Building the bank for the firms that build things.

This year, Steelbanc closed its third full fiscal year as a specialty commercial lender to North American manufacturers. When we incorporated in 2022, we set out to build something uncomplicated and unfashionable: a credit shop run by people who have stood inside a stamping plant before they ever stood inside a credit committee. Three years on, that is still the firm.

In 2025, we originated $310 million across 28 new borrowers and renewed or upsized facilities for 19 existing clients. Our average facility size grew to $13.6 million, up from $11.4 million in 2024, as we extended further into the lower middle market — companies between $30 million and $250 million in annual revenue, often founder- or family-owned, frequently underserved by both money-center banks and the private credit megafunds.

We took our first credit loss this year. Final recovery came in at 91 cents on the dollar. Collateral discipline did most of the work, and we have not changed it.

A precision-machining client in the Mahoning Valley filed Chapter 11 in October after losing a single program with a Tier 1 automotive customer. Our facility was senior secured against equipment we underwrote at 65 percent of forced-liquidation value. We will write more about the workout in our 2026 letter, but the short version is this: collateral discipline did the work, and we have not changed it.

We added one office (Chicago, opened April 2025), four bankers, and one operating advisor. We did not add a single layer of management.

The thesis on American industrial credit is, if anything, stronger than when we started. Tariff policy, onshoring commitments, and a generational replacement cycle in capital equipment continue to draw manufacturers into longer planning horizons. Those horizons require capital partners who will sit across the table for ten or fifteen years — not five quarters. That is the seat we are paid to occupy.

We are grateful to our clients for their trust, to our limited partners for their patience, and to our team for the long hours behind these numbers.

The fiscal year ending December 31, 2025 was Steelbanc’s third full year of operations and the first in which we operated from two coverage offices. The firm grew along three dimensions — originations, headcount, and geographic reach — while holding credit quality and operating discipline.

Originations

We closed $310 million of new commitments in 2025, an increase of 41.6 percent over 2024 ($219 million). Senior secured term loans accounted for 58 percent of originations, equipment finance 27 percent, and asset-based revolvers 15 percent. The largest single facility closed in the year was a $42 million senior secured term loan to a Wisconsin foundry group; the smallest was a $4.8 million equipment finance facility for a family-owned CNC shop in Tennessee.

Client growth

We added 28 new borrowers in the year. We also declined a $60 million sponsor-backed acquisition financing in the third quarter on collateral grounds, in a deal that cleared the market at a tighter spread than we would have accepted. We expect to lose more deals like this one. We do not grow by underwriting around discipline.

Geographic expansion

Our Chicago office opened in April 2025 and now covers eight Midwestern states, anchored by a four-banker team. The office contributed $84 million in originations in its first nine months. We expect to evaluate a third office (Atlanta or Charlotte) in 2027.

The table below presents selected financial data for the fiscal years ended December 31, 2025 and 2024. All amounts are stated in U.S. dollars and prepared in accordance with U.S. GAAP.

Amounts may not foot due to rounding. Loss rate measured on a cumulative basis against committed capital since inception. See Note 7 of the Audited Financial Statements for non-GAAP reconciliations.

Net interest income

Net interest income grew 60.7 percent year-over-year to $28.6 million, driven primarily by the growth in committed and funded capital. Average funded capital across the year was $342 million; the FY24 figure was $214 million. Net interest margin held at approximately 4.7 percent across the year despite a roughly 75 basis point decline in the underlying policy rate over the same period — a result of selective pricing discipline on the front book and a stable mix of senior secured and equipment finance exposures.

Operating expenses

Total operating expenses grew 33.5 percent to $14.9 million, below the growth rate of net interest income. The largest single line item was compensation, which grew with headcount. Occupancy expense increased materially in the second quarter with the opening of our Chicago office; technology and professional services expenses grew at modest rates relative to the firm overall.

Credit performance

We took our first net charge-off in 2025, totaling $1.15 million, representing 18 basis points against committed capital on a cumulative basis since inception. We added $1.4 million to our allowance for expected credit losses in the year. We continue to view our reserve coverage as appropriate given the collateral profile of the portfolio.

Senior Secured Credit

Senior secured term loans and revolvers represented 58 percent of FY25 originations ($180 million). Average facility size was $14.2 million, with a weighted-average tenor of 4.7 years and a weighted-average advance rate of 64 percent on appraised collateral. Borrowers averaged $84 million in revenue.

Equipment & Capital Asset Finance

Equipment finance grew to $84 million of originations in FY25, from $46 million in FY24. The book is concentrated in CNC and multi-axis machining (38 percent), robotics and automation cells (24 percent), and metal-forming and casting equipment (22 percent). Term-to-useful-life ratios averaged 0.72x.

Working Capital

Working capital facilities — borrowing-base revolvers against receivables and inventory — accounted for $46 million of new commitments. Average utilization across the portfolio at year end was 41 percent.

The Steelbanc portfolio is, by design, concentrated in U.S. discrete and process manufacturing. The exhibit below summarizes committed capital by sector at year end.

The principal risks facing Steelbanc are summarized below. This list is not exhaustive and is not intended as a substitute for the risk disclosures contained in our confidential offering materials, which remain the controlling documents for our limited partners.

Credit risk

Steelbanc’s portfolio is concentrated by design in U.S. and Canadian manufacturers. A material deterioration in the U.S. industrial cycle — driven by trade policy, demand destruction, or commodity price dislocation — would be expected to affect the credit quality of our portfolio. We partially mitigate this exposure through collateral discipline and through diversification across sub-sectors, but a concentrated portfolio is by definition more sensitive to sector-level shocks than a more diversified book.

Liquidity & funding

Steelbanc funds itself primarily through committed capital from a small number of institutional limited partners. Concentration in our LP base is a risk to liquidity should commitments not be renewed or extended on customary terms. We mitigate this through long-dated commitment terms and ongoing dialogue with our partners.

Operational & cyber

Like any financial services firm, Steelbanc is exposed to operational and cybersecurity risks, including the risk of unauthorized access to client data and the risk of operational interruption. We maintain administrative, technical, and physical safeguards designed to mitigate these risks, but cannot eliminate them.