Triumph Bancorp Reports Fourth Quarter Net Income to Common Stockholders of $25.8 million

Dallas, Texas


DALLAS, Jan. 20, 2022 (GLOBE NEWSWIRE) -- Triumph Bancorp, Inc. (Nasdaq: TBK) (“Triumph” or the “Company”) today announced earnings and operating results for the fourth 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 Fourth Quarter Highlights

  • For the fourth quarter of 2021, net income to common shareholders was $25.8 million, and diluted earnings per share were $1.02.
  • Net interest income was $104.1 million.
  • Non-interest income was $14.3 million.
  • Non-interest expense was $83.0 million. Included in non-interest expense was a $7.4 million accrual for our Strategic Equity Grant ("SEG") reflected in salaries and employee benefits which represents a cumulative catch-up to cover two-thirds of the three year vesting period. Further discussion of the SEG can be found in our 2020 Proxy.
  • Net interest margin was 7.66%. Yield on loans and the average cost of our total deposits were 8.68% and 0.16%, respectively.
  • Credit loss expense for the quarter ended December 31, 2021 was $2.0 million.
  • Net charge-offs were $0.2 million for the quarter.
  • The total dollar value of invoices purchased by Triumph Business Capital was $4.033 billion with an average invoice size of $2,416. The transportation average invoice size for the quarter was $2,291.
  • TriumphPay processed 4,027,680 invoices paying carriers a total of $5.242 billion.

Balance Sheet

Total loans held for investment increased $84.8 million, or 1.8%, during the fourth quarter to $4.868 billion at December 31, 2021. Average loans held for investment for the quarter increased $73.1 million, or 1.5%, to $4.844 billion.

Total deposits were $4.647 billion at December 31, 2021, a decrease of $175.9 million, or 3.6%, in the fourth quarter of 2021. Non-interest-bearing deposits accounted for 41% of total deposits and non-time deposits accounted for 86% of total deposits at December 31, 2021.

Asset Quality and Allowance for Credit Loss

Our nonperforming assets ratio at December 31, 2021 was 0.92%. Approximately 2 basis points of this ratio at December 31, 2021 consisted of $1.4 million of the acquired Over-Formula Advance portfolio which represents the portion that is not covered by CVLG's indemnification. An additional 33 basis points of this ratio at December 31, 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 December 31, 2021 was 2.86%. Approximately 21 basis points of this ratio at December 31, 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 December 31, 2021 consisted of the $19.4 million of Misdirected Payments, as discussed below.

Our ACL as a percentage of loans held for investment increased 1 basis point during the quarter to 0.87% at December 31, 2021.

CARES Act and Paycheck Protection Program

As of December 31, 2021, our balance sheet reflected deferrals on outstanding loan balances of $31.9 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 December 31, 2021, these deferred balances carried accrued interest of $0.1 million.

As of December 31, 2021, we carried 118 PPP loans representing a balance of $27.2 million classified as commercial loans. We recognized $2.7 million in fees from the SBA on PPP loans during the three months ended December 31, 2021 and carry $0.8 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 December 31, 2021.

At December 31, 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 December 31, 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 in the United States Court of Federal Claims against the USPS seeking a ruling that the USPS was obligated to make the payments represented by this receivable directly to us. Based on our legal analysis and discussions with our counsel advising us on this matter, we 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 December 31, 2021. The full amount of such receivable is reflected in non-performing and past due factored receivables as of December 31, 2021 in accordance with our policy. As of December 31, 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 financial results in a conference call for investors and analysts beginning at 7:00 a.m. Central Time on Friday, January 21, 2022.

To participate in the live conference call, please dial 1-844-200-6205 (International: +1-929-526-1599) and access code 984179.  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/tbk220121.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, offering a diversified line of payments, factoring, and banking services. 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 Twelve
Months Ended
(Dollars in thousands)December 31,
2021
 September 30,
2021
 June 30,
2021
 March 31,
2021
 December 31,
2020
 December 31,
2021
 December 31,
2020
Financial Highlights:             
Total assets$5,956,250  $6,024,535  $6,015,877  $6,099,628  $5,935,791  $5,956,250  $5,935,791 
Loans held for investment$4,867,572  $4,782,730  $4,831,215  $5,084,512  $4,996,776  $4,867,572  $4,996,776 
Deposits$4,646,679  $4,822,575  $4,725,450  $4,789,665  $4,716,600  $4,646,679  $4,716,600 
Net income available to common stockholders$25,839  $23,627  $27,180  $33,122  $31,328  $109,768  $62,323 
              
Performance Ratios - Annualized:             
Return on average assets 1.77%  1.61%  1.84%  2.29%  2.21%  1.87%  1.18%
Return on average total equity 12.41%  11.85%  14.27%  18.42%  17.73%  14.10%  9.67%
Return on average common equity 12.71%  12.13%  14.70%  19.14%  18.44%  14.52%  9.77%
Return on average tangible common equity (1) 19.41%  19.21%  20.92%  26.19%  25.70%  21.42%  13.92%
Yield on loans(2) 8.68%  7.92%  7.77%  7.24%  7.20%  7.91%  7.00%
Cost of interest bearing deposits 0.27%  0.27%  0.31%  0.41%  0.54%  0.32%  0.93%
Cost of total deposits 0.16%  0.16%  0.20%  0.28%  0.38%  0.20%  0.67%
Cost of total funds 0.29%  0.38%  0.34%  0.42%  0.51%  0.36%  0.80%
Net interest margin(2) 7.66%  6.69%  6.47%  6.06%  6.20%  6.72%  5.71%
Net non-interest expense to average assets 4.56%  4.00%  3.75%  3.14%  2.54%  3.87%  2.98%
Adjusted net non-interest expense to average assets (1) 4.56%  4.00%  3.55%  3.14%  2.54%  3.82%  3.14%
Efficiency ratio 70.16%  70.13%  67.96%  62.57%  55.95%  67.87%  64.35%
Adjusted efficiency ratio (1) 70.16%  70.13%  65.09%  62.57%  55.95%  67.16%  65.97%
                            
Asset Quality:(3)                           
Past due to total loans 2.86%  2.31%  2.28%  1.96%  3.22%  2.86%  3.22%
Non-performing loans to total loans 0.95%  0.90%  1.06%  1.17%  1.16%  0.95%  1.16%
Non-performing assets to total assets 0.92%  0.86%  0.97%  1.15%  1.15%  0.92%  1.15%
ACL to non-performing loans 91.20%  95.75%  88.92%  80.87%  164.98%  91.20%  164.98%
ACL to total loans 0.87%  0.86%  0.95%  0.94%  1.92%  0.87%  1.92%
Net charge-offs to average loans %  0.08%  0.01%  0.85%  0.03%  0.95%  0.10%
                            
Capital:                           
Tier 1 capital to average assets(4) 11.11%  10.43%  9.73%  10.89%  10.80%  11.11%  10.80%
Tier 1 capital to risk-weighted assets(4) 11.51%  11.06%  10.33%  11.28%  10.60%  11.51%  10.60%
Common equity tier 1 capital to risk-weighted assets(4) 9.94%  9.45%  8.74%  9.72%  9.05%  9.94%  9.05%
Total capital to risk-weighted assets 14.10%  13.69%  12.65%  13.58%  13.03%  14.10%  13.03%
Total equity to total assets 14.42%  13.62%  13.17%  12.53%  12.24%  14.42%  12.24%
Tangible common stockholders' equity to tangible assets(1) 9.46%  8.63%  8.04%  8.98%  8.56%  9.46%  8.56%
              
Per Share Amounts:             
Book value per share$32.35  $30.87  $29.76  $28.90  $27.42  $32.35  $27.42 
Tangible book value per share (1)$21.34  $19.73  $18.35  $21.34  $19.78  $21.34  $19.78 
Basic earnings per common share$1.04  $0.95  $1.10  $1.34  $1.27  $4.44  $2.56 
Diluted earnings per common share$1.02  $0.94  $1.08  $1.32  $1.25  $4.35  $2.53 
Adjusted diluted earnings per common share(1)$1.02  $0.94  $1.17  $1.32  $1.25  $4.44  $2.26 
Shares outstanding end of period 25,158,879   25,123,342   25,109,703   24,882,929   24,868,218   25,158,879   24,868,218 
                            

Unaudited consolidated balance sheet as of:

(Dollars in thousands)December 31,
2021
 September 30,
2021
 June 30,
2021
 March 31,
2021
 December 31,
2020
ASSETS         
Total cash and cash equivalents$383,178  $532,764  $444,439  $380,811  $314,393 
Securities - available for sale 182,426   164,816   193,627   205,330   224,310 
Securities - held to maturity, net 4,947   5,488   5,658   5,828   5,919 
Equity securities 5,504   5,623   5,854   5,826   5,826 
Loans held for sale 7,330   26,437   31,136   22,663   24,546 
Loans held for investment 4,867,572   4,782,730   4,831,215   5,084,512   4,996,776 
Allowance for credit losses (42,213)  (41,017)  (45,694)  (48,024)  (95,739)
Loans, net 4,825,359   4,741,713   4,785,521   5,036,488   4,901,037 
FHLB and other restricted stock 10,146   4,901   8,096   9,807   6,751 
Premises and equipment, net 105,729   104,311   106,720   105,390   103,404 
Other real estate owned ("OREO"), net 524   893   1,013   1,421   1,432 
Goodwill and intangible assets, net 276,856   280,055   286,567   188,006   189,922 
Bank-owned life insurance 40,993   41,540   41,912   41,805   41,608 
Deferred tax asset, net 10,023         1,260   6,427 
Indemnification asset 4,786   4,786   5,246   5,246   36,225 
Other assets 98,449   111,208   100,088   89,747   73,991 
Total assets$5,956,250  $6,024,535  $6,015,877  $6,099,628  $5,935,791 
LIABILITIES         
Non-interest bearing deposits$1,925,370  $2,020,984  $1,803,552  $1,637,653  $1,352,785 
Interest bearing deposits 2,721,309   2,801,591   2,921,898   3,152,012   3,363,815 
Total deposits 4,646,679   4,822,575   4,725,450   4,789,665   4,716,600 
Customer repurchase agreements 2,103   11,990   9,243   2,668   3,099 
Federal Home Loan Bank advances 180,000   30,000   130,000   180,000   105,000 
Payment Protection Program Liquidity Facility 27,144   97,554   139,673   158,796   191,860 
Subordinated notes 106,957   106,755   87,620   87,564   87,509 
Junior subordinated debentures 40,602   40,467   40,333   40,201   40,072 
Deferred tax liability, net    982   3,333       
Other liabilities 93,901   93,538   87,837   76,730   64,870 
Total liabilities 5,097,386   5,203,861   5,223,489   5,335,624   5,209,010 
EQUITY         
Preferred Stock 45,000   45,000   45,000   45,000   45,000 
Common stock 283   282   282   280   280 
Additional paid-in-capital 510,939   499,282   494,224   490,699   489,151 
Treasury stock, at cost (104,743)  (104,600)  (104,486)  (103,059)  (103,052)
Retained earnings 399,351   373,512   349,885   322,705   289,583 
Accumulated other comprehensive income (loss) 8,034   7,198   7,483   8,379   5,819 
Total stockholders' equity 858,864   820,674   792,388   764,004   726,781 
Total liabilities and equity$5,956,250  $6,024,535  $6,015,877  $6,099,628  $5,935,791 
                    

Unaudited consolidated statement of income:

 For the Three Months Ended For the Twelve Months Ended
(Dollars in thousands)December 31,
2021
 September 30,
2021
 June 30,
2021
 March 31,
2021
 December 31,
2020
 December 31,
2021
 December 31,
2020
Interest income:             
Loans, including fees$43,979  $44,882  $45,988  $48,706  $50,723  $183,555  $198,214 
Factored receivables, including fees 62,196   50,516   47,328   37,795   37,573   197,835   114,434 
Securities 1,438   1,126   1,187   1,650   1,519   5,401   8,229 
FHLB and other restricted stock 25   28   27   76   56   156   530 
Cash deposits 141   183   158   126   68   608   708 
Total interest income 107,779   96,735   94,688   88,353   89,939   387,555   322,115 
Interest expense:             
Deposits 1,907   1,948   2,470   3,372   4,308   9,697   27,403 
Subordinated notes 1,297   2,449   1,350   1,349   1,347   6,445   5,363 
Junior subordinated debentures 444   443   446   442   452   1,775   2,114 
Other borrowings 74   124   140   170   234   508   2,507 
Total interest expense 3,722   4,964   4,406   5,333   6,341   18,425   37,387 
Net interest income 104,057   91,771   90,282   83,020   83,598   369,130   284,728 
Credit loss expense (benefit) 2,008   (1,187)  (1,806)  (7,845)  4,680   (8,830)  38,329 
Net interest income after credit loss expense (benefit) 102,049   92,958   92,088   90,865   78,918   377,960   246,399 
Non-interest income:             
Service charges on deposits 2,050   2,030   1,857   1,787   1,643   7,724   5,274 
Card income 2,470   2,144   2,225   1,972   1,949   8,811   7,781 
Net OREO gains (losses) and valuation adjustments 29   (9)  (287)  (80)  (217)  (347)  (616)
Net gains (losses) on sale of securities    4   1      16   5   3,226 
Fee income 5,711   5,198   4,470   2,249   1,615   17,628   6,007 
Insurance commissions 1,138   1,231   1,272   1,486   1,327   5,127   4,232 
Gain on sale of subsidiary                   9,758 
Other 2,861   1,457   4,358   6,877   16,053   15,553   24,723 
Total non-interest income 14,259   12,055   13,896   14,291   22,386   54,501   60,385 
Non-interest expense:             
Salaries and employee benefits 52,544   43,769   41,658   35,980   33,798   173,951   126,975 
Occupancy, furniture and equipment 6,194   6,388   6,112   5,779   7,046   24,473   22,766 
FDIC insurance and other regulatory assessments 288   353   500   977   350   2,118   1,520 
Professional fees 2,633   2,362   5,052   2,545   2,326   12,592   9,349 
Amortization of intangible assets 3,199   3,274   2,428   1,975   2,065   10,876   8,330 
Advertising and promotion 1,640   1,403   1,241   890   1,170   5,174   4,718 
Communications and technology 7,844   7,090   6,028   5,900   5,639   26,862   22,153 
Other 8,662   8,174   7,779   6,846   6,904   31,461   26,263 
Total non-interest expense 83,004   72,813   70,798   60,892   59,298   287,507   222,074 
Net income before income tax 33,304   32,200   35,186   44,264   42,006   144,954   84,710 
Income tax expense 6,664   7,771   7,204   10,341   9,876   31,980   20,686 
Net income$26,640  $24,429  $27,982  $33,923  $32,130  $112,974  $64,024 
Dividends on preferred stock (801)  (802)  (802)  (801)  (802)  (3,206)  (1,701)
Net income available to common stockholders$25,839  $23,627  $27,180  $33,122  $31,328  $109,768  $62,323 
                            

Earnings per share:

 For the Three Months Ended Twelve Months Ended
(Dollars in thousands)December 31,
2021
 September 30,
2021
 June 30,
2021
 March 31,
2021
 December 31,
2020
 December 31,
2021
 December 31,
2020
Basic             
Net income to common stockholders$25,839 $23,627 $27,180 $33,122 $31,328 $109,768 $62,323
Weighted average common shares outstanding 24,786,720  24,759,419  24,724,128  24,675,109  24,653,099  24,736,713  24,387,932
Basic earnings per common share$1.04 $0.95 $1.10 $1.34 $1.27 $4.44 $2.56
              
Diluted             
Net income to common stockholders - diluted$25,839 $23,627 $27,180 $33,122 $31,328 $109,768 $62,323
Weighted average common shares outstanding 24,786,720  24,759,419  24,724,128  24,675,109  24,653,099  24,736,713  24,387,932
 Dilutive effects of:             
Assumed exercises of stock options 124,462  121,110  134,358  130,016  101,664  130,198  64,104
Restricted stock awards 236,251  141,204  139,345  169,514  136,239  170,276  86,498
Restricted stock units 87,605  74,268  73,155  66,714  50,156  76,049  25,978
Performance stock units - market based 150,969  131,346  134,313  128,167  112,228  136,199  51,304
Performance stock units - performance based             
Employee stock purchase plan 4,726  616  3,708  1,418    2,617  
Weighted average shares outstanding - diluted 25,390,733  25,227,963  25,209,007  25,170,938  25,053,386  25,252,052  24,615,816
Diluted earnings per common share$1.02 $0.94 $1.08 $1.32 $1.25 $4.35 $2.53
                     

Shares that were not considered in computing diluted earnings per common share because they were antidilutive or have not met the thresholds to be considered in the dilutive calculation are as follows:

 For the Three Months Ended Twelve Months Ended
 December 31,
2021
 September 30,
2021
 June 30,
2021
 March 31,
2021
 December 31,
2020
 December 31,
2021
 December 31,
2020
Stock options 16,939 16,939   16,939 64,947
Restricted stock awards8,463     8,463 
Restricted stock units15,000     15,000 
Performance stock units - market based 12,020 13,520    
Performance stock units - performance based259,383 259,383 265,625 256,625 256,625 259,383 256,625
Employee stock purchase plan      
              

Loans held for investment summarized as of:

(Dollars in thousands)December 31,
2021
 September 30,
2021
 June 30,
2021
 March 31,
2021
 December 31,
2020
Commercial real estate$632,775 $630,106 $701,576 $784,110 $779,158
Construction, land development, land 123,464  171,814  185,444  223,841  219,647
1-4 family residential properties 123,115  127,073  135,288  142,859  157,147
Farmland 77,394  82,990  91,122  97,835  103,685
Commercial 1,430,429  1,398,497  1,453,583  1,581,125  1,562,957
Factored receivables 1,699,537  1,607,028  1,398,299  1,208,718  1,120,770
Consumer 10,885  12,677  12,389  14,332  15,838
Mortgage warehouse 769,973  752,545  853,514  1,031,692  1,037,574
Total loans$4,867,572 $4,782,730 $4,831,215 $5,084,512 $4,996,776
               

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)December 31,
2021
 September 30,
2021
 June 30,
2021
 March 31,
2021
 December 31,
2020
Commercial real estate$632,775 $630,106 $701,576 $784,110 $779,158
Construction, land development, land 123,464  171,814  185,444  223,841  219,647
1-4 family residential 123,115  127,073  135,288  142,859  157,147
Farmland 77,394  82,990  91,122  97,835  103,685
Commercial - General 295,662  289,242  290,562  288,458  340,850
Commercial - Paycheck Protection Program 27,197  87,413  135,307  237,299  189,857
Commercial - Agriculture 70,127  77,263  76,346  83,859  94,572
Commercial - Equipment 621,437  588,105  604,396  623,248  573,163
Commercial - Asset-based lending 281,659  213,927  181,394  188,825  180,488
Commercial - Liquid Credit 134,347  142,547  165,578  159,436  184,027
Consumer 10,885  12,677  12,389  14,332  15,838
Mortgage Warehouse 769,973  752,545  853,514  1,031,692  1,037,574
Total banking loans held for investment$3,168,035 $3,175,702 $3,432,916 $3,875,794 $3,876,006
               

The following table presents the Company’s operating segments:

(Dollars in thousands)          
Three months ended December 31, 2021 Banking Factoring Payments Corporate Consolidated
Total interest income $45,534 $58,042  $4,154  $49  $107,779
Intersegment interest allocations  2,272  (2,178)  (94)     
Total interest expense  1,980        1,742   3,722
Net interest income (expense)  45,826  55,864   4,060   (1,693)  104,057
Credit loss expense (benefit)  171  1,600   (110)  347   2,008
Net interest income after credit loss expense  45,655  54,264   4,170   (2,040)  102,049
Noninterest income  8,308  2,295   3,209   447   14,259
Noninterest expense  46,617  22,335   13,376   676   83,004
Operating income (loss) $7,346 $34,224  $(5,997) $(2,269) $33,304


(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 
                     

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:

 December 31,
2021
 September 30,
2021
 June 30,
2021
 March 31,
2021
 December 31,
2020
Factored receivable period end balance$1,546,361,000  $1,479,989,000  $1,284,314,000  $1,118,988,000  $1,036,548,000 
Yield on average receivable balance 14.42%  13.75%  14.99%  13.85%  13.80%
Current quarter charge-off rate(1) 0.01%  0.24%  0.04%  3.95%  0.02%
Factored receivables - transportation concentration 90%  90%  91%  90%  89%
          
Interest income, including fees$58,042,000  $47,222,000  $44,653,000  $35,824,000  $35,439,000 
Non-interest income(2) 2,295,000   1,557,000   2,742,000   1,757,000   1,358,000 
Factored receivable total revenue 60,337,000   48,779,000   47,395,000   37,581,000   36,797,000 
Average net funds employed 1,442,551,000   1,235,610,000   1,072,405,000   936,528,000   924,899,000 
Yield on average net funds employed 16.59%  15.66%  17.73%  16.27%  15.83%
          
Accounts receivable purchased$4,032,585,000  $3,531,811,000  $3,068,262,000  $2,492,468,000  $2,461,249,000 
Number of invoices purchased 1,669,387   1,535,321   1,401,695   1,188,678   1,189,271 
Average invoice size$2,416  $2,300  $2,189  $2,097  $2,070 
Average invoice size - transportation$2,291  $2,195  $2,090  $1,974  $1,943 
Average invoice size - non-transportation$5,648  $4,944  $4,701  $4,775  $5,091 


(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 and $15.5 million for the three months ended March 31, 2021 and December 31, 2020, respectively.
  
 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.
  

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

 December 31,
2021
 September 30,
2021
 June 30,
2021
 March 31,
2021
 December 31,
2020
Factored receivable period end balance$153,176,000  $127,039,000  $113,985,000  $89,730,000  $84,222,000 
          
Interest income$4,154,000  $3,295,000  $2,675,000  $1,969,000  $2,034,000 
Noninterest income 3,209,000   3,086,000   1,083,000   73,000   51,000 
Total revenue$7,363,000  $6,381,000  $3,758,000  $2,042,000  $2,085,000 
          
Pre-tax operating income (loss)$(5,997,000) $(5,184,000) $(7,441,000) $(2,552,000) $(2,026,000)
Interest expense 94,000   111,000   139,000   167,000   178,000 
Depreciation and software amortization expense 57,000   77,000   68,000   65,000   63,000 
Intangible amortization expense 1,489,000   1,490,000   497,000       
Earnings (losses) before interest, taxes, depreciation, and amortization$(4,357,000) $(3,506,000) $(6,737,000) $(2,320,000) $(1,785,000)
Transaction costs       2,992,000       
Adjusted earnings (losses) before interest, taxes, depreciation, and amortization(1)$(4,357,000) $(3,506,000) $(3,745,000) $(2,320,000) $(1,785,000)
          
Number of invoices processed 4,027,680   3,760,948   3,165,119   2,529,673   1,818,145 
Amount of payments processed$5,242,051,000  $4,191,424,000  $3,426,808,000  $2,301,632,000  $1,920,037,000 

(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)December 31,
2021
 September 30,
2021
 June 30,
2021
 March 31,
2021
 December 31,
2020
Non-interest bearing demand$1,925,370 $2,020,984 $1,803,552 $1,637,653 $1,352,785
Interest bearing demand 830,019  795,234  760,874  729,364  688,680
Individual retirement accounts 83,410  86,012  87,052  89,748  92,584
Money market 520,358  472,242  395,035  402,070  393,325
Savings 504,146  483,946  474,163  464,035  421,488
Certificates of deposit 533,206  574,539  612,730  740,694  790,844
Brokered time deposits 40,125  117,064  306,975  516,006  516,786
Other brokered deposits 210,045  272,554  285,069  210,095  460,108
Total deposits$4,646,679 $4,822,575 $4,725,450 $4,789,665 $4,716,600
               

Net interest margin summarized for the three months ended:

 December 31, 2021 September 30, 2021
(Dollars in thousands)Average
Balance
 Interest Average
Rate
 Average
Balance
 Interest Average
Rate
Interest earning assets:           
Interest earning cash balances$361,059 $141 0.15% $474,122 $183 0.15%
Taxable securities 142,658  1,266 3.52%  154,017  948 2.44%
Tax-exempt securities 26,691  172 2.56%  27,839  178 2.54%
FHLB and other restricted stock 5,170  25 1.92%  7,956  28 1.40%
Loans 4,851,171  106,175 8.68%  4,777,409  95,398 7.92%
  Total interest earning assets$5,386,749 $107,779 7.94% $5,441,343 $96,735 7.05%
Non-interest earning assets:           
Other assets 593,013      579,288    
       Total assets$5,979,762     $6,020,631    
Interest bearing liabilities:           
Deposits:           
 Interest bearing demand$825,784 $486 0.23% $779,625 $435 0.22%
 Individual retirement accounts 84,966  115 0.54%  86,571  126 0.58%
 Money market 486,939  261 0.21%  417,435  225 0.21%
 Savings 493,796  190 0.15%  479,915  185 0.15%
 Certificates of deposit 550,746  647 0.47%  595,001  725 0.48%
 Brokered time deposits 33,263  9 0.11%  99,116  29 0.12%
 Other brokered deposits 299,290  199 0.26%  441,446  223 0.20%
  Total interest bearing deposits 2,774,784  1,907 0.27%  2,899,109  1,948 0.27%
Federal Home Loan Bank advances 38,967  24 0.24%  36,522  22 0.24%
Subordinated notes 106,847  1,297 4.82%  114,071  2,449 8.52%
Junior subordinated debentures 40,530  444 4.35%  40,390  443 4.35%
Other borrowings 62,143  50 0.32%  127,946  102 0.32%
  Total interest bearing liabilities$3,023,271 $3,722 0.49% $3,218,038 $4,964 0.61%
Non-interest bearing liabilities and equity:           
Non-interest bearing demand deposits 2,022,973      1,912,398    
Other liabilities 81,835      72,173    
Total equity 851,683      818,022    
   Total liabilities and equity$5,979,762     $6,020,631    
Net interest income  $104,057     $91,771  
Interest spread    7.45%     6.44%
Net interest margin    7.66%     6.69%

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)December 31,
2021
 September 30,
2021
 June 30,
2021
 March 31,
2021
 December 31,
2020
Average Banking loans$3,112,072  $3,299,152  $3,516,747  $3,722,895  $3,777,553 
Average Factoring receivables 1,597,091   1,362,856   1,195,209   1,048,968   1,024,307 
Average Payments receivables 142,008   115,401   102,094   76,412   74,947 
Average total loans$4,851,171  $4,777,409  $4,814,050  $4,848,275  $4,876,807 
Banking yield 5.61%  5.40%  5.25%  5.31%  5.34%
Factoring yield 14.42%  13.75%  14.99%  13.85%  13.80%
Payments Yield 11.61%  11.33%  10.51%  10.45%  10.80%
Total loan yield 8.68%  7.92%  7.77%  7.24%  7.20%
                    

Metrics and non-GAAP financial reconciliation:

  As of and for the Three Months Ended As of and for the Twelve
Months Ended
(Dollars in thousands,
except per share amounts)
 December 31,
2021
 September 30,
2021
 June 30,
2021
 March 31,
2021
 December 31,
2020
 December 31,
2021
 December 31,
2020
Net income available to common stockholders $25,839  $23,627  $27,180  $33,122  $31,328  $109,768  $62,323 
Transaction costs        2,992         2,992   827 
Gain on sale of subsidiary or division                    (9,758)
Tax effect of adjustments        (715)        (715)  2,254 
Adjusted net income available to common stockholders - diluted $25,839  $23,627  $29,457  $33,122  $31,328  $112,045  $55,646 
               
Weighted average shares outstanding - diluted  25,390,733   25,227,963   25,209,007   25,170,938   25,053,386   25,252,052   24,615,816 
Adjusted diluted earnings per common share $1.02  $0.94  $1.17  $1.32  $1.25  $4.44  $2.26 
               
Average total stockholders' equity $851,683  $818,022  $786,404  $746,849  $720,892  $801,074  $661,942 
Average preferred stock liquidation preference  (45,000)  (45,000)  (45,000)  (45,000)  (45,000)  (45,000)  (24,099)
Average total common stockholders' equity  806,683   773,022   741,404   701,849   675,892   756,074   637,843 
Average goodwill and other intangibles  (278,528)  (284,970)  (220,310)  (188,980)  (191,017)  (243,541)  (190,088)
Average tangible common stockholders' equity $528,155  $488,052  $521,094  $512,869  $484,875  $512,533  $447,755 
               
Net income available to common stockholders $25,839  $23,627  $27,180  $33,122  $31,328  $109,768  $62,323 
Average tangible common equity  528,155   488,052   521,094   512,869   484,875   512,533   447,755 
Return on average tangible common equity  19.41%  19.21%  20.92%  26.19%  25.70%  21.42%  13.92%
               
Net interest income $104,057  $91,771  $90,282  $83,020  $83,598  $369,130  $284,728 
Non-interest income  14,259   12,055   13,896   14,291   22,386   54,501   60,385 
Operating revenue  118,316   103,826   104,178   97,311   105,984   423,631   345,113 
Gain on sale of subsidiary or division                    (9,758)
Adjusted operating revenue $118,316  $103,826  $104,178  $97,311  $105,984  $423,631  $335,355 
Non-interest expenses $83,004  $72,813  $70,798  $60,892  $59,298  $287,507  $222,074 
Transaction costs        (2,992)        (2,992)  (827)
Adjusted non-interest expenses $83,004  $72,813  $67,806  $60,892  $59,298  $284,515  $221,247 
Adjusted efficiency ratio  70.16%  70.13%  65.09%  62.57%  55.95%  67.16%  65.97%
               
Adjusted net non-interest expense to average assets ratio:              
Non-interest expenses $83,004  $72,813  $70,798  $60,892  $59,298  $287,507  $222,074 
Transaction costs        (2,992)        (2,992)  (827)
Adjusted non-interest expenses $83,004  $72,813  $67,806  $60,892  $59,298  $284,515  $221,247 
Total non-interest income $14,259  $12,055  $13,896  $14,291  $22,386  $54,501  $60,385 
Gain on sale of subsidiary or division                    (9,758)
Adjusted non-interest income $14,259  $12,055  $13,896  $14,291  $22,386  $54,501  $50,627 
Adjusted net non-interest expenses $68,745  $60,758  $53,910  $46,601  $36,912  $230,014  $170,620 
Average total assets $5,979,762  $6,020,631  $6,093,805  $6,013,668  $5,788,549  $6,026,819  $5,426,469 
Adjusted net non-interest expense to average assets ratio  4.56%  4.00%  3.55%  3.14%  2.54%  3.82%  3.14%
               
Total stockholders' equity $858,864  $820,674  $792,388  $764,004  $726,781  $858,864  $726,781 
Preferred stock liquidation preference  (45,000)  (45,000)  (45,000)  (45,000)  (45,000)  (45,000)  (45,000)
Total common stockholders' equity  813,864   775,674   747,388   719,004   681,781   813,864   681,781 
Goodwill and other intangibles  (276,856)  (280,055)  (286,567)  (188,006)  (189,922)  (276,856)  (189,922)
Tangible common stockholders' equity $537,008  $495,619  $460,821  $530,998  $491,859  $537,008  $491,859 
Common shares outstanding  25,158,879   25,123,342   25,109,703   24,882,929   24,868,218   25,158,879   24,868,218 
Tangible book value per share $21.34  $19.73  $18.35  $21.34  $19.78  $21.34  $19.78 
               
Total assets at end of period $5,956,250  $6,024,535  $6,015,877  $6,099,628  $5,935,791  $5,956,250  $5,935,791 
Goodwill and other intangibles  (276,856)  (280,055)  (286,567)  (188,006)  (189,922)  (276,856)  (189,922)
Tangible assets at period end $5,679,394  $5,744,480  $5,729,310  $5,911,622  $5,745,869  $5,679,394  $5,745,869 
Tangible common stockholders' equity ratio  9.46%  8.63%  8.04%  8.98%  8.56%  9.46%  8.56%

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 Twelve Months Ended
(Dollars in thousands)December 31,
2021
 September 30,
2021
 June 30,
2021
 March 31,
2021
 December 31,
2020
 December 31,
2021
 December 31,
2020
Loan discount accretion$1,674 $1,953 $2,161 $3,501 $2,334 $9,289 $10,711

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