Triumph Bancorp Reports Third Quarter Net Income to Common Stockholders of $23.6 million

Dallas, Texas


DALLAS, Oct. 20, 2021 (GLOBE NEWSWIRE) -- Triumph Bancorp, Inc. (Nasdaq: TBK) (“Triumph” or the “Company”) today announced earnings and operating results for the third 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 Third Quarter Highlights

  • For the third quarter of 2021, net income to common shareholders was $23.6 million, and diluted earnings per share were $0.94.
  • Net interest income was $91.8 million.
  • Non-interest income was $12.1 million.
  • Non-interest expense was $72.8 million.
  • Net interest margin was 6.69%. Yield on loans and the average cost of our total deposits were 7.92% and 0.16%, respectively.
  • Credit loss expense for the quarter ended September 30, 2021 was a benefit of $1.2 million.
  • Net charge-offs were $3.7 million, or 0.08% of average loans, for the quarter.
  • We recognized a downward adjustment to third quarter interest income of $3.5 million related to certain factored receivables. The majority of this adjustment represents a timing difference for revenue that will be recognized in future periods. This adjustment will have minimal impact on subsequent quarters.
  • The total dollar value of invoices purchased by Triumph Business Capital was $3.532 billion with an average invoice size of $2,300. The transportation average invoice size for the quarter was $2,195.
  • TriumphPay processed 3,760,948 invoices paying carriers a total of $4.191 billion.

Balance Sheet

Total loans held for investment decreased $48.5 million, or 1.0%, during the third quarter to $4.783 billion at September 30, 2021. Average loans held for investment for the quarter decreased $27.9 million, or 0.6%, to $4.771 billion.

Total deposits were $4.823 billion at September 30, 2021, an increase of $97.1 million, or 2.1%, in the third quarter of 2021. Non-interest-bearing deposits accounted for 42% of total deposits and non-time deposits accounted for 84% of total deposits at September 30, 2021.

Asset Quality and Allowance for Credit Loss

Our nonperforming assets ratio at September 30, 2021 was 0.86%. Approximately 2 basis points of this ratio at September 30, 2021 consisted of $1.4 million of the acquired Over-Formula Advance portfolio which represents the portion that is not covered by CVLG's indemnification. An additional 32 basis points of this ratio at September 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 September 30, 2021 was 2.31%. Approximately 21 basis points of this ratio at September 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 September 30, 2021 consisted of the $19.4 million of Misdirected Payments, as discussed below.

Our ACL as a percentage of loans held for investment decreased 9 basis point during the quarter to 0.86% at September 30, 2021.

CARES Act and Paycheck Protection Program

As of September 30, 2021, our balance sheet reflected deferrals on outstanding loan balances of $32.2 million to assist customers impacted by COVID-19. Modifications related to the COVID-19 pandemic and qualifying under the provisions of Section 4013 of the CARES Act are not considered troubled debt restructurings. As of September 30, 2021, these deferred balances carried accrued interest of $0.1 million.

As of September 30, 2021, we carried 815 PPP loans representing a balance of $87.4 million classified as commercial loans. We recognized $1.6 million in fees from the SBA on PPP loans during the three months ended September 30, 2021 and carry $3.6 million of deferred fees on PPP loans at quarter end. The remaining fees will be amortized over the respective lives of the loans or recognized upon forgiveness 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 September 30, 2021.

At September 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 $4.8 million.

As of September 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 commenced litigation against the USPS seeking a ruling that the USPS was obligated to make the payments represented by this receivable directly to us. During the third quarter of 2021 we, together with the USPS, entered into a stipulation of dismissal without prejudice for our initial action with respect to this matter in United States Federal District Court and filed a new action seeking recourse from the USPS in the United States Court of Federal Claims. Based on our legal analysis and discussions with our counsel advising us on this matter, we continue to 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 September 30, 2021. The full amount of such receivable is reflected in non-performing and past due factored receivables as of September 30, 2021 in accordance with our policy. As of September 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 Brad Voss, CFO will review the quarterly results in a conference call for investors and analysts beginning at 7:00 a.m. Central Time on Thursday, October 21, 2021.

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/tbk211021.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 Nine Months Ended
(Dollars in thousands)September 30,
2021
 June 30,
2021
 March 31,
2021
 December 31,
2020
 September 30,
2020
 September 30,
2021
 September 30,
2020
Financial Highlights:             
Total assets$6,024,535  $6,015,877  $6,099,628  $5,935,791  $5,836,787  $6,024,535  $5,836,787 
Loans held for investment$4,782,730  $4,831,215  $5,084,512  $4,996,776  $4,852,911  $4,782,730  $4,852,911 
Deposits$4,822,575  $4,725,450  $4,789,665  $4,716,600  $4,248,101  $4,822,575  $4,248,101 
Net income available to common stockholders$23,627  $27,180  $33,122  $31,328  $22,005  $83,929  $30,995 
              
Performance Ratios - Annualized:             
Return on average assets1.61% 1.84% 2.29% 2.21% 1.65% 1.91% 0.80%
Return on average total equity11.85% 14.27% 18.42% 17.73% 13.24% 14.72% 6.63%
Return on average common equity12.13% 14.70% 19.14% 18.44% 13.61% 15.18% 6.62%
Return on average tangible common equity (1)19.21% 20.92% 26.19% 25.70% 19.43% 22.12% 9.51%
Yield on loans(2)7.92% 7.77% 7.24% 7.20% 7.05% 7.65% 6.92%
Cost of interest bearing deposits0.27% 0.31% 0.41% 0.54% 0.79% 0.33% 1.07%
Cost of total deposits0.16% 0.20% 0.28% 0.38% 0.56% 0.21% 0.79%
Cost of total funds0.38% 0.34% 0.42% 0.51% 0.67% 0.38% 0.90%
Net interest margin(2)6.69% 6.47% 6.06% 6.20% 5.83% 6.41% 5.52%
Net non-interest expense to average assets4.00% 3.75% 3.14% 2.54% 3.23% 3.63% 3.14%
Adjusted net non-interest expense to average assets (1)4.00% 3.55% 3.14% 2.54% 3.17% 3.57% 3.37%
Efficiency ratio70.13% 67.96% 62.57% 55.95% 65.15% 66.98% 68.07%
Adjusted efficiency ratio (1)70.13% 65.09% 62.57% 55.95% 64.18% 66.00% 70.61%
              
Asset Quality:(3)             
Past due to total loans2.31% 2.28% 1.96% 3.22% 2.40% 2.31% 2.40%
Non-performing loans to total loans0.90% 1.06% 1.17% 1.16% 1.17% 0.90% 1.17%
Non-performing assets to total assets0.86% 0.97% 1.15% 1.15% 1.52% 0.86% 1.52%
ACL to non-performing loans95.75% 88.92% 80.87% 164.98% 159.67% 95.75% 159.67%
ACL to total loans0.86% 0.95% 0.94% 1.92% 1.88% 0.86% 1.88%
Net charge-offs to average loans0.08% 0.01% 0.85% 0.03% 0.02% 0.94% 0.08%
              
Capital:             
Tier 1 capital to average assets(4)10.43% 9.73% 10.89% 10.80% 10.75% 10.43% 10.75%
Tier 1 capital to risk-weighted assets(4)11.06% 10.33% 11.28% 10.60% 10.32% 11.06% 10.32%
Common equity tier 1 capital to risk-weighted assets(4)9.45% 8.74% 9.72% 9.05% 8.72% 9.45% 8.72%
Total capital to risk-weighted assets13.69% 12.65% 13.58% 13.03% 12.94% 13.69% 12.94%
Total equity to total assets13.62% 13.17% 12.53% 12.24% 11.89% 13.62% 11.89%
Tangible common stockholders' equity to tangible assets(1)8.63% 8.04% 8.98% 8.56% 8.09% 8.63% 8.09%
              
Per Share Amounts:             
Book value per share$30.87  $29.76  $28.90  $27.42  $26.11  $30.87  $26.11 
Tangible book value per share (1)$19.73  $18.35  $21.34  $19.78  $18.38  $19.73  $18.38 
Basic earnings (loss) per common share$0.95  $1.10  $1.34  $1.27  $0.89  $3.40  $1.28 
Diluted earnings (loss) per common share$0.94  $1.08  $1.32  $1.25  $0.89  $3.33  $1.27 
Adjusted diluted earnings per common share(1)$0.94  $1.17  $1.32  $1.25  $0.91  $3.42  $0.99 
Shares outstanding end of period25,123,342  25,109,703  24,882,929  24,868,218  24,851,601  25,123,342  24,851,601 
                     

Unaudited consolidated balance sheet as of:

(Dollars in thousands)September 30,
2021
 June 30,
2021
 March 31,
2021
 December 31,
2020
 September 30,
2020
ASSETS         
Total cash and cash equivalents$532,764  $444,439  $380,811  $314,393  $288,278 
Securities - available for sale164,816  193,627  205,330  224,310  242,802 
Securities - held to maturity, net5,488  5,658  5,828  5,919  6,096 
Equity securities5,623  5,854  5,826  5,826  6,040 
Loans held for sale26,437  31,136  22,663  24,546  36,716 
Loans held for investment4,782,730  4,831,215  5,084,512  4,996,776  4,852,911 
Allowance for credit losses(41,017) (45,694) (48,024) (95,739) (90,995)
Loans, net4,741,713  4,785,521  5,036,488  4,901,037  4,761,916 
FHLB and other restricted stock4,901  8,096  9,807  6,751  18,464 
Premises and equipment, net104,311  106,720  105,390  103,404  105,455 
Other real estate owned ("OREO"), net893  1,013  1,421  1,432  1,704 
Goodwill and intangible assets, net280,055  286,567  188,006  189,922  192,041 
Bank-owned life insurance41,540  41,912  41,805  41,608  41,440 
Deferred tax asset, net    1,260  6,427  7,716 
Indemnification asset4,786  5,246  5,246  36,225  31,218 
Other assets111,208  100,088  89,747  73,991  96,901 
Total assets$6,024,535  $6,015,877  $6,099,628  $5,935,791  $5,836,787 
LIABILITIES         
Non-interest bearing deposits$2,020,984  $1,803,552  $1,637,653  $1,352,785  $1,315,900 
Interest bearing deposits2,801,591  2,921,898  3,152,012  3,363,815  2,932,201 
Total deposits4,822,575  4,725,450  4,789,665  4,716,600  4,248,101 
Customer repurchase agreements11,990  9,243  2,668  3,099  14,192 
Federal Home Loan Bank advances30,000  130,000  180,000  105,000  435,000 
Payment Protection Program Liquidity Facility97,554  139,673  158,796  191,860  223,713 
Subordinated notes106,755  87,620  87,564  87,509  87,455 
Junior subordinated debentures40,467  40,333  40,201  40,072  39,944 
Deferred tax liability, net982  3,333       
Other liabilities93,538  87,837  76,730  64,870  94,540 
Total liabilities5,203,861  5,223,489  5,335,624  5,209,010  5,142,945 
EQUITY         
Preferred Stock45,000  45,000  45,000  45,000  45,000 
Common stock282  282  280  280  279 
Additional paid-in-capital499,282  494,224  490,699  489,151  488,094 
Treasury stock, at cost(104,600) (104,486) (103,059) (103,052) (102,942)
Retained earnings373,512  349,885  322,705  289,583  258,254 
Accumulated other comprehensive income (loss)7,198  7,483  8,379  5,819  5,157 
Total stockholders' equity820,674  792,388  764,004  726,781  693,842 
Total liabilities and equity$6,024,535  $6,015,877  $6,099,628  $5,935,791  $5,836,787 
                    

Unaudited consolidated statement of income:

 For the Three Months Ended For the Nine Months Ended
(Dollars in thousands)September 30,
2021
 June 30,
2021
 March 31,
2021
 December 31,
2020
 September 30,
2020
 September 30,
2021
 September 30,
2020
Interest income:             
Loans, including fees$44,882  $45,988  $48,706  $50,723  $48,774  $139,576  $147,491 
Factored receivables, including fees50,516  47,328  37,795  37,573  31,468  135,639  76,861 
Securities1,126  1,187  1,650  1,519  1,927  3,963  6,710 
FHLB and other restricted stock28  27  76  56  122  131  474 
Cash deposits183  158  126  68  73  467  640 
Total interest income96,735  94,688  88,353  89,939  82,364  279,776  232,176 
Interest expense:             
Deposits1,948  2,470  3,372  4,308  5,834  7,790  23,095 
Subordinated notes2,449  1,350  1,349  1,347  1,348  5,148  4,016 
Junior subordinated debentures443  446  442  452  462  1,331  1,662 
Other borrowings124  140  170  234  341  434  2,273 
Total interest expense4,964  4,406  5,333  6,341  7,985  14,703  31,046 
Net interest income91,771  90,282  83,020  83,598  74,379  265,073  201,130 
Credit loss expense (benefit)(1,187) (1,806) (7,845) 4,680  (258) (10,838) 33,649 
Net interest income after credit loss expense (benefit)92,958  92,088  90,865  78,918  74,637  275,911  167,481 
Non-interest income:             
Service charges on deposits2,030  1,857  1,787  1,643  1,470  5,674  3,631 
Card income2,144  2,225  1,972  1,949  2,091  6,341  5,832 
Net OREO gains (losses) and valuation adjustments(9) (287) (80) (217) (41) (376) (399)
Net gains (losses) on sale of securities4  1    16  3,109  5  3,210 
Fee income5,198  4,470  2,249  1,615  1,402  11,917  4,392 
Insurance commissions1,231  1,272  1,486  1,327  990  3,989  2,905 
Gain on sale of subsidiary            9,758 
Other1,457  4,358  6,877  16,053  1,472  12,692  8,670 
Total non-interest income12,055  13,896  14,291  22,386  10,493  40,242  37,999 
Non-interest expense:             
Salaries and employee benefits43,769  41,658  35,980  33,798  31,651  121,407  93,177 
Occupancy, furniture and equipment6,388  6,112  5,779  7,046  5,574  18,279  15,720 
FDIC insurance and other regulatory assessments353  500  977  350  360  1,830  1,170 
Professional fees2,362  5,052  2,545  2,326  3,265  9,959  7,023 
Amortization of intangible assets3,274  2,428  1,975  2,065  2,141  7,677  6,265 
Advertising and promotion1,403  1,241  890  1,170  1,105  3,534  3,548 
Communications and technology7,090  6,028  5,900  5,639  5,569  19,018  16,514 
Other8,174  7,779  6,846  6,904  5,632  22,799  19,359 
Total non-interest expense72,813  70,798  60,892  59,298  55,297  204,503  162,776 
Net income before income tax32,200  35,186  44,264  42,006  29,833  111,650  42,704 
Income tax expense7,771  7,204  10,341  9,876  6,929  25,316  10,810 
Net income$24,429  $27,982  $33,923  $32,130  $22,904  $86,334  $31,894 
Dividends on preferred stock(802) (802) (801) (802) (899) (2,405) (899)
Net income available to common stockholders$23,627  $27,180  $33,122  $31,328  $22,005  $83,929  $30,995 
                            

Earnings per share:

 For the Three Months Ended Nine Months Ended
(Dollars in thousands)September 30,
2021
 June 30,
2021
 March 31,
2021
 December 31,
2020
 September 30,
2020
 September 30,
2021
 September 30,
2020
Basic             
Net income to common stockholders$23,627  $27,180  $33,122  $31,328  $22,005  $83,929  $30,995 
Weighted average common shares outstanding24,759,419  24,724,128  24,675,109  24,653,099  24,592,092  24,719,861  24,298,897 
Basic earnings per common share$0.95  $1.10  $1.34  $1.27  $0.89  $3.40  $1.28 
              
Diluted             
Net income to common stockholders - diluted$23,627  $27,180  $33,122  $31,328  $22,005  $83,929  $30,995 
Weighted average common shares outstanding24,759,419  24,724,128  24,675,109  24,653,099  24,592,092  24,719,861  24,298,897 
Dilutive effects of:             
Assumed exercises of stock options121,110  134,358  130,016  101,664  48,102  129,149  53,232 
Restricted stock awards141,204  139,345  169,514  136,239  67,907  146,172  65,893 
Restricted stock units74,268  73,155  66,714  50,156  18,192  71,620  15,198 
Performance stock units - market based131,346  134,313  128,167  112,228  76,095  131,275  30,995 
Performance stock units - performance based             
Employee stock purchase plan616  3,708  1,418      1,914   
Weighted average shares outstanding - diluted25,227,963  25,209,007  25,170,938  25,053,386  24,802,388  25,199,991  24,464,215 
Diluted earnings per common share$0.94  $1.08  $1.32  $1.25  $0.89  $3.33  $1.27 
                            

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

 For the Three Months Ended Nine Months Ended
 September 30,
2021
 June 30,
2021
 March 31,
2021
 December 31,
2020
 September 30,
2020
 September 30,
2021
 September 30,
2020
Stock options16,939  16,939      98,513  16,939  98,513 
Restricted stock awards          195,640   
Restricted stock units          17,757   
Performance stock units - market based12,020  13,520        12,020   
Performance stock units - performance based259,383  265,625  256,625  256,625  261,125  259,383  261,125 
Employee stock purchase plan             

Loans held for investment summarized as of:

(Dollars in thousands)September 30,
2021
 June 30,
2021
 March 31,
2021
 December 31,
2020
 September 30,
2020
Commercial real estate$630,106  $701,576  $784,110  $779,158  $762,531 
Construction, land development, land171,814  185,444  223,841  219,647  244,512 
1-4 family residential properties127,073  135,288  142,859  157,147  164,785 
Farmland82,990  91,122  97,835  103,685  110,966 
Commercial1,398,497  1,453,583  1,581,125  1,562,957  1,536,903 
Factored receivables1,607,028  1,398,299  1,208,718  1,120,770  1,016,337 
Consumer12,677  12,389  14,332  15,838  17,106 
Mortgage warehouse752,545  853,514  1,031,692  1,037,574  999,771 
Total loans$4,782,730  $4,831,215  $5,084,512  $4,996,776  $4,852,911 
                    

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)September 30,
2021
 June 30,
2021
 March 31,
2021
 December 31,
2020
 September 30,
2020
Commercial real estate$630,106  $701,576  $784,110  $779,158  $762,531 
Construction, land development, land171,814  185,444  223,841  219,647  244,512 
1-4 family residential127,073  135,288  142,859  157,147  164,785 
Farmland82,990  91,122  97,835  103,685  110,966 
Commercial - General289,242  290,562  288,458  340,850  342,858 
Commercial - Paycheck Protection Program87,413  135,307  237,299  189,857  223,230 
Commercial - Agriculture77,263  76,346  83,859  94,572  112,221 
Commercial - Equipment588,105  604,396  623,248  573,163  509,849 
Commercial - Asset-based lending213,927  181,394  188,825  180,488  160,711 
Commercial - Liquid Credit142,547  165,578  159,436  184,027  188,034 
Consumer12,677  12,389  14,332  15,838  17,106 
Mortgage Warehouse752,545  853,514  1,031,692  1,037,574  999,771 
Total banking loans held for investment$3,175,702  $3,432,916  $3,875,794  $3,876,006  $3,836,574 
                    

The following table presents the Company’s operating segments:

(Dollars in thousands)          
Three months ended September 30, 2021 Banking Factoring Payments Corporate Consolidated
Total interest income $46,175  $47,222  $3,295  $43  $96,735 
Intersegment interest allocations 2,452  (2,341) (111)    
Total interest expense 2,073      2,891  4,964 
Net interest income (expense) 46,554  44,881  3,184  (2,848) 91,771 
Credit loss expense (benefit) (2,399) 1,164  38  10  (1,187)
Net interest income after credit loss expense 48,953  43,717  3,146  (2,858) 92,958 
Noninterest income 7,371  1,557  3,086  41  12,055 
Noninterest expense 41,183  19,106  11,416  1,108  72,813 
Operating income (loss) $15,141  $26,168  $(5,184) $(3,925) $32,200 


(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 
                     

Information pertaining to our factoring segment, which includes only factoring originated by our Triumph Business Capital subsidiary, summarized as of and for the quarters ended:

 September 30,
2021
 June 30,
2021
 March 31,
2021
 December 31,
2020
 September 30,
2020
Factored receivable period end balance$1,479,989,000  $1,284,314,000  $1,118,988,000  $1,036,548,000  $953,434,000 
Yield on average receivable balance13.75% 14.99% 13.85% 13.80% 15.59%
Current quarter charge-off rate(1)0.24% 0.04% 3.95% 0.02% 0.09%
Factored receivables - transportation concentration90% 91% 90% 89% 88%
          
Interest income, including fees$47,222,000  $44,653,000  $35,824,000  $35,439,000  $30,068,000 
Non-interest income(2)1,557,000  2,742,000  1,757,000  1,358,000  1,157,000 
Factored receivable total revenue48,779,000  47,395,000  37,581,000  36,797,000  31,225,000 
Average net funds employed1,235,610,000  1,072,405,000  936,528,000  924,899,000  694,170,000 
Yield on average net funds employed15.66% 17.73% 16.27% 15.83% 17.89%
          
Accounts receivable purchased$3,531,811,000  $3,068,262,000  $2,492,468,000  $2,461,249,000  $1,984,490,000 
Number of invoices purchased1,535,321  1,401,695  1,188,678  1,189,271  1,027,839 
Average invoice size$2,300  $2,189  $2,097  $2,070  $1,931 
Average invoice size - transportation$2,195  $2,090  $1,974  $1,943  $1,787 
Average invoice size - non-transportation$4,944  $4,701  $4,775  $5,091  $5,181 


(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:

 September 30,
2021
 June 30,
2021
 March 31,
2021
 December 31,
2020
 September 30,
2020
Factored receivable period end balance$127,039,000  $113,985,000  $89,730,000  $84,222,000  $62,903,000 
          
Interest income$3,295,000  $2,675,000  $1,969,000  $2,034,000  $1,361,000 
Noninterest income3,086,000  1,083,000  73,000  51,000  47,000 
Total revenue$6,381,000  $3,758,000  $2,042,000  $2,085,000  $1,408,000 
          
Pre-tax operating income (loss)$(5,184,000) $(7,441,000) $(2,552,000) $(2,026,000) $(1,936,000)
Interest expense111,000  139,000  167,000  178,000  147,000 
Depreciation and software amortization expense77,000  68,000  65,000  63,000  63,000 
Intangible amortization expense1,490,000  497,000       
Earnings (losses) before interest, taxes, depreciation, and amortization$(3,506,000) $(6,737,000) $(2,320,000) $(1,785,000) $(1,726,000)
Transaction costs  2,992,000       
Adjusted earnings (losses) before interest, taxes, depreciation, and amortization(1)$(3,506,000) $(3,745,000) $(2,320,000) $(1,785,000) $(1,726,000)
          
Number of invoices processed3,760,948  3,165,119  2,529,673  1,818,145  1,408,232 
Amount of payments processed$4,191,424,000  $3,426,808,000  $2,301,632,000  $1,920,037,000  $1,221,305,000 

(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)September 30,
2021
 June 30,
2021
 March 31,
2021
 December 31,
2020
 September 30,
2020
Non-interest bearing demand$2,020,984  $1,803,552  $1,637,653  $1,352,785  $1,315,900 
Interest bearing demand795,234  760,874  729,364  688,680  634,272 
Individual retirement accounts86,012  87,052  89,748  92,584  94,933 
Money market472,242  395,035  402,070  393,325  384,476 
Savings483,946  474,163  464,035  421,488  405,954 
Certificates of deposit574,539  612,730  740,694  790,844  857,514 
Brokered time deposits117,064  306,975  516,006  516,786  344,986 
Other brokered deposits272,554  285,069  210,095  460,108  210,066 
Total deposits$4,822,575  $4,725,450  $4,789,665  $4,716,600  $4,248,101 
                    

Net interest margin summarized for the three months ended:

 September 30, 2021 June 30, 2021
(Dollars in thousands)Average
Balance
 Interest Average
Rate
 Average
Balance
 Interest Average
Rate
Interest earning assets:           
Interest earning cash balances$474,122  $183  0.15% $572,485  $158  0.11%
Taxable securities154,017  948  2.44% 165,786  967  2.34%
Tax-exempt securities27,839  178  2.54% 33,451  220  2.64%
FHLB and other restricted stock7,956  28  1.40% 9,518  27  1.14%
Loans4,777,409  95,398  7.92% 4,814,050  93,316  7.77%
Total interest earning assets$5,441,343  $96,735  7.05% $5,595,290  $94,688  6.79%
Non-interest earning assets:           
Other assets579,288      498,515     
     Total assets$6,020,631      $6,093,805     
Interest bearing liabilities:           
Deposits:           
Interest bearing demand$779,625  $435  0.22% $757,529  $469  0.25%
Individual retirement accounts86,571  126  0.58% 88,142  143  0.65%
Money market417,435  225  0.21% 398,290  216  0.22%
Savings479,915  185  0.15% 468,517  178  0.15%
Certificates of deposit595,001  725  0.48% 664,478  1,157  0.70%
Brokered time deposits99,116  29  0.12% 138,102  51  0.15%
Other brokered deposits441,446  223  0.20% 685,397  256  0.15%
     Total interest bearing deposits2,899,109  1,948  0.27% 3,200,455  2,470  0.31%
Federal Home Loan Bank advances36,522  22  0.24% 39,341  22  0.22%
Subordinated notes114,071  2,449  8.52% 87,590  1,350  6.18%
Junior subordinated debentures40,390  443  4.35% 40,251  446  4.44%
Other borrowings127,946  102  0.32% 138,649  118  0.34%
     Total interest bearing liabilities$3,218,038  $4,964  0.61% $3,506,286  $4,406  0.50%
Non-interest bearing liabilities and equity:           
Non-interest bearing demand deposits1,912,398      1,749,858     
Other liabilities72,173      51,257     
Total equity818,022      786,404     
     Total liabilities and equity$6,020,631      $6,093,805     
Net interest income  $91,771      $90,282   
Interest spread    6.44%     6.29%
Net interest margin    6.69%     6.47%

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)September 30,
2021
 June 30,
2021
 March 31,
2021
 December 31,
2020
 September 30,
2020
Average Banking loans$3,299,152   $3,516,747   $3,722,895   $3,777,553   $3,707,293  
Average Factoring receivables1,362,856   1,195,209   1,048,968   1,024,307   768,087  
Average Payments receivables115,401   102,094   76,412   74,947   50,683  
Average total loans$4,777,409   $4,814,050   $4,848,275   $4,876,807   $4,526,063  
Banking yield5.40 % 5.25 % 5.31 % 5.34 % 5.23 %
Factoring yield13.75 % 14.99 % 13.85 % 13.80 % 15.59 %
Payments Yield11.33 % 10.51 % 10.45 % 10.80 % 10.68 %
Total loan yield7.92 % 7.77 % 7.24 % 7.20 % 7.05 %
               

Metrics and non-GAAP financial reconciliation:

  As of and for the Three Months Ended As of and for the Nine Months Ended
(Dollars in thousands,
except per share amounts)
 September 30,
2021
 June 30,
2021
 March 31,
2021
 December 31,
2020
 September 30,
2020
 September 30,
2021
 September 30,
2020
Net income available to common stockholders $23,627   $27,180   $33,122   $31,328   $22,005   $83,929   $30,995  
Transaction costs    2,992         827   2,992   827  
Gain on sale of subsidiary or division                   (9,758) 
Tax effect of adjustments    (715)        (197)  (715)  2,254  
Adjusted net income available to common stockholders - diluted $23,627   $29,457   $33,122   $31,328   $22,635   $86,206   $24,318  
               
Weighted average shares outstanding - diluted 25,227,963   25,209,007   25,170,938   25,053,386   24,802,388   25,199,991   24,464,215  
Adjusted diluted earnings per common share $0.94   $1.17   $1.32   $1.25   $0.91   $3.42   $0.99  
               
Average total stockholders' equity $818,022   $786,404   $746,849   $720,892   $688,327   $784,019   $642,151  
Average preferred stock liquidation preference (45,000)  (45,000)  (45,000)  (45,000)  (45,000)  (45,000)  (17,080) 
Average total common stockholders' equity 773,022   741,404   701,849   675,892   643,327   739,019   625,071  
Average goodwill and other intangibles (284,970)  (220,310)  (188,980)  (191,017)  (192,682)  (231,751)  (189,776) 
Average tangible common stockholders' equity $488,052   $521,094   $512,869   $484,875   $450,645   $507,268   $435,295  
               
Net income available to common stockholders $23,627   $27,180   $33,122   $31,328   $22,005   $83,929   $30,995  
Average tangible common equity 488,052   521,094   512,869   484,875   450,645   507,268   435,295  
Return on average tangible common equity 19.21 % 20.92 % 26.19 % 25.70 % 19.43 % 22.12 % 9.51 %
               
Net interest income $91,771   $90,282   $83,020   $83,598   $74,379   $265,073   $201,130  
Non-interest income 12,055   13,896   14,291   22,386   10,493   40,242   37,999  
Operating revenue 103,826   104,178   97,311   105,984   84,872   305,315   239,129  
Gain on sale of subsidiary or division                   (9,758) 
Adjusted operating revenue $103,826   $104,178   $97,311   $105,984   $84,872   $305,315   $229,371  
Non-interest expenses $72,813   $70,798   $60,892   $59,298   $55,297   $204,503   $162,776  
Transaction costs    (2,992)        (827)  (2,992)  (827) 
Adjusted non-interest expenses $72,813   $67,806   $60,892   $59,298   $54,470   $201,511   $161,949  
Adjusted efficiency ratio 70.13 % 65.09 % 62.57 % 55.95 % 64.18 % 66.00 % 70.61 %
               
Adjusted net non-interest expense to average assets ratio:              
Non-interest expenses $72,813   $70,798   $60,892   $59,298   $55,297   $204,503   $162,776  
Transaction costs    (2,992)        (827)  (2,992)  (827) 
Adjusted non-interest expenses $72,813   $67,806   $60,892   $59,298   $54,470   $201,511   $161,949  
Total non-interest income $12,055   $13,896   $14,291   $22,386   $10,493   $40,242   $37,999  
Gain on sale of subsidiary or division                   (9,758) 
Adjusted non-interest income $12,055   $13,896   $14,291   $22,386   $10,493   $40,242   $28,241  
Adjusted net non-interest expenses $60,758   $53,910   $46,601   $36,912   $43,977   $161,269   $133,708  
Average total assets $6,020,631   $6,093,805   $6,013,668   $5,788,549   $5,518,708   $6,042,677   $5,304,903  
Adjusted net non-interest expense to average assets ratio 4.00 % 3.55 % 3.14 % 2.54 % 3.17 % 3.57 % 3.37 %
                                    
Total stockholders' equity $820,674   $792,388   $764,004   $726,781   $693,842   $820,674   $693,842  
Preferred stock liquidation preference (45,000)  (45,000)  (45,000)  (45,000)  (45,000)  (45,000)  (45,000) 
Total common stockholders' equity 775,674   747,388   719,004   681,781   648,842   775,674   648,842  
Goodwill and other intangibles (280,055)  (286,567)  (188,006)  (189,922)  (192,041)  (280,055)  (192,041) 
Tangible common stockholders' equity $495,619   $460,821   $530,998   $491,859   $456,801   $495,619   $456,801  
Common shares outstanding 25,123,342   25,109,703   24,882,929   24,868,218   24,851,601   25,123,342   24,851,601  
Tangible book value per share $19.73   $18.35   $21.34   $19.78   $18.38   $19.73   $18.38  
               
Total assets at end of period $6,024,535   $6,015,877   $6,099,628   $5,935,791   $5,836,787   $6,024,535   $5,836,787  
Goodwill and other intangibles (280,055)  (286,567)  (188,006)  (189,922)  (192,041)  (280,055)  (192,041) 
Tangible assets at period end $5,744,480   $5,729,310   $5,911,622   $5,745,869   $5,644,746   $5,744,480   $5,644,746  
Tangible common stockholders' equity ratio 8.63 % 8.04 % 8.98 % 8.56 % 8.09 % 8.63 % 8.09 %

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

  • “Adjusted diluted earnings per common share” is defined as adjusted net income available to common stockholders divided by adjusted weighted average diluted common shares outstanding. Excluded from net income available to common stockholders are material gains and expenses related to merger and acquisition-related activities, including divestitures, net of tax. In our judgment, the adjustments made to net income available to common stockholders allow management and investors to better assess our performance in relation to our core net income by removing the volatility associated with certain acquisition-related items and other discrete items that are unrelated to our core business. Weighted average diluted common shares outstanding are adjusted as a result of changes in their dilutive properties given the gain and expense adjustments described herein.
  • "Tangible common stockholders' equity" is defined as common stockholders' equity less goodwill and other intangible assets.
  • "Total tangible assets" is defined as total assets less goodwill and other intangible assets.
  • "Tangible book value per share" is defined as tangible common stockholders' equity divided by total common shares outstanding. This measure is important to investors interested in changes from period-to-period in book value per share exclusive of changes in intangible assets.
  • "Tangible common stockholders' equity ratio" is defined as the ratio of tangible common stockholders' equity divided by total tangible assets. We believe that this measure is important to many investors in the marketplace who are interested in relative changes from period-to period in common equity and total assets, each exclusive of changes in intangible assets.
  • "Return on Average Tangible Common Equity" is defined as net income available to common stockholders divided by average tangible common stockholders' equity.
  • "Adjusted efficiency ratio" is defined as non-interest expenses divided by our operating revenue, which is equal to net interest income plus non-interest income. Also excluded are material gains and expenses related to merger and acquisition-related activities, including divestitures. In our judgment, the adjustments made to operating revenue and non-interest expense allow management and investors to better assess our performance in relation to our core operating revenue by removing the volatility associated with certain acquisition-related items and other discrete items that are unrelated to our core business.
  • "Adjusted net non-interest expense to average total assets" is defined as non-interest expenses net of non-interest income divided by total average assets. Excluded are material gains and expenses related to merger and acquisition-related activities, including divestitures. This metric is used by our management to better assess our operating efficiency.

2)  Performance ratios include discount accretion on purchased loans for the periods presented as follows:

 For the Three Months Ended For the Nine Months Ended
(Dollars in thousands)September 30,
2021
 June 30,
2021
 March 31,
2021
 December 31,
2020
 September 30,
2020
 September 30,
2021
 September 30,
2020
Loan discount accretion$1,953  $2,161  $3,501  $2,334  $4,104  $7,615  $8,377 

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