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Triumph Bancorp Reports Second Quarter Net Income to Common Stockholders of $12.7 Million

DALLAS, July 17, 2019 (GLOBE NEWSWIRE) -- Triumph Bancorp, Inc. (TBK) (“Triumph” or the “Company”) today announced earnings and operating results for the second quarter of 2019.

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.

2019 Second Quarter Highlights and Recent Developments

  • For the second quarter of 2019, net income available to common stockholders was $12.7 million. Diluted earnings per share were $0.48. 
  • Net interest margin (“NIM”) was 5.99% for the quarter ended June 30, 2019. 
  • Total loans held for investment increased $223.0 million, or 6.2%, to $3.836 billion at June 30, 2019. Average loans for the quarter increased $172.9 million, or 4.9%, to $3.708 billion.
  • Triumph Business Capital grew period-end clients to 6,455 clients, which is an increase of 73 clients, or 1.1%. The total dollar value of invoices purchased for the quarter ended June 30, 2019 was $1.409 billion with an average invoice price of $1,612. 
  • At June 30, 2019, there were 146 clients utilizing the TriumphPay platform, which is an increase of 16 clients, or 12.3%, during the quarter. For the quarter ended June 30, 2019, TriumphPay processed 149,734 invoices paying 28,126 distinct carriers a total of $168.8 million.
  • During the quarter ended June 30, 2019, the Company repurchased 590,829 shares into treasury stock under its stock repurchase program at an average price of $29.42, for a total of $17.4 million. During the six months ended June 30, 2019, the Company has repurchased 838,141 shares into treasury stock under its stock repurchase program at an average price of $29.74, for a total of $24.9 million, completing its previously announced $25.0 million stock repurchase program.

Repurchase Program Authorization

On July 17, 2019 the Company’s board of directors authorized the Company to repurchase up to an additional $25.0 million of the Company’s outstanding common stock.  The Company may repurchase these shares from time to time in open market transactions or through privately negotiated transactions at the Company’s discretion.  The amount, timing and nature of any share repurchases will be based on a variety of factors, including the trading price of the Company’s common stock, applicable securities laws restrictions, regulatory limitations and market and economic factors.  This repurchase program is authorized for a period of up to one year and does not require the Company to repurchase any specific number of shares.  The repurchase program may be modified, suspended or discontinued at any time, at the Company’s discretion.

Balance Sheet

Total loans held for investment increased $223.0 million, or 6.2%, during the second quarter to $3.836 billion at June 30, 2019. The commercial finance portfolio increased $77.6 million, or 7.0%, to $1.187 billion at June 30, 2019. The national lending portfolio increased $91.5 million, or 23.7%, to $477.2 million at June 30, 2019. The community banking portfolio increased $53.9 million, or 2.5%, to $2.172 billion at June 30, 2019.

Total deposits were $3.659 billion at June 30, 2019, an increase of $344.5 million or 10.4% in the second quarter of 2019.  Non-interest-bearing deposits accounted for 19% of total deposits and non-time deposits accounted for 57% of total deposits at June 30, 2019. 

Net Interest Income

We earned net interest income for the quarter ended June 30, 2019 of $63.4 million compared to $61.3 million for the quarter ended March 31, 2019.

Yields on loans for the quarter ended June 30, 2019 were down 4 bps from the prior quarter to 7.95%. The average cost of our total deposits was 1.14% for the quarter ended June 30, 2019 compared to 0.99% for the quarter ended March 31, 2019. 

Asset Quality

Non-performing assets were 0.86% of total assets at June 30, 2019 compared to 0.84% of total assets at March 31, 2019.  The ratio of past due to total loans decreased to 1.90% at June 30, 2019 from 2.33% at March 31, 2019. We recorded total net charge-offs of $1.9 million, or 0.05% of average loans, for the quarter ended June 30, 2019 compared to net charge-offs of $1.0 million, or 0.03% of average loans, for the quarter ended March 31, 2019. 

We recorded a provision for loan losses of $3.7 million for the quarter ended June 30, 2019 compared to a provision of $1.0 million for the quarter ended March 31, 2019. From March 31, 2019 to June 30, 2019, our ALLL increased from $27.6 million or 0.76% of total loans to $29.4 million or 0.77% of total loans.

Non-Interest Income and Expense

We earned non-interest income for the quarter ended June 30, 2019 of $7.6 million compared to $7.5 million for the quarter ended March 31, 2019.

For the quarter ended June 30, 2019, non-interest expense totaled $50.7 million, compared to $48.6 million for the quarter ended March 31, 2019. 

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 18, 2019. 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/tbk190718.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. (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; our ability to mitigate our risk exposures; our ability to maintain our historical earnings trends; risks related to the integration of acquired businesses (including our acquisitions of First Bancorp of Durango, Inc., Southern Colorado Corp., and the operating assets of Interstate Capital Corporation and certain of its affiliates) and any future acquisitions; changes in management personnel; interest rate risk; concentration of our factoring 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; 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 the Federal Deposit Insurance Corporation 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, 2019.

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 its 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  
    June 30,     March 31,     December 31,     September 30,     June 30,     June 30,     June 30,  
(Dollars in thousands)   2019     2019     2018     2018     2018     2019     2018  
Financial Highlights:                                                        
Total assets   $ 4,783,189     $ 4,529,783     $ 4,559,779     $ 4,537,102     $ 3,794,631     $ 4,783,189     $ 3,794,631  
Loans held for investment   $ 3,835,903     $ 3,612,869     $ 3,608,644     $ 3,512,143     $ 3,196,462     $ 3,835,903     $ 3,196,462  
Deposits   $ 3,658,978     $ 3,314,440     $ 3,450,349     $ 3,439,049     $ 2,624,942     $ 3,658,978     $ 2,624,942  
Net income available to common stockholders   $ 12,730     $ 14,788     $ 18,085     $ 8,975     $ 12,192     $ 27,518     $ 24,070  
                                                         
Performance Ratios - Annualized:                                                        
Return on average assets     1.09 %     1.33 %     1.60 %     0.90 %     1.37 %     1.21 %     1.40 %
Return on average total equity     7.83 %     9.30 %     11.35 %     5.88 %     8.53 %     8.55 %     10.01 %
Return on average common equity     7.83 %     9.30 %     11.40 %     5.85 %     8.54 %     8.55 %     10.05 %
Return on average tangible common equity(1)     11.19 %     13.43 %     16.73 %     7.57 %     9.95 %     12.29 %     11.85 %
Yield on loans(2)     7.95 %     7.99 %     8.14 %     8.33 %     8.09 %     7.97 %     7.88 %
Cost of interest bearing deposits     1.42 %     1.24 %     1.15 %     1.08 %     0.93 %     1.33 %     0.89 %
Cost of total deposits     1.14 %     0.99 %     0.91 %     0.85 %     0.73 %     1.07 %     0.70 %
Cost of total funds     1.40 %     1.28 %     1.14 %     1.16 %     1.06 %     1.34 %     1.00 %
Net interest margin(2)     5.99 %     6.15 %     6.34 %     6.59 %     6.36 %     6.07 %     6.21 %
Net non-interest expense to average assets     3.68 %     3.70 %     3.55 %     4.19 %     3.59 %     3.69 %     3.51 %
Adjusted net non-interest expense to average assets(1)     3.68 %     3.70 %     3.55 %     3.62 %     3.47 %     3.69 %     3.51 %
Efficiency ratio     71.37 %     70.54 %     65.52 %     72.15 %     64.26 %     70.96 %     64.65 %
Adjusted efficiency ratio(1)     71.37 %     70.54 %     65.52 %     63.49 %     62.38 %     70.96 %     64.29 %
                                                         
Asset Quality:(3)                                                        
Past due to total loans     1.90 %     2.33 %     2.41 %     2.23 %     2.54 %     1.90 %     2.54 %
Non-performing loans to total loans     0.96 %     0.95 %     1.00 %     1.13 %     1.43 %     0.96 %     1.43 %
Non-performing assets to total assets     0.86 %     0.84 %     0.84 %     0.93 %     1.28 %     0.86 %     1.28 %
ALLL to non-performing loans     79.91 %     80.70 %     76.47 %     68.82 %     53.57 %     79.91 %     53.57 %
ALLL to total loans     0.77 %     0.76 %     0.76 %     0.78 %     0.77 %     0.77 %     0.77 %
Net charge-offs to average loans     0.05 %     0.03 %     0.05 %     0.12 %     0.01 %     0.08 %     0.06 %
                                                         
Capital:                                                        
Tier 1 capital to average assets(4)     10.84 %     11.32 %     11.08 %     11.75 %     15.00 %     10.84 %     15.00 %
Tier 1 capital to risk-weighted assets(4)     11.09 %     11.76 %     11.49 %     11.16 %     14.68 %     11.09 %     14.68 %
Common equity tier 1 capital to risk-weighted assets(4)     10.19 %     10.81 %     10.55 %     9.96 %     13.32 %     10.19 %     13.32 %
Total capital to risk-weighted assets(4)     12.88 %     13.62 %     13.35 %     13.05 %     16.73 %     12.88 %     16.73 %
Total equity to total assets     13.45 %     14.27 %     13.96 %     13.59 %     16.00 %     13.45 %     16.00 %
Tangible common stockholders' equity to tangible assets(1)     9.78 %     10.37 %     10.03 %     9.35 %     13.05 %     9.78 %     13.05 %
                                                         
Per Share Amounts:                                                        
Book value per share   $ 24.56     $ 24.19     $ 23.62     $ 23.10     $ 22.76     $ 24.56     $ 22.76  
Tangible book value per share(1)   $ 17.13     $ 16.82     $ 16.22     $ 15.42     $ 18.27     $ 17.13     $ 18.27  
Basic earnings per common share   $ 0.48     $ 0.55     $ 0.68     $ 0.34     $ 0.48     $ 1.04     $ 1.04  
Diluted earnings per common share   $ 0.48     $ 0.55     $ 0.67     $ 0.34     $ 0.47     $ 1.03     $ 1.02  
Adjusted diluted earnings per common share(1)   $ 0.48     $ 0.55     $ 0.67     $ 0.51     $ 0.50     $ 1.03     $ 1.02  
Shares outstanding end of period     26,198,308       26,709,411       26,949,936       26,279,761       26,260,785       26,198,308       26,260,785  
                                                         

Unaudited consolidated balance sheet as of:

                               
    June 30,     March 31,     December 31,     September 30,     June 30,  
 (Dollars in thousands)   2019     2019     2018     2018     2018  
ASSETS                                        
Total cash and cash equivalents   $ 209,305     $ 171,950     $ 234,939     $ 282,409     $ 133,365  
Securities - available for sale     329,991       339,465       336,423       355,981       183,184  
Securities - held to maturity     8,573       8,499       8,487       8,403       8,673  
Equity securities     5,479       5,183       5,044       4,981       5,025  
Loans held for sale     2,877       610       2,106       683        
Loans held for investment     3,835,903       3,612,869       3,608,644       3,512,143       3,196,462  
Allowance for loan and lease losses     (29,416 )     (27,605 )     (27,571 )     (27,256 )     (24,547 )
Loans, net     3,806,487       3,585,264       3,581,073       3,484,887       3,171,915  
FHLB stock     18,037       21,191       15,943       23,109       19,223  
Premises and equipment, net     84,998       84,931       83,392       82,935       68,313  
Other real estate owned ("OREO"), net     3,351       3,073       2,060       2,442       2,528  
Goodwill and intangible assets, net     194,668       197,015       199,417       201,842       117,777  
Bank-owned life insurance     40,847       40,667       40,509       40,339       40,168  
Deferred tax asset, net     7,278       7,608       8,438       8,137       8,810  
Other assets     71,298       64,327       41,948       40,954       35,650  
Total assets   $ 4,783,189     $ 4,529,783     $ 4,559,779     $ 4,537,102     $ 3,794,631  
LIABILITIES                                        
Non-interest bearing deposits   $ 684,223     $ 667,597     $ 724,527     $ 697,903     $ 561,033  
Interest bearing deposits     2,974,755       2,646,843       2,725,822       2,741,146       2,063,909  
Total deposits     3,658,978       3,314,440       3,450,349       3,439,049       2,624,942  
Customer repurchase agreements     12,788       3,727       4,485       13,248       10,509  
Federal Home Loan Bank advances     305,000       405,000       330,000       330,000       420,000  
Subordinated notes     48,983       48,956       48,929       48,903       48,878  
Junior subordinated debentures     39,320       39,200       39,083       38,966       38,849  
Other liabilities     74,758       72,244       50,326       50,295       44,228  
Total liabilities     4,139,827       3,883,567       3,923,172       3,920,461       3,187,406  
EQUITY                                        
Preferred stock series A                       4,550       4,550  
Preferred stock series B                       5,108       5,108  
Common stock     271       271       271       264       264  
Additional paid-in-capital     471,145       470,292       469,341       458,920       457,980  
Treasury stock, at cost     (27,468 )     (9,881 )     (2,288 )     (2,285 )     (2,254 )
Retained earnings     198,004       185,274       170,486       152,401       143,426  
Accumulated other comprehensive income     1,410       260       (1,203 )     (2,317 )     (1,849 )
Total equity     643,362       646,216       636,607       616,641       607,225  
Total liabilities and equity   $ 4,783,189     $ 4,529,783     $ 4,559,779     $ 4,537,102     $ 3,794,631  
                                         

Unaudited consolidated statement of income:

             
    For the Three Months Ended     For the Six Months Ended  
    June 30,     March 31,     December 31,     September 30,     June 30,     June 30,     June 30,  
 (Dollars in thousands)   2019     2019     2018     2018     2018     2019     2018  
Interest income:                                                        
Loans, including fees   $ 47,910     $ 45,094     $ 44,435     $ 41,257     $ 38,148     $ 93,004     $ 75,031  
Factored receivables, including fees     25,558       24,556       28,070       27,939       20,791       50,114       36,094  
Securities     2,667       2,644       2,314       1,551       1,179       5,311       2,489  
FHLB stock     146       192       154       147       101       338       206  
Cash deposits     1,022       778       877       865       1,030       1,800       1,547  
Total interest income     77,303       73,264       75,850       71,759       61,249       150,567       115,367  
Interest expense:                                                        
Deposits     10,010       8,218       7,931       6,219       4,631       18,228       8,908  
Subordinated notes     839       839       839       837       838       1,678       1,675  
Junior subordinated debentures     744       760       717       714       713       1,504       1,310  
Other borrowings     2,291       2,136       1,482       2,207       1,810       4,427       3,087  
Total interest expense     13,884       11,953       10,969       9,977       7,992       25,837       14,980  
Net interest income     63,419       61,311       64,881       61,782       53,257       124,730       100,387  
Provision for loan losses     3,681       1,014       1,910       6,803       4,906       4,695       7,454  
Net interest income after provision for loan losses     59,738       60,297       62,971       54,979       48,351       120,035       92,933  
Non-interest income:                                                        
Service charges on deposits     1,700       1,606       1,702       1,412       1,210       3,306       2,355  
Card income     2,071       1,844       1,999       1,877       1,394       3,915       2,638  
Net OREO gains (losses) and valuation adjustments     148       209       37       65       (528 )     357       (616 )
Net gains (losses) on sale of securities     14       (11 )                       3       (272 )
Fee income     1,519       1,612       1,636       1,593       1,121       3,131       1,921  
Insurance commissions     961       919       846       1,113       819       1,880       1,533  
Gain on sale of subsidiary                                         1,071  
Other     1,210       1,359       574       (1 )     929       2,569       1,487  
Total non-interest income     7,623       7,538       6,794       6,059       4,945       15,161       10,117  
Non-interest expense:                                                        
Salaries and employee benefits     28,120       26,439       25,586       24,695       20,527       54,559       39,931  
Occupancy, furniture and equipment     4,502       4,522       4,402       3,553       3,014       9,024       6,068  
FDIC insurance and other regulatory assessments     303       299       184       363       383       602       582  
Professional fees     1,550       1,865       1,837       3,384       2,078       3,415       3,718  
Amortization of intangible assets     2,347       2,402       2,438       2,064       1,361       4,749       2,478  
Advertising and promotion     1,796       1,604       1,036       1,609       1,300       3,400       2,329  
Communications and technology     4,988       4,874       4,388       7,252       3,271       9,862       6,630  
Other     7,098       6,561       7,091       6,026       5,469       13,659       9,709  
Total non-interest expense     50,704       48,566       46,962       48,946       37,403       99,270       71,445  
Net income before income tax     16,657       19,269       22,803       12,092       15,893       35,926       31,605  
Income tax expense     3,927       4,481       4,718       2,922       3,508       8,408       7,152  
Net income   $ 12,730     $ 14,788     $ 18,085     $ 9,170     $ 12,385     $ 27,518     $ 24,453  
Dividends on preferred stock                       (195 )     (193 )           (383 )
Net income available to common stockholders   $ 12,730     $ 14,788     $ 18,085     $ 8,975     $ 12,192     $ 27,518     $ 24,070  
                                                         

Earnings per share:

             
    For the Three Months Ended     For the Six Months Ended  
    June 30,     March 31,     December 31,     September 30,     June 30,     June 30,     June 30,  
(Dollars in thousands)   2019     2019     2018     2018     2018     2019     2018  
Basic                                                        
Net income to common stockholders   $ 12,730     $ 14,788     $ 18,085     $ 8,975     $ 12,192     $ 27,518     $ 24,070  
Weighted average common shares outstanding     26,396,351       26,679,724       26,666,554       26,178,194       25,519,108       26,537,255       23,133,489  
Basic earnings per common share   $ 0.48     $ 0.55     $ 0.68     $ 0.34     $ 0.48     $ 1.04     $ 1.04  
                                                         
Diluted                                                        
Net income to common stockholders   $ 12,730     $ 14,788     $ 18,085     $ 8,975     $ 12,192     $ 27,518     $ 24,070  
Dilutive effect of preferred stock                       195       193             383  
Net income to common stockholders - diluted   $ 12,730     $ 14,788     $ 18,085     $ 9,170     $ 12,385     $ 27,518     $ 24,453  
Weighted average common shares outstanding     26,396,351       26,679,724       26,666,554       26,178,194       25,519,108       26,537,255       23,133,489  
Dilutive effects of:                                                        
Assumed conversion of Preferred A                 89,240       315,773       315,773             315,773  
Assumed conversion of Preferred B                 100,176       354,471       354,471             354,471  
Assumed exercises of stock options     59,962       64,166       76,219       90,320       86,821       61,819       85,123  
Restricted stock awards     30,110       49,795       46,457       45,796       37,417       39,352       60,425  
Restricted stock units                 1,303       7,276       2,288             862  
Performance stock units                                          
Weighted average shares outstanding - diluted     26,486,423       26,793,685       26,979,949       26,991,830       26,315,878       26,638,426       23,950,143  
Diluted earnings per common share   $ 0.48     $ 0.55     $ 0.67     $ 0.34     $ 0.47     $ 1.03     $ 1.02  
                                                         
                                                         
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 Six Months Ended  
    June 30,     March 31,     December 31,     September 30,     June 30,     June 30,     June 30,  
    2019     2019     2018     2018     2018     2019     2018  
Assumed conversion of Preferred A                                          
Assumed conversion of Preferred B                                          
Stock options     70,037       50,752       51,952       51,952       51,952       70,037       51,952  
Restricted stock awards           13,290       14,513       14,513                    
Restricted stock units     58,400       58,400                         58,400        
Performance stock units     70,879       58,400       59,658       59,658       59,658       70,879       59,658  
                                                         

Loans held for investment summarized as of:

...