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Triumph Bancorp Reports First Quarter Net Income to Common Stockholders of $33.1 Million

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DALLAS, April 21, 2021 (GLOBE NEWSWIRE) -- Triumph Bancorp, Inc. (Nasdaq: TBK) (“Triumph” or the “Company”) today announced earnings and operating results for the first 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 First Quarter Highlights

  • For the first quarter of 2021, net income to common shareholders was $33.1 million, and diluted earnings per share were $1.32.

  • Net interest income was $83.0 million.

  • Net interest margin was 6.06%. Yield on loans and the average cost of our total deposits were 7.24% and 0.28%, respectively.

  • Non-interest income was $14.3 million, including a $4.7 million gain on indemnification asset related to the Transport Financial Solutions ("TFS") acquisition as described below.

  • Non-interest expense was $60.9 million.

  • Credit loss expense for the quarter ended March 31, 2021 was a benefit of $7.8 million. Components of our credit loss expense included:

    • A $9.5 million reduction in current expected losses in the loan portfolio and off balance sheet loan commitments primarily due to improvements in our macroeconomic forecasts.

    • $1.9 million expense due to net increases in specific reserves, including $2.9 million expense related to the TFS acquisition as discussed below.

  • Net charge-offs were $41.3 million, or 0.85% of average loans, for the quarter including a fully reserved $41.3 million charge-off related to the TFS acquisition; $35.6 million of which was indemnified and reimbursed to us by Covenant Logistics Group, Inc. as discussed below.

  • The total dollar value of invoices purchased by Triumph Business Capital was $2.492 billion with an average invoice size of $2,097. The transportation average invoice size for the quarter was $1,974.

  • TriumphPay processed 2,529,673 invoices paying carriers a total of $2.302 billion.

  • On March 31, 2021, we, through TriumphPay, a division of our wholly-owned subsidiary TBK Bank, SSB, entered into a definitive agreement to acquire HubTran, Inc., a cloud-based provider of automation software for the transportation industry's back-office, for $97 million in cash subject to customary purchase price adjustments and closing conditions. The acquisition is subject to customary closing conditions, including receipt of regulatory approval, and is expected to close in the second quarter of 2021.

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. Developments related to that transaction impacted our operating results for the three months ended March 31, 2021 as follows:

  • During the quarter, new adverse developments with the largest of the three Over-Formula Advance clients caused us to charge-off the entire $41.3 million net Over-Formula Advance amount due from that client. This net charge-off had no impact on credit loss expense for the three months ended March 31, 2021 as the entire amount had been reserved in a prior period. In accordance with the amended terms of the transaction, CVLG reimbursed us for $35.6 million of this charge-off by drawing on its secured line of credit which is reflected on our March 31, 2021 Consolidated Balance Sheet as a performing equipment loan held for investment.

  • Given separate developments with the other two Over-Formula Advance clients, we reserved an additional $2.9 million reflected in credit loss expense during the three months ended March 31, 2021. At quarter end, our entire remaining over formula advance position was down from $62.1 million at December 31, 2020 to $10.6 million at March 31, 2021 and the $10.6 million balance at March 31, 2021 was fully reserved. The $2.9 million increase in required ACL as well as accretion of most of the fair value discount on the indemnification asset held at December 31, 2020 resulted in a $4.7 million gain on the indemnification asset which was recorded through non-interest income.

  • The net pretax income impact of the adjustments to credit loss expense and indemnification asset associated with the three Over-Formula Advance clients was pretax income of $1.8 million.

At March 31, 2021, the carrying value of the acquired over-formula advances was $10.6 million, the total reserve on acquired over-formula advances was $10.6 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 $5.2 million.

As of March 31, 2021 we carried a separate $19.2 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 also filed a declaratory judgment action in United States Federal District Court for the Southern District of Florida seeking a ruling that the USPS was obligated to make the payments represented by this receivable directly to us. Based on our legal analysis and discussions with our counsel advising us on this matter, we 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 March 31, 2021. The full amount of such receivable is reflected in non-performing and past due factored receivables as of March 31, 2021 in accordance with our policy. As of March 31, 2021, the entire $19.2 million Misdirected Payments amount was greater than 90 days past due.

Balance Sheet

Total loans held for investment increased $87.7 million, or 1.8%, during the first quarter to $5.085 billion at March 31, 2021. Average loans held for investment for the quarter decreased $24.7 million, or 0.5%, to $4.834 billion. The commercial finance portfolio increased $146.4 million, or 7.8%, to $2.021 billion, the national lending portfolio decreased $30.5 million, or 2.5%, to $1.191 billion, and the community banking portfolio decreased $28.2 million, or 1.5%, to $1.873 billion during the quarter.

Total deposits were $4.790 billion at March 31, 2021, an increase of $73.1 million, or 1.5%, in the first quarter of 2021. Non-interest-bearing deposits accounted for 34% of total deposits and non-time deposits accounted for 72% of total deposits at March 31, 2021.

Asset Quality and Allowance for Credit Loss

Our nonperforming assets ratio at March 31, 2021 was 1.15%. Approximately 2 basis points of this ratio at March 31, 2021 consisted of $1.4 million of the acquired Over-Formula Advance portfolio which represents the portion that is not covered by CVLG's indemnification. An additional 38 basis points of this ratio at March 31, 2021 consisted of $19.2 million of the Misdirected Payments, as discussed above.

Our past-due loan ratio at March 31, 2021 was 1.96%. Approximately 21 basis points of this ratio at March 31, 2021 consisted of $10.6 million of past due factored receivables related to the Over-Formula Advance portfolio. An additional 38 basis points of this ratio at March 31, 2021 consisted of the $19.2 million of Misdirected Payments, as discussed above.

We recorded total net charge-offs of $41.3 million, or 0.85% of average loans, for the quarter ended March 31, 2021. Net charge-offs were impacted by items related to our TFS acquisition, as discussed above.

Our ACL as a percentage of loans held for investment decreased 98 basis points during the quarter to 0.94% at March 31, 2021. In addition to the impact of an improved macroeconomic forecast, this decrease reflects a $41.3 million charge-off during the period related to the TFS acquisition as discussed above. The recorded reserves on the over-formula advance portfolio acquired from TFS constitute 21 basis points of the ACL ratio at March 31, 2021.

CARES Act and Paycheck Protection Program

As of March 31, 2021, our balance sheet reflected deferrals on outstanding loan balances of $85.3 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 March 31, 2021, these deferred balances carried accrued interest of $0.5 million.

During the three months ended March 31, 2021, we originated $83.5 million of PPP loans. As of March 31, 2021, we carried 2,670 PPP loans representing a balance of $237.3 million classified as commercial loans. We recognized $1.1 million in fees from the SBA on PPP loans during the three months ended March 31, 2021 and carry $6.6 million of deferred fees on PPP loans at quarter end. The remaining fees will be amortized over the respective lives of the loans.

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 Thursday, April 22, 2021. Todd Ritterbusch, Chief Lending Officer, and Geoff Brenner, Triumph Business Capital CEO, 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/tbk210422.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, including our pending 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

(Dollars in thousands)

March 31,
2021

December 31,
2020

September 30,
2020

June 30,
2020

March 31,
2020

Financial Highlights:

Total assets

$

6,099,628

$

5,935,791

$

5,836,787

$

5,617,493

$

5,353,729

Loans held for investment

$

5,084,512

$

4,996,776

$

4,852,911

$

4,393,311

$

4,320,548

Deposits

$

4,789,665

$

4,716,600

$

4,248,101

$

4,062,332

$

3,682,015

Net income available to common stockholders

$

33,122

$

31,328

$

22,005

$

13,440

$

(4,450

)

Performance Ratios - Annualized:

Return on average assets

2.29

%

2.21

%

1.65

%

0.99

%

(0.36

%)

Return on average total equity

18.42

%

17.73

%

13.24

%

8.86

%

(2.85

%)

Return on average common equity

19.14

%

18.44

%

13.61

%

8.94

%

(2.85

%)

Return on average tangible common equity (1)

26.19

%

25.70

%

19.43

%

12.96

%

(4.09

%)

Yield on loans(2)

7.24

%

7.20

%

7.05

%

6.52

%

7.22

%

Cost of interest bearing deposits

0.41

%

0.54

%

0.79

%

1.08

%

1.34

%

Cost of total deposits

0.28

%

0.38

%

0.56

%

0.79

%

1.05

%

Cost of total funds

0.42

%

0.51

%

0.67

%

0.85

%

1.23

%

Net interest margin(2)

6.06

%

6.20

%

5.83

%

5.11

%

5.63

%

Net non-interest expense to average assets

3.14

%

2.54

%

3.23

%

2.40

%

3.88

%

Adjusted net non-interest expense to average assets (1)

3.14

%

2.54

%

3.17

%

3.11

%

3.88

%

Efficiency ratio

62.57

%

55.95

%

65.15

%

62.56

%

78.24

%

Adjusted efficiency ratio (1)

62.57

%

55.95

%

64.18

%

70.75

%

78.24

%

Asset Quality:(3)

Past due to total loans

1.96

%

3.22

%

2.40

%

1.50

%

1.99

%

Non-performing loans to total loans

1.17

%

1.16

%

1.17

%

1.27

%

1.26

%

Non-performing assets to total assets

1.15

%

1.15

%

1.52

%

1.20

%

1.09

%

ACL to non-performing loans

80.87

%

164.98

%

159.67

%

97.66

%

82.37

%

ACL to total loans

0.94

%

1.92

%

1.88

%

1.24

%

1.04

%

Net charge-offs to average loans

0.85

%

0.03

%

0.02

%

0.02

%

0.04

%

Capital:

Tier 1 capital to average assets(4)

10.89

%

10.80

%

10.75

%

9.98

%

9.62

%

Tier 1 capital to risk-weighted assets(4)

11.28

%

10.60

%

10.32

%

10.57

%

9.03

%

Common equity tier 1 capital to risk-weighted assets(4)

9.72

%

9.05

%

8.72

%

8.84

%

8.24

%

Total capital to risk-weighted assets

13.58

%

13.03

%

12.94

%

13.44

%

11.63

%

Total equity to total assets

12.53

%

12.24

%

11.89

%

11.69

%

11.01

%

Tangible common stockholders' equity to tangible assets(1)

8.98

%

8.56

%

8.09

%

7.84

%

7.77

%

Per Share Amounts:

Book value per share

$

28.90

$

27.42

$

26.11

$

25.28

$

24.45

Tangible book value per share (1)

$

21.34

$

19.78

$

18.38

$

17.59

$

16.64

Basic earnings (loss) per common share

$

1.34

$

1.27

$

0.89

$

0.56

$

(0.18

)

Diluted earnings (loss) per common share

$

1.32

$

1.25

$

0.89

$

0.56

$

(0.18

)

Adjusted diluted earnings per common share(1)

$

1.32

$

1.25

$

0.91

$

0.25

$

(0.18

)

Shares outstanding end of period

24,882,929

24,868,218

24,851,601

24,202,686

24,101,120

Unaudited consolidated balance sheet as of:

(Dollars in thousands)

March 31,
2021

December 31,
2020

September 30,
2020

June 30,
2020

March 31,
2020

ASSETS

Total cash and cash equivalents

$

380,811

$

314,393

$

288,278

$

437,064

$

208,414

Securities - available for sale

205,330

224,310

242,802

331,126

302,122

Securities - held to maturity, net

5,828

5,919

6,096

6,285

8,217

Equity securities

5,826

5,826

6,040

6,411

5,678

Loans held for sale

22,663

24,546

36,716

50,382

4,431

Loans held for investment

5,084,512

4,996,776

4,852,911

4,393,311

4,320,548

Allowance for credit losses

(48,024

)

(95,739

)

(90,995

)

(54,613

)

(44,732

)

Loans, net

5,036,488

4,901,037

4,761,916

4,338,698

4,275,816

Assets held for sale

97,895

FHLB and other restricted stock

9,807

6,751

18,464

26,345

37,080

Premises and equipment, net

105,390

103,404

105,455

107,736

98,363

Other real estate owned ("OREO"), net

1,421

1,432

1,704

1,962

2,540

Goodwill and intangible assets, net

188,006

189,922

192,041

186,162

188,208

Bank-owned life insurance

41,805

41,608

41,440

41,298

41,122

Deferred tax asset, net

1,260

6,427

7,716

8,544

9,457

Indemnification asset

5,246

36,225

31,218

Other assets

89,747

73,991

96,901

75,480

74,386

Total assets

$

6,099,628

$

5,935,791

$

5,836,787

$

5,617,493

$

5,353,729

LIABILITIES

Non-interest bearing deposits

$

1,637,653

$

1,352,785

$

1,315,900

$

1,120,949

$

846,412

Interest bearing deposits

3,152,012

3,363,815

2,932,201

2,941,383

2,835,603

Total deposits

4,789,665

4,716,600

4,248,101

4,062,332

3,682,015

Customer repurchase agreements

2,668

3,099

14,192

6,732

3,693

Federal Home Loan Bank advances

180,000

105,000

435,000

455,000

850,000

Payment Protection Program Liquidity Facility

158,796

191,860

223,713

223,809

Subordinated notes

87,564

87,509

87,455

87,402

87,347

Junior subordinated debentures

40,201

40,072

39,944

39,816

39,689

Other liabilities

76,730

64,870

94,540

85,531

101,638

Total liabilities

5,335,624

5,209,010

5,142,945

4,960,622

4,764,382

EQUITY

Preferred Stock

45,000

45,000

45,000

45,000

Common stock

280

280

279

273

272

Additional paid-in-capital

490,699

489,151

488,094

472,795

474,441

Treasury stock, at cost

(103,059

)

(103,052

)

(102,942

)

(102,888

)

(102,677

)

Retained earnings

322,705

289,583

258,254

236,249

222,809

Accumulated other comprehensive income (loss)

8,379

5,819

5,157

5,442

(5,498

)

Total stockholders' equity

764,004

726,781

693,842

656,871

589,347

Total liabilities and equity

$

6,099,628

$

5,935,791

$

5,836,787

$

5,617,493

$

5,353,729

Unaudited consolidated statement of income:

For the Three Months Ended

(Dollars in thousands)

March 31,
2021

December 31,
2020

September 30,
2020

June 30,
2020

March 31,
2020

Interest income:

Loans, including fees

$

48,706

$

50,723

$

48,774

$

50,394

$

48,323

Factored receivables, including fees

37,795

37,573

31,468

21,101

24,292

Securities

1,650

1,519

1,927

2,676

2,107

FHLB and other restricted stock

76

56

122

148

204

Cash deposits

126

68

73

79

488

Total interest income

88,353

89,939

82,364

74,398

75,414

Interest expense:

Deposits

3,372

4,308

5,834

7,584

9,677

Subordinated notes

1,349

1,347

1,348

1,321

1,347

Junior subordinated debentures

442

452

462

554

646

Other borrowings

170

234

341

688

1,244

Total interest expense

5,333

6,341

7,985

10,147

12,914

Net interest income

83,020

83,598

74,379

64,251

62,500

Credit loss expense (benefit)

(7,845

)

4,680

(258

)

13,609

20,298

Net interest income after credit loss expense (benefit)

90,865

78,918

74,637

50,642

42,202

Non-interest income:

Service charges on deposits

1,787

1,643

1,470

573

1,588

Card income

1,972

1,949

2,091

1,941

1,800

Net OREO gains (losses) and valuation adjustments

(80

)

(217

)

(41

)

(101

)

(257

)

Net gains (losses) on sale of securities

16

3,109

63

38

Fee income

2,249

1,615

1,402

1,304

1,686

Insurance commissions

1,486

1,327

990

864

1,051

Gain on sale of subsidiary

9,758

Other

6,877

16,053

1,472

5,627

1,571

Total non-interest income

14,291

22,386

10,493

20,029

7,477

Non-interest expense:

Salaries and employee benefits

35,980

33,798

31,651

30,804

30,722

Occupancy, furniture and equipment

5,779

7,046

5,574

4,964

5,182

FDIC insurance and other regulatory assessments

977

350

360

495

315

Professional fees

2,545

2,326

3,265

1,651

2,107

Amortization of intangible assets

1,975

2,065

2,141

2,046

2,078

Advertising and promotion

890

1,170

1,105

1,151

1,292

Communications and technology

5,900

5,639

5,569

5,444

5,501

Other

6,846

6,904

5,632

6,171

7,556

Total non-interest expense

60,892

59,298

55,297

52,726

54,753

Net income (loss) before income tax

44,264

42,006

29,833

17,945

(5,074

)

Income tax expense (benefit)

10,341

9,876

6,929

4,505

(624

)

Net income (loss)

$

33,923

$

32,130

$

22,904

$

13,440

$

(4,450

)

Dividends on preferred stock

(801

)

(802

)

(899

)

Net income available to common stockholders

$

33,122

$

31,328

$

22,005

$

13,440

$

(4,450

)

Earnings per share:

For the Three Months Ended

(Dollars in thousands)

March 31,
2021

December 31,
2020

September 30,
2020

June 30,
2020

March 31,
2020

Basic

Net income (loss) to common stockholders

$

33,122

$

31,328

$

22,005

$

13,440

$

(4,450

)

Weighted average common shares outstanding

24,675,109

24,653,099

24,592,092

23,987,049

24,314,329

Basic earnings (loss) per common share

$

1.34

$

1.27

$

0.89

$

0.56

$

(0.18

)

Diluted

Net income (loss) to common stockholders - diluted

$

33,122

$

31,328

$

22,005

$

13,440

$

(4,450

)

Weighted average common shares outstanding

24,675,109

24,653,099

24,592,092

23,987,049

24,314,329

Dilutive effects of:

Assumed exercises of stock options

130,016

101,664

48,102

38,627

Restricted stock awards

169,514

136,239

67,907

37,751

Restricted stock units

66,714

50,156

18,192

4,689

Performance stock units - market based

128,167

112,228

76,095

6,326

Performance stock units - performance based

Employee stock purchase plan

1,418

Weighted average shares outstanding - diluted

25,170,938

25,053,386

24,802,388

24,074,442

24,314,329

Diluted earnings (loss) per common share

$

1.32

$

1.25

$

0.89

$

0.56

$

(0.18

)

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

For the Three Months Ended

March 31,
2021

December 31,
2020

September 30,
2020

June 30,
2020

March 31,
2020

Stock options

98,513

148,528

225,055

Restricted stock awards

109,834

147,748

Restricted stock units

38,801

55,228

Performance stock units - market based

76,461

67,707

Performance stock units - performance based

256,625

256,625

261,125

262,625

254,000

Employee stock purchase plan

Loans held for investment summarized as of:

(Dollars in thousands)

March 31,
2021

December 31,
2020

September 30,
2020

June 30,
2020

March 31,
2020

Commercial real estate

$

784,110

$

779,158

$

762,531

$

910,261

$

985,757

Construction, land development, land

223,841

219,647

244,512

213,617

198,050

1-4 family residential properties

142,859

157,147

164,785

168,707

169,703

Farmland

97,835

103,685

110,966

125,259

133,579

Commercial

1,581,125

1,562,957

1,536,903

1,518,656

1,412,822

Factored receivables

1,208,718

1,120,770

1,016,337

561,576

661,100

Consumer

14,332

15,838

17,106

18,450

20,326

Mortgage warehouse

1,031,692

1,037,574

999,771

876,785

739,211

Total loans

$

5,084,512

$

4,996,776

$

4,852,911

4,393,311

$

4,320,548

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:

(Dollars in thousands)

March 31,
2021

December 31,
2020

September 30,
2020

June 30,
2020

March 31,
2020

Commercial - Equipment

$

623,248

$

573,163

$

509,849

$

487,145

$

479,483

Commercial - Asset-based lending

188,825

180,488

160,711

176,235

245,001

Factored receivables

1,208,718

1,120,770

1,016,337

561,576

661,100

Commercial finance

$

2,020,791

$

1,874,421

$

1,686,897

$

1,224,956

$

1,385,584

Commercial finance % of total loans

40

%

38

%

35

%

28

%

32

%

National lending loans are further summarized below:

(Dollars in thousands)

March 31,
2021

December 31,
2020

September 30,
2020

June 30,
2020

March 31,
2020

Mortgage warehouse

$

1,031,692

$

1,037,574

$

999,771

$

876,785

$

739,211

Commercial - Liquid credit

159,436

184,027

188,034

192,118

172,380

National lending

$

1,191,128

$

1,221,601

$

1,187,805

$

1,068,903

$

911,591

National lending % of total loans

23

%

24

%

24

%

24

%

21

%

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)

March 31,
2021

December 31,
2020

September 30,
2020

June 30,
2020

March 31,
2020

Average community banking

$

1,843,002

$

1,963,435

$

2,047,059

$

2,111,615

$

2,041,256

Average commercial finance

1,899,264

1,798,550

1,480,593

1,259,584

1,292,749

Average national lending

1,106,010

1,114,822

998,411

1,038,476

711,837

Average total loans

$

4,848,276

$

4,876,807

$

4,526,063

$

4,409,675

$

4,045,842

Community banking yield

4.90

%

5.46

%

5.05

%

5.23

%

5.67

%

Commercial finance yield

10.81

%

10.74

%

11.23

%

10.21

%

11.00

%

National lending yield

5.00

%

4.58

%

4.98

%

4.67

%

4.80

%

Total loan yield

7.24

%

7.20

%

7.05

%

6.52

%

7.22

%

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:

March 31,
2021

December 31,
2020

September 30,
2020

June 30,
2020

March 31,
2020

Factored receivable period end balance

$

1,118,972,000

$

1,036,369,000

$

948,987,000

$

528,379,000

$

641,366,000

Yield on average receivable balance

13.85

%

13.81

%

15.65

%

15.48

%

16.13

%

Current quarter charge-off rate(1)

3.95

%

0.02

%

0.09

%

0.16

%

0.23

%

Factored receivables - transportation concentration

90

%

89

%

88

%

85

%

80

%

Interest income, including fees

$

35,824,000

$

35,439,000

$

30,068,000

$

20,387,000

$

23,497,000

Non-interest income(2)

1,757,000

1,358,000

1,157,000

1,072,000

1,296,000

Factored receivable total revenue

37,581,000

36,797,000

31,225,000

21,459,000

24,793,000

Average net funds employed

936,528,000

924,899,000

694,170,000

477,112,000

537,138,000

Yield on average net funds employed

16.27

%

15.83

%

17.89

%

18.09

%

18.56

%

Accounts receivable purchased

$

2,492,468,000

$

2,461,249,000

$

1,984,490,000

$

1,238,465,000

$

1,450,618,000

Number of invoices purchased

1,188,678

1,189,271

1,027,839

812,902

878,767

Average invoice size

$

2,097

$

2,070

$

1,931

$

1,524

$

1,651

Average invoice size - transportation

$

1,974

$

1,943

$

1,787

$

1,378

$

1,481

Average invoice size - non-transportation

$

4,775

$

5,091

$

5,181

$

4,486

$

4,061


(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.


Deposits summarized as of:

(Dollars in thousands)

March 31,
2021

December 31,
2020

September 30,
2020

June 30,
2020

March 31,
2020

Non-interest bearing demand

$

1,637,653

$

1,352,785

$

1,315,900

$

1,120,949

$

846,412

Interest bearing demand

729,364

688,680

634,272

648,309

583,445

Individual retirement accounts

89,748

92,584

94,933

97,388

101,743

Money market

402,070

393,325

384,476

397,914

412,376

Savings

464,035

421,488

405,954

391,624

367,163

Certificates of deposit

740,694

790,844

857,514

937,766

1,056,012

Brokered time deposits

516,006

516,786

344,986

258,378

314,864

Other brokered deposits

210,095

460,108

210,066

210,004

Total deposits

$

4,789,665

$

4,716,600

$

4,248,101

$

4,062,332

$

3,682,015

Net interest margin summarized for the three months ended:

March 31, 2021

December 31, 2020

(Dollars in thousands)

Average
Balance

Interest

Average
Rate

Average
Balance

Interest

Average
Rate

Interest earning assets:

Interest earning cash balances

$

478,275

$

126

0.11

%

$

230,893

$

68

0.12

%

Taxable securities

189,407

1,428

3.06

%

202,867

1,283

2.52

%

Tax-exempt securities

34,717

222

2.59

%

37,070

236

2.53

%

FHLB and other restricted stock

8,511

76

3.62

%

15,759

56

1.41

%

Loans

4,848,275

86,501

7.24

%

4,876,807

88,296

7.20

%

Total interest earning assets

$

5,559,185

$

88,353

6.45

%

$

5,363,396

$

89,939

6.67

%

Non-interest earning assets:

Other assets

454,483

425,153

Total assets

$

6,013,668

$

5,788,549

Interest bearing liabilities:

Deposits:

Interest bearing demand

$

701,759

$

384

0.22

%

$

662,458

$

235

0.14

%

Individual retirement accounts

91,074

186

0.83

%

94,328

250

1.05

%

Money market

398,015

229

0.23

%

395,900

257

0.26

%

Savings

446,322

167

0.15

%

413,214

157

0.15

%

Certificates of deposit

765,244

1,955

1.04

%

814,954

2,633

1.29

%

Brokered time deposits

167,881

179

0.43

%

221,346

528

0.95

%

Other brokered deposits

803,009

272

0.14

%

560,805

248

0.18

%

Total interest bearing deposits

3,373,304

3,372

0.41

%

3,163,005

4,308

0.54

%

Federal Home Loan Bank advances

35,833

24

0.27

%

80,217

43

0.21

%

Subordinated notes

87,532

1,349

6.25

%

87,476

1,347

6.13

%

Junior subordinated debentures

40,125

442

4.47

%

39,996

452

4.50

%

Other borrowings

171,902

146

0.34

%

223,501

191

0.34

%

Total interest bearing liabilities

$

3,708,696

$

5,333

0.58

%

$

3,594,195

$

6,341

0.70

%

Non-interest bearing liabilities and equity:

Non-interest bearing demand deposits

1,494,001

1,392,389

Other liabilities

64,122

81,073

Total equity

746,849

720,892

Total liabilities and equity

$

6,013,668

$

5,788,549

Net interest income

$

83,020

$

83,598

Interest spread

5.87

%

5.97

%

Net interest margin

6.06

%

6.20

%


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

(Dollars in thousands,
except per share amounts)

March 31,
2021

December 31,
2020

September 30,
2020

June 30,
2020

March 31,
2020

Net income available to common stockholders

$

33,122

$

31,328

$

22,005

$

13,440

$

(4,450

)

Transaction costs

827

Gain on sale of subsidiary or division

(9,758

)

Tax effect of adjustments

(197

)

2,451

Adjusted net income available to common stockholders - diluted

$

33,122

$

31,328

$

22,635

$

6,133

$

(4,450

)

Weighted average shares outstanding - diluted

25,170,938

25,053,386

24,802,388

24,074,442

24,314,329

Adjusted diluted earnings per common share

$

1.32

$

1.25

$

0.91

$

0.25

$

(0.18

)

Average total stockholders' equity

$

746,849

$

720,892

$

688,327

$

610,258

$

627,369

Average preferred stock liquidation preference

(45,000

)

(45,000

)

(45,000

)

(5,934

)

Average total common stockholders' equity

701,849

675,892

643,327

604,324

627,369

Average goodwill and other intangibles

(188,980

)

(191,017

)

(192,682

)

(187,255

)

(189,359

)

Average tangible common stockholders' equity

$

512,869

$

484,875

$

450,645

$

417,069

$

438,010

Net income available to common stockholders

$

33,122

$

31,328

$

22,005

$

13,440

$

(4,450

)

Average tangible common equity

512,869

484,875

450,645

417,069

438,010

Return on average tangible common equity

26.19

%

25.70

%

19.43

%

12.96

%

(4.09

%)

Net interest income

$

83,020

$

83,598

$

74,379

$

64,251

$

62,500

Non-interest income

14,291

22,386

10,493

20,029

7,477

Operating revenue

97,311

105,984

84,872

84,280

69,977

Gain on sale of subsidiary or division

(9,758

)

Adjusted operating revenue

$

97,311

$

105,984

$

84,872

$

74,522

$

69,977

Non-interest expenses

$

60,892

$

59,298

$

55,297

$

52,726

$

54,753

Transaction costs

(827

)

Adjusted non-interest expenses

$

60,892

$

59,298

$

54,470

$

52,726

$

54,753

Adjusted efficiency ratio

62.57

%

55.95

%

64.18

%

70.75

%

78.24

%

Adjusted net non-interest expense to average assets ratio:

Non-interest expenses

$

60,892

$

59,298

$

55,297

$

52,726

$

54,753

Transaction costs

(827

)

Adjusted non-interest expenses

$

60,892

$

59,298

$

54,470

$

52,726

$

54,753

Total non-interest income

$

14,291

$

22,386

$

10,493

$

20,029

$

7,477

Gain on sale of subsidiary or division

(9,758

)

Adjusted non-interest income

$

14,291

$

22,386

$

10,493

$

10,271

$

7,477

Adjusted net non-interest expenses

$

46,601

$

36,912

$

43,977

$

42,455

$

47,276

Average total assets

$

6,013,668

$

5,788,549

$

5,518,708

$

5,487,072

$

4,906,547

Adjusted net non-interest expense to average assets ratio

3.14

%

2.54

%

3.17

%

3.11

%

3.88

%

Total stockholders' equity

$

764,004

$

726,781

$

693,842

$

656,871

$

589,347

Preferred stock liquidation preference

(45,000

)

(45,000

)

(45,000

)

(45,000

)

Total common stockholders' equity

719,004

681,781

648,842

611,871

589,347

Goodwill and other intangibles

(188,006

)

(189,922

)

(192,041

)

(186,162

)

(188,208

)

Tangible common stockholders' equity

$

530,998

$

491,859

$

456,801

$

425,709

$

401,139

Common shares outstanding

24,882,929

24,868,218

24,851,601

24,202,686

24,101,120

Tangible book value per share

$

21.34

$

19.78

$

18.38

$

17.59

$

16.64

Total assets at end of period

$

6,099,628

$

5,935,791

$

5,836,787

$

5,617,493

$

5,353,729

Goodwill and other intangibles

(188,006

)

(189,922

)

(192,041

)

(186,162

)

(188,208

)

Tangible assets at period end

$

5,911,622

$

5,745,869

$

5,644,746

$

5,431,331

$

5,165,521

Tangible common stockholders' equity ratio

8.98

%

8.56

%

8.09

%

7.84

%

7.77

%


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

(Dollars in thousands)

March 31,
2021

December 31,
2020

September 30,
2020

June 30,
2020

March 31,
2020

Loan discount accretion

$

3,501

$

2,334

$

4,104

$

2,139

$

2,134


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