. thank you all for joining us Stay warm, and we'll see you next time. stay warm and we'll see you next time