Triumph Bancorp Reports Fourth Quarter Net Income to Common Stockholders of $25.8 Million

Jan 20, 2022

DALLAS, Jan. 20, 2022 (GLOBE NEWSWIRE) -- Triumph Bancorp, Inc. (Nasdaq: TBK) (“Triumph” or the “Company”) today announced earnings and operating results for the fourth quarter of 2021.

As part of how we measure our results, we use certain non-GAAP financial measures to ascertain performance. These non-GAAP financial measures are reconciled in the section labeled “Metrics and non-GAAP financial reconciliation” at the end of this press release.

2021 Fourth Quarter Highlights

  • For the fourth quarter of 2021, net income to common shareholders was $25.8 million, and diluted earnings per share were $1.02.
  • Net interest income was $104.1 million.
  • Non-interest income was $14.3 million.
  • Non-interest expense was $83.0 million. Included in non-interest expense was a $7.4 million accrual for our Strategic Equity Grant ("SEG") reflected in salaries and employee benefits which represents a cumulative catch-up to cover two-thirds of the three year vesting period. Further discussion of the SEG can be found in our 2020 Proxy.
  • Net interest margin was 7.66%. Yield on loans and the average cost of our total deposits were 8.68% and 0.16%, respectively.
  • Credit loss expense for the quarter ended December 31, 2021 was $2.0 million.
  • Net charge-offs were $0.2 million for the quarter.
  • The total dollar value of invoices purchased by Triumph Business Capital was $4.033 billion with an average invoice size of $2,416. The transportation average invoice size for the quarter was $2,291.
  • TriumphPay processed 4,027,680 invoices paying carriers a total of $5.242 billion.

Balance Sheet

Total loans held for investment increased $84.8 million, or 1.8%, during the fourth quarter to $4.868 billion at December 31, 2021. Average loans held for investment for the quarter increased $73.1 million, or 1.5%, to $4.844 billion.

Total deposits were $4.647 billion at December 31, 2021, a decrease of $175.9 million, or 3.6%, in the fourth quarter of 2021. Non-interest-bearing deposits accounted for 41% of total deposits and non-time deposits accounted for 86% of total deposits at December 31, 2021.

Asset Quality and Allowance for Credit Loss

Our nonperforming assets ratio at December 31, 2021 was 0.92%. Approximately 2 basis points of this ratio at December 31, 2021 consisted of $1.4 million of the acquired Over-Formula Advance portfolio which represents the portion that is not covered by CVLG's indemnification. An additional 33 basis points of this ratio at December 31, 2021 consisted of $19.4 million of the Misdirected Payments. Over-Formula Advances and Misdirected Payments are discussed in greater detail below.

Our past-due loan ratio at December 31, 2021 was 2.86%. Approximately 21 basis points of this ratio at December 31, 2021 consisted of $10.1 million of past due factored receivables related to the Over-Formula Advance portfolio. An additional 40 basis points of this ratio at December 31, 2021 consisted of the $19.4 million of Misdirected Payments, as discussed below.

Our ACL as a percentage of loans held for investment increased 1 basis point during the quarter to 0.87% at December 31, 2021.

CARES Act and Paycheck Protection Program

As of December 31, 2021, our balance sheet reflected deferrals on outstanding loan balances of $31.9 million to assist customers impacted by COVID-19. Modifications related to the COVID-19 pandemic and qualifying under the provisions of Section 4013 of the CARES Act are not considered troubled debt restructurings. As of December 31, 2021, these deferred balances carried accrued interest of $0.1 million.

As of December 31, 2021, we carried 118 PPP loans representing a balance of $27.2 million classified as commercial loans. We recognized $2.7 million in fees from the SBA on PPP loans during the three months ended December 31, 2021 and carry $0.8 million of deferred fees on PPP loans at quarter end. The remaining fees will be amortized over the respective lives of the loans or recognized upon forgiveness of the loans.

Items related to our July 2020 acquisition of TFS

As disclosed on our SEC Forms 8-K filed on July 8, 2020 and September 23, 2020, we acquired the transportation factoring assets of TFS, a wholly owned subsidiary of Covenant Logistics Group, Inc. ("CVLG"), and subsequently amended the terms of that transaction. There were no material developments related to that transaction that impacted our operating results for the three months ended December 31, 2021.

At December 31, 2021, the carrying value of the acquired over-formula advances was $10.1 million, the total reserve on acquired over-formula advances was $10.1 million and the balance of our indemnification asset, the value of the payment that would be due to us from CVLG in the event that these over-advances are charged off, was $4.8 million.

As of December 31, 2021 we carried a separate $19.4 million receivable (the “Misdirected Payments”) payable by the United States Postal Service (“USPS”) arising from accounts factored to the largest over-formula advance carrier. This amount is separate from the acquired Over-Formula Advances. The amounts represented by this receivable were paid by the USPS directly to such customer in contravention of notices of assignment delivered to, and previously honored by, the USPS, which amount was then not remitted back to us by such customer as required. The USPS disputes their obligation to make such payment, citing purported deficiencies in the notices delivered to them. In addition to commencing litigation against such customer, we have commenced litigation in the United States Court of Federal Claims against the USPS seeking a ruling that the USPS was obligated to make the payments represented by this receivable directly to us. Based on our legal analysis and discussions with our counsel advising us on this matter, we continue to believe it is probable that we will prevail in such action and that the USPS will have the capacity to make payment on such receivable. Consequently, we have not reserved for such balance as of December 31, 2021. The full amount of such receivable is reflected in non-performing and past due factored receivables as of December 31, 2021 in accordance with our policy. As of December 31, 2021, the entire $19.4 million Misdirected Payments amount was greater than 90 days past due.

Conference Call Information

Aaron P. Graft, Vice Chairman and CEO and Brad Voss, CFO will review the financial results in a conference call for investors and analysts beginning at 7:00 a.m. Central Time on Friday, January 21, 2022.

To participate in the live conference call, please dial 1-844-200-6205 (International: +1-929-526-1599) and access code 984179.  A simultaneous audio-only webcast may be accessed via the Company's website at www.triumphbancorp.com through the Investor Relations, News & Events, Webcasts and Presentations links, or through a direct link here at: https://services.choruscall.com/links/tbk220121.html. An archive of this conference call will subsequently be available at this same location on the Company’s website.

About Triumph

Triumph Bancorp, Inc. (Nasdaq: TBK) is a financial holding company headquartered in Dallas, Texas, offering a diversified line of payments, factoring, and banking services. www.triumphbancorp.com 

Forward-Looking Statements

This press release contains forward-looking statements. Any statements about our expectations, beliefs, plans, predictions, forecasts, objectives, assumptions or future events or performance are not historical facts and may be forward-looking. You can identify forward-looking statements by the use of forward-looking terminology such as “believes,” “expects,” “could,” “may,” “will,” “should,” “seeks,” “likely,” “intends,” “plans,” “pro forma,” “projects,” “estimates” or “anticipates” or the negative of these words and phrases or similar words or phrases that are predictions of or indicate future events or trends and that do not relate solely to historical matters. You can also identify forward-looking statements by discussions of strategy, plans or intentions. Forward-looking statements involve numerous risks and uncertainties and you should not rely on them as predictions of future events. Forward-looking statements depend on assumptions, data or methods that may be incorrect or imprecise and we may not be able to realize them. We do not guarantee that the transactions and events described will happen as described (or that they will happen at all). The following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements: business and economic conditions generally and in the bank and non-bank financial services industries, nationally and within our local market areas; the impact of COVID-19 on our business, including the impact of the actions taken by governmental authorities to try and contain the virus or address the impact of the virus on the United States economy (including, without limitation, the CARES Act), and the resulting effect of all of such items on our operations, liquidity and capital position, and on the financial condition of our borrowers and other customers; our ability to mitigate our risk exposures; our ability to maintain our historical earnings trends; changes in management personnel; interest rate risk; concentration of our products and services in the transportation industry; credit risk associated with our loan portfolio; lack of seasoning in our loan portfolio; deteriorating asset quality and higher loan charge-offs; time and effort necessary to resolve nonperforming assets; inaccuracy of the assumptions and estimates we make in establishing reserves for probable loan losses and other estimates; risks related to the integration of acquired businesses, including our acquisition of HubTran Inc. and developments related to our acquisition of Transport Financial Solutions and the related over-formula advances, and any future acquisitions; our ability to successfully identify and address the risks associated with our possible future acquisitions, and the risks that our prior and possible future acquisitions make it more difficult for investors to evaluate our business, financial condition and results of operations, and impairs our ability to accurately forecast our future performance; lack of liquidity; fluctuations in the fair value and liquidity of the securities we hold for sale; impairment of investment securities, goodwill, other intangible assets or deferred tax assets; our risk management strategies; environmental liability associated with our lending activities; increased competition in the bank and non-bank financial services industries, nationally, regionally or locally, which may adversely affect pricing and terms; the accuracy of our financial statements and related disclosures; material weaknesses in our internal control over financial reporting; system failures or failures to prevent breaches of our network security; the institution and outcome of litigation and other legal proceedings against us or to which we become subject; changes in carry-forwards of net operating losses; changes in federal tax law or policy; the impact of recent and future legislative and regulatory changes, including changes in banking, securities and tax laws and regulations, such as the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) and their application by our regulators; governmental monetary and fiscal policies; changes in the scope and cost of FDIC, insurance and other coverages; failure to receive regulatory approval for future acquisitions; and increases in our capital requirements.

While forward-looking statements reflect our good-faith beliefs, they are not guarantees of future performance. All forward-looking statements are necessarily only estimates of future results. Accordingly, actual results may differ materially from those expressed in or contemplated by the particular forward-looking statement, and, therefore, you are cautioned not to place undue reliance on such statements. Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events or circumstances, except as required by applicable law. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see "Risk Factors" and the forward-looking statement disclosure contained in Triumph’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission on February 12, 2021.

Non-GAAP Financial Measures

This press release includes certain non‐GAAP financial measures intended to supplement, not substitute for, comparable GAAP measures. Reconciliations of non‐GAAP financial measures to GAAP financial measures are provided at the end of this press release.

The following table sets forth key metrics used by Triumph to monitor our operations. Footnotes in this table can be found in our definitions of non-GAAP financial measures at the end of this document.

  As of and for the Three Months Ended   As of and for the Twelve
Months Ended
(Dollars in thousands) December 31,
2021
  September 30,
2021
  June 30,
2021
  March 31,
2021
  December 31,
2020
  December 31,
2021
  December 31,
2020
Financial Highlights:                          
Total assets $ 5,956,250     $ 6,024,535     $ 6,015,877     $ 6,099,628     $ 5,935,791     $ 5,956,250     $ 5,935,791  
Loans held for investment $ 4,867,572     $ 4,782,730     $ 4,831,215     $ 5,084,512     $ 4,996,776     $ 4,867,572     $ 4,996,776  
Deposits $ 4,646,679     $ 4,822,575     $ 4,725,450     $ 4,789,665     $ 4,716,600     $ 4,646,679     $ 4,716,600  
Net income available to common stockholders $ 25,839     $ 23,627     $ 27,180     $ 33,122     $ 31,328     $ 109,768     $ 62,323  
                           
Performance Ratios - Annualized:                          
Return on average assets   1.77 %     1.61 %     1.84 %     2.29 %     2.21 %     1.87 %     1.18 %
Return on average total equity   12.41 %     11.85 %     14.27 %     18.42 %     17.73 %     14.10 %     9.67 %
Return on average common equity   12.71 %     12.13 %     14.70 %     19.14 %     18.44 %     14.52 %     9.77 %
Return on average tangible common equity (1)   19.41 %     19.21 %     20.92 %     26.19 %     25.70 %     21.42 %     13.92 %
Yield on loans(2)   8.68 %     7.92 %     7.77 %     7.24 %     7.20 %     7.91 %     7.00 %
Cost of interest bearing deposits   0.27 %     0.27 %     0.31 %     0.41 %     0.54 %     0.32 %     0.93 %
Cost of total deposits   0.16 %     0.16 %     0.20 %     0.28 %     0.38 %     0.20 %     0.67 %
Cost of total funds   0.29 %     0.38 %     0.34 %     0.42 %     0.51 %     0.36 %     0.80 %
Net interest margin(2)   7.66 %     6.69 %     6.47 %     6.06 %     6.20 %     6.72 %     5.71 %
Net non-interest expense to average assets   4.56 %     4.00 %     3.75 %     3.14 %     2.54 %     3.87 %     2.98 %
Adjusted net non-interest expense to average assets (1)   4.56 %     4.00 %     3.55 %     3.14 %     2.54 %     3.82 %     3.14 %
Efficiency ratio   70.16 %     70.13 %     67.96 %     62.57 %     55.95 %     67.87 %     64.35 %
Adjusted efficiency ratio (1)   70.16 %     70.13 %     65.09 %     62.57 %     55.95 %     67.16 %     65.97 %
                                                       
Asset Quality:(3)                                                      
Past due to total loans   2.86 %     2.31 %     2.28 %     1.96 %     3.22 %     2.86 %     3.22 %
Non-performing loans to total loans   0.95 %     0.90 %     1.06 %     1.17 %     1.16 %     0.95 %     1.16 %
Non-performing assets to total assets   0.92 %     0.86 %     0.97 %     1.15 %     1.15 %     0.92 %     1.15 %
ACL to non-performing loans   91.20 %     95.75 %     88.92 %     80.87 %     164.98 %     91.20 %     164.98 %
ACL to total loans   0.87 %     0.86 %     0.95 %     0.94 %     1.92 %     0.87 %     1.92 %
Net charge-offs to average loans   %     0.08 %     0.01 %     0.85 %     0.03 %     0.95 %     0.10 %
                                                       
Capital:                                                      
Tier 1 capital to average assets(4)   11.11 %     10.43 %     9.73 %     10.89 %     10.80 %     11.11 %     10.80 %
Tier 1 capital to risk-weighted assets(4)   11.51 %     11.06 %     10.33 %     11.28 %     10.60 %     11.51 %     10.60 %
Common equity tier 1 capital to risk-weighted assets(4)   9.94 %     9.45 %     8.74 %     9.72 %     9.05 %     9.94 %     9.05 %
Total capital to risk-weighted assets   14.10 %     13.69 %     12.65 %     13.58 %     13.03 %     14.10 %     13.03 %
Total equity to total assets   14.42 %     13.62 %     13.17 %     12.53 %     12.24 %     14.42 %     12.24 %
Tangible common stockholders' equity to tangible assets(1)   9.46 %     8.63 %     8.04 %     8.98 %     8.56 %     9.46 %     8.56 %
                           
Per Share Amounts:                          
Book value per share $ 32.35     $ 30.87     $ 29.76     $ 28.90     $ 27.42     $ 32.35     $ 27.42  
Tangible book value per share (1) $ 21.34     $ 19.73     $ 18.35     $ 21.34     $ 19.78     $ 21.34     $ 19.78  
Basic earnings per common share $ 1.04     $ 0.95     $ 1.10     $ 1.34     $ 1.27     $ 4.44     $ 2.56  
Diluted earnings per common share $ 1.02     $ 0.94     $ 1.08     $ 1.32     $ 1.25     $ 4.35     $ 2.53  
Adjusted diluted earnings per common share(1) $ 1.02     $ 0.94     $ 1.17     $ 1.32     $ 1.25     $ 4.44     $ 2.26  
Shares outstanding end of period   25,158,879       25,123,342       25,109,703       24,882,929       24,868,218       25,158,879       24,868,218  
                                                       

Unaudited consolidated balance sheet as of:

(Dollars in thousands) December 31,
2021
  September 30,
2021
  June 30,
2021
  March 31,
2021
  December 31,
2020
ASSETS                  
Total cash and cash equivalents $ 383,178     $ 532,764     $ 444,439     $ 380,811     $ 314,393  
Securities - available for sale   182,426       164,816       193,627       205,330       224,310  
Securities - held to maturity, net   4,947       5,488       5,658       5,828       5,919  
Equity securities   5,504       5,623       5,854       5,826       5,826  
Loans held for sale   7,330       26,437       31,136       22,663       24,546  
Loans held for investment   4,867,572       4,782,730       4,831,215       5,084,512       4,996,776  
Allowance for credit losses   (42,213 )     (41,017 )     (45,694 )     (48,024 )     (95,739 )
Loans, net   4,825,359       4,741,713       4,785,521       5,036,488       4,901,037  
FHLB and other restricted stock   10,146       4,901       8,096       9,807       6,751  
Premises and equipment, net   105,729       104,311       106,720       105,390       103,404  
Other real estate owned ("OREO"), net   524       893       1,013       1,421       1,432  
Goodwill and intangible assets, net   276,856       280,055       286,567       188,006       189,922  
Bank-owned life insurance   40,993       41,540       41,912       41,805       41,608  
Deferred tax asset, net   10,023                   1,260       6,427  
Indemnification asset   4,786       4,786       5,246       5,246       36,225  
Other assets   98,449       111,208       100,088       89,747       73,991  
Total assets $ 5,956,250     $ 6,024,535     $ 6,015,877     $ 6,099,628     $ 5,935,791  
LIABILITIES                  
Non-interest bearing deposits $ 1,925,370     $ 2,020,984     $ 1,803,552     $ 1,637,653     $ 1,352,785  
Interest bearing deposits   2,721,309       2,801,591       2,921,898       3,152,012       3,363,815  
Total deposits   4,646,679       4,822,575       4,725,450       4,789,665       4,716,600  
Customer repurchase agreements   2,103       11,990       9,243       2,668       3,099  
Federal Home Loan Bank advances   180,000       30,000       130,000       180,000       105,000  
Payment Protection Program Liquidity Facility   27,144       97,554       139,673       158,796       191,860  
Subordinated notes   106,957       106,755       87,620       87,564       87,509  
Junior subordinated debentures   40,602       40,467       40,333       40,201       40,072  
Deferred tax liability, net         982       3,333              
Other liabilities   93,901       93,538       87,837       76,730       64,870  
Total liabilities   5,097,386       5,203,861       5,223,489       5,335,624       5,209,010  
EQUITY                  
Preferred Stock   45,000       45,000       45,000       45,000       45,000  
Common stock   283       282       282       280       280  
Additional paid-in-capital   510,939       499,282       494,224       490,699       489,151  
Treasury stock, at cost   (104,743 )     (104,600 )     (104,486 )     (103,059 )     (103,052 )
Retained earnings   399,351       373,512       349,885       322,705       289,583  
Accumulated other comprehensive income (loss)   8,034       7,198       7,483       8,379       5,819  
Total stockholders' equity   858,864       820,674       792,388       764,004       726,781  
Total liabilities and equity $ 5,956,250     $ 6,024,535     $ 6,015,877     $ 6,099,628     $ 5,935,791  
                                       

Unaudited consolidated statement of income:

  For the Three Months Ended   For the Twelve Months Ended
(Dollars in thousands) December 31,
2021
  September 30,
2021
  June 30,
2021
  March 31,
2021
  December 31,
2020
  December 31,
2021
  December 31,
2020
Interest income:                          
Loans, including fees $ 43,979     $ 44,882     $ 45,988     $ 48,706     $ 50,723     $ 183,555     $ 198,214  
Factored receivables, including fees   62,196       50,516       47,328       37,795       37,573       197,835       114,434  
Securities   1,438       1,126       1,187       1,650       1,519       5,401       8,229  
FHLB and other restricted stock   25       28       27       76       56       156       530  
Cash deposits   141       183       158       126       68       608       708  
Total interest income   107,779       96,735       94,688       88,353       89,939       387,555       322,115  
Interest expense:                          
Deposits   1,907       1,948       2,470       3,372       4,308       9,697       27,403  
Subordinated notes   1,297       2,449       1,350       1,349       1,347       6,445       5,363  
Junior subordinated debentures   444       443       446       442       452       1,775       2,114  
Other borrowings   74       124       140       170       234       508       2,507  
Total interest expense   3,722       4,964       4,406       5,333       6,341       18,425       37,387  
Net interest income   104,057       91,771       90,282       83,020       83,598       369,130       284,728  
Credit loss expense (benefit)   2,008       (1,187 )     (1,806 )     (7,845 )     4,680       (8,830 )     38,329  
Net interest income after credit loss expense (benefit)   102,049       92,958       92,088       90,865       78,918       377,960       246,399  
Non-interest income:                          
Service charges on deposits   2,050       2,030       1,857       1,787       1,643       7,724       5,274  
Card income   2,470       2,144       2,225       1,972       1,949       8,811       7,781  
Net OREO gains (losses) and valuation adjustments   29       (9 )     (287 )     (80 )     (217 )     (347 )     (616 )
Net gains (losses) on sale of securities         4       1             16       5       3,226  
Fee income   5,711       5,198       4,470       2,249       1,615       17,628       6,007  
Insurance commissions   1,138       1,231       1,272       1,486       1,327       5,127       4,232  
Gain on sale of subsidiary                                       9,758  
Other   2,861       1,457       4,358       6,877       16,053       15,553       24,723  
Total non-interest income   14,259       12,055       13,896       14,291       22,386       54,501       60,385  
Non-interest expense:                          
Salaries and employee benefits   52,544       43,769       41,658       35,980       33,798       173,951       126,975  
Occupancy, furniture and equipment   6,194       6,388       6,112       5,779       7,046       24,473       22,766  
FDIC insurance and other regulatory assessments   288       353       500       977       350       2,118       1,520  
Professional fees   2,633       2,362       5,052       2,545       2,326       12,592       9,349  
Amortization of intangible assets   3,199       3,274       2,428       1,975       2,065       10,876       8,330  
Advertising and promotion   1,640       1,403       1,241       890       1,170       5,174       4,718  
Communications and technology   7,844       7,090       6,028       5,900       5,639       26,862       22,153  
Other   8,662       8,174       7,779       6,846       6,904       31,461       26,263  
Total non-interest expense   83,004       72,813       70,798       60,892       59,298       287,507       222,074  
Net income before income tax   33,304       32,200       35,186       44,264       42,006       144,954       84,710  
Income tax expense   6,664       7,771       7,204       10,341       9,876       31,980       20,686  
Net income $ 26,640     $ 24,429     $ 27,982     $ 33,923     $ 32,130     $ 112,974     $ 64,024  
Dividends on preferred stock   (801 )     (802 )     (802 )     (801 )     (802 )     (3,206 )     (1,701 )
Net income available to common stockholders $ 25,839     $ 23,627     $ 27,180     $ 33,122     $ 31,328     $ 109,768     $ 62,323  
                                                       

Earnings per share:

  For the Three Months Ended   Twelve Months Ended
(Dollars in thousands) December 31,
2021
  September 30,
2021
  June 30,
2021
  March 31,
2021
  December 31,
2020
  December 31,
2021
  December 31,
2020
Basic                          
Net income to common stockholders $ 25,839   $ 23,627   $ 27,180   $ 33,122   $ 31,328   $ 109,768   $ 62,323
Weighted average common shares outstanding   24,786,720     24,759,419     24,724,128     24,675,109     24,653,099     24,736,713     24,387,932
Basic earnings per common share $ 1.04   $ 0.95   $ 1.10   $ 1.34   $ 1.27   $ 4.44   $ 2.56
                           
Diluted                          
Net income to common stockholders - diluted $ 25,839   $ 23,627   $ 27,180   $ 33,122   $ 31,328   $ 109,768   $ 62,323
Weighted average common shares outstanding   24,786,720     24,759,419     24,724,128     24,675,109     24,653,099     24,736,713     24,387,932
 Dilutive effects of:                          
Assumed exercises of stock options   124,462     121,110     134,358     130,016     101,664     130,198     64,104
Restricted stock awards   236,251     141,204     139,345     169,514     136,239     170,276     86,498
Restricted stock units   87,605     74,268     73,155     66,714     50,156     76,049     25,978
Performance stock units - market based   150,969     131,346     134,313     128,167     112,228     136,199     51,304
Performance stock units - performance based                          
Employee stock purchase plan   4,726     616     3,708     1,418         2,617    
Weighted average shares outstanding - diluted   25,390,733     25,227,963     25,209,007     25,170,938     25,053,386     25,252,052     24,615,816
Diluted earnings per common share $ 1.02   $ 0.94   $ 1.08   $ 1.32   $ 1.25   $ 4.35   $ 2.53
                                         

Shares that were not considered in computing diluted earnings per common share because they were antidilutive or have not met the thresholds to be considered in the dilutive calculation are as follows:

  For the Three Months Ended   Twelve Months Ended
  December 31,
2021
  September 30,
2021
  June 30,
2021
  March 31,
2021
  December 31,
2020
  December 31,
2021
  December 31,
2020
Stock options   16,939   16,939       16,939   64,947
Restricted stock awards 8,463           8,463  
Restricted stock units 15,000           15,000  
Performance stock units - market based   12,020   13,520        
Performance stock units - performance based 259,383   259,383   265,625   256,625   256,625   259,383   256,625
Employee stock purchase plan            
                           

Loans held for investment summarized as of:

(Dollars in thousands) December 31,
2021
  September 30,
2021
  June 30,
2021
  March 31,
2021
  December 31,
2020
Commercial real estate $ 632,775   $ 630,106   $ 701,576   $ 784,110   $ 779,158
Construction, land development, land   123,464     171,814     185,444     223,841     219,647
1-4 family residential properties   123,115     127,073     135,288     142,859     157,147
Farmland   77,394     82,990     91,122     97,835     103,685
Commercial   1,430,429     1,398,497     1,453,583     1,581,125     1,562,957
Factored receivables   1,699,537     1,607,028     1,398,299     1,208,718     1,120,770
Consumer   10,885     12,677     12,389     14,332     15,838
Mortgage warehouse   769,973     752,545     853,514     1,031,692     1,037,574
Total loans $ 4,867,572   $ 4,782,730   $ 4,831,215   $ 5,084,512   $ 4,996,776
                             

Our banking loan portfolio consists of traditional community bank loans as well as commercial finance product lines focused on businesses that require specialized financial solutions and national lending product lines that further diversify our lending operations.

Banking loans held for investment are further summarized below:

(Dollars in thousands) December 31,
2021
  September 30,
2021
  June 30,
2021
  March 31,
2021
  December 31,
2020
Commercial real estate $ 632,775   $ 630,106   $ 701,576   $ 784,110   $ 779,158
Construction, land development, land   123,464     171,814     185,444     223,841     219,647
1-4 family residential   123,115     127,073     135,288     142,859     157,147
Farmland   77,394     82,990     91,122     97,835     103,685
Commercial - General   295,662     289,242     290,562     288,458     340,850
Commercial - Paycheck Protection Program   27,197     87,413     135,307     237,299     189,857
Commercial - Agriculture   70,127     77,263     76,346     83,859     94,572
Commercial - Equipment   621,437     588,105     604,396     623,248     573,163
Commercial - Asset-based lending   281,659     213,927     181,394     188,825     180,488
Commercial - Liquid Credit   134,347     142,547     165,578     159,436     184,027
Consumer   10,885     12,677     12,389     14,332     15,838
Mortgage Warehouse   769,973     752,545     853,514     1,031,692     1,037,574
Total banking loans held for investment $ 3,168,035   $ 3,175,702   $ 3,432,916   $ 3,875,794   $ 3,876,006
                             

The following table presents the Company’s operating segments:

(Dollars in thousands)                    
Three months ended December 31, 2021   Banking   Factoring   Payments   Corporate   Consolidated
Total interest income   $ 45,534   $ 58,042     $ 4,154     $ 49     $ 107,779
Intersegment interest allocations     2,272     (2,178 )     (94 )          
Total interest expense     1,980                 1,742       3,722
Net interest income (expense)     45,826     55,864       4,060       (1,693 )     104,057
Credit loss expense (benefit)     171     1,600       (110 )     347       2,008
Net interest income after credit loss expense     45,655     54,264       4,170       (2,040 )     102,049
Noninterest income     8,308     2,295       3,209       447       14,259
Noninterest expense     46,617     22,335       13,376       676       83,004
Operating income (loss)   $ 7,346   $ 34,224     $ (5,997 )   $ (2,269 )   $ 33,304

 

(Dollars in thousands)                    
Three months ended September 30, 2021   Banking   Factoring   Payments   Corporate   Consolidated
Total interest income   $ 46,175     $ 47,222     $ 3,295     $ 43     $ 96,735  
Intersegment interest allocations     2,452       (2,341 )     (111 )            
Total interest expense     2,073                   2,891       4,964  
Net interest income (expense)     46,554       44,881       3,184       (2,848 )     91,771  
Credit loss expense (benefit)     (2,399 )     1,164       38       10       (1,187 )
Net interest income after credit loss expense     48,953       43,717       3,146       (2,858 )     92,958  
Noninterest income     7,371       1,557       3,086       41       12,055  
Noninterest expense     41,183       19,106       11,416       1,108       72,813  
Operating income (loss)   $ 15,141     $ 26,168     $ (5,184 )   $ (3,925 )   $ 32,200  
                                         

Information pertaining to our factoring segment, which includes only factoring originated by our Triumph Business Capital subsidiary, summarized as of and for the quarters ended:

  December 31,
2021
  September 30,
2021
  June 30,
2021
  March 31,
2021
  December 31,
2020
Factored receivable period end balance $ 1,546,361,000     $ 1,479,989,000     $ 1,284,314,000     $ 1,118,988,000     $ 1,036,548,000  
Yield on average receivable balance   14.42 %     13.75 %     14.99 %     13.85 %     13.80 %
Current quarter charge-off rate(1)   0.01 %     0.24 %     0.04 %     3.95 %     0.02 %
Factored receivables - transportation concentration   90 %     90 %     91 %     90 %     89 %
                   
Interest income, including fees $ 58,042,000     $ 47,222,000     $ 44,653,000     $ 35,824,000     $ 35,439,000  
Non-interest income(2)   2,295,000       1,557,000       2,742,000       1,757,000       1,358,000  
Factored receivable total revenue   60,337,000       48,779,000       47,395,000       37,581,000       36,797,000  
Average net funds employed   1,442,551,000       1,235,610,000       1,072,405,000       936,528,000       924,899,000  
Yield on average net funds employed   16.59 %     15.66 %     17.73 %     16.27 %     15.83 %
                   
Accounts receivable purchased $ 4,032,585,000     $ 3,531,811,000     $ 3,068,262,000     $ 2,492,468,000     $ 2,461,249,000  
Number of invoices purchased   1,669,387       1,535,321       1,401,695       1,188,678       1,189,271  
Average invoice size $ 2,416     $ 2,300     $ 2,189     $ 2,097     $ 2,070  
Average invoice size - transportation $ 2,291     $ 2,195     $ 2,090     $ 1,974     $ 1,943  
Average invoice size - non-transportation $ 5,648     $ 4,944     $ 4,701     $ 4,775     $ 5,091  

 

(1) March 31, 2021 includes a $41.3 million charge-off related to the TFS acquisition, which contributed approximately 3.94% to the net charge-off rate for the quarter.
   
(2)  Total factoring segment non-interest income was $6.4 million and $15.5 million for the three months ended March 31, 2021 and December 31, 2020, respectively.
   
  March 31, 2021 non-interest income used to calculate yield on average net funds employed excludes a $4.7 million gain on our indemnification asset.
   
  December 31, 2020 non-interest income used to calculate yield on average net funds employed excludes a gain of $8.9 million related to CVLG’s delivery of proceeds resulting from the liquidation of its acquired stock and a $5.3 million gain on our indemnification asset.
   

Information pertaining to our payments segment, which includes only our TriumphPay division, summarized as of and for the quarters ended:

  December 31,
2021
  September 30,
2021
  June 30,
2021
  March 31,
2021
  December 31,
2020
Factored receivable period end balance $ 153,176,000     $ 127,039,000     $ 113,985,000     $ 89,730,000     $ 84,222,000  
                   
Interest income $ 4,154,000     $ 3,295,000     $ 2,675,000     $ 1,969,000     $ 2,034,000  
Noninterest income   3,209,000       3,086,000       1,083,000       73,000       51,000  
Total revenue $ 7,363,000     $ 6,381,000     $ 3,758,000     $ 2,042,000     $ 2,085,000  
                   
Pre-tax operating income (loss) $ (5,997,000 )   $ (5,184,000 )   $ (7,441,000 )   $ (2,552,000 )   $ (2,026,000 )
Interest expense   94,000       111,000       139,000       167,000       178,000  
Depreciation and software amortization expense   57,000       77,000       68,000       65,000       63,000  
Intangible amortization expense   1,489,000       1,490,000       497,000              
Earnings (losses) before interest, taxes, depreciation, and amortization $ (4,357,000 )   $ (3,506,000 )   $ (6,737,000 )   $ (2,320,000 )   $ (1,785,000 )
Transaction costs               2,992,000              
Adjusted earnings (losses) before interest, taxes, depreciation, and amortization(1) $ (4,357,000 )   $ (3,506,000 )   $ (3,745,000 )   $ (2,320,000 )   $ (1,785,000 )
                   
Number of invoices processed   4,027,680       3,760,948       3,165,119       2,529,673       1,818,145  
Amount of payments processed $ 5,242,051,000     $ 4,191,424,000     $ 3,426,808,000     $ 2,301,632,000     $ 1,920,037,000  

(1)   Adjusted earnings (losses) before interest, taxes, depreciation, and amortization excludes material gains and expenses related to merger and acquisition-related activities and is a non-GAAP financial measure used to provide meaningful supplemental information regarding the segment's operational performance and to enhance investors' overall understanding of such financial performance by removing the volatility associated with certain acquisition-related items that are unrelated to our core business.
 

Deposits summarized as of:

(Dollars in thousands) December 31,
2021
  September 30,
2021
  June 30,
2021
  March 31,
2021
  December 31,
2020
Non-interest bearing demand $ 1,925,370   $ 2,020,984   $ 1,803,552   $ 1,637,653   $ 1,352,785
Interest bearing demand   830,019     795,234     760,874     729,364     688,680
Individual retirement accounts   83,410     86,012     87,052     89,748     92,584
Money market   520,358     472,242     395,035     402,070     393,325
Savings   504,146     483,946     474,163     464,035     421,488
Certificates of deposit   533,206     574,539     612,730     740,694     790,844
Brokered time deposits   40,125     117,064     306,975     516,006     516,786
Other brokered deposits   210,045     272,554     285,069     210,095     460,108
Total deposits $ 4,646,679   $ 4,822,575   $ 4,725,450   $ 4,789,665   $ 4,716,600
                             

Net interest margin summarized for the three months ended:

  December 31, 2021   September 30, 2021
(Dollars in thousands) Average
Balance
  Interest   Average
Rate
  Average
Balance
  Interest   Average
Rate
Interest earning assets:                      
Interest earning cash balances $ 361,059   $ 141   0.15 %   $ 474,122   $ 183   0.15 %
Taxable securities   142,658     1,266   3.52 %     154,017     948   2.44 %
Tax-exempt securities   26,691     172   2.56 %     27,839     178   2.54 %
FHLB and other restricted stock   5,170     25   1.92 %     7,956     28   1.40 %
Loans   4,851,171     106,175   8.68 %     4,777,409     95,398   7.92 %
  Total interest earning assets $ 5,386,749   $ 107,779   7.94 %   $ 5,441,343   $ 96,735   7.05 %
Non-interest earning assets:                      
Other assets   593,013             579,288        
       Total assets $ 5,979,762           $ 6,020,631        
Interest bearing liabilities:                      
Deposits:                      
 Interest bearing demand $ 825,784   $ 486   0.23 %   $ 779,625   $ 435   0.22 %
 Individual retirement accounts   84,966     115   0.54 %     86,571     126   0.58 %
 Money market   486,939     261   0.21 %     417,435     225   0.21 %
 Savings   493,796     190   0.15 %     479,915     185   0.15 %
 Certificates of deposit   550,746     647   0.47 %     595,001     725   0.48 %
 Brokered time deposits   33,263     9   0.11 %     99,116     29   0.12 %
 Other brokered deposits   299,290     199   0.26 %     441,446     223   0.20 %
  Total interest bearing deposits   2,774,784     1,907   0.27 %     2,899,109     1,948   0.27 %
Federal Home Loan Bank advances   38,967     24   0.24 %     36,522     22   0.24 %
Subordinated notes   106,847     1,297   4.82 %     114,071     2,449   8.52 %
Junior subordinated debentures   40,530     444   4.35 %     40,390     443   4.35 %
Other borrowings   62,143     50   0.32 %     127,946     102   0.32 %
  Total interest bearing liabilities $ 3,023,271   $ 3,722   0.49 %   $ 3,218,038   $ 4,964   0.61 %
Non-interest bearing liabilities and equity:                      
Non-interest bearing demand deposits   2,022,973             1,912,398        
Other liabilities   81,835             72,173        
Total equity   851,683             818,022        
   Total liabilities and equity $ 5,979,762           $ 6,020,631        
Net interest income     $ 104,057           $ 91,771    
Interest spread         7.45 %           6.44 %
Net interest margin         7.66 %           6.69 %

Loan balance totals include respective nonaccrual assets.
Net interest spread is the yield on average interest earning assets less the rate on interest bearing liabilities.
Net interest margin is the ratio of net interest income to average interest earning assets.
Average rates have been annualized.

Additional information pertaining to our loan portfolio, including loans held for investment and loans held for sale, summarized for the quarters ended:

(Dollars in thousands) December 31,
2021
  September 30,
2021
  June 30,
2021
  March 31,
2021
  December 31,
2020
Average Banking loans $ 3,112,072     $ 3,299,152     $ 3,516,747     $ 3,722,895     $ 3,777,553  
Average Factoring receivables   1,597,091       1,362,856       1,195,209       1,048,968       1,024,307  
Average Payments receivables   142,008       115,401       102,094       76,412       74,947  
Average total loans $ 4,851,171     $ 4,777,409     $ 4,814,050     $ 4,848,275     $ 4,876,807  
Banking yield   5.61 %     5.40 %     5.25 %     5.31 %     5.34 %
Factoring yield   14.42 %     13.75 %     14.99 %     13.85 %     13.80 %
Payments Yield   11.61 %     11.33 %     10.51 %     10.45 %     10.80 %
Total loan yield   8.68 %     7.92 %     7.77 %     7.24 %     7.20 %
                                       

Metrics and non-GAAP financial reconciliation:

    As of and for the Three Months Ended   As of and for the Twelve
Months Ended
(Dollars in thousands,
except per share amounts)
  December 31,
2021
  September 30,
2021
  June 30,
2021
  March 31,
2021
  December 31,
2020
  December 31,
2021
  December 31,
2020
Net income available to common stockholders   $ 25,839     $ 23,627     $ 27,180     $ 33,122     $ 31,328     $ 109,768     $ 62,323  
Transaction costs                 2,992                   2,992       827  
Gain on sale of subsidiary or division                                         (9,758 )
Tax effect of adjustments                 (715 )                 (715 )     2,254  
Adjusted net income available to common stockholders - diluted   $ 25,839     $ 23,627     $ 29,457     $ 33,122     $ 31,328     $ 112,045     $ 55,646  
                             
Weighted average shares outstanding - diluted     25,390,733       25,227,963       25,209,007       25,170,938       25,053,386       25,252,052       24,615,816  
Adjusted diluted earnings per common share   $ 1.02     $ 0.94     $ 1.17     $ 1.32     $ 1.25     $ 4.44     $ 2.26  
                             
Average total stockholders' equity   $ 851,683     $ 818,022     $ 786,404     $ 746,849     $ 720,892     $ 801,074     $ 661,942  
Average preferred stock liquidation preference     (45,000 )     (45,000 )     (45,000 )     (45,000 )     (45,000 )     (45,000 )     (24,099 )
Average total common stockholders' equity     806,683       773,022       741,404       701,849       675,892       756,074       637,843  
Average goodwill and other intangibles     (278,528 )     (284,970 )     (220,310 )     (188,980 )     (191,017 )     (243,541 )     (190,088 )
Average tangible common stockholders' equity   $ 528,155     $ 488,052     $ 521,094     $ 512,869     $ 484,875     $ 512,533     $ 447,755  
                             
Net income available to common stockholders   $ 25,839     $ 23,627     $ 27,180     $ 33,122     $ 31,328     $ 109,768     $ 62,323  
Average tangible common equity     528,155       488,052       521,094       512,869       484,875       512,533       447,755  
Return on average tangible common equity     19.41 %     19.21 %     20.92 %     26.19 %     25.70 %     21.42 %     13.92 %
                             
Net interest income   $ 104,057     $ 91,771     $ 90,282     $ 83,020     $ 83,598     $ 369,130     $ 284,728  
Non-interest income     14,259       12,055       13,896       14,291       22,386       54,501       60,385  
Operating revenue     118,316       103,826       104,178       97,311       105,984       423,631       345,113  
Gain on sale of subsidiary or division                                         (9,758 )
Adjusted operating revenue   $ 118,316     $ 103,826     $ 104,178     $ 97,311     $ 105,984     $ 423,631     $ 335,355  
Non-interest expenses   $ 83,004     $ 72,813     $ 70,798     $ 60,892     $ 59,298     $ 287,507     $ 222,074  
Transaction costs                 (2,992 )                 (2,992 )     (827 )
Adjusted non-interest expenses   $ 83,004     $ 72,813     $ 67,806     $ 60,892     $ 59,298     $ 284,515     $ 221,247  
Adjusted efficiency ratio     70.16 %     70.13 %     65.09 %     62.57 %     55.95 %     67.16 %     65.97 %
                             
Adjusted net non-interest expense to average assets ratio:                            
Non-interest expenses   $ 83,004     $ 72,813     $ 70,798     $ 60,892     $ 59,298     $ 287,507     $ 222,074  
Transaction costs                 (2,992 )                 (2,992 )     (827 )
Adjusted non-interest expenses   $ 83,004     $ 72,813     $ 67,806     $ 60,892     $ 59,298     $ 284,515     $ 221,247  
Total non-interest income   $ 14,259     $ 12,055     $ 13,896     $ 14,291     $ 22,386     $ 54,501     $ 60,385  
Gain on sale of subsidiary or division                                         (9,758 )
Adjusted non-interest income   $ 14,259     $ 12,055     $ 13,896     $ 14,291     $ 22,386     $ 54,501     $ 50,627  
Adjusted net non-interest expenses   $ 68,745     $ 60,758     $ 53,910     $ 46,601     $ 36,912     $ 230,014     $ 170,620  
Average total assets   $ 5,979,762     $ 6,020,631     $ 6,093,805     $ 6,013,668     $ 5,788,549     $ 6,026,819     $ 5,426,469  
Adjusted net non-interest expense to average assets ratio     4.56 %     4.00 %     3.55 %     3.14 %     2.54 %     3.82 %     3.14 %
                             
Total stockholders' equity   $ 858,864     $ 820,674     $ 792,388     $ 764,004     $ 726,781     $ 858,864     $ 726,781  
Preferred stock liquidation preference     (45,000 )     (45,000 )     (45,000 )     (45,000 )     (45,000 )     (45,000 )     (45,000 )
Total common stockholders' equity     813,864       775,674       747,388       719,004       681,781       813,864       681,781  
Goodwill and other intangibles     (276,856 )     (280,055 )     (286,567 )     (188,006 )     (189,922 )     (276,856 )     (189,922 )
Tangible common stockholders' equity   $ 537,008     $ 495,619     $ 460,821     $ 530,998     $ 491,859     $ 537,008     $ 491,859  
Common shares outstanding     25,158,879       25,123,342       25,109,703       24,882,929       24,868,218       25,158,879       24,868,218  
Tangible book value per share   $ 21.34     $ 19.73     $ 18.35     $ 21.34     $ 19.78     $ 21.34     $ 19.78  
                             
Total assets at end of period   $ 5,956,250     $ 6,024,535     $ 6,015,877     $ 6,099,628     $ 5,935,791     $ 5,956,250     $ 5,935,791  
Goodwill and other intangibles     (276,856 )     (280,055 )     (286,567 )     (188,006 )     (189,922 )     (276,856 )     (189,922 )
Tangible assets at period end   $ 5,679,394     $ 5,744,480     $ 5,729,310     $ 5,911,622     $ 5,745,869     $ 5,679,394     $ 5,745,869  
Tangible common stockholders' equity ratio     9.46 %     8.63 %     8.04 %     8.98 %     8.56 %     9.46 %     8.56 %

1) Triumph uses certain non-GAAP financial measures to provide meaningful supplemental information regarding Triumph's operational performance and to enhance investors' overall understanding of such financial performance. The non-GAAP measures used by Triumph include the following:

  • “Adjusted diluted earnings per common share” is defined as adjusted net income available to common stockholders divided by adjusted weighted average diluted common shares outstanding. Excluded from net income available to common stockholders are material gains and expenses related to merger and acquisition-related activities, including divestitures, net of tax. In our judgment, the adjustments made to net income available to common stockholders allow management and investors to better assess our performance in relation to our core net income by removing the volatility associated with certain acquisition-related items and other discrete items that are unrelated to our core business. Weighted average diluted common shares outstanding are adjusted as a result of changes in their dilutive properties given the gain and expense adjustments described herein.
  • "Tangible common stockholders' equity" is defined as common stockholders' equity less goodwill and other intangible assets.
  • "Total tangible assets" is defined as total assets less goodwill and other intangible assets.
  • "Tangible book value per share" is defined as tangible common stockholders' equity divided by total common shares outstanding. This measure is important to investors interested in changes from period-to-period in book value per share exclusive of changes in intangible assets.
  • "Tangible common stockholders' equity ratio" is defined as the ratio of tangible common stockholders' equity divided by total tangible assets. We believe that this measure is important to many investors in the marketplace who are interested in relative changes from period-to period in common equity and total assets, each exclusive of changes in intangible assets.
  • "Return on Average Tangible Common Equity" is defined as net income available to common stockholders divided by average tangible common stockholders' equity.
  • "Adjusted efficiency ratio" is defined as non-interest expenses divided by our operating revenue, which is equal to net interest income plus non-interest income. Also excluded are material gains and expenses related to merger and acquisition-related activities, including divestitures. In our judgment, the adjustments made to operating revenue and non-interest expense allow management and investors to better assess our performance in relation to our core operating revenue by removing the volatility associated with certain acquisition-related items and other discrete items that are unrelated to our core business.
  • "Adjusted net non-interest expense to average total assets" is defined as non-interest expenses net of non-interest income divided by total average assets. Excluded are material gains and expenses related to merger and acquisition-related activities, including divestitures. This metric is used by our management to better assess our operating efficiency.

2) Performance ratios include discount accretion on purchased loans for the periods presented as follows:

  For the Three Months Ended   For the Twelve Months Ended
(Dollars in thousands) December 31,
2021
  September 30,
2021
  June 30,
2021
  March 31,
2021
  December 31,
2020
  December 31,
2021
  December 31,
2020
Loan discount accretion $ 1,674   $ 1,953   $ 2,161   $ 3,501   $ 2,334   $ 9,289   $ 10,711

3) Asset quality ratios exclude loans held for sale, except for non-performing assets to total assets.

4) Current quarter ratios are preliminary.

Source: Triumph Bancorp, Inc.

Investor Relations:
Luke Wyse
Senior Vice President, Finance & Investor Relations
lwyse@tbkbank.com
214-365-6936

Media Contact:
Amanda Tavackoli
Senior Vice President, Director of Corporate Communication
atavackoli@tbkbank.com
214-365-6930


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Source: Triumph Bancorp, Inc.
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