Triumph Bancorp Reports First Quarter Net Income to Common Stockholders of $10.3 Million

Dallas, Texas


DALLAS, April 19, 2017 (GLOBE NEWSWIRE) -- Triumph Bancorp, Inc. (NASDAQ:TBK) today announced earnings and operating results for the first quarter of 2017.

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 document. 

2017 First Quarter Material Items of Note

  • We completed the sale of our asset management subsidiary, Triumph Capital Advisors, LLC (“TCA”) and recorded a pre-tax gain on sale of $20.9 million.  The net impact of the sale of TCA, after taxes and transaction related expenses, was approximately $10.0 million, or $0.53 per diluted share. 
     
  • We recorded a provision for loan loss of $7.7 million during the first quarter of 2017, including net charge-offs of $4.0 million and a net increase in specific reserves of $1.0 million.  Approximately $1.4 million of the charge-offs had specific reserves previously recorded, which reduced our net specific reserves by such amount.  The charge-offs also contributed to an increase in the estimate of the allowance for loan and lease losses (“ALLL”) recorded against the remaining loan portfolio of $2.3 million as a result of higher general loss factors incorporated into our ALLL methodology.  

    Approximately $3.1 million of the charge-offs and $1.8 million of the additional specific reserves recorded were associated with five loan relationships.  Two of the loans are part of our healthcare finance unit and have been previously reported as problem credits.  Three were acquired via ColoEast Bankshares, Inc.  The charge-offs and specific reserves related to the healthcare credits represents substantially all of the remaining balance sheet exposure we have to these two borrowers. 

2017 First Quarter Highlights

  • For the first quarter of 2017, net income was $10.5 million and net income available to common stockholders was $10.3 million, compared to net income of $6.3 million and net income available to common stockholders of $6.1 million for the quarter ended December 31, 2016. 
     
  • Diluted earnings per share were $0.55 for the quarter ended March 31, 2017, compared to $0.33 for the quarter ended December 31, 2016.  Adjusted diluted earnings per share, which exclude the TCA gain on sale and transaction related costs, were $0.02 for the quarter ended March 31, 2017. 
     
  • Net interest margin (“NIM”) was 5.37% for the quarter ended March 31, 2017, compared to 5.60% for the quarter ended December 31, 2016. Adjusted NIM, which excludes loan discount accretion, was 5.19% for the quarter ended March 31, 2017, compared to 5.15% for the quarter ended December 31, 2016. 
     
  • Total loans held for investment increased $7.6 million to $2.035 billion at March 31, 2017, compared to $2.028 billion at December 31, 2016.  Excluding our mortgage warehouse facilities, which experienced a $60.1 million seasonal decline, our total loans held for investment increased $67.7 million, or 4%, during the first quarter.

Sale of Triumph Capital Advisors, LLC

Set forth below is a summary of the consideration received and the resulting gain on sale recorded from the TCA transaction, including transaction related expenses incurred in conjunction with the sale.  Triumph extended financing for a portion of the consideration received with a credit facility in the amount of $10.5 million and is entitled to receive 3% of TCA’s future revenues, with a maximum earn-out of $2.5 million.

         (Dollars in thousands)        
 Consideration received (fair value):    
 Cash $10,554 
 Loan receivable  10,500 
 Revenue share  1,623 
 Total consideration received  22,677 
 Carrying value of TCA membership interest  1,417 
 Direct transaction costs  400 
 Gain on sale of subsidiary $20,860 
 Incremental bonus related to transaction  4,814 
 Indirect transaction costs  325 
 Earnings impact of transaction, pre-tax  15,721 
 Tax effect of transaction  5,754 
 Earnings impact of transaction, net of taxes $9,967 

Also as a result of the transaction, we incurred direct transaction expenses of $0.4 million, other indirect transaction costs of $0.3 million, and accrued $4.8 million in incremental bonus expense. The substantial majority of this bonus was paid to employees of TCA in recognition of their contribution to this transaction and building the value realized in the sale of this business.

Net of taxes and transaction related costs, the TCA sale contributed approximately $10.0 million, or $0.53 per diluted share, to earnings for the first quarter of 2017.

Balance Sheet

Total loans held for investment were $2.035 billion at March 31, 2017.  Our commercial finance loans, which comprise 35% of the loan portfolio, were $713.6 million at March 31, 2017, compared to $693.7 million at December 31, 2016.  This is an increase of $20.0 million, or 2.9%, in the first quarter of 2017. 

Total deposits were $2.024 billion at March 31, 2017, an increase of $8.5 million or 0.4% for the first quarter of 2017.  Non-interest-bearing deposits accounted for 19% of total deposits and non-time deposits accounted for 54% of total deposits at March 31, 2017.

Net Interest Income

We earned net interest income for the quarter ended March 31, 2017 of $31.8 million compared to $33.5 million for the quarter ended December 31, 2016.  Yields on loans for the quarter ended March 31, 2017 were down 21 bps from the prior quarter to 7.15% (up 11 bps from the prior quarter to 6.93% adjusted to exclude loan discount accretion). The average cost of our total deposits was 0.58% for the quarter ended March 31, 2017 compared to 0.54% for the quarter ended December 31, 2016, on an annualized basis. 

Asset Quality

Non-performing assets decreased 6 bps from December 31, 2016 to 1.92% of total assets at March 31, 2017.  The ratio of past due to total loans decreased to 3.16% at March 31, 2017 from 3.61% at December 31, 2016.  We recorded total net charge-offs of $4.0 million for the quarter ended March 31, 2017 compared to net charge-offs of $2.0 million for the quarter ended December 31, 2016.  We recorded a provision for loan losses of $7.7 million for the quarter ended March 31, 2017 compared to a provision of $2.4 million for the quarter ended December 31, 2016. From December 31, 2016 to March 31, 2017, our ALLL increased from $15.4 million or 0.76% of total loans to $19.1 million or 0.94% of total loans. 

Non-interest Income and Expense

We earned non-interest income for the quarter ended March 31, 2017 of $27.3 million (or $6.4 million excluding the gain on sale of TCA) compared to $6.2 million for the quarter ended December 31, 2016.

For the quarter ended March 31, 2017, non-interest expense totaled $34.8 million (or $29.7 million excluding the incremental bonus and indirect transaction costs associated with the sale of TCA) compared to $26.9 million for the quarter ended December 31, 2016. Included in non-interest expense for the quarter ended March 31, 2017 were $0.8 million of legal and other loan related expenses, the majority of which was associated with the five nonperforming credits that contributed to the increased provision for loan loss recorded for the three months ended March 31, 2017.

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 8:30 a.m. Central Time on Thursday, April 20, 2017. Dan Karas, Chief Lending Officer, will also be available for questions.

To participate in the live conference call, please dial 1-888-317-6016 (Canada: 1-855-669-9657) and request to be joined into the Triumph Bancorp, Inc. (TBK) call.  A simultaneous audio-only webcast may be accessed via our website at www.triumphbancorp.com through the Investor Relations, News & Events, Webcasts and Presentations links, or through a direct link here at http://services.choruscall.com/links/tbk170420. An archive of this conference call will subsequently be available at this same location on our 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 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: our limited operating history as an integrated company; business and economic conditions generally and in the bank and non-bank financial services industries, nationally and within our local market area; our ability to mitigate our risk exposures; our ability to maintain our historical earnings trends; risks related to the integration of acquired businesses 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 non-performing 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; increases in our capital requirements; and risk retention requirements under the Dodd-Frank Act.

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 17, 2017.

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 
  March 31,  December 31,  September 30,  June 30,  March 31, 
  2017  2016  2016  2016  2016 
Financial Highlights (Dollars in thousands):                    
Total assets $2,635,358  $2,641,067  $2,575,490  $1,783,395  $1,687,795 
Loans held for investment $2,035,236  $2,027,624  $1,959,855  $1,410,518  $1,245,840 
Deposits $2,024,288  $2,015,785  $1,950,677  $1,275,154  $1,260,393 
Net income available to common stockholders $10,281  $6,064  $4,506  $4,431  $4,812 
                     
Performance Ratios - Annualized:                    
Return on average assets  1.62%  0.96%  0.84%  1.07%  1.20%
Return on average total equity  14.44%  8.58%  6.63%  6.69%  7.39%
Return on average common equity (1)  14.66%  8.60%  6.51%  6.64%  7.37%
Return on average tangible common equity (1)  17.49%  10.32%  7.60%  7.37%  8.23%
Yield on loans  7.15%  7.36%  7.42%  8.50%  7.84%
Adjusted yield on loans (1)  6.93%  6.82%  7.10%  7.81%  7.47%
Cost of interest bearing deposits  0.71%  0.66%  0.68%  0.72%  0.74%
Cost of total deposits  0.58%  0.54%  0.57%  0.63%  0.64%
Cost of total funds  0.79%  0.73%  0.61%  0.68%  0.69%
Net interest margin  5.37%  5.60%  5.79%  6.53%  5.90%
Adjusted net interest margin (1)  5.19%  5.15%  5.53%  5.98%  5.61%
Net non-interest expense to average assets  1.17%  3.16%  3.43%  3.85%  3.61%
Adjusted net non-interest expense to average assets (1)  3.60%  3.16%  3.15%  3.85%  3.61%
Efficiency ratio  58.94%  67.70%  70.63%  68.74%  73.09%
Adjusted efficiency ratio (1)  77.65%  67.70%  66.20%  68.74%  73.09%
                     
Asset Quality:(2)                    
Past due to total loans  3.16%  3.61%  3.86%  2.80%  3.61%
Non-performing loans to total loans  1.80%  2.23%  2.25%  1.56%  1.70%
Non-performing assets to total assets  1.92%  1.98%  2.05%  1.60%  1.72%
ALLL to non-performing loans  52.18%  34.00%  33.78%  62.60%  56.96%
ALLL to total loans  0.94%  0.76%  0.76%  0.98%  0.97%
Net charge-offs to average loans  0.20%  0.10%  0.10%  0.02%  0.00%
                     
Capital:                    
Tier 1 capital to average assets(3)  11.32%  10.85%  12.04%  16.02%  16.24%
Tier 1 capital to risk-weighted assets(3)  12.16%  11.85%  11.94%  17.14%  18.79%
Common equity tier 1 capital to risk-weighted assets(3)  10.42%  10.18%  10.24%  15.19%  16.62%
Total capital to risk-weighted assets(3)  15.00%  14.60%  14.77%  18.01%  19.65%
Total equity to total assets  11.40%  10.96%  11.05%  15.69%  16.24%
Tangible common stockholders' equity to tangible assets  9.51%  8.98%  8.99%  13.88%  14.30%
                     
Per Share Amounts:                    
Book value per share $16.08  $15.47  $15.18  $14.91  $14.67 
Tangible book value per share (1) $13.63  $12.89  $12.55  $13.47  $13.18 
Basic earnings per common share $0.57  $0.34  $0.25  $0.25  $0.27 
Diluted earnings per common share $0.55  $0.33  $0.25  $0.25  $0.27 
Adjusted diluted earnings per common share(1) $0.02  $0.33  $0.32  $0.25  $0.27 
Shares outstanding end of period  18,078,769   18,078,247   18,106,978   18,107,493   18,015,423 

 

Unaudited consolidated balance sheet as of:
 
  March 31,  December 31,  September 30,  June 30,  March 31, 
(Dollars in thousands) 2017  2016  2016  2016  2016 
ASSETS                    
Total cash and cash equivalents $126,084  $114,514  $104,725  $61,750  $123,715 
Securities - available for sale  254,452   275,029   286,574   159,790   161,517 
Securities - held to maturity  28,882   29,352   29,316   27,502   25,796 
Loans held for sale        9,623      3,043 
Loans held for investment  2,035,236   2,027,624   1,959,855   1,410,518   1,245,840 
Allowance for loan and lease losses  (19,093)  (15,405)  (14,912)  (13,772)  (12,093)
Loans, net  2,016,143   2,012,219   1,944,943   1,396,746   1,233,747 
FHLB stock  7,167   8,430   8,397   6,368   4,234 
Premises and equipment, net  44,630   45,460   45,050   19,629   19,934 
Other real estate owned ("OREO"), net  11,638   6,077   8,061   6,074   7,478 
Goodwill and intangible assets, net  44,233   46,531   47,449   26,160   26,877 
Bank-owned life insurance  36,679   36,509   36,347   29,786   29,658 
Deferred tax asset, net  15,678   18,825   20,042   15,042   15,240 
Other assets  49,772   48,121   34,963   34,548   36,556 
Total assets $2,635,358  $2,641,067  $2,575,490  $1,783,395  $1,687,795 
LIABILITIES                    
Non-interest bearing deposits $382,009  $363,351  $339,999  $170,834  $160,818 
Interest bearing deposits  1,642,279   1,652,434   1,610,678   1,104,320   1,099,575 
Total deposits  2,024,288   2,015,785   1,950,677   1,275,154   1,260,393 
Customer repurchase agreements  10,468   10,490   15,329   13,635   9,641 
Federal Home Loan Bank advances  200,000   230,000   230,000   180,500   110,000 
Subordinated notes  48,757   48,734   48,676       
Junior subordinated debentures  32,840   32,740   32,640   24,823   24,754 
Other liabilities  18,580   13,973   13,647   9,520   8,893 
Total liabilities  2,334,933   2,351,722   2,290,969   1,503,632   1,413,681 
EQUITY                    
Preferred stock series A  4,550   4,550   4,550   4,550   4,550 
Preferred stock series B  5,196   5,196   5,196   5,196   5,196 
Common stock  182   182   182   182   181 
Additional paid-in-capital  197,866   197,157   196,306   195,711   194,687 
Treasury stock, at cost  (1,494)  (1,374)  (751)  (741)  (597)
Retained earnings  94,191   83,910   77,846   73,340   68,909 
Accumulated other comprehensive income  (66)  (276)  1,192   1,525   1,188 
Total equity  300,425   289,345   284,521   279,763   274,114 
Total liabilities and equity $2,635,358  $2,641,067  $2,575,490  $1,783,395  $1,687,795 

  

Unaudited consolidated statement of income:
 
  For the Three Months Ended 
  March 31,  December 31,  September 30,  June 30,  March 31, 
(Dollars in thousands) 2017  2016  2016  2016  2016 
Interest income:                    
Loans, including fees $25,185  $26,486  $23,123  $18,547  $16,088 
Factored receivables, including fees  9,167   9,731   9,021   8,639   7,822 
Securities  1,611   1,368   1,218   958   765 
FHLB stock  42   34   16   13   10 
Cash deposits  327   155   93   197   208 
Total interest income  36,332   37,774   33,471   28,354   24,893 
Interest expense:                    
Deposits  2,869   2,735   2,408   2,020   1,993 
Subordinated notes  835   835          
Junior subordinated debentures  465   431   382   312   302 
Other borrowings  344   229   263   115   109 
Total interest expense  4,513   4,230   3,053   2,447   2,404 
Net interest income  31,819   33,544   30,418   25,907   22,489 
Provision for loan losses  7,678   2,446   2,819   1,939   (511)
Net interest income after provision for loan losses  24,141   31,098   27,599   23,968   23,000 
Non-interest income:                    
Service charges on deposits  980   1,109   984   695   659 
Card income  827   842   767   577   546 
Net OREO gains (losses) and valuation adjustments  11   (275)  63   (1,204)  (11)
Net gains (losses) on sale of securities     7   (68)     5 
Net gains on sale of loans           4   12 
Fee income  583   547   655   504   534 
Asset management fees  1,717   1,787   1,553   1,605   1,629 
Gain on sale of subsidiary  20,860             
Other  2,307   2,191   2,145   1,487   1,607 
Total non-interest income  27,285   6,208   6,099   3,668   4,981 
Non-interest expense:                    
Salaries and employee benefits  21,958   15,351   14,699   12,229   12,252 
Occupancy, furniture and equipment  2,359   2,353   1,921   1,534   1,493 
FDIC insurance and other regulatory assessments  226   265   143   281   224 
Professional fees  1,968   1,481   1,874   1,101   1,073 
Amortization of intangible assets  1,111   1,130   958   717   977 
Advertising and promotion  938   790   779   628   519 
Communications and technology  2,174   1,830   1,966   1,263   1,432 
Other  4,103   3,711   3,452   2,578   2,108 
Total non-interest expense  34,837   26,911   25,792   20,331   20,078 
Net income before income tax  16,589   10,395   7,906   7,305   7,903 
Income tax expense  6,116   4,134   3,099   2,679   2,897 
Net income $10,473  $6,261  $4,807  $4,626  $5,006 
Dividends on preferred stock  (192)  (197)  (301)  (195)  (194)
Net income available to common stockholders $10,281  $6,064  $4,506  $4,431  $4,812 

 

Earnings per share:
 
  For the Three Months Ended 
  March 31,  December 31,  September 30,  June 30,  March 31, 
(Dollars in thousands) 2017  2016  2016  2016  2016 
Basic                    
Net income to common stockholders $10,281  $6,064  $4,506  $4,431  $4,812 
Weighted average common shares outstanding  17,955,144   17,890,781   17,859,604   17,859,604   17,816,930 
Basic earnings per common share $0.57  $0.34  $0.25  $0.25  $0.27 
                     
Diluted                    
Net income to common stockholders $10,281  $6,064  $4,506  $4,431  $4,812 
Dilutive effect of preferred stock  192   197          
Net income to common stockholders - diluted $10,473  $6,261  $4,506  $4,431  $4,812 
Weighted average common shares outstanding  17,955,144   17,890,781   17,859,604   17,859,604   17,816,930 
Dilutive effects of:                    
Restricted stock  87,094   66,613   148,977   112,880   113,788 
Assumed exercises of stock warrants  145,896   118,285   93,095   70,101   50,558 
Assumed exercises of stock options  47,873   12,511          
Assumed conversion of Preferred A  315,773   315,773          
Assumed conversion of Preferred B  360,578   360,578          
Weighted average shares outstanding - diluted  18,912,358   18,764,541   18,101,676   18,042,585   17,981,276 
Diluted earnings per common share $0.55  $0.33  $0.25  $0.25  $0.27 
                     
                     
Shares that were not considered in computing diluted earnings per common share because they were antidilutive are as follows: 
                     
  For the Three Months Ended 
  March 31,  December 31,  September 30,  June 30,  March 31, 
  2017  2016  2016  2016  2016 
Assumed conversion of Preferred A        315,773   315,773   315,773 
Assumed conversion of Preferred B        360,578   360,578   360,578 
Restricted stock awards           76,362    
Stock options        164,175   164,175    

 

Loans held for investment summarized as of:
 
  March 31,  December 31,  September 30,  June 30,  March 31, 
 (Dollars in thousands) 2017  2016  2016  2016  2016 
Commercial real estate $498,099  $442,237  $420,742  $298,991  $293,485 
Construction, land development, land  109,849   109,812   101,169   36,498   41,622 
1-4 family residential properties  105,230   104,974   108,721   74,121   76,973 
Farmland  136,537   141,615   139,109   35,795   33,250 
Commercial  792,764   778,643   777,806   574,508   509,433 
Factored receivables  242,098   238,198   213,955   237,520   199,532 
Consumer  28,415   29,764   25,602   17,339   13,530 
Mortgage warehouse  122,244   182,381   172,751   135,746   78,015 
  Total loans $2,035,236  $2,027,624  $1,959,855  $1,410,518  $1,245,840 

 

A portion of our total loan portfolio consists of commercial finance products offered under our commercial finance brands on a nationwide basis, as further summarized below:
 
  March 31,  December 31,  September 30,  June 30,  March 31, 
(Dollars in thousands) 2017  2016  2016  2016  2016 
Equipment $203,251  $190,393  $181,987  $167,000  $159,755 
Asset based lending (General)  166,917   161,454   129,501   114,632   85,739 
Asset based lending (Healthcare)  78,208   79,668   84,900   81,664   79,580 
Premium finance  23,162   23,971   27,573   6,117   3,506 
Factored receivables  242,098   238,198   213,955   237,520   199,532 
  Commercial finance $713,636  $693,684  $637,916  $606,933  $528,112 
                     
Commercial finance % of total loans  35%  34%  33%  43%  42%
Yield on commercial finance loans  10.25%  10.54%  10.57%  11.40%  11.11%

 

Deposits summarized as of:
 
  March 31,  December 31,  September 30,  June 30,  March 31,  
(Dollars in thousands) 2017  2016  2016  2016  2016  
Non-interest bearing demand $382,009  $363,351  $339,999  $170,834  $160,818  
Interest bearing demand  329,201   340,362   311,351   235,877   227,002  
Individual retirement accounts  100,436   103,022   103,007   64,204   63,265  
Money market  203,686   213,253   209,572   120,929   111,578  
Savings  173,258   171,354   171,665   77,625   77,969  
Certificates of deposit  767,602   756,351   765,093   555,710   569,820  
Brokered deposits  68,096   68,092   49,990   49,975   49,941  
  Total deposits $2,024,288  $2,015,785  $1,950,677  $1,275,154  $1,260,393  

 

Net interest margin summarized for the three months ended:
 
   March 31, 2017  December 31, 2016 
  Average      Average  Average      Average 
(Dollars in thousands) Balance  Interest  Rate  Balance  Interest  Rate 
Interest earning assets:                        
Interest earning cash balances $153,621  $327   0.86% $109,898  $155   0.56%
Taxable securities  266,591   1,527   2.32%  280,764   1,283   1.82%
Tax-exempt securities  26,190   84   1.30%  28,116   85   1.20%
FHLB stock  8,536   42   2.00%  8,466   34   1.60%
Loans  1,947,483   34,352   7.15%  1,957,167   36,217   7.36%
Total interest earning assets $2,402,421  $36,332   6.13% $2,384,411  $37,774   6.30%
Non-interest earning assets:                        
Other assets  216,861           218,815         
Total assets $2,619,282          $2,603,226         
Interest bearing liabilities:                        
Deposits:                        
Interest bearing demand $325,589  $111   0.14% $333,327  $91   0.11%
Individual retirement accounts  101,484   291   1.16%  101,860   286   1.12%
Money market  209,216   118   0.23%  208,674   102   0.19%
Savings  171,828   34   0.08%  171,175   20   0.05%
Certificates of deposit  756,606   2,079   1.11%  762,644   2,062   1.08%
Brokered deposits  68,086   236   1.41%  61,293   174   1.13%
Total deposits  1,632,809   2,869   0.71%  1,638,973   2,735   0.66%
Subordinated notes  48,743   835   6.95%  48,695   835   6.82%
Junior subordinated debentures  32,780   465   5.75%  32,685   431   5.25%
Other borrowings  222,561   344   0.63%  218,105   229   0.42%
Total interest bearing liabilities $1,936,893  $4,513   0.94% $1,938,458  $4,230   0.87%
Non-interest bearing liabilities and equity:                        
Non-interest bearing demand deposits  377,769           361,292         
Other liabilities  10,384           13,061         
Total equity  294,236           290,415         
Total liabilities and equity $2,619,282          $2,603,226         
Net interest income     $31,819          $33,544     
Interest spread          5.19%          5.43%
Net interest margin          5.37%          5.60%

 

Metrics and non-GAAP financial reconciliation:
 
  As of and for the Three Months Ended 
 (Dollars in thousands, March 31,  December 31,  September 30,  June 30,  March 31, 
 except per share amounts) 2017  2016  2016  2016  2016 
Net income available to common stockholders $10,281  $6,064  $4,506  $4,431  $4,812 
Gain on sale of subsidiary  (20,860)            
Incremental bonus related to transaction  4,814             
Transaction related costs  325      1,618       
Tax effect of adjustments  5,754      (251)      
Adjusted net income available to common stockholders $314  $6,064  $5,873  $4,431  $4,812 
Dilutive effect of convertible preferred stock     197   197       
Adjusted net income available to common stockholders - diluted $314  $6,261  $6,070  $4,431  $4,812 
                     
Weighted average shares outstanding - diluted  18,912,358   18,764,541   18,101,676   18,042,585   17,981,276 
Adjusted effects of assumed Preferred Stock conversion  (676,351)     676,351       
Adjusted weighted average shares outstanding - diluted  18,236,007   18,764,541   18,778,027   18,042,585   17,981,276 
Adjusted diluted earnings per common share $0.02  $0.33  $0.32  $0.25  $0.27 
                     
Net income available to common stockholders $10,281  $6,064  $4,506  $4,431  $4,812 
Average tangible common equity  238,405   233,733   235,938   241,666   235,192 
Return on average tangible common equity  17.49%  10.32%  7.60%  7.37%  8.23%
                     
Adjusted efficiency ratio:                    
Net interest income $31,819  $33,544  $30,418  $25,907  $22,489 
Non-interest income  27,285   6,208   6,099   3,668   4,981 
Operating revenue  59,104   39,752   36,517   29,575   27,470 
Gain on sale of subsidiary  (20,860)            
Adjusted operating revenue $38,244  $39,752  $36,517  $29,575  $27,470 
Non-interest expenses $34,837  $26,911  $25,792  $20,331  $20,078 
Incremental bonus related to transaction  (4,814)            
Transaction related costs  (325)     (1,618)      
Adjusted non-interest expenses $29,698  $26,911  $24,174  $20,331  $20,078 
Adjusted efficiency ratio  77.65%  67.70%  66.20%  68.74%  73.09%
                     
Adjusted net non-interest expense to average assets ratio:                    
Non-interest expenses $34,837  $26,911  $25,792  $20,331  $20,078 
Incremental bonus related to transaction  (4,814)            
Transaction related costs  (325)     (1,618)      
Adjusted non-interest expenses $29,698  $26,911  $24,174  $20,331  $20,078 
                     
Total non-interest income $27,285  $6,208  $6,099  $3,668  $4,981 
Gain on sale of subsidiary  (20,860)            
Adjusted non-interest income $6,425  $6,208  $6,099  $3,668  $4,981 
Adjusted net non-interest expenses $23,273  $20,703  $18,075  $16,663  $15,097 
Average total assets $2,619,282  $2,603,226  $2,282,279  $1,742,942  $1,682,640 
Adjusted net non-interest expense to average assets ratio  3.60%  3.16%  3.15%  3.85%  3.61%

 

                      As of and for the Three Months Ended 
 (Dollars in thousands, March 31,  December 31,  September 30,  June 30,  March 31, 
 except per share amounts) 2017  2016  2016  2016  2016 
Reported yield on loans  7.15%  7.36%  7.42%  8.50%  7.84%
Effect of accretion income on acquired loans  (0.22%)  (0.54%)  (0.32%)  (0.69%)  (0.37%)
Adjusted yield on loans  6.93%  6.82%  7.10%  7.81%  7.47%
                     
Reported net interest margin  5.37%  5.60%  5.79%  6.53%  5.90%
Effect of accretion income on acquired loans  (0.18%)  (0.45%)  (0.26%)  (0.55%)  (0.29%)
Adjusted net interest margin  5.19%  5.15%  5.53%  5.98%  5.61%
                     
Total stockholders' equity $300,425  $289,345  $284,521  $279,763  $274,114 
Preferred stock liquidation preference  (9,746)  (9,746)  (9,746)  (9,746)  (9,746)
Total common stockholders' equity  290,679   279,599   274,775   270,017   264,368 
Goodwill and other intangibles  (44,233)  (46,531)  (47,449)  (26,160)  (26,877)
Tangible common stockholders' equity $246,446  $233,068  $227,326  $243,857  $237,491 
Common shares outstanding  18,078,769   18,078,247   18,106,978   18,107,493   18,015,423 
Tangible book value per share $13.63  $12.89  $12.55  $13.47  $13.18 
                     
Total assets at end of period $2,635,358  $2,641,067  $2,575,490  $1,783,395  $1,687,795 
Goodwill and other intangibles  (44,233)  (46,531)  (47,449)  (26,160)  (26,877)
Adjusted total assets at period end $2,591,125  $2,594,536  $2,528,041  $1,757,235  $1,660,918 
Tangible common stockholders' equity ratio  9.51%  8.98%  8.99%  13.88%  14.30%

1) The Company uses certain non-GAAP financial measures to provide meaningful supplemental information regarding the Company's operational performance and to enhance investors' overall understanding of such financial performance.  The non-GAAP measures used by the Company include the following:

  • "Common stockholders' equity" is defined as total stockholders' equity at end of period less the liquidation preference value of the preferred stock. 
     
  • “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 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.  
     
  • "Adjusted yield on loans" is our yield on loans after excluding loan discount accretion from our acquired loan portfolio.  Our management uses this metric to better assess the impact of purchase accounting on our yield on loans, as the effect of loan discount accretion is expected to decrease as the acquired loans pay down or mature and are removed from our balance sheet. 
     
  • “Adjusted net interest margin” is net interest margin after excluding loan accretion from the acquired loan portfolio.  Our management uses this metric to better assess the impact of purchase accounting on net interest margin, as the effect of loan discount accretion is expected to decrease as the acquired loans pay down or mature and are removed from our balance sheet. 

2) Asset quality ratios exclude loans held for sale.

3) Current quarter ratios are preliminary.


            

Contact Data