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Triumph Bancorp Reports Second Quarter Net Income to Common Stockholders of $27.2 million

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

  • For the second quarter of 2021, net income to common shareholders was $27.2 million, and diluted earnings per share were $1.08.

  • Adjusted diluted earnings per share were $1.17 for the second quarter of 2021, which exclude transaction costs related to the acquisition of HubTran, Inc., net of taxes.

  • Net interest income was $90.3 million.

  • Non-interest income was $13.9 million.

  • Non-interest expense was $70.8 million, including $3.0 million of transaction costs related to the HubTran, Inc. acquisition.

  • Net interest margin was 6.47%. Yield on loans and the average cost of our total deposits were 7.77% and 0.20%, respectively.

  • Credit loss expense for the quarter ended June 30, 2021 was a benefit of $1.8 million primarily due to improvements in our macroeconomic forecasts and changes in the volume and mix of our underlying loan portfolio.

  • Net charge-offs were $0.4 million, or 0.01% of average loans, for the quarter.

  • The total dollar value of invoices purchased by Triumph Business Capital was $3.068 billion with an average invoice size of $2,189. The transportation average invoice size for the quarter was $2,090.

  • TriumphPay processed 3,165,119 invoices paying carriers a total of $3.427 billion.

  • On June 1, 2021, we, through TriumphPay, a division of our wholly-owned subsidiary TBK Bank, SSB, acquired HubTran, Inc., a cloud-based provider of automation software for the transportation industry's back-office, for $97 million in cash. As part of the acquisition, we acquired $27.3 million of intangible assets and $73.7 million of goodwill.

Balance Sheet

Total loans held for investment decreased $253.3 million, or 5.0%, during the second quarter to $4.831 billion at June 30, 2021. Average loans held for investment for the quarter decreased $35.5 million, or 0.7%, to $4.799 billion.

Total deposits were $4.725 billion at June 30, 2021, a decrease of $64.2 million, or 1.3%, in the second quarter of 2021. Non-interest-bearing deposits accounted for 38% of total deposits and non-time deposits accounted for 79% of total deposits at June 30, 2021.

Asset Quality and Allowance for Credit Loss

Our nonperforming assets ratio at June 30, 2021 was 0.97%. Approximately 2 basis points of this ratio at June 30, 2021 consisted of $1.5 million of the acquired Over-Formula Advance portfolio which represents the portion that is not covered by CVLG's indemnification. An additional 32 basis points of this ratio at June 30, 2021 consisted of $19.4 million of the Misdirected Payments. Over-Formula Advances and Misdirected Payments are discussed in greater detail below.

Our past-due loan ratio at June 30, 2021 was 2.28%. Approximately 21 basis points of this ratio at June 30, 2021 consisted of $10.1 million of past due factored receivables related to the Over-Formula Advance portfolio. An additional 40 basis points of this ratio at June 30, 2021 consisted of the $19.4 million of Misdirected Payments, as discussed below.

Our ACL as a percentage of loans held for investment increased 1 basis point during the quarter to 0.95% at June 30, 2021.

CARES Act and Paycheck Protection Program

As of June 30, 2021, our balance sheet reflected deferrals on outstanding loan balances of $53.7 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 June 30, 2021, these deferred balances carried accrued interest of $0.2 million.

As of June 30, 2021, we carried 1,390 PPP loans representing a balance of $135.3 million classified as commercial loans. We recognized $1.8 million in fees from the SBA on PPP loans during the three months ended June 30, 2021 and carry $5.2 million of deferred fees on PPP loans at quarter end. The remaining fees will be amortized over the respective lives of the loans.

Items related to our July 2020 acquisition of TFS

As disclosed on our SEC Forms 8-K filed on July 8, 2020 and September 23, 2020, we acquired the transportation factoring assets of TFS, a wholly owned subsidiary of Covenant Logistics Group, Inc. ("CVLG"), and subsequently amended the terms of that transaction. There were no material developments related to that transaction that impacted our operating results for the three months ended June 30, 2021.

At June 30, 2021, the carrying value of the acquired over-formula advances was $10.1 million, the total reserve on acquired over-formula advances was $10.1 million and the balance of our indemnification asset, the value of the payment that would be due to us from CVLG in the event that these over-advances are charged off, was approximately $5 million.

As of June 30, 2021 we carried a separate $19.4 million receivable (the “Misdirected Payments”) payable by the United States Postal Service (“USPS”) arising from accounts factored to the largest over-formula advance carrier. This amount is separate from the acquired Over-Formula Advances. The amounts represented by this receivable were paid by the USPS directly to such customer in contravention of notices of assignment delivered to, and previously honored by, the USPS, which amount was then not remitted back to us by such customer as required. The USPS disputes their obligation to make such payment, citing purported deficiencies in the notices delivered to them. In addition to commencing litigation against such customer, we have 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 June 30, 2021. The full amount of such receivable is reflected in non-performing and past due factored receivables as of June 30, 2021 in accordance with our policy. As of June 30, 2021, the entire $19.4 million Misdirected Payments amount was greater than 90 days past due.

Conference Call Information

Aaron P. Graft, Vice Chairman and CEO and 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, July 22, 2021. 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/tbk210722.html. An archive of this conference call will subsequently be available at this same location on the Company’s website.

About Triumph

Triumph Bancorp, Inc. (Nasdaq: TBK) is a financial holding company headquartered in Dallas, Texas. Triumph offers a diversified line of banking, payments, and factoring services products through its bank subsidiary, TBK Bank, SSB. www.triumphbancorp.com

Forward-Looking Statements

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

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

Non-GAAP Financial Measures

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

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

As of and for the Three Months Ended

As of and for the Six Months Ended

(Dollars in thousands)

June 30,
2021

March 31,
2021

December 31,
2020

September 30,
2020

June 30,
2020

June 30,
2021

June 30,
2020

Financial Highlights:

Total assets

$

6,015,877

$

6,099,628

$

5,935,791

$

5,836,787

$

5,617,493

$

6,015,877

$

5,617,493

Loans held for investment

$

4,831,215

$

5,084,512

$

4,996,776

$

4,852,911

$

4,393,311

$

4,831,215

$

4,393,311

Deposits

$

4,725,450

$

4,789,665

$

4,716,600

$

4,248,101

$

4,062,332

$

4,725,450

$

4,062,332

Net income available to common stockholders

$

27,180

$

33,122

$

31,328

$

22,005

$

13,440

$

60,302

$

8,990

Performance Ratios - Annualized:

Return on average assets

1.84

%

2.29

%

2.21

%

1.65

%

0.99

%

2.06

%

0.35

%

Return on average total equity

14.27

%

18.42

%

17.73

%

13.24

%

8.86

%

16.28

%

2.92

%

Return on average common equity

14.70

%

19.14

%

18.44

%

13.61

%

8.94

%

16.85

%

2.94

%

Return on average tangible common equity (1)

20.92

%

26.19

%

25.70

%

19.43

%

12.96

%

23.52

%

4.23

%

Yield on loans(2)

7.77

%

7.24

%

7.20

%

7.05

%

6.52

%

7.51

%

6.85

%

Cost of interest bearing deposits

0.31

%

0.41

%

0.54

%

0.79

%

1.08

%

0.36

%

1.21

%

Cost of total deposits

0.20

%

0.28

%

0.38

%

0.56

%

0.79

%

0.24

%

0.92

%

Cost of total funds

0.34

%

0.42

%

0.51

%

0.67

%

0.85

%

0.38

%

1.03

%

Net interest margin(2)

6.47

%

6.06

%

6.20

%

5.83

%

5.11

%

6.27

%

5.36

%

Net non-interest expense to average assets

3.75

%

3.14

%

2.54

%

3.23

%

2.40

%

3.45

%

3.09

%

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

3.55

%

3.14

%

2.54

%

3.17

%

3.11

%

3.35

%

3.47

%

Efficiency ratio

67.96

%

62.57

%

55.95

%

65.15

%

62.56

%

65.36

%

69.68

%

Adjusted efficiency ratio (1)

65.09

%

62.57

%

55.95

%

64.18

%

70.75

%

63.87

%

74.38

%

Asset Quality:(3)

Past due to total loans

2.28

%

1.96

%

3.22

%

2.40

%

1.50

%

2.28

%

1.50

%

Non-performing loans to total loans

1.06

%

1.17

%

1.16

%

1.17

%

1.27

%

1.06

%

1.27

%

Non-performing assets to total assets

0.97

%

1.15

%

1.15

%

1.52

%

1.20

%

0.97

%

1.20

%

ACL to non-performing loans

88.92

%

80.87

%

164.98

%

159.67

%

97.66

%

88.92

%

97.66

%

ACL to total loans

0.95

%

0.94

%

1.92

%

1.88

%

1.24

%

0.95

%

1.24

%

Net charge-offs to average loans

0.01

%

0.85

%

0.03

%

0.02

%

0.02

%

0.86

%

0.06

%

Capital:

Tier 1 capital to average assets(4)

9.73

%

10.89

%

10.80

%

10.75

%

9.98

%

9.73

%

9.98

%

Tier 1 capital to risk-weighted assets(4)

10.33

%

11.28

%

10.60

%

10.32

%

10.57

%

10.33

%

10.57

%

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

8.74

%

9.72

%

9.05

%

8.72

%

8.84

%

8.74

%

8.84

%

Total capital to risk-weighted assets

12.65

%

13.58

%

13.03

%

12.94

%

13.44

%

12.65

%

13.44

%

Total equity to total assets

13.17

%

12.53

%

12.24

%

11.89

%

11.69

%

13.17

%

11.69

%

Tangible common stockholders' equity to tangible assets(1)

8.04

%

8.98

%

8.56

%

8.09

%

7.84

%

8.04

%

7.84

%

Per Share Amounts:

Book value per share

$

29.76

$

28.90

$

27.42

$

26.11

$

25.28

$

29.76

$

25.28

Tangible book value per share (1)

$

18.35

$

21.34

$

19.78

$

18.38

$

17.59

$

18.35

$

17.59

Basic earnings (loss) per common share

$

1.10

$

1.34

$

1.27

$

0.89

$

0.56

$

2.44

$

0.37

Diluted earnings (loss) per common share

$

1.08

$

1.32

$

1.25

$

0.89

$

0.56

$

2.39

$

0.37

Adjusted diluted earnings per common share(1)

$

1.17

$

1.32

$

1.25

$

0.91

$

0.25

$

2.48

$

0.07

Shares outstanding end of period

25,109,703

24,882,929

24,868,218

24,851,601

24,202,686

25,109,703

24,202,686

Unaudited consolidated balance sheet as of:

(Dollars in thousands)

June 30,
2021

March 31,
2021

December 31,
2020

September 30,
2020

June 30,
2020

ASSETS

Total cash and cash equivalents

$

444,439

$

380,811

$

314,393

$

288,278

$

437,064

Securities - available for sale

193,627

205,330

224,310

242,802

331,126

Securities - held to maturity, net

5,658

5,828

5,919

6,096

6,285

Equity securities

5,854

5,826

5,826

6,040

6,411

Loans held for sale

31,136

22,663

24,546

36,716

50,382

Loans held for investment

4,831,215

5,084,512

4,996,776

4,852,911

4,393,311

Allowance for credit losses

(45,694

)

(48,024

)

(95,739

)

(90,995

)

(54,613

)

Loans, net

4,785,521

5,036,488

4,901,037

4,761,916

4,338,698

FHLB and other restricted stock

8,096

9,807

6,751

18,464

26,345

Premises and equipment, net

106,720

105,390

103,404

105,455

107,736

Other real estate owned ("OREO"), net

1,013

1,421

1,432

1,704

1,962

Goodwill and intangible assets, net

286,567

188,006

189,922

192,041

186,162

Bank-owned life insurance

41,912

41,805

41,608

41,440

41,298

Deferred tax asset, net

1,260

6,427

7,716

8,544

Indemnification asset

5,246

5,246

36,225

31,218

Other assets

100,088

89,747

73,991

96,901

75,480

Total assets

$

6,015,877

$

6,099,628

$

5,935,791

$

5,836,787

$

5,617,493

LIABILITIES

Non-interest bearing deposits

$

1,803,552

$

1,637,653

$

1,352,785

$

1,315,900

$

1,120,949

Interest bearing deposits

2,921,898

3,152,012

3,363,815

2,932,201

2,941,383

Total deposits

4,725,450

4,789,665

4,716,600

4,248,101

4,062,332

Customer repurchase agreements

9,243

2,668

3,099

14,192

6,732

Federal Home Loan Bank advances

130,000

180,000

105,000

435,000

455,000

Payment Protection Program Liquidity Facility

139,673

158,796

191,860

223,713

223,809

Subordinated notes

87,620

87,564

87,509

87,455

87,402

Junior subordinated debentures

40,333

40,201

40,072

39,944

39,816

Deferred tax liability, net

3,333

Other liabilities

87,837

76,730

64,870

94,540

85,531

Total liabilities

5,223,489

5,335,624

5,209,010

5,142,945

4,960,622

EQUITY

Preferred Stock

45,000

45,000

45,000

45,000

45,000

Common stock

282

280

280

279

273

Additional paid-in-capital

494,224

490,699

489,151

488,094

472,795

Treasury stock, at cost

(104,486

)

(103,059

)

(103,052

)

(102,942

)

(102,888

)

Retained earnings

349,885

322,705

289,583

258,254

236,249

Accumulated other comprehensive income (loss)

7,483

8,379

5,819

5,157

5,442

Total stockholders' equity

792,388

764,004

726,781

693,842

656,871

Total liabilities and equity

$

6,015,877

$

6,099,628

$

5,935,791

$

5,836,787

$

5,617,493

Unaudited consolidated statement of income:

For the Three Months Ended

For the Six Months Ended

(Dollars in thousands)

June 30,
2021

March 31,
2021

December 31,
2020

September 30,
2020

June 30,
2020

June 30,
2021

June 30,
2020

Interest income:

Loans, including fees

$

45,988

$

48,706

$

50,723

$

48,774

$

50,394

$

94,694

$

98,717

Factored receivables, including fees

47,328

37,795

37,573

31,468

21,101

85,123

45,393

Securities

1,187

1,650

1,519

1,927

2,676

2,837

4,783

FHLB and other restricted stock

27

76

56

122

148

103

352

Cash deposits

158

126

68

73

79

284

567

Total interest income

94,688

88,353

89,939

82,364

74,398

183,041

149,812

Interest expense:

Deposits

2,470

3,372

4,308

5,834

7,584

5,842

17,261

Subordinated notes

1,350

1,349

1,347

1,348

1,321

2,699

2,668

Junior subordinated debentures

446

442

452

462

554

888

1,200

Other borrowings

140

170

234

341

688

310

1,932

Total interest expense

4,406

5,333

6,341

7,985

10,147

9,739

23,061

Net interest income

90,282

83,020

83,598

74,379

64,251

173,302

126,751

Credit loss expense (benefit)

(1,806

)

(7,845

)

4,680

(258

)

13,609

(9,651

)

33,907

Net interest income after credit loss expense (benefit)

92,088

90,865

78,918

74,637

50,642

182,953

92,844

Non-interest income:

Service charges on deposits

1,857

1,787

1,643

1,470

573

3,644

2,161

Card income

2,225

1,972

1,949

2,091

1,941

4,197

3,741

Net OREO gains (losses) and valuation adjustments

(287

)

(80

)

(217

)

(41

)

(101

)

(367

)

(358

)

Net gains (losses) on sale of securities

1

16

3,109

63

1

101

Fee income

4,470

2,249

1,615

1,402

1,304

6,719

2,990

Insurance commissions

1,272

1,486

1,327

990

864

2,758

1,915

Gain on sale of subsidiary

9,758

9,758

Other

4,358

6,877

16,053

1,472

5,627

11,235

7,198

Total non-interest income

13,896

14,291

22,386

10,493

20,029

28,187

27,506

Non-interest expense:

Salaries and employee benefits

41,658

35,980

33,798

31,651

30,804

77,638

61,526

Occupancy, furniture and equipment

6,112

5,779

7,046

5,574

4,964

11,891

10,146

FDIC insurance and other regulatory assessments

500

977

350

360

495

1,477

810

Professional fees

5,052

2,545

2,326

3,265

1,651

7,597

3,758

Amortization of intangible assets

2,428

1,975

2,065

2,141

2,046

4,403

4,124

Advertising and promotion

1,241

890

1,170

1,105

1,151

2,131

2,443

Communications and technology

6,028

5,900

5,639

5,569

5,444

11,928

10,945

Other

7,779

6,846

6,904

5,632

6,171

14,625

13,727

Total non-interest expense

70,798

60,892

59,298

55,297

52,726

131,690

107,479

Net income before income tax

35,186

44,264

42,006

29,833

17,945

79,450

12,871

Income tax expense

7,204

10,341

9,876

6,929

4,505

17,545

3,881

Net income

$

27,982

$

33,923

$

32,130

$

22,904

$

13,440

$

61,905

$

8,990

Dividends on preferred stock

(802

)

(801

)

(802

)

(899

)

(1,603

)

Net income available to common stockholders

$

27,180

$

33,122

$

31,328

$

22,005

$

13,440

$

60,302

$

8,990

Earnings per share:

For the Three Months Ended

Six Months Ended June 30,

(Dollars in thousands)

June 30,
2021

March 31,
2021

December 31,
2020

September 30,
2020

June 30,
2020

June 30,
2021

June 30,
2020

Basic

Net income to common stockholders

$

27,180

$

33,122

$

31,328

$

22,005

$

13,440

$

60,302

$

8,990

Weighted average common shares outstanding

24,724,128

24,675,109

24,653,099

24,592,092

23,987,049

24,699,754

24,150,689

Basic earnings per common share

$

1.10

$

1.34

$

1.27

$

0.89

$

0.56

$

2.44

$

0.37

Diluted

Net income to common stockholders - diluted

$

27,180

$

33,122

$

31,328

$

22,005

$

13,440

$

60,302

$

8,990

Weighted average common shares outstanding

24,724,128

24,675,109

24,653,099

24,592,092

23,987,049

24,699,754

24,150,689

Dilutive effects of:

Assumed exercises of stock options

134,358

130,016

101,664

48,102

38,627

133,219

55,753

Restricted stock awards

139,345

169,514

136,239

67,907

37,751

156,029

66,364

Restricted stock units

73,155

66,714

50,156

18,192

4,689

70,236

13,255

Performance stock units - market based

134,313

128,167

112,228

76,095

6,326

131,240

8,446

Performance stock units - performance based

Employee stock purchase plan

3,708

1,418

2,563

Weighted average shares outstanding - diluted

25,209,007

25,170,938

25,053,386

24,802,388

24,074,442

25,193,041

24,294,507

Diluted earnings per common share

$

1.08

$

1.32

$

1.25

$

0.89

$

0.56

$

2.39

$

0.37

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

For the Three Months Ended

Six Months Ended June 30,

June 30,
2021

March 31,
2021

December 31,
2020

September 30,
2020

June 30,
2020

June 30,
2021

June 30,
2020

Stock options

16,939

98,513

148,528

16,939

98,956

Restricted stock awards

109,834

209,040

Restricted stock units

38,801

17,757

Performance stock units - market based

13,520

76,461

13,520

76,461

Performance stock units - performance based

265,625

256,625

256,625

261,125

262,625

265,625

262,625

Employee stock purchase plan

Loans held for investment summarized as of:

(Dollars in thousands)

June 30,
2021

March 31,
2021

December 31,
2020

September 30,
2020

June 30,
2020

Commercial real estate

$

701,576

$

784,110

$

779,158

$

762,531

$

910,261

Construction, land development, land

185,444

223,841

219,647

244,512

213,617

1-4 family residential properties

135,288

142,859

157,147

164,785

168,707

Farmland

91,122

97,835

103,685

110,966

125,259

Commercial

1,453,583

1,581,125

1,562,957

1,536,903

1,518,656

Factored receivables

1,398,299

1,208,718

1,120,770

1,016,337

561,576

Consumer

12,389

14,332

15,838

17,106

18,450

Mortgage warehouse

853,514

1,031,692

1,037,574

999,771

876,785

Total loans

$

4,831,215

$

5,084,512

$

4,996,776

$

4,852,911

$

4,393,311

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

Banking loans held for investment are further summarized below:

(Dollars in thousands)

June 30,
2021

March 31,
2021

December 31,
2020

September 30,
2020

June 30,
2020

Commercial real estate

$

701,576

$

784,110

$

779,158

$

762,531

$

910,261

Construction, land development, land

185,444

223,841

219,647

244,512

213,617

1-4 family residential

135,288

142,859

157,147

164,785

168,707

Farmland

91,122

97,835

103,685

110,966

125,259

Commercial - General

290,562

288,458

340,850

342,858

333,793

Commercial - Paycheck Protection Program

135,307

237,299

189,857

223,230

219,122

Commercial - Agriculture

76,346

83,859

94,572

112,221

110,243

Commercial - Equipment

604,396

623,248

573,163

509,849

487,145

Commercial - Asset-based lending

181,394

188,825

180,488

160,711

176,235

Commercial - Liquid Credit

165,578

159,436

184,027

188,034

192,118

Consumer

12,389

14,332

15,838

17,106

18,450

Mortgage Warehouse

853,514

1,031,692

1,037,574

999,771

876,785

Total banking loans held for investment

$

3,432,916

$

3,875,794

$

3,876,006

$

3,836,574

$

3,831,735

The following table presents the Company’s operating segments:

(Dollars in thousands)

Three months ended June 30, 2021

Banking

Factoring

Payments

Corporate

Consolidated

Total interest income

$

47,356

$

44,653

$

2,675

$

4

$

94,688

Intersegment interest allocations

2,723

(2,584

)

(139

)

Total interest expense

2,610

1,796

4,406

Net interest income (expense)

47,469

42,069

2,536

(1,792

)

90,282

Credit loss expense (benefit)

(4,335

)

2,444

218

(133

)

(1,806

)

Net interest income after credit loss expense

51,804

39,625

2,318

(1,659

)

92,088

Noninterest income

10,018

2,742

1,083

53

13,896

Noninterest expense

41,860

17,174

10,842

922

70,798

Operating income (loss)

$

19,962

$

25,193

$

(7,441

)

$

(2,528

)

$

35,186


(Dollars in thousands)

Three months ended March 31, 2021

Banking

Factoring

Payments

Corporate

Consolidated

Total interest income

$

50,556

$

35,824

$

1,969

$

4

$

88,353

Intersegment interest allocations

2,942

(2,775

)

(167

)

Total interest expense

3,542

1,791

5,333

Net interest income (expense)

49,956

33,049

1,802

(1,787

)

83,020

Credit loss expense (benefit)

(12,453

)

4,483

292

(167

)

(7,845

)

Net interest income after credit loss expense

62,409

28,566

1,510

(1,620

)

90,865

Noninterest income

7,750

6,411

73

57

14,291

Noninterest expense

39,454

16,153

4,135

1,150

60,892

Operating income (loss)

$

30,705

$

18,824

$

(2,552

)

$

(2,713

)

$

44,264

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:

June 30,
2021

March 31,
2021

December 31,
2020

September 30,
2020

June 30,
2020

Factored receivable period end balance

$

1,284,314,000

$

1,118,988,000

$

1,036,548,000

$

953,434,000

$

531,933,000

Yield on average receivable balance

14.99

%

13.85

%

13.80

%

15.59

%

15.34

%

Current quarter charge-off rate(1)

0.04

%

3.95

%

0.02

%

0.09

%

0.16

%

Factored receivables - transportation concentration

91

%

90

%

89

%

88

%

85

%

Interest income, including fees

$

44,653,000

$

35,824,000

$

35,439,000

$

30,068,000

$

20,387,000

Non-interest income(2)

2,742,000

1,757,000

1,358,000

1,157,000

1,072,000

Factored receivable total revenue

47,395,000

37,581,000

36,797,000

31,225,000

21,459,000

Average net funds employed

1,072,405,000

936,528,000

924,899,000

694,170,000

477,112,000

Yield on average net funds employed

17.73

%

16.27

%

15.83

%

17.89

%

18.09

%

Accounts receivable purchased

$

3,068,262,000

$

2,492,468,000

$

2,461,249,000

$

1,984,490,000

$

1,238,465,000

Number of invoices purchased

1,401,695

1,188,678

1,189,271

1,027,839

812,902

Average invoice size

$

2,189

$

2,097

$

2,070

$

1,931

$

1,524

Average invoice size - transportation

$

2,090

$

1,974

$

1,943

$

1,787

$

1,378

Average invoice size - non-transportation

$

4,701

$

4,775

$

5,091

$

5,181

$

4,486


(1)

March 31, 2021 includes a $41.3 million charge-off related to the TFS acquisition, which contributed approximately 3.94% to the net charge-off rate for the quarter.

(2)

Total factoring segment non-interest income was $6.4 million, $15.5 million, and $3.2 million for the three months ended March 31, 2021, December 31, 2020 and September 30, 2020.

March 31, 2021 non-interest income used to calculate yield on average net funds employed excludes a $4.7 million gain on our indemnification asset.

December 31, 2020 non-interest income used to calculate yield on average net funds employed excludes a gain of $8.9 million related to CVLG’s delivery of proceeds resulting from the liquidation of its acquired stock and a $5.3 million gain on our indemnification asset.

September 30, 2020 non-interest income used to calculate yield on average net funds employed excludes a $2.0 million gain recognized on the increased value of the receivable due from CVLG resulting from the amended TFS acquisition agreement.

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

June 30,
2021

March 31,
2021

December 31,
2020

September 30,
2020

June 30,
2020

Factored receivable period end balance

$

113,985,000

$

89,730,000

$

84,222,000

$

62,903,000

$

29,643,000

Interest income

$

2,675,000

$

1,969,000

$

2,034,000

$

1,361,000

$

692,000

Noninterest income

1,083,000

73,000

51,000

47,000

12,000

Total revenue

$

3,758,000

$

2,042,000

$

2,085,000

$

1,408,000

$

704,000

Pre-tax operating income (loss)

$

(7,441,000

)

$

(2,552,000

)

$

(2,026,000

)

$

(1,936,000

)

$

(2,823,000

)

Interest expense

139,000

167,000

178,000

147,000

88,000

Depreciation and software amortization expense

68,000

65,000

63,000

63,000

63,000

Intangible amortization expense

497,000

Earnings (losses) before interest, taxes, depreciation, and amortization

$

(6,737,000

)

$

(2,320,000

)

$

(1,785,000

)

$

(1,726,000

)

$

(2,672,000

)

Transaction costs

2,992,000

Adjusted earnings (losses) before interest, taxes, depreciation, and amortization(1)

$

(3,745,000

)

$

(2,320,000

)

$

(1,785,000

)

$

(1,726,000

)

$

(2,672,000

)

Number of invoices processed

3,165,119

2,529,673

1,818,145

1,408,232

767,180

Amount of payments processed

$

3,426,808,000

$

2,301,632,000

$

1,920,037,000

$

1,221,305,000

$

667,354,000


(1)

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


Deposits summarized as of:

(Dollars in thousands)

June 30,
2021

March 31,
2021

December 31,
2020

September 30,
2020

June 30,
2020

Non-interest bearing demand

$

1,803,552

$

1,637,653

$

1,352,785

$

1,315,900

$

1,120,949

Interest bearing demand

760,874

729,364

688,680

634,272

648,309

Individual retirement accounts

87,052

89,748

92,584

94,933

97,388

Money market

395,035

402,070

393,325

384,476

397,914

Savings

474,163

464,035

421,488

405,954

391,624

Certificates of deposit

612,730

740,694

790,844

857,514

937,766

Brokered time deposits

306,975

516,006

516,786

344,986

258,378

Other brokered deposits

285,069

210,095

460,108

210,066

210,004

Total deposits

$

4,725,450

$

4,789,665

$

4,716,600

$

4,248,101

$

4,062,332

Net interest margin summarized for the three months ended:

June 30, 2021

March 31, 2021

(Dollars in thousands)

Average
Balance

Interest

Average
Rate

Average
Balance

Interest

Average
Rate

Interest earning assets:

Interest earning cash balances

$

572,485

$

158

0.11

%

$

478,275

$

126

0.11

%

Taxable securities

165,786

967

2.34

%

189,407

1,428

3.06

%

Tax-exempt securities

33,451

220

2.64

%

34,717

222

2.59

%

FHLB and other restricted stock

9,518

27

1.14

%

8,511

76

3.62

%

Loans

4,814,050

93,316

7.77

%

4,848,275

86,501

7.24

%

Total interest earning assets

$

5,595,290

$

94,688

6.79

%

$

5,559,185

$

88,353

6.45

%

Non-interest earning assets:

Other assets

498,515

454,483

Total assets

$

6,093,805

$

6,013,668

Interest bearing liabilities:

Deposits:

Interest bearing demand

$

757,529

$

469

0.25

%

$

701,759

$

384

0.22

%

Individual retirement accounts

88,142

143

0.65

%

91,074

186

0.83

%

Money market

398,290

216

0.22

%

398,015

229

0.23

%

Savings

468,517

178

0.15

%

446,322

167

0.15

%

Certificates of deposit

664,478

1,157

0.70

%

765,244

1,955

1.04

%

Brokered time deposits

138,102

51

0.15

%

167,881

179

0.43

%

Other brokered deposits

685,397

256

0.15

%

803,009

272

0.14

%

Total interest bearing deposits

3,200,455

2,470

0.31

%

3,373,304

3,372

0.41

%

Federal Home Loan Bank advances

39,341

22

0.22

%

35,833

24

0.27

%

Subordinated notes

87,590

1,350

6.18

%

87,532

1,349

6.25

%

Junior subordinated debentures

40,251

446

4.44

%

40,125

442

4.47

%

Other borrowings

138,649

118

0.34

%

171,902

146

0.34

%

Total interest bearing liabilities

$

3,506,286

$

4,406

0.50

%

$

3,708,696

$

5,333

0.58

%

Non-interest bearing liabilities and equity:

Non-interest bearing demand deposits

1,749,858

1,494,001

Other liabilities

51,257

64,122

Total equity

786,404

746,849

Total liabilities and equity

$

6,093,805

$

6,013,668

Net interest income

$

90,282

$

83,020

Interest spread

6.29

%

5.87

%

Net interest margin

6.47

%

6.06

%

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

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

(Dollars in thousands)

June 30,
2021

March 31,
2021

December 31,
2020

September 30,
2020

June 30,
2020

Average Banking loans

$

3,516,747

$

3,722,895

$

3,777,553

$

3,707,293

$

3,846,994

Average Factoring receivables

1,195,209

1,048,968

1,024,307

768,087

534,943

Average Payments receivables

102,094

76,412

74,947

50,683

27,738

Average total loans

$

4,814,050

$

4,848,275

$

4,876,807

$

4,526,063

$

4,409,675

Banking yield

5.25

%

5.31

%

5.34

%

5.23

%

5.27

%

Factoring yield

14.99

%

13.85

%

13.80

%

15.59

%

15.34

%

Payments Yield

10.51

%

10.45

%

10.80

%

10.68

%

10.03

%

Total loan yield

7.77

%

7.24

%

7.20

%

7.05

%

6.52

%

Metrics and non-GAAP financial reconciliation:

As of and for the Three Months Ended

As of and for the Six Months Ended

(Dollars in thousands,
except per share amounts)

June 30,
2021

March 31,
2021

December 31,
2020

September 30,
2020

June 30,
2020

June 30,
2021

June 30,
2020

Net income available to common stockholders

$

27,180

$

33,122

$

31,328

$

22,005

$

13,440

$

60,302

$

8,990

Transaction costs

2,992

827

2,992

Gain on sale of subsidiary or division

(9,758

)

(9,758

)

Tax effect of adjustments

(715

)

(197

)

2,451

(715

)

2,451

Adjusted net income available to common stockholders - diluted

$

29,457

$

33,122

$

31,328

$

22,635

$

6,133

$

62,579

$

1,683

Weighted average shares outstanding - diluted

25,209,007

25,170,938

25,053,386

24,802,388

24,074,442

25,193,041

24,294,507

Adjusted diluted earnings per common share

$

1.17

$

1.32

$

1.25

$

0.91

$

0.25

$

2.48

$

0.07

Average total stockholders' equity

$

786,404

$

746,849

$

720,892

$

688,327

$

610,258

$

766,736

$

618,808

Average preferred stock liquidation preference

(45,000

)

(45,000

)

(45,000

)

(45,000

)

(5,934

)

(45,000

)

(2,967

)

Average total common stockholders' equity

741,404

701,849

675,892

643,327

604,324

721,736

615,841

Average goodwill and other intangibles

(220,310

)

(188,980

)

(191,017

)

(192,682

)

(187,255

)

(204,732

)

(188,307

)

Average tangible common stockholders' equity

$

521,094

$

512,869

$

484,875

$

450,645

$

417,069

$

517,004

$

427,534

Net income available to common stockholders

$

27,180

$

33,122

$

31,328

$

22,005

$

13,440

$

60,302

$

8,990

Average tangible common equity

521,094

512,869

484,875

450,645

417,069

517,004

427,534

Return on average tangible common equity

20.92

%

26.19

%

25.70

%

19.43

%

12.96

%

23.52

%

4.23

%

Net interest income

$

90,282

$

83,020

$

83,598

$

74,379

$

64,251

$

173,302

$

126,751

Non-interest income

13,896

14,291

22,386

10,493

20,029

28,187

27,506

Operating revenue

104,178

97,311

105,984

84,872

84,280

201,489

154,257

Gain on sale of subsidiary or division

(9,758

)

(9,758

)

Adjusted operating revenue

$

104,178

$

97,311

$

105,984

$

84,872

$

74,522

$

201,489

$

144,499

Non-interest expenses

$

70,798

$

60,892

$

59,298

$

55,297

$

52,726

$

131,690

$

107,479

Transaction costs

(2,992

)

(827

)

(2,992

)

Adjusted non-interest expenses

$

67,806

$

60,892

$

59,298

$

54,470

$

52,726

$

128,698

$

107,479

Adjusted efficiency ratio

65.09

%

62.57

%

55.95

%

64.18

%

70.75

%

63.87

%

74.38

%

Adjusted net non-interest expense to average assets ratio:

Non-interest expenses

$

70,798

$

60,892

$

59,298

$

55,297

$

52,726

$

131,690

$

107,479

Transaction costs

(2,992

)

(827

)

(2,992

)

Adjusted non-interest expenses

$

67,806

$

60,892

$

59,298

$

54,470

$

52,726

$

128,698

$

107,479

Total non-interest income

$

13,896

$

14,291

$

22,386

$

10,493

$

20,029

$

28,187

$

27,506

Gain on sale of subsidiary or division

(9,758

)

(9,758

)

Adjusted non-interest income

$

13,896

$

14,291

$

22,386

$

10,493

$

10,271

$

28,187

$

17,748

Adjusted net non-interest expenses

$

53,910

$

46,601

$

36,912

$

43,977

$

42,455

$

100,511

$

89,731

Average total assets

$

6,093,805

$

6,013,668

$

5,788,549

$

5,518,708

$

5,487,072

$

6,053,826

$

5,196,815

Adjusted net non-interest expense to average assets ratio

3.55

%

3.14

%

2.54

%

3.17

%

3.11

%

3.35

%

3.47

%

Total stockholders' equity

$

792,388

$

764,004

$

726,781

$

693,842

$

656,871

$

792,388

$

656,871

Preferred stock liquidation preference

(45,000

)

(45,000

)

(45,000

)

(45,000

)

(45,000

)

(45,000

)

(45,000

)

Total common stockholders' equity

747,388

719,004

681,781

648,842

611,871

747,388

611,871

Goodwill and other intangibles

(286,567

)

(188,006

)

(189,922

)

(192,041

)

(186,162

)

(286,567

)

(186,162

)

Tangible common stockholders' equity

$

460,821

$

530,998

$

491,859

$

456,801

$

425,709

$

460,821

$

425,709

Common shares outstanding

25,109,703

24,882,929

24,868,218

24,851,601

24,202,686

25,109,703

24,202,686

Tangible book value per share

$

18.35

$

21.34

$

19.78

$

18.38

$

17.59

$

18.35

$

17.59

Total assets at end of period

$

6,015,877

$

6,099,628

$

5,935,791

$

5,836,787

$

5,617,493

$

6,015,877

$

5,617,493

Goodwill and other intangibles

(286,567

)

(188,006

)

(189,922

)

(192,041

)

(186,162

)

(286,567

)

(186,162

)

Tangible assets at period end

$

5,729,310

$

5,911,622

$

5,745,869

$

5,644,746

$

5,431,331

$

5,729,310

$

5,431,331

Tangible common stockholders' equity ratio

8.04

%

8.98

%

8.56

%

8.09

%

7.84

%

8.04

%

7.84

%

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 Six Months Ended

(Dollars in thousands)

June 30,
2021

March 31,
2021

December 31,
2020

September 30,
2020

June 30,
2020

June 30,
2021

June 30,
2020

Loan discount accretion

$

2,161

$

3,501

$

2,334

$

4,104

$

2,139

$

5,662

$

4,273

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