Triumph Bancorp Reports Third Quarter Net Income to Common Stockholders of $22.0 Million

Oct 19, 2020

DALLAS, Oct. 19, 2020 (GLOBE NEWSWIRE) -- Triumph Bancorp, Inc. (Nasdaq: TBK) (“Triumph” or the “Company”) today announced earnings and operating results for the third quarter of 2020.

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.

2020 Third Quarter Highlights

  • For the third quarter of 2020, net income available to common stockholders was $22.0 million. Diluted earnings per share were $0.89.
  • Adjusted diluted earnings per share were $0.91 for the quarter ended September 30, 2020, which exclude transaction costs related to the acquisition of Transport Financial Solutions (“TFS”), net of taxes.
  • On July 8, 2020, we acquired the transportation factoring assets (the “TFS Acquisition”) of Transport Financial Solutions (“TFS”), a wholly owned subsidiary of Covenant Logistics Group, Inc. ("CVLG"). Details of the TFS Acquisition can be found in our SEC Form 8-K filed on July 13, 2020. On September 23, 2020, we entered into an Account Management Agreement, Amendment to Purchase Agreement and Mutual Release (the “Agreement”) with Covenant Transport Solutions, LLC (“CTS”) and CVLG the details of which can be found in our SEC Form 8-K filed on September 23, 2020. The TFS Acquisition and subsequent Agreement resulted in our acquisition of $101.9 million of net factored receivables, a purchase credit deteriorated (“PCD”) allowance for credit loss (“ACL”) of $37.4 million, an indemnification asset of $31.2 million, a net deferred tax asset of $1.4 million, and $8.0 million of intangible assets including $4.5 million of goodwill. Total consideration paid was $105.1 million. Further details regarding the transaction can be found in the appendix to the accompanying investor deck.
  • For the quarter ended September 30, 2020, we recorded a $0.3 million benefit to total credit loss expense, comprised of a $0.4 million benefit to credit loss expense related to our loan portfolio and $0.1 million of credit loss expense related to held to maturity securities. Credit loss expense related to off balance sheet loan commitments was insignificant for the quarter. Regarding the $0.4 million benefit to credit loss expense on our loan portfolio:
    • Our macroeconomic forecasts did not change materially from the prior quarter and resulted in credit loss expense of approximately $0.6 million.
    • Changes in the volume and mix of our loan portfolio provided a benefit of $1.7 million to credit loss expense. Net charge offs were $0.7 million and the increase in non-purchase credit deteriorated specific reserves was $0.1 million.
    • Our ACL as a percentage of loans held for investment increased 64 basis points during the quarter to 1.88% at September 30, 2020. We recorded PCD specific reserves of $37.4 million during the quarter on the Over-Formula Advance Portfolio obtained through the TFS Acquisition, which contributed 77 basis points to the ratio at September 30, 2020. The PCD reserves were recorded through purchase accounting and had no impact on our credit loss expense for the quarter.
  • As of September 30, 2020, the Company’s balance sheet reflected short-term deferrals on outstanding loan balances of $103.0 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, 2020, these deferred balances carried accrued interest of $0.7 million.
  • As of September 30, 2020, the Company carried 2,080 PPP loans representing a balance of $223.2 million classified as commercial loans. The Company has received approximately $7.7 million in total fees from the SBA, $1.2 million and $2.6 million of which were recognized in earnings during the three and nine months ended September 30, 2020, respectively. The remaining fees will be amortized over the respective lives of the loans.
  • Net interest margin (“NIM”) was 5.83% for the quarter ended September 30, 2020.
  • Included in noninterest income for the quarter ended September 30, 2020 was a $3.1 million gain on sale of securities and a $2.0 million gain recognized on the increased value of the receivable due from CVLG resulting from the Agreement. These gains were partially offset by a $0.7 million loss recognized on the donation of a branch to a local municipality during the same period.
  • Total loans held for investment increased $459.6 million, or 10.5%, to $4.853 billion at September 30, 2020. Average loans for the quarter increased $116.4 million, or 2.6%, to $4.526 billion. The increase in total loans reflects $107.5 million of factored receivables purchased through the TFS Acquisition. Excluding the TFS Acquisition, organic growth in factored receivables was $347.2 million, or 61.8%, during the three months ended September 30, 2020.
  • Triumph Business Capital and TriumphPay processed a combined $2.920 billion in invoice payments for the quarter ended September 30, 2020.
  • The total dollar value of invoices purchased by Triumph Business Capital for the quarter ended September 30, 2020 was $1.984 billion with an average invoice size of $1,931. The transportation average invoice size for the quarter was $1,787.
  • For the quarter ended September 30, 2020, TriumphPay processed 1,364,606 invoices paying 57,953 distinct carriers a total of $1.161 billion.

B alance Sheet

Total loans held for investment increased $459.6 million, or 10.5%, during the third quarter to $4.853 billion at September 30, 2020. The national lending portfolio increased $118.9 million, or 11.1%, to $1,187.8 million, the commercial finance portfolio increased $461.9 million, or 37.7%, to $1.687 billion, and the community banking portfolio decreased $121.2 million, or 5.8%, to $1.978 billion during the quarter. The increase in total loans and the commercial finance portfolio reflects $107.5 million of factored receivables purchased through the TFS Acquisition.

Total deposits were $4.248 billion at September 30, 2020, an increase of $185.8 million, or 4.6%, in the third quarter of 2020. Non-interest-bearing deposits accounted for 31% of total deposits and non-time deposits accounted for 69% of total deposits at September 30, 2020.

Net Interest Income

We earned net interest income for the quarter ended September 30, 2020 of $74.4 million compared to $64.3 million for the quarter ended June 30, 2020.

Yields on loans for the quarter ended September 30, 2020 were up 53 bps from the prior quarter to 7.05%. The average cost of our total deposits was 0.56% for the quarter ended September 30, 2020 compared to 0.79% for the quarter ended June 30, 2020.

Asset Quality

Non-performing assets were 1.52% of total assets at September 30, 2020 compared to 1.20% of total assets at June 30, 2020. Approximately 17 basis points of this ratio at September 30, 2020 consisted of $10.0 million of the Over-Formula Advance Portfolio obtained through TFS Acquisition which represents the portion that not covered by CVLG’s indemnification.

The ratio of past due to total loans increased to 2.40% at September 30, 2020 from 1.50% at June 30, 2020. Approximately 79 basis points of this ratio at September 30, 2020 consisted of $38.5 million of past due factored receivables related to the Over-Formula Advance Portfolio. We recorded total net charge-offs of $0.7 million, or 0.02% of average loans, for the quarter ended September 30, 2020 compared to net charge-offs of $1.1 million, or 0.02% of average loans, for the quarter ended June 30, 2020.

Non-Interest Income and Expense

We earned non-interest income for the quarter ended September 30, 2020 of $10.5 million compared to $20.0 million for the quarter ended June 30, 2020. Excluding the gain on sale of TPF, we earned adjusted noninterest income of $10.2 million for the three months ended June 30, 2020.

For the quarter ended September 30, 2020, non-interest expense totaled $55.3 million. Non-interest expense for the quarter ended June 30, 2020 was $52.7 million. Excluding the transaction costs related to the TFS acquisition, we incurred adjusted noninterest expense of $54.5 million for the three months ended September 30, 2020.

Conference Call Information

Aaron P. Graft, Vice Chairman and CEO and Bryce Fowler, CFO will review the quarterly results in a conference call for investors and analysts beginning at 7:00 a.m. Central Time on Tuesday, October 20, 2020. Todd Ritterbusch, Chief Lending Officer, will also be available for questions.

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/tbk201020.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 community banking, national lending, and commercial finance 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 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 11, 2020 and its Quarterly Report on Form 10-Q, filed with the SEC on August 7, 2020.

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  
    September 30,     June 30,     March 31,     December 31,     September 30,     September 30,     September 30,  
(Dollars in thousands)   2020     2020     2020     2019     2019     2020     2019  
Financial Highlights:                                                        
Total assets   $ 5,836,787     $ 5,617,493     $ 5,353,729     $ 5,060,297     $ 5,039,697     $ 5,836,787     $ 5,039,697  
Loans held for investment   $ 4,852,911     $ 4,393,311     $ 4,320,548     $ 4,194,512     $ 4,209,417     $ 4,852,911     $ 4,209,417  
Deposits   $ 4,248,101     $ 4,062,332     $ 3,682,015     $ 3,789,906     $ 3,697,833     $ 4,248,101     $ 3,697,833  
Net income available to common stockholders   $ 22,005     $ 13,440     $ (4,450 )   $ 16,709     $ 14,317     $ 30,995     $ 41,835  
                                                         
Performance Ratios - Annualized:                                                        
Return on average assets     1.65 %     0.99 %     (0.36 %)     1.31 %     1.17 %     0.80 %     1.20 %
Return on average total equity     13.24 %     8.86 %     (2.85 %)     10.24 %     8.79 %     6.63 %     8.63 %
Return on average common equity     13.61 %     8.94 %     (2.85 %)     10.24 %     8.79 %     6.62 %     8.63 %
Return on average tangible common equity (1)     19.43 %     12.96 %     (4.09 %)     14.54 %     12.56 %     9.51 %     12.38 %
Yield on loans(2)     7.05 %     6.52 %     7.22 %     7.48 %     7.63 %     6.92 %     7.85 %
Cost of interest bearing deposits     0.79 %     1.08 %     1.34 %     1.45 %     1.49 %     1.07 %     1.39 %
Cost of total deposits     0.56 %     0.79 %     1.05 %     1.15 %     1.19 %     0.79 %     1.11 %
Cost of total funds     0.67 %     0.85 %     1.23 %     1.35 %     1.41 %     0.90 %     1.36 %
Net interest margin(2)     5.83 %     5.11 %     5.63 %     5.72 %     5.85 %     5.52 %     5.99 %
Net non-interest expense to average assets     3.23 %     2.40 %     3.88 %     3.46 %     3.64 %     3.14 %     3.67 %
Adjusted net non-interest expense to average assets (1)     3.17 %     3.11 %     3.88 %     3.46 %     3.64 %     3.37 %     3.67 %
Efficiency ratio     65.15 %     62.56 %     78.24 %     70.15 %     71.93 %     68.07 %     71.29 %
Adjusted efficiency ratio (1)     64.18 %     70.75 %     78.24 %     70.15 %     71.93 %     70.61 %     71.29 %
                                                         
Asset Quality:(3)                                                        
Past due to total loans(4)     2.40 %     1.50 %     1.99 %     1.74 %     1.91 %     2.40 %     1.91 %
Non-performing loans to total loans     1.17 %     1.27 %     1.26 %     0.97 %     1.00 %     1.17 %     1.00 %
Non-performing assets to total assets     1.52 %     1.20 %     1.09 %     0.87 %     0.91 %     1.52 %     0.91 %
ACL to non-performing loans(5)     159.67 %     97.66 %     82.37 %     71.63 %     75.58 %     159.67 %     75.58 %
ACL to total loans(5)     1.88 %     1.24 %     1.04 %     0.69 %     0.76 %     1.88 %     0.76 %
Net charge-offs to average loans     0.02 %     0.02 %     0.04 %     0.08 %     0.01 %     0.08 %     0.09 %
                                                         
Capital:                                                        
Tier 1 capital to average assets(6)     10.75 %     9.98 %     9.62 %     10.03 %     10.37 %     10.75 %     10.37 %
Tier 1 capital to risk-weighted assets(6)     10.32 %     10.57 %     9.03 %     10.29 %     10.08 %     10.32 %     10.08 %
Common equity tier 1 capital to risk-weighted assets(6)     8.72 %     8.84 %     8.24 %     9.46 %     9.26 %     8.72 %     9.26 %
Total capital to risk-weighted assets(5)     12.94 %     13.44 %     11.63 %     12.76 %     11.79 %     12.94 %     11.79 %
Total equity to total assets     11.89 %     11.69 %     11.01 %     12.58 %     12.57 %     11.89 %     12.57 %
Tangible common stockholders' equity to tangible assets(1)     8.09 %     7.84 %     7.77 %     9.16 %     9.10 %     8.09 %     9.10 %
                                                         
Per Share Amounts:                                                        
Book value per share   $ 26.11     $ 25.28     $ 24.45     $ 25.50     $ 24.99     $ 26.11     $ 24.99  
Tangible book value per share (1)   $ 18.38     $ 17.59     $ 16.64     $ 17.88     $ 17.40     $ 18.38     $ 17.40  
Basic earnings (loss) per common share   $ 0.89     $ 0.56     $ (0.18 )   $ 0.67     $ 0.56     $ 1.28     $ 1.60  
Diluted earnings (loss) per common share   $ 0.89     $ 0.56     $ (0.18 )   $ 0.66     $ 0.56     $ 1.27     $ 1.59  
Adjusted diluted earnings per common share(1)   $ 0.91     $ 0.25     $ (0.18 )   $ 0.66     $ 0.56     $ 0.99     $ 1.59  
Shares outstanding end of period     24,851,601       24,202,686       24,101,120       24,964,961       25,357,985       24,851,601       25,357,985  


Unaudited consolidated balance sheet as of:
 

    September 30,     June 30,     March 31,     December 31,     September 30,  
(Dollars in thousands)   2020     2020     2020     2019     2019  
ASSETS                                        
Total cash and cash equivalents   $ 288,278     $ 437,064     $ 208,414     $ 197,880     $ 115,043  
Securities - available for sale     242,802       331,126       302,122       248,820       302,917  
Securities - held to maturity     6,096       6,285       8,217       8,417       8,517  
Equity securities     6,040       6,411       5,678       5,437       5,543  
Loans held for sale     36,716       50,382       4,431       2,735       7,499  
Loans held for investment     4,852,911       4,393,311       4,320,548       4,194,512       4,209,417  
Allowance for credit losses     (90,995 )     (54,613 )     (44,732 )     (29,092 )     (31,895 )
Loans, net     4,761,916       4,338,698       4,275,816       4,165,420       4,177,522  
Assets held for sale                 97,895              
FHLB and other restricted stock     18,464       26,345       37,080       19,860       23,960  
Premises and equipment, net     105,455       107,736       98,363       96,595       87,112  
Other real estate owned ("OREO"), net     1,704       1,962       2,540       3,009       2,849  
Goodwill and intangible assets, net     192,041       186,162       188,208       190,286       192,440  
Bank-owned life insurance     41,440       41,298       41,122       40,954       40,724  
Deferred tax asset, net     7,716       8,544       9,457       3,812       5,971  
Other assets     128,119       75,480       74,386       77,072       69,600  
Total assets   $ 5,836,787     $ 5,617,493     $ 5,353,729     $ 5,060,297     $ 5,039,697  
LIABILITIES                                        
Non-interest bearing deposits   $ 1,315,900     $ 1,120,949     $ 846,412     $ 809,696     $ 754,233  
Interest bearing deposits     2,932,201       2,941,383       2,835,603       2,980,210       2,943,600  
Total deposits     4,248,101       4,062,332       3,682,015       3,789,906       3,697,833  
Customer repurchase agreements     14,192       6,732       3,693       2,033       14,124  
Federal Home Loan Bank advances     435,000       455,000       850,000       430,000       530,000  
Payment Protection Program Liquidity Facility     223,713       223,809                    
Subordinated notes     87,455       87,402       87,347       87,327       49,010  
Junior subordinated debentures     39,944       39,816       39,689       39,566       39,443  
Other liabilities     94,540       85,531       101,638       74,875       75,594  
Total liabilities     5,142,945       4,960,622       4,764,382       4,423,707       4,406,004  
EQUITY                                        
Preferred Stock     45,000       45,000                    
Common stock     279       273       272       272       272  
Additional paid-in-capital     488,094       472,795       474,441       473,251       472,368  
Treasury stock, at cost     (102,942 )     (102,888 )     (102,677 )     (67,069 )     (52,632 )
Retained earnings     258,254       236,249       222,809       229,030       212,321  
Accumulated other comprehensive income (loss)     5,157       5,442       (5,498 )     1,106       1,364  
Total stockholders' equity     693,842       656,871       589,347       636,590       633,693  
Total liabilities and equity   $ 5,836,787     $ 5,617,493     $ 5,353,729     $ 5,060,297     $ 5,039,697  


Unaudited consolidated statement of income:
 

    For the Three Months Ended     For the Nine Months Ended  
    September 30,     June 30,     March 31,     December 31,     September 30,     September 30,     September 30,  
(Dollars in thousands)   2020     2020     2020     2019     2019     2020     2019  
Interest income:                                                        
Loans, including fees   $ 48,774     $ 50,394     $ 48,323     $ 52,395     $ 50,249     $ 147,491     $ 143,253  
Factored receivables, including fees     31,468       21,101       24,292       25,573       25,570       76,861       75,684  
Securities     1,927       2,676       2,107       2,379       2,784       6,710       8,095  
FHLB and other restricted stock     122       148       204       165       209       474       547  
Cash deposits     73       79       488       659       603       640       2,403  
Total interest income     82,364       74,398       75,414       81,171       79,415       232,176       229,982  
Interest expense:                                                        
Deposits     5,834       7,584       9,677       10,961       11,036       23,095       29,264  
Subordinated notes     1,348       1,321       1,347       1,035       840       4,016       2,518  
Junior subordinated debentures     462       554       646       687       719       1,662       2,223  
Other borrowings     341       688       1,244       2,080       2,055       2,273       6,482  
Total interest expense     7,985       10,147       12,914       14,763       14,650       31,046       40,487  
Net interest income     74,379       64,251       62,500       66,408       64,765       201,130       189,495  
Credit loss expense (benefit)     (258 )     13,609       20,298       382       2,865       33,649       7,560  
Net interest income after credit loss expense     74,637       50,642       42,202       66,026       61,900       167,481       181,935  
Non-interest income:                                                        
Service charges on deposits     1,470       573       1,588       1,889       1,937       3,631       5,243  
Card income     2,091       1,941       1,800       1,943       2,015       5,832       5,930  
Net OREO gains (losses) and valuation adjustments     (41 )     (101 )     (257 )     50       (56 )     (399 )     301  
Net gains (losses) on sale of securities     3,109       63       38       39       19       3,210       22  
Fee income     1,402       1,304       1,686       1,686       1,624       4,392       4,755  
Insurance commissions     990       864       1,051       1,092       1,247       2,905       3,127  
Gain on sale of subsidiary           9,758                         9,758        
Other     1,472       5,627       1,571       1,967       956       8,670       3,525  
Total non-interest income     10,493       20,029       7,477       8,666       7,742       37,999       22,903  
Non-interest expense:                                                        
Salaries and employee benefits     31,651       30,804       30,722       29,586       28,717       93,177       83,276  
Occupancy, furniture and equipment     5,574       4,964       5,182       4,667       4,505       15,720       13,529  
FDIC insurance and other regulatory assessments     360       495       315       (302 )     (2 )     1,170       600  
Professional fees     3,265       1,651       2,107       1,904       1,969       7,023       5,384  
Amortization of intangible assets     2,141       2,046       2,078       2,154       2,228       6,265       6,977  
Advertising and promotion     1,105       1,151       1,292       1,347       1,379       3,548       4,779  
Communications and technology     5,569       5,444       5,501       5,732       5,382       16,514       15,244  
Other     5,632       6,171       7,556       7,573       7,975       19,359       21,634  
Total non-interest expense     55,297       52,726       54,753       52,661       52,153       162,776       151,423  
Net income (loss) before income tax     29,833       17,945       (5,074 )     22,031       17,489       42,704       53,415  
Income tax expense (benefit)     6,929       4,505       (624 )     5,322       3,172       10,810       11,580  
Net income (loss)   $ 22,904     $ 13,440     $ (4,450 )   $ 16,709     $ 14,317     $ 31,894     $ 41,835  
Dividends on preferred stock     (899 )                             (899 )      
Net income available to common stockholders   $ 22,005     $ 13,440     $ (4,450 )   $ 16,709     $ 14,317     $ 30,995     $ 41,835  


Earnings per share:
 

    For the Three Months Ended     For the Nine Months Ended  
    September 30,     June 30,     March 31,     December 31,     September 30,     September 30,     September 30,  
(Dollars in thousands)   2020     2020     2020     2019     2019     2020     2019  
Basic                                                        
Net income (loss) to common stockholders   $ 22,005     $ 13,440     $ (4,450 )   $ 16,709     $ 14,317     $ 30,995     $ 41,835  
Weighted average common shares outstanding     24,592,092       23,987,049       24,314,329       25,089,447       25,621,054       24,298,897       26,228,499  
Basic earnings (loss) per common share   $ 0.89     $ 0.56     $ (0.18 )   $ 0.67     $ 0.56     $ 1.28     $ 1.60  
                                                         
Diluted                                                        
Net income (loss) to common stockholders - diluted   $ 22,005     $ 13,440     $ (4,450 )   $ 16,709     $ 14,317     $ 30,995     $ 41,835  
Weighted average common shares outstanding     24,592,092       23,987,049       24,314,329       25,089,447       25,621,054       24,298,897       26,228,499  
Dilutive effects of:                                                        
Assumed exercises of stock options     48,102       38,627             69,865       60,068       53,232       61,054  
Restricted stock awards     67,907       37,751             70,483       45,631       65,893       40,572  
Restricted stock units     18,192       4,689             13,264       3,045       15,198       57  
Performance stock units - market based     76,095       6,326             11,803       4,673       30,995       1,558  
Performance stock units - performance based                                          
Weighted average shares outstanding - diluted     24,802,388       24,074,442       24,314,329       25,254,862       25,734,471       24,464,215       26,331,740  
Diluted earnings (loss) per common share   $ 0.89     $ 0.56     $ (0.18 )   $ 0.66     $ 0.56     $ 1.27     $ 1.59  
                                                         
Shares that were not considered in computing diluted earnings per common share because they were antidilutive are as follows:  
                                                         
    For the Three Months Ended     For the Nine Months Ended  
    September 30,     June 30,     March 31,     December 31,     September 30,     September 30,     September 30,  
    2020     2020     2020     2019     2019     2020     2019  
Stock options     98,513       148,528       225,055       66,019       67,023       98,513       67,023  
Restricted stock awards           109,834       147,748             3,209             3,209  
Restricted stock units           38,801       55,228                         54,077  
Performance stock units - market based           76,461       67,707       55,228       55,228             55,228  
Performance stock units - performance based     261,125       262,625       254,000       254,000             261,125        


Loans held for investment summarized as of:
 

     September 30,     June 30,     March 31,     December 31,     September 30,  
(Dollars in thousands)   2020     2020     2020     2019     2019  
Commercial real estate   $ 762,531     $ 910,261     $ 985,757     $ 1,046,961     $ 1,115,559  
Construction, land development, land     244,512       213,617       198,050       160,569       164,186  
1-4 family residential properties     164,785       168,707       169,703       179,425       186,405  
Farmland     110,966       125,259       133,579       154,975       161,447  
Commercial     1,536,903       1,518,656       1,412,822       1,342,683       1,369,505  
Factored receivables     1,016,337       561,576       661,100       619,986       599,651  
Consumer     17,106       18,450       20,326       21,925       24,967  
Mortgage warehouse     999,771       876,785       739,211       667,988       587,697  
Total loans   $ 4,852,911     $ 4,393,311     $ 4,320,548     $ 4,194,512     $ 4,209,417  


Our total loans held for investment 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.

Commercial finance loans are further summarized below:
 

    September 30,     June 30,     March 31,     December 31,     September 30,  
(Dollars in thousands)   2020     2020     2020     2019     2019  
Commercial - Equipment   $ 509,849     $ 487,145     $ 479,483     $ 461,555     $ 429,412  
Commercial - Asset-based lending     160,711       176,235       245,001       168,955       247,026  
Factored receivables     1,016,337       561,576       661,100       619,986       599,651  
Commercial finance   $ 1,686,897     $ 1,224,956     $ 1,385,584     $ 1,250,496     $ 1,276,089  
                                         
Commercial finance % of total loans     35 %     28 %     32 %     30 %     30 %


National lending loans are further summarized below:
 

    September 30,     June 30,     March 31,     December 31,     September 30,  
(Dollars in thousands)   2020     2020     2020     2019     2019  
Mortgage warehouse   $ 999,771     $ 876,785     $ 739,211     $ 667,988     $ 587,697  
Commercial - Liquid credit     188,034       192,118       172,380       81,353       37,386  
Commercial - Premium finance                       101,015       101,562  
National lending   $ 1,187,805     $ 1,068,903     $ 911,591     $ 850,356     $ 726,645  
                                         
National lending % of total loans     24 %     24 %     21 %     20 %     17 %


Additional information pertaining to our loan portfolio, summarized for the quarters ended:
 

    September 30,     June 30,     March 31,     December 31,     September 30,  
(Dollars in thousands)   2020     2020     2020     2019     2019  
Average community banking   $ 2,047,059     $ 2,111,615     $ 2,041,256     $ 2,170,149     $ 2,193,533  
Average commercial finance     1,480,593       1,259,584       1,292,749       1,260,000       1,208,823  
Average national lending     998,411       1,038,476       711,837       704,244       541,367  
Average total loans   $ 4,526,063     $ 4,409,675     $ 4,045,842     $ 4,134,393     $ 3,943,723  
Community banking yield     5.05 %     5.23 %     5.67 %     5.89 %     5.79 %
Commercial finance yield     11.23 %     10.21 %     11.00 %     11.64 %     12.31 %
National lending yield     4.98 %     4.67 %     4.80 %     4.96 %     4.63 %
Total loan yield     7.05 %     6.52 %     7.22 %     7.48 %     7.63 %


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,     June 30,     March 31,     December 31,     September 30,  
    2020     2020     2020     2019     2019  
Factored receivable period end balance   $ 948,987,000     $ 528,379,000     $ 641,366,000     $ 573,372,000     $ 562,009,000  
Yield on average receivable balance     15.65 %     15.48 %     16.13 %     17.20 %     18.23 %
Rolling twelve quarter annual charge-off rate     0.43 %     0.43 %     0.42 %     0.39 %     0.36 %
Factored receivables - transportation concentration     88 %     85 %     80 %     81 %     83 %
                                         
Interest income, including fees   $ 30,068,000     $ 20,387,000     $ 23,497,000     $ 24,813,000     $ 24,869,000  
Non-interest income(1)     1,157,000       1,072,000       1,296,000       1,154,000       1,291,000  
Factored receivable total revenue     31,225,000       21,459,000       24,793,000       25,967,000       26,160,000  
Average net funds employed     694,170,000       477,112,000       537,138,000       524,546,000       494,198,000  
Yield on average net funds employed     17.89 %     18.09 %     18.56 %     19.64 %     21.00 %
                                         
Accounts receivable purchased   $ 1,984,490,000     $ 1,238,465,000     $ 1,450,618,000     $ 1,489,538,000     $ 1,450,905,000  
Number of invoices purchased     1,027,839       812,902       878,767       896,487       890,986  
Average invoice size   $ 1,931     $ 1,524     $ 1,651     $ 1,662     $ 1,628  
Average invoice size - transportation   $ 1,787     $ 1,378     $ 1,481     $ 1,507     $ 1,497  
Average invoice size - non-transportation   $ 5,181     $ 4,486     $ 4,061     $ 3,891     $ 3,467  

(1)  September 30, 2020 balance excludes the $2.0 million gain recognized on the increased value of the receivable due from CVLG resulting from the amended TFS acquisition agreement.
 

Deposits summarized as of:
 

    September 30,     June 30,     March 31,     December 31,     September 30,  
(Dollars in thousands)   2020     2020     2020     2019     2019  
Non-interest bearing demand   $ 1,315,900     $ 1,120,949     $ 846,412     $ 809,696     $ 754,233  
Interest bearing demand     634,272       648,309       583,445       580,323       587,123  
Individual retirement accounts     94,933       97,388       101,743       104,472       108,593  
Money market     384,476       397,914       412,376       497,105       424,162  
Savings     405,954       391,624       367,163       363,270       356,368  
Certificates of deposit     857,514       937,766       1,056,012       1,084,425       1,120,850  
Brokered time deposits     344,986       258,378       314,864       350,615       346,504  
Other brokered deposits     210,066       210,004                    
Total deposits   $ 4,248,101     $ 4,062,332     $ 3,682,015     $ 3,789,906     $ 3,697,833  


Net interest margin summarized for the three months ended:
 

  September 30, 2020     June 30, 2020  
  Average             Average     Average             Average  
(Dollars in thousands) Balance     Interest     Rate     Balance     Interest     Rate  
Interest earning assets:                                              
Interest earning cash balances $ 224,958     $ 73       0.13 %   $ 262,615     $ 79       0.12 %
Taxable securities   259,470       1,674       2.57 %     303,519       2,400       3.18 %
Tax-exempt securities   39,847       253       2.53 %     43,796       276       2.53 %
FHLB and other restricted stock   22,121       122       2.19 %     36,375       148       1.64 %
Loans   4,526,063       80,242       7.05 %     4,409,675       71,495       6.52 %
Total interest earning assets $ 5,072,459     $ 82,364       6.46 %   $ 5,055,980     $ 74,398       5.92 %
Non-interest earning assets:                                              
Other assets   446,249                       431,092                  
Total assets $ 5,518,708                     $ 5,487,072                  
Interest bearing liabilities:                                              
Deposits:                                              
Interest bearing demand $ 635,287     $ 207       0.13 %   $ 630,023     $ 287       0.18 %
Individual retirement accounts   95,962       300       1.24 %     100,211       359       1.44 %
Money market   385,620       263       0.27 %     398,276       363       0.37 %
Savings   400,102       152       0.15 %     382,521       144       0.15 %
Certificates of deposit   905,075       3,782       1.66 %     1,008,644       5,055       2.02 %
Brokered time deposits   247,928       941       1.51 %     301,262       1,374       1.83 %
Other brokered deposits   251,701       189       0.30 %     4,670       2       0.17 %
Total interest bearing deposits   2,921,675       5,834       0.79 %     2,825,607       7,584       1.08 %
Federal Home Loan Bank advances   255,163       143       0.22 %     678,225       572       0.34 %
Subordinated notes   87,425       1,348       6.13 %     87,368       1,321       6.08 %
Junior subordinated debentures   39,874       462       4.61 %     39,745       554       5.61 %
Other borrowings   236,297       198       0.33 %     137,045       116       0.34 %
Total interest bearing liabilities $ 3,540,434     $ 7,985       0.90 %   $ 3,767,990     $ 10,147       1.08 %
Non-interest bearing liabilities and equity:                                              
Non-interest bearing demand deposits   1,213,494                       1,038,979                  
Other liabilities   76,453                       69,845                  
Total equity   688,327                       610,258                  
Total liabilities and equity $ 5,518,708                     $ 5,487,072                  
Net interest income         $ 74,379                     $ 64,251          
Interest spread                   5.56 %                     4.84 %
Net interest margin                   5.83 %                     5.11 %

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.


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,   September 30,     June 30,     March 31,     December 31,     September 30,     September 30,     September 30,  
except per share amounts)   2020     2020     2020     2019     2019     2020     2019  
Net income available to common stockholders   $ 22,005     $ 13,440     $ (4,450 )   $ 16,709     $ 14,317     $ 30,995     $ 41,835  
Transaction costs     827                               827        
Gain on sale of subsidiary or division           (9,758 )                       (9,758 )      
Tax effect of adjustments     (197 )     2,451                         2,254        
Adjusted net income available to common stockholders - diluted   $ 22,635     $ 6,133     $ (4,450 )   $ 16,709     $ 14,317     $ 24,318     $ 41,835  
                                                         
Weighted average shares outstanding - diluted     24,802,388       24,074,442       24,314,329       25,254,862       25,734,471       24,464,215       26,331,740  
Adjusted diluted earnings per common share   $ 0.91     $ 0.25     $ (0.18 )   $ 0.66     $ 0.56     $ 0.99     $ 1.59  
                                                         
Average total stockholders' equity   $ 688,327     $ 610,258     $ 627,369     $ 647,546     $ 646,041     $ 642,151     $ 647,787  
Average preferred stock liquidation preference     (45,000 )     (5,934 )                       (17,080 )      
Average total common stockholders' equity     643,327       604,324       627,369       647,546       646,041       625,071       647,787  
Average goodwill and other intangibles     (192,682 )     (187,255 )     (189,359 )     (191,551 )     (193,765 )     (189,776 )     (196,035 )
Average tangible common stockholders' equity   $ 450,645     $ 417,069     $ 438,010     $ 455,995     $ 452,276     $ 435,295     $ 451,752  
                                                         
Net income available to common stockholders   $ 22,005     $ 13,440     $ (4,450 )   $ 16,709     $ 14,317     $ 30,995     $ 41,835  
Average tangible common equity     450,645       417,069       438,010       455,995       452,276       435,295       451,752  
Return on average tangible common equity     19.43 %     12.96 %     (4.09 %)     14.54 %     12.56 %     9.51 %     12.38 %
                                                         
Net interest income   $ 74,379     $ 64,251     $ 62,500     $ 66,408     $ 64,765     $ 201,130     $ 189,495  
Non-interest income     10,493       20,029       7,477       8,666       7,742       37,999       22,903  
Operating revenue     84,872       84,280       69,977       75,074       72,507       239,129       212,398  
Gain on sale of subsidiary or division           (9,758 )                       (9,758 )      
Adjusted operating revenue   $ 84,872     $ 74,522     $ 69,977     $ 75,074     $ 72,507     $ 229,371     $ 212,398  
Non-interest expenses   $ 55,297     $ 52,726     $ 54,753     $ 52,661     $ 52,153     $ 162,776     $ 151,423  
Transaction costs     (827 )                             (827 )      
Adjusted non-interest expenses   $ 54,470     $ 52,726     $ 54,753     $ 52,661     $ 52,153     $ 161,949     $ 151,423  
Adjusted efficiency ratio     64.18 %     70.75 %     78.24 %     70.15 %     71.93 %     70.61 %     71.29 %
                                                         
Adjusted net non-interest expense to average assets ratio:                                                        
Non-interest expenses   $ 55,297     $ 52,726     $ 54,753     $ 52,661     $ 52,153     $ 162,776     $ 151,423  
Transaction costs     (827 )                             (827 )      
Adjusted non-interest expenses   $ 54,470     $ 52,726     $ 54,753     $ 52,661     $ 52,153     $ 161,949     $ 151,423  
Total non-interest income   $ 10,493     $ 20,029     $ 7,477     $ 8,666     $ 7,742     $ 37,999     $ 22,903  
Gain on sale of subsidiary or division           (9,758 )                       (9,758 )      
Adjusted non-interest income   $ 10,493     $ 10,271     $ 7,477     $ 8,666     $ 7,742     $ 28,241     $ 22,903  
Adjusted net non-interest expenses   $ 43,977     $ 42,455     $ 47,276     $ 43,995     $ 44,411     $ 133,708     $ 128,520  
Average total assets   $ 5,518,708     $ 5,487,072     $ 4,906,547     $ 5,050,860     $ 4,840,540     $ 5,304,903     $ 4,680,234  
Adjusted net non-interest expense to average assets ratio     3.17 %     3.11 %     3.88 %     3.46 %     3.64 %     3.37 %     3.67 %
                                                         
Total stockholders' equity   $ 693,842     $ 656,871     $ 589,347     $ 636,590     $ 633,693     $ 693,842     $ 633,693  
Preferred stock liquidation preference     (45,000 )     (45,000 )                       (45,000 )      
Total common stockholders' equity     648,842       611,871       589,347       636,590       633,693       648,842       633,693  
Goodwill and other intangibles     (192,041 )     (186,162 )     (188,208 )     (190,286 )     (192,440 )     (192,041 )     (192,440 )
Tangible common stockholders' equity   $ 456,801     $ 425,709     $ 401,139     $ 446,304     $ 441,253     $ 456,801     $ 441,253  
Common shares outstanding     24,851,601       24,202,686       24,101,120       24,964,961       25,357,985       24,851,601       25,357,985  
Tangible book value per share   $ 18.38     $ 17.59     $ 16.64     $ 17.88     $ 17.40     $ 18.38     $ 17.40  
                                                         
Total assets at end of period   $ 5,836,787     $ 5,617,493     $ 5,353,729     $ 5,060,297     $ 5,039,697     $ 5,836,787     $ 5,039,697  
Goodwill and other intangibles     (192,041 )     (186,162 )     (188,208 )     (190,286 )     (192,440 )     (192,041 )     (192,440 )
Tangible assets at period end   $ 5,644,746     $ 5,431,331     $ 5,165,521     $ 4,870,011     $ 4,847,257     $ 5,644,746     $ 4,847,257  
Tangible common stockholders' equity ratio     8.09 %     7.84 %     7.77 %     9.16 %     9.10 %     8.09 %     9.10 %

 

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  
    September 30,     June 30,     March 31,     December 31,     September 30,     September 30,     September 30,  
(Dollars in thousands)   2020     2020     2020     2019     2019     2020     2019  
Loan discount accretion   $ 4,104     $ 2,139     $ 2,134     $ 1,555     $ 1,159     $ 8,377     $ 4,013  

 

3) Asset quality ratios exclude loans held for sale, except for non-performing assets to total assets.
   
4) Past due ratio has been revised to exclude nonaccrual loans with contractual payments less than 30 days past due.
   
5) Beginning January 1, 2020, the allowance for credit losses was calculated in accordance with Accounting Standards Codification Topic 326, “Financial Instruments – Credit Losses” (“ASC 326”).
   
6) 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

 

Triumph.jpg

Source: Triumph Bancorp, Inc.

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