Triumph Bancorp Reports Third Quarter Net Income to Common Stockholders of $23.6 Million

Oct 20, 2021

DALLAS, Oct. 20, 2021 (GLOBE NEWSWIRE) -- Triumph Bancorp, Inc. (Nasdaq: TBK) (“Triumph” or the “Company”) today announced earnings and operating results for the third 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 Third Quarter Highlights

  • For the third quarter of 2021, net income to common shareholders was $23.6 million, and diluted earnings per share were $0.94.
  • Net interest income was $91.8 million.
  • Non-interest income was $12.1 million.
  • Non-interest expense was $72.8 million.
  • Net interest margin was 6.69%. Yield on loans and the average cost of our total deposits were 7.92% and 0.16%, respectively.
  • Credit loss expense for the quarter ended September 30, 2021 was a benefit of $1.2 million.
  • Net charge-offs were $3.7 million, or 0.08% of average loans, for the quarter.
  • We recognized a downward adjustment to third quarter interest income of $3.5 million related to certain factored receivables. The majority of this adjustment represents a timing difference for revenue that will be recognized in future periods. This adjustment will have minimal impact on subsequent quarters.
  • The total dollar value of invoices purchased by Triumph Business Capital was $3.532 billion with an average invoice size of $2,300. The transportation average invoice size for the quarter was $2,195.
  • TriumphPay processed 3,760,948 invoices paying carriers a total of $4.191 billion.

Balance Sheet

Total loans held for investment decreased $48.5 million, or 1.0%, during the third quarter to $4.783 billion at September 30, 2021. Average loans held for investment for the quarter decreased $27.9 million, or 0.6%, to $4.771 billion.

Total deposits were $4.823 billion at September 30, 2021, an increase of $97.1 million, or 2.1%, in the third quarter of 2021. Non-interest-bearing deposits accounted for 42% of total deposits and non-time deposits accounted for 84% of total deposits at September 30, 2021.

Asset Quality and Allowance for Credit Loss

Our nonperforming assets ratio at September 30, 2021 was 0.86%. Approximately 2 basis points of this ratio at September 30, 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 32 basis points of this ratio at September 30, 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 September 30, 2021 was 2.31%. Approximately 21 basis points of this ratio at September 30, 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 September 30, 2021 consisted of the $19.4 million of Misdirected Payments, as discussed below.

Our ACL as a percentage of loans held for investment decreased 9 basis point during the quarter to 0.86% at September 30, 2021.

CARES Act and Paycheck Protection Program

As of September 30, 2021, our balance sheet reflected deferrals on outstanding loan balances of $32.2 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 September 30, 2021, these deferred balances carried accrued interest of $0.1 million.

As of September 30, 2021, we carried 815 PPP loans representing a balance of $87.4 million classified as commercial loans. We recognized $1.6 million in fees from the SBA on PPP loans during the three months ended September 30, 2021 and carry $3.6 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 September 30, 2021.

At September 30, 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 September 30, 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 against the USPS seeking a ruling that the USPS was obligated to make the payments represented by this receivable directly to us. During the third quarter of 2021 we, together with the USPS, entered into a stipulation of dismissal without prejudice for our initial action with respect to this matter in United States Federal District Court and filed a new action seeking recourse from the USPS in the United States Court of Federal Claims. 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 September 30, 2021. The full amount of such receivable is reflected in non-performing and past due factored receivables as of September 30, 2021 in accordance with our policy. As of September 30, 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 quarterly results in a conference call for investors and analysts beginning at 7:00 a.m. Central Time on Thursday, October 21, 2021.

To participate in the live conference call, please dial 1-855-940-9472 (Canada: 1-855-669-9657) and request to be joined into the Triumph Bancorp, Inc. call.  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/tbk211021.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.  Triumph offers a diversified line of banking, payments, and factoring services products through its bank subsidiary, TBK Bank, SSB. 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 Nine Months Ended
(Dollars in thousands) September 30,
2021
  June 30,
2021
  March 31,
2021
  December 31,
2020
  September 30,
2020
  September 30,
2021
  September 30,
2020
Financial Highlights:                          
Total assets $ 6,024,535     $ 6,015,877     $ 6,099,628     $ 5,935,791     $ 5,836,787     $ 6,024,535     $ 5,836,787  
Loans held for investment $ 4,782,730     $ 4,831,215     $ 5,084,512     $ 4,996,776     $ 4,852,911     $ 4,782,730     $ 4,852,911  
Deposits $ 4,822,575     $ 4,725,450     $ 4,789,665     $ 4,716,600     $ 4,248,101     $ 4,822,575     $ 4,248,101  
Net income available to common stockholders $ 23,627     $ 27,180     $ 33,122     $ 31,328     $ 22,005     $ 83,929     $ 30,995  
                           
Performance Ratios - Annualized:                          
Return on average assets 1.61 %   1.84 %   2.29 %   2.21 %   1.65 %   1.91 %   0.80 %
Return on average total equity 11.85 %   14.27 %   18.42 %   17.73 %   13.24 %   14.72 %   6.63 %
Return on average common equity 12.13 %   14.70 %   19.14 %   18.44 %   13.61 %   15.18 %   6.62 %
Return on average tangible common equity (1) 19.21 %   20.92 %   26.19 %   25.70 %   19.43 %   22.12 %   9.51 %
Yield on loans(2) 7.92 %   7.77 %   7.24 %   7.20 %   7.05 %   7.65 %   6.92 %
Cost of interest bearing deposits 0.27 %   0.31 %   0.41 %   0.54 %   0.79 %   0.33 %   1.07 %
Cost of total deposits 0.16 %   0.20 %   0.28 %   0.38 %   0.56 %   0.21 %   0.79 %
Cost of total funds 0.38 %   0.34 %   0.42 %   0.51 %   0.67 %   0.38 %   0.90 %
Net interest margin(2) 6.69 %   6.47 %   6.06 %   6.20 %   5.83 %   6.41 %   5.52 %
Net non-interest expense to average assets 4.00 %   3.75 %   3.14 %   2.54 %   3.23 %   3.63 %   3.14 %
Adjusted net non-interest expense to average assets (1) 4.00 %   3.55 %   3.14 %   2.54 %   3.17 %   3.57 %   3.37 %
Efficiency ratio 70.13 %   67.96 %   62.57 %   55.95 %   65.15 %   66.98 %   68.07 %
Adjusted efficiency ratio (1) 70.13 %   65.09 %   62.57 %   55.95 %   64.18 %   66.00 %   70.61 %
                           
Asset Quality:(3)                          
Past due to total loans 2.31 %   2.28 %   1.96 %   3.22 %   2.40 %   2.31 %   2.40 %
Non-performing loans to total loans 0.90 %   1.06 %   1.17 %   1.16 %   1.17 %   0.90 %   1.17 %
Non-performing assets to total assets 0.86 %   0.97 %   1.15 %   1.15 %   1.52 %   0.86 %   1.52 %
ACL to non-performing loans 95.75 %   88.92 %   80.87 %   164.98 %   159.67 %   95.75 %   159.67 %
ACL to total loans 0.86 %   0.95 %   0.94 %   1.92 %   1.88 %   0.86 %   1.88 %
Net charge-offs to average loans 0.08 %   0.01 %   0.85 %   0.03 %   0.02 %   0.94 %   0.08 %
                           
Capital:                          
Tier 1 capital to average assets(4) 10.43 %   9.73 %   10.89 %   10.80 %   10.75 %   10.43 %   10.75 %
Tier 1 capital to risk-weighted assets(4) 11.06 %   10.33 %   11.28 %   10.60 %   10.32 %   11.06 %   10.32 %
Common equity tier 1 capital to risk-weighted assets(4) 9.45 %   8.74 %   9.72 %   9.05 %   8.72 %   9.45 %   8.72 %
Total capital to risk-weighted assets 13.69 %   12.65 %   13.58 %   13.03 %   12.94 %   13.69 %   12.94 %
Total equity to total assets 13.62 %   13.17 %   12.53 %   12.24 %   11.89 %   13.62 %   11.89 %
Tangible common stockholders' equity to tangible assets(1) 8.63 %   8.04 %   8.98 %   8.56 %   8.09 %   8.63 %   8.09 %
                           
Per Share Amounts:                          
Book value per share $ 30.87     $ 29.76     $ 28.90     $ 27.42     $ 26.11     $ 30.87     $ 26.11  
Tangible book value per share (1) $ 19.73     $ 18.35     $ 21.34     $ 19.78     $ 18.38     $ 19.73     $ 18.38  
Basic earnings (loss) per common share $ 0.95     $ 1.10     $ 1.34     $ 1.27     $ 0.89     $ 3.40     $ 1.28  
Diluted earnings (loss) per common share $ 0.94     $ 1.08     $ 1.32     $ 1.25     $ 0.89     $ 3.33     $ 1.27  
Adjusted diluted earnings per common share(1) $ 0.94     $ 1.17     $ 1.32     $ 1.25     $ 0.91     $ 3.42     $ 0.99  
Shares outstanding end of period 25,123,342     25,109,703     24,882,929     24,868,218     24,851,601     25,123,342     24,851,601  
                                         

Unaudited consolidated balance sheet as of:

(Dollars in thousands) September 30,
2021
  June 30,
2021
  March 31,
2021
  December 31,
2020
  September 30,
2020
ASSETS                  
Total cash and cash equivalents $ 532,764     $ 444,439     $ 380,811     $ 314,393     $ 288,278  
Securities - available for sale 164,816     193,627     205,330     224,310     242,802  
Securities - held to maturity, net 5,488     5,658     5,828     5,919     6,096  
Equity securities 5,623     5,854     5,826     5,826     6,040  
Loans held for sale 26,437     31,136     22,663     24,546     36,716  
Loans held for investment 4,782,730     4,831,215     5,084,512     4,996,776     4,852,911  
Allowance for credit losses (41,017 )   (45,694 )   (48,024 )   (95,739 )   (90,995 )
Loans, net 4,741,713     4,785,521     5,036,488     4,901,037     4,761,916  
FHLB and other restricted stock 4,901     8,096     9,807     6,751     18,464  
Premises and equipment, net 104,311     106,720     105,390     103,404     105,455  
Other real estate owned ("OREO"), net 893     1,013     1,421     1,432     1,704  
Goodwill and intangible assets, net 280,055     286,567     188,006     189,922     192,041  
Bank-owned life insurance 41,540     41,912     41,805     41,608     41,440  
Deferred tax asset, net         1,260     6,427     7,716  
Indemnification asset 4,786     5,246     5,246     36,225     31,218  
Other assets 111,208     100,088     89,747     73,991     96,901  
Total assets $ 6,024,535     $ 6,015,877     $ 6,099,628     $ 5,935,791     $ 5,836,787  
LIABILITIES                  
Non-interest bearing deposits $ 2,020,984     $ 1,803,552     $ 1,637,653     $ 1,352,785     $ 1,315,900  
Interest bearing deposits 2,801,591     2,921,898     3,152,012     3,363,815     2,932,201  
Total deposits 4,822,575     4,725,450     4,789,665     4,716,600     4,248,101  
Customer repurchase agreements 11,990     9,243     2,668     3,099     14,192  
Federal Home Loan Bank advances 30,000     130,000     180,000     105,000     435,000  
Payment Protection Program Liquidity Facility 97,554     139,673     158,796     191,860     223,713  
Subordinated notes 106,755     87,620     87,564     87,509     87,455  
Junior subordinated debentures 40,467     40,333     40,201     40,072     39,944  
Deferred tax liability, net 982     3,333              
Other liabilities 93,538     87,837     76,730     64,870     94,540  
Total liabilities 5,203,861     5,223,489     5,335,624     5,209,010     5,142,945  
EQUITY                  
Preferred Stock 45,000     45,000     45,000     45,000     45,000  
Common stock 282     282     280     280     279  
Additional paid-in-capital 499,282     494,224     490,699     489,151     488,094  
Treasury stock, at cost (104,600 )   (104,486 )   (103,059 )   (103,052 )   (102,942 )
Retained earnings 373,512     349,885     322,705     289,583     258,254  
Accumulated other comprehensive income (loss) 7,198     7,483     8,379     5,819     5,157  
Total stockholders' equity 820,674     792,388     764,004     726,781     693,842  
Total liabilities and equity $ 6,024,535     $ 6,015,877     $ 6,099,628     $ 5,935,791     $ 5,836,787  
                                       

Unaudited consolidated statement of income:

  For the Three Months Ended   For the Nine Months Ended
(Dollars in thousands) September 30,
2021
  June 30,
2021
  March 31,
2021
  December 31,
2020
  September 30,
2020
  September 30,
2021
  September 30,
2020
Interest income:                          
Loans, including fees $ 44,882     $ 45,988     $ 48,706     $ 50,723     $ 48,774     $ 139,576     $ 147,491  
Factored receivables, including fees 50,516     47,328     37,795     37,573     31,468     135,639     76,861  
Securities 1,126     1,187     1,650     1,519     1,927     3,963     6,710  
FHLB and other restricted stock 28     27     76     56     122     131     474  
Cash deposits 183     158     126     68     73     467     640  
Total interest income 96,735     94,688     88,353     89,939     82,364     279,776     232,176  
Interest expense:                          
Deposits 1,948     2,470     3,372     4,308     5,834     7,790     23,095  
Subordinated notes 2,449     1,350     1,349     1,347     1,348     5,148     4,016  
Junior subordinated debentures 443     446     442     452     462     1,331     1,662  
Other borrowings 124     140     170     234     341     434     2,273  
Total interest expense 4,964     4,406     5,333     6,341     7,985     14,703     31,046  
Net interest income 91,771     90,282     83,020     83,598     74,379     265,073     201,130  
Credit loss expense (benefit) (1,187 )   (1,806 )   (7,845 )   4,680     (258 )   (10,838 )   33,649  
Net interest income after credit loss expense (benefit) 92,958     92,088     90,865     78,918     74,637     275,911     167,481  
Non-interest income:                          
Service charges on deposits 2,030     1,857     1,787     1,643     1,470     5,674     3,631  
Card income 2,144     2,225     1,972     1,949     2,091     6,341     5,832  
Net OREO gains (losses) and valuation adjustments (9 )   (287 )   (80 )   (217 )   (41 )   (376 )   (399 )
Net gains (losses) on sale of securities 4     1         16     3,109     5     3,210  
Fee income 5,198     4,470     2,249     1,615     1,402     11,917     4,392  
Insurance commissions 1,231     1,272     1,486     1,327     990     3,989     2,905  
Gain on sale of subsidiary                         9,758  
Other 1,457     4,358     6,877     16,053     1,472     12,692     8,670  
Total non-interest income 12,055     13,896     14,291     22,386     10,493     40,242     37,999  
Non-interest expense:                          
Salaries and employee benefits 43,769     41,658     35,980     33,798     31,651     121,407     93,177  
Occupancy, furniture and equipment 6,388     6,112     5,779     7,046     5,574     18,279     15,720  
FDIC insurance and other regulatory assessments 353     500     977     350     360     1,830     1,170  
Professional fees 2,362     5,052     2,545     2,326     3,265     9,959     7,023  
Amortization of intangible assets 3,274     2,428     1,975     2,065     2,141     7,677     6,265  
Advertising and promotion 1,403     1,241     890     1,170     1,105     3,534     3,548  
Communications and technology 7,090     6,028     5,900     5,639     5,569     19,018     16,514  
Other 8,174     7,779     6,846     6,904     5,632     22,799     19,359  
Total non-interest expense 72,813     70,798     60,892     59,298     55,297     204,503     162,776  
Net income before income tax 32,200     35,186     44,264     42,006     29,833     111,650     42,704  
Income tax expense 7,771     7,204     10,341     9,876     6,929     25,316     10,810  
Net income $ 24,429     $ 27,982     $ 33,923     $ 32,130     $ 22,904     $ 86,334     $ 31,894  
Dividends on preferred stock (802 )   (802 )   (801 )   (802 )   (899 )   (2,405 )   (899 )
Net income available to common stockholders $ 23,627     $ 27,180     $ 33,122     $ 31,328     $ 22,005     $ 83,929     $ 30,995  
                                                       

Earnings per share:

  For the Three Months Ended   Nine Months Ended
(Dollars in thousands) September 30,
2021
  June 30,
2021
  March 31,
2021
  December 31,
2020
  September 30,
2020
  September 30,
2021
  September 30,
2020
Basic                          
Net income to common stockholders $ 23,627     $ 27,180     $ 33,122     $ 31,328     $ 22,005     $ 83,929     $ 30,995  
Weighted average common shares outstanding 24,759,419     24,724,128     24,675,109     24,653,099     24,592,092     24,719,861     24,298,897  
Basic earnings per common share $ 0.95     $ 1.10     $ 1.34     $ 1.27     $ 0.89     $ 3.40     $ 1.28  
                           
Diluted                          
Net income to common stockholders - diluted $ 23,627     $ 27,180     $ 33,122     $ 31,328     $ 22,005     $ 83,929     $ 30,995  
Weighted average common shares outstanding 24,759,419     24,724,128     24,675,109     24,653,099     24,592,092     24,719,861     24,298,897  
Dilutive effects of:                          
Assumed exercises of stock options 121,110     134,358     130,016     101,664     48,102     129,149     53,232  
Restricted stock awards 141,204     139,345     169,514     136,239     67,907     146,172     65,893  
Restricted stock units 74,268     73,155     66,714     50,156     18,192     71,620     15,198  
Performance stock units - market based 131,346     134,313     128,167     112,228     76,095     131,275     30,995  
Performance stock units - performance based                          
Employee stock purchase plan 616     3,708     1,418             1,914      
Weighted average shares outstanding - diluted 25,227,963     25,209,007     25,170,938     25,053,386     24,802,388     25,199,991     24,464,215  
Diluted earnings per common share $ 0.94     $ 1.08     $ 1.32     $ 1.25     $ 0.89     $ 3.33     $ 1.27  
                                                       

Shares that were not considered in computing diluted earnings per common share because they were antidilutive are as follows:

  For the Three Months Ended   Nine Months Ended
  September 30,
2021
  June 30,
2021
  March 31,
2021
  December 31,
2020
  September 30,
2020
  September 30,
2021
  September 30,
2020
Stock options 16,939     16,939             98,513     16,939     98,513  
Restricted stock awards                     195,640      
Restricted stock units                     17,757      
Performance stock units - market based 12,020     13,520                 12,020      
Performance stock units - performance based 259,383     265,625     256,625     256,625     261,125     259,383     261,125  
Employee stock purchase plan                          

Loans held for investment summarized as of:

(Dollars in thousands) September 30,
2021
  June 30,
2021
  March 31,
2021
  December 31,
2020
  September 30,
2020
Commercial real estate $ 630,106     $ 701,576     $ 784,110     $ 779,158     $ 762,531  
Construction, land development, land 171,814     185,444     223,841     219,647     244,512  
1-4 family residential properties 127,073     135,288     142,859     157,147     164,785  
Farmland 82,990     91,122     97,835     103,685     110,966  
Commercial 1,398,497     1,453,583     1,581,125     1,562,957     1,536,903  
Factored receivables 1,607,028     1,398,299     1,208,718     1,120,770     1,016,337  
Consumer 12,677     12,389     14,332     15,838     17,106  
Mortgage warehouse 752,545     853,514     1,031,692     1,037,574     999,771  
Total loans $ 4,782,730     $ 4,831,215     $ 5,084,512     $ 4,996,776     $ 4,852,911  
                                       

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) September 30,
2021
  June 30,
2021
  March 31,
2021
  December 31,
2020
  September 30,
2020
Commercial real estate $ 630,106     $ 701,576     $ 784,110     $ 779,158     $ 762,531  
Construction, land development, land 171,814     185,444     223,841     219,647     244,512  
1-4 family residential 127,073     135,288     142,859     157,147     164,785  
Farmland 82,990     91,122     97,835     103,685     110,966  
Commercial - General 289,242     290,562     288,458     340,850     342,858  
Commercial - Paycheck Protection Program 87,413     135,307     237,299     189,857     223,230  
Commercial - Agriculture 77,263     76,346     83,859     94,572     112,221  
Commercial - Equipment 588,105     604,396     623,248     573,163     509,849  
Commercial - Asset-based lending 213,927     181,394     188,825     180,488     160,711  
Commercial - Liquid Credit 142,547     165,578     159,436     184,027     188,034  
Consumer 12,677     12,389     14,332     15,838     17,106  
Mortgage Warehouse 752,545     853,514     1,031,692     1,037,574     999,771  
Total banking loans held for investment $ 3,175,702     $ 3,432,916     $ 3,875,794     $ 3,876,006     $ 3,836,574  
                                       

The following table presents the Company’s operating segments:

(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  

 

(Dollars in thousands)                    
Three months ended June 30, 2021   Banking   Factoring   Payments   Corporate   Consolidated
Total interest income   $ 47,356     $ 44,653     $ 2,675     $ 4     $ 94,688  
Intersegment interest allocations   2,723     (2,584 )   (139 )        
Total interest expense   2,610             1,796     4,406  
Net interest income (expense)   47,469     42,069     2,536     (1,792 )   90,282  
Credit loss expense (benefit)   (4,335 )   2,444     218     (133 )   (1,806 )
Net interest income after credit loss expense   51,804     39,625     2,318     (1,659 )   92,088  
Noninterest income   10,018     2,742     1,083     53     13,896  
Noninterest expense   41,860     17,174     10,842     922     70,798  
Operating income (loss)   $ 19,962     $ 25,193     $ (7,441 )   $ (2,528 )   $ 35,186  
                                         

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:

  September 30,
2021
  June 30,
2021
  March 31,
2021
  December 31,
2020
  September 30,
2020
Factored receivable period end balance $ 1,479,989,000     $ 1,284,314,000     $ 1,118,988,000     $ 1,036,548,000     $ 953,434,000  
Yield on average receivable balance 13.75 %   14.99 %   13.85 %   13.80 %   15.59 %
Current quarter charge-off rate(1) 0.24 %   0.04 %   3.95 %   0.02 %   0.09 %
Factored receivables - transportation concentration 90 %   91 %   90 %   89 %   88 %
                   
Interest income, including fees $ 47,222,000     $ 44,653,000     $ 35,824,000     $ 35,439,000     $ 30,068,000  
Non-interest income(2) 1,557,000     2,742,000     1,757,000     1,358,000     1,157,000  
Factored receivable total revenue 48,779,000     47,395,000     37,581,000     36,797,000     31,225,000  
Average net funds employed 1,235,610,000     1,072,405,000     936,528,000     924,899,000     694,170,000  
Yield on average net funds employed 15.66 %   17.73 %   16.27 %   15.83 %   17.89 %
                   
Accounts receivable purchased $ 3,531,811,000     $ 3,068,262,000     $ 2,492,468,000     $ 2,461,249,000     $ 1,984,490,000  
Number of invoices purchased 1,535,321     1,401,695     1,188,678     1,189,271     1,027,839  
Average invoice size $ 2,300     $ 2,189     $ 2,097     $ 2,070     $ 1,931  
Average invoice size - transportation $ 2,195     $ 2,090     $ 1,974     $ 1,943     $ 1,787  
Average invoice size - non-transportation $ 4,944     $ 4,701     $ 4,775     $ 5,091     $ 5,181  

 

(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, $15.5 million, and $3.2 million for the three months ended March 31, 2021, December 31, 2020 and September 30, 2020.
   
  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.
   
  September 30, 2020 non-interest income used to calculate yield on average net funds employed excludes a $2.0 million gain recognized on the increased value of the receivable due from CVLG resulting from the amended TFS acquisition agreement.
   

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

  September 30,
2021
  June 30,
2021
  March 31,
2021
  December 31,
2020
  September 30,
2020
Factored receivable period end balance $ 127,039,000     $ 113,985,000     $ 89,730,000     $ 84,222,000     $ 62,903,000  
                   
Interest income $ 3,295,000     $ 2,675,000     $ 1,969,000     $ 2,034,000     $ 1,361,000  
Noninterest income 3,086,000     1,083,000     73,000     51,000     47,000  
Total revenue $ 6,381,000     $ 3,758,000     $ 2,042,000     $ 2,085,000     $ 1,408,000  
                   
Pre-tax operating income (loss) $ (5,184,000 )   $ (7,441,000 )   $ (2,552,000 )   $ (2,026,000 )   $ (1,936,000 )
Interest expense 111,000     139,000     167,000     178,000     147,000  
Depreciation and software amortization expense 77,000     68,000     65,000     63,000     63,000  
Intangible amortization expense 1,490,000     497,000              
Earnings (losses) before interest, taxes, depreciation, and amortization $ (3,506,000 )   $ (6,737,000 )   $ (2,320,000 )   $ (1,785,000 )   $ (1,726,000 )
Transaction costs     2,992,000              
Adjusted earnings (losses) before interest, taxes, depreciation, and amortization(1) $ (3,506,000 )   $ (3,745,000 )   $ (2,320,000 )   $ (1,785,000 )   $ (1,726,000 )
                   
Number of invoices processed 3,760,948     3,165,119     2,529,673     1,818,145     1,408,232  
Amount of payments processed $ 4,191,424,000     $ 3,426,808,000     $ 2,301,632,000     $ 1,920,037,000     $ 1,221,305,000  

(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) September 30,
2021
  June 30,
2021
  March 31,
2021
  December 31,
2020
  September 30,
2020
Non-interest bearing demand $ 2,020,984     $ 1,803,552     $ 1,637,653     $ 1,352,785     $ 1,315,900  
Interest bearing demand 795,234     760,874     729,364     688,680     634,272  
Individual retirement accounts 86,012     87,052     89,748     92,584     94,933  
Money market 472,242     395,035     402,070     393,325     384,476  
Savings 483,946     474,163     464,035     421,488     405,954  
Certificates of deposit 574,539     612,730     740,694     790,844     857,514  
Brokered time deposits 117,064     306,975     516,006     516,786     344,986  
Other brokered deposits 272,554     285,069     210,095     460,108     210,066  
Total deposits $ 4,822,575     $ 4,725,450     $ 4,789,665     $ 4,716,600     $ 4,248,101  
                                       

Net interest margin summarized for the three months ended:

  September 30, 2021   June 30, 2021
(Dollars in thousands) Average
Balance
  Interest   Average
Rate
  Average
Balance
  Interest   Average
Rate
Interest earning assets:                      
Interest earning cash balances $ 474,122     $ 183     0.15 %   $ 572,485     $ 158     0.11 %
Taxable securities 154,017     948     2.44 %   165,786     967     2.34 %
Tax-exempt securities 27,839     178     2.54 %   33,451     220     2.64 %
FHLB and other restricted stock 7,956     28     1.40 %   9,518     27     1.14 %
Loans 4,777,409     95,398     7.92 %   4,814,050     93,316     7.77 %
Total interest earning assets $ 5,441,343     $ 96,735     7.05 %   $ 5,595,290     $ 94,688     6.79 %
Non-interest earning assets:                      
Other assets 579,288             498,515          
     Total assets $ 6,020,631             $ 6,093,805          
Interest bearing liabilities:                      
Deposits:                      
Interest bearing demand $ 779,625     $ 435     0.22 %   $ 757,529     $ 469     0.25 %
Individual retirement accounts 86,571     126     0.58 %   88,142     143     0.65 %
Money market 417,435     225     0.21 %   398,290     216     0.22 %
Savings 479,915     185     0.15 %   468,517     178     0.15 %
Certificates of deposit 595,001     725     0.48 %   664,478     1,157     0.70 %
Brokered time deposits 99,116     29     0.12 %   138,102     51     0.15 %
Other brokered deposits 441,446     223     0.20 %   685,397     256     0.15 %
     Total interest bearing deposits 2,899,109     1,948     0.27 %   3,200,455     2,470     0.31 %
Federal Home Loan Bank advances 36,522     22     0.24 %   39,341     22     0.22 %
Subordinated notes 114,071     2,449     8.52 %   87,590     1,350     6.18 %
Junior subordinated debentures 40,390     443     4.35 %   40,251     446     4.44 %
Other borrowings 127,946     102     0.32 %   138,649     118     0.34 %
     Total interest bearing liabilities $ 3,218,038     $ 4,964     0.61 %   $ 3,506,286     $ 4,406     0.50 %
Non-interest bearing liabilities and equity:                      
Non-interest bearing demand deposits 1,912,398             1,749,858          
Other liabilities 72,173             51,257          
Total equity 818,022             786,404          
     Total liabilities and equity $ 6,020,631             $ 6,093,805          
Net interest income     $ 91,771             $ 90,282      
Interest spread         6.44 %           6.29 %
Net interest margin         6.69 %           6.47 %

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) September 30,
2021
  June 30,
2021
  March 31,
2021
  December 31,
2020
  September 30,
2020
Average Banking loans $ 3,299,152      $ 3,516,747      $ 3,722,895      $ 3,777,553      $ 3,707,293   
Average Factoring receivables 1,362,856      1,195,209      1,048,968      1,024,307      768,087   
Average Payments receivables 115,401      102,094      76,412      74,947      50,683   
Average total loans $ 4,777,409      $ 4,814,050      $ 4,848,275      $ 4,876,807      $ 4,526,063   
Banking yield 5.40  %   5.25  %   5.31  %   5.34  %   5.23  %
Factoring yield 13.75  %   14.99  %   13.85  %   13.80  %   15.59  %
Payments Yield 11.33  %   10.51  %   10.45  %   10.80  %   10.68  %
Total loan yield 7.92  %   7.77  %   7.24  %   7.20  %   7.05  %
                             

Metrics and non-GAAP financial reconciliation:

    As of and for the Three Months Ended   As of and for the Nine Months Ended
(Dollars in thousands,
except per share amounts)
  September 30,
2021
  June 30,
2021
  March 31,
2021
  December 31,
2020
  September 30,
2020
  September 30,
2021
  September 30,
2020
Net income available to common stockholders   $ 23,627       $ 27,180       $ 33,122       $ 31,328       $ 22,005       $ 83,929       $ 30,995    
Transaction costs         2,992                   827       2,992       827    
Gain on sale of subsidiary or division                                       (9,758 )  
Tax effect of adjustments         (715 )                 (197 )     (715 )     2,254    
Adjusted net income available to common stockholders - diluted   $ 23,627       $ 29,457       $ 33,122       $ 31,328       $ 22,635       $ 86,206       $ 24,318    
                             
Weighted average shares outstanding - diluted   25,227,963       25,209,007       25,170,938       25,053,386       24,802,388       25,199,991       24,464,215    
Adjusted diluted earnings per common share   $ 0.94       $ 1.17       $ 1.32       $ 1.25       $ 0.91       $ 3.42       $ 0.99    
                             
Average total stockholders' equity   $ 818,022       $ 786,404       $ 746,849       $ 720,892       $ 688,327       $ 784,019       $ 642,151    
Average preferred stock liquidation preference   (45,000 )     (45,000 )     (45,000 )     (45,000 )     (45,000 )     (45,000 )     (17,080 )  
Average total common stockholders' equity   773,022       741,404       701,849       675,892       643,327       739,019       625,071    
Average goodwill and other intangibles   (284,970 )     (220,310 )     (188,980 )     (191,017 )     (192,682 )     (231,751 )     (189,776 )  
Average tangible common stockholders' equity   $ 488,052       $ 521,094       $ 512,869       $ 484,875       $ 450,645       $ 507,268       $ 435,295    
                             
Net income available to common stockholders   $ 23,627       $ 27,180       $ 33,122       $ 31,328       $ 22,005       $ 83,929       $ 30,995    
Average tangible common equity   488,052       521,094       512,869       484,875       450,645       507,268       435,295    
Return on average tangible common equity   19.21   %   20.92   %   26.19   %   25.70   %   19.43   %   22.12   %   9.51   %
                             
Net interest income   $ 91,771       $ 90,282       $ 83,020       $ 83,598       $ 74,379       $ 265,073       $ 201,130    
Non-interest income   12,055       13,896       14,291       22,386       10,493       40,242       37,999    
Operating revenue   103,826       104,178       97,311       105,984       84,872       305,315       239,129    
Gain on sale of subsidiary or division                                       (9,758 )  
Adjusted operating revenue   $ 103,826       $ 104,178       $ 97,311       $ 105,984       $ 84,872       $ 305,315       $ 229,371    
Non-interest expenses   $ 72,813       $ 70,798       $ 60,892       $ 59,298       $ 55,297       $ 204,503       $ 162,776    
Transaction costs         (2,992 )                 (827 )     (2,992 )     (827 )  
Adjusted non-interest expenses   $ 72,813       $ 67,806       $ 60,892       $ 59,298       $ 54,470       $ 201,511       $ 161,949    
Adjusted efficiency ratio   70.13   %   65.09   %   62.57   %   55.95   %   64.18   %   66.00   %   70.61   %
                             
Adjusted net non-interest expense to average assets ratio:                            
Non-interest expenses   $ 72,813       $ 70,798       $ 60,892       $ 59,298       $ 55,297       $ 204,503       $ 162,776    
Transaction costs         (2,992 )                 (827 )     (2,992 )     (827 )  
Adjusted non-interest expenses   $ 72,813       $ 67,806       $ 60,892       $ 59,298       $ 54,470       $ 201,511       $ 161,949    
Total non-interest income   $ 12,055       $ 13,896       $ 14,291       $ 22,386       $ 10,493       $ 40,242       $ 37,999    
Gain on sale of subsidiary or division                                       (9,758 )  
Adjusted non-interest income   $ 12,055       $ 13,896       $ 14,291       $ 22,386       $ 10,493       $ 40,242       $ 28,241    
Adjusted net non-interest expenses   $ 60,758       $ 53,910       $ 46,601       $ 36,912       $ 43,977       $ 161,269       $ 133,708    
Average total assets   $ 6,020,631       $ 6,093,805       $ 6,013,668       $ 5,788,549       $ 5,518,708       $ 6,042,677       $ 5,304,903    
Adjusted net non-interest expense to average assets ratio   4.00   %   3.55   %   3.14   %   2.54   %   3.17   %   3.57   %   3.37   %
                                                                       
Total stockholders' equity   $ 820,674       $ 792,388       $ 764,004       $ 726,781       $ 693,842       $ 820,674       $ 693,842    
Preferred stock liquidation preference   (45,000 )     (45,000 )     (45,000 )     (45,000 )     (45,000 )     (45,000 )     (45,000 )  
Total common stockholders' equity   775,674       747,388       719,004       681,781       648,842       775,674       648,842    
Goodwill and other intangibles   (280,055 )     (286,567 )     (188,006 )     (189,922 )     (192,041 )     (280,055 )     (192,041 )  
Tangible common stockholders' equity   $ 495,619       $ 460,821       $ 530,998       $ 491,859       $ 456,801       $ 495,619       $ 456,801    
Common shares outstanding   25,123,342       25,109,703       24,882,929       24,868,218       24,851,601       25,123,342       24,851,601    
Tangible book value per share   $ 19.73       $ 18.35       $ 21.34       $ 19.78       $ 18.38       $ 19.73       $ 18.38    
                             
Total assets at end of period   $ 6,024,535       $ 6,015,877       $ 6,099,628       $ 5,935,791       $ 5,836,787       $ 6,024,535       $ 5,836,787    
Goodwill and other intangibles   (280,055 )     (286,567 )     (188,006 )     (189,922 )     (192,041 )     (280,055 )     (192,041 )  
Tangible assets at period end   $ 5,744,480       $ 5,729,310       $ 5,911,622       $ 5,745,869       $ 5,644,746       $ 5,744,480       $ 5,644,746    
Tangible common stockholders' equity ratio   8.63   %   8.04   %   8.98   %   8.56   %   8.09   %   8.63   %   8.09   %

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 Nine Months Ended
(Dollars in thousands) September 30,
2021
  June 30,
2021
  March 31,
2021
  December 31,
2020
  September 30,
2020
  September 30,
2021
  September 30,
2020
Loan discount accretion $ 1,953     $ 2,161     $ 3,501     $ 2,334     $ 4,104     $ 7,615     $ 8,377  

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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