Triumph Bancorp Reports First Quarter Net Income to Common Stockholders of $23.5 million

Dallas, Texas


DALLAS, April 20, 2022 (GLOBE NEWSWIRE) -- Triumph Bancorp, Inc. (Nasdaq: TBK) (“Triumph” or the “Company”) today announced earnings and operating results for the first quarter of 2022.

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.

2022 First Quarter Highlights

  • For the first quarter of 2022, net income to common shareholders was $23.5 million, and diluted earnings per share were $0.93.
  • Net interest income was $100.1 million.
  • Non-interest income was $11.1 million.
  • Non-interest expense was $78.6 million.
  • Net interest margin was 7.68%. Yield on loans and the average cost of our total deposits were 8.60% and 0.14%, respectively.
  • Credit loss expense for the quarter ended March 31, 2022 was $0.5 million.
  • Net charge-offs were $1.5 million, or 0.03% of average loans, for the quarter.
  • The total dollar value of invoices purchased by Triumph Business Capital was $4.042 billion with an average invoice size of $2,520. The transportation average invoice size for the quarter was $2,401.
  • TriumphPay processed 4.0 million invoices paying carriers a total of $5.701 billion.
  • We repurchased 14,810 shares into treasury stock under our stock repurchase program at an average price of $88.81, for a total of $1.3 million, under the $50.0 million stock repurchase program authorized by our board of directors on February 7, 2022.
  • We classified certain non-transportation factored receivables, and their related customer reserves, (the "Factored Receivable Disposal Group") as held for sale on the unaudited March 31, 2022 Consolidated Balance Sheet. The Factored Receivable Disposal Group was classified as held for sale at cost with no impact to earnings except for the reversal of the allowance for credit loss associated with the factored receivables. As a result, factored receivables totaling $80.8 million and customer reserves totaling $10.4 million were included in assets held for sale and deposits held for sale, respectively, at March 31, 2022.
  • We classified the gross assets and liabilities of 15 branches primarily located in rural eastern Colorado and western Kansas (the “Branch Disposal Group”) as held for sale on the unaudited March 31, 2022 Consolidated Balance Sheet. The Branch Disposal Group was classified as held for sale at cost with no impact to earnings except for the reversal of the allowance for credit loss associated with the branch loans. Loans totaling $159.2 million and deposits totaling $367.3 million were included in assets held for sale and deposits held for sale, respectively, at March 31, 2022.

Balance Sheet

Total loans held for investment decreased $143.5 million, or 2.9%, during the first quarter to $4.724 billion at March 31, 2022. Average loans held for investment for the quarter decreased $38.5 million, or 0.8%, to $4.805 billion.

Total deposits were $4.332 billion at March 31, 2022, a decrease of $314.9 million, or 6.8%, in the first quarter of 2022. Non-interest-bearing deposits accounted for 43% of total deposits and non-time deposits accounted for 88% of total deposits at March 31, 2022.

The decline in loans held for investment and deposits was driven by the classification of a portion of such assets and deposits to held for sale at March 31, 2022 as previously discussed.

Asset Quality and Allowance for Credit Loss

Our nonperforming assets ratio at March 31, 2022 was 0.87%. Approximately 2 basis points of this ratio at March 31, 2022 consisted of $1.2 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 March 31, 2022 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 March 31, 2022 was 2.73%. Approximately 20 basis points of this ratio at March 31, 2022 consisted of $9.6 million of past due factored receivables related to the Over-Formula Advance portfolio. An additional 41 basis points of this ratio at March 31, 2022 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 0.88% at March 31, 2022.

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 March 31, 2022.

At March 31, 2022, the carrying value of the acquired over-formula advances was $9.6 million, the total reserve on acquired over-formula advances was $9.6 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 $4.6 million.

As of March 31, 2022 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. 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 March 31, 2022. The full amount of such receivable is reflected in non-performing and past due factored receivables as of March 31, 2022 in accordance with our policy. As of March 31, 2022, 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 Thursday, April 21, 2022.

To participate in the live conference call, please dial 1-844-200-6205 (International: +1-929-526-1599) and access code
026223. 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/mediaframe/webcast.html?webcastid=L79lY4Dy.  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 14, 2022.

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
(Dollars in thousands)March 31,
2022
 December 31,
2021
 September 30,
2021
 June 30,
2021
 March 31,
2021
Financial Highlights:         
Total assets$6,076,434  $5,956,250  $6,024,535  $6,015,877  $6,099,628 
Loans held for investment$4,724,078  $4,867,572  $4,782,730  $4,831,215  $5,084,512 
Deposits$4,331,786  $4,646,679  $4,822,575  $4,725,450  $4,789,665 
Net income available to common stockholders$23,528  $25,839  $23,627  $27,180  $33,122 
                    
Performance Ratios - Annualized:                   
Return on average assets 1.69%  1.77%  1.61%  1.84%  2.29%
Return on average total equity 11.20%  12.41%  11.85%  14.27%  18.42%
Return on average common equity 11.41%  12.71%  12.13%  14.70%  19.14%
Return on average tangible common equity(1) 17.02%  19.41%  19.21%  20.92%  26.19%
Yield on loans(2) 8.60%  8.68%  7.92%  7.77%  7.24%
Cost of interest bearing deposits 0.23%  0.27%  0.27%  0.31%  0.41%
Cost of total deposits 0.14%  0.16%  0.16%  0.20%  0.28%
Cost of total funds 0.28%  0.29%  0.38%  0.34%  0.42%
Net interest margin(2) 7.68%  7.66%  6.69%  6.47%  6.06%
Net non-interest expense to average assets 4.68%  4.56%  4.00%  3.75%  3.14%
Adjusted net non-interest expense to average assets(1) 4.68%  4.56%  4.00%  3.55%  3.14%
Efficiency ratio 70.65%  70.16%  70.13%  67.96%  62.57%
Adjusted efficiency ratio(1) 70.65%  70.16%  70.13%  65.09%  62.57%
          
Asset Quality:(3)         
Past due to total loans 2.73%  2.86%  2.31%  2.28%  1.96%
Non-performing loans to total loans 0.94%  0.95%  0.90%  1.06%  1.17%
Non-performing assets to total assets 0.87%  0.92%  0.86%  0.97%  1.15%
ACL to non-performing loans 93.62%  91.20%  95.75%  88.92%  80.87%
ACL to total loans 0.88%  0.87%  0.86%  0.95%  0.94%
Net charge-offs to average loans 0.03%  %  0.08%  0.01%  0.85%
          
Capital:         
Tier 1 capital to average assets(4) 11.82%  11.11%  10.43%  9.73%  10.89%
Tier 1 capital to risk-weighted assets(4) 11.96%  11.51%  11.06%  10.33%  11.28%
Common equity tier 1 capital to risk-weighted assets(4) 10.40%  9.94%  9.45%  8.74%  9.72%
Total capital to risk-weighted assets 14.53%  14.10%  13.69%  12.65%  13.58%
Total equity to total assets 14.59%  14.42%  13.62%  13.17%  12.53%
Tangible common stockholders' equity to tangible assets(1) 9.86%  9.46%  8.63%  8.04%  8.98%
          
Per Share Amounts:         
Book value per share$33.45  $32.35  $30.87  $29.76  $28.90 
Tangible book value per share(1)$22.75  $21.34  $19.73  $18.35  $21.34 
Basic earnings per common share$0.95  $1.04  $0.95  $1.10  $1.34 
Diluted earnings per common share$0.93  $1.02  $0.94  $1.08  $1.32 
Adjusted diluted earnings per common share(1)$0.93  $1.02  $0.94  $1.17  $1.32 
Shares outstanding end of period 25,161,690   25,158,879   25,123,342   25,109,703   24,882,929 
                    

Unaudited consolidated balance sheet as of:

(Dollars in thousands)March 31,
2022
 December 31,
2021
 September 30,
2021
 June 30,
2021
 March 31,
2021
ASSETS         
Total cash and cash equivalents$413,704  $383,178  $532,764  $444,439  $380,811 
Securities - available for sale 191,440   182,426   164,816   193,627   205,330 
Securities - held to maturity, net 4,404   4,947   5,488   5,658   5,828 
Equity securities 5,085   5,504   5,623   5,854   5,826 
Loans held for sale 607   7,330   26,437   31,136   22,663 
Loans held for investment 4,724,078   4,867,572   4,782,730   4,831,215   5,084,512 
Allowance for credit losses (41,553)  (42,213)  (41,017)  (45,694)  (48,024)
Loans, net 4,682,525   4,825,359   4,741,713   4,785,521   5,036,488 
Assets held for sale 260,085             
FHLB and other restricted stock 12,196   10,146   4,901   8,096   9,807 
Premises and equipment, net 91,725   105,729   104,311   106,720   105,390 
Other real estate owned ("OREO"), net 383   524   893   1,013   1,421 
Goodwill and intangible assets, net 269,119   276,856   280,055   286,567   188,006 
Bank-owned life insurance 41,141   40,993   41,540   41,912   41,805 
Deferred tax asset, net 10,174   10,023         1,260 
Indemnification asset 4,582   4,786   4,786   5,246   5,246 
Other assets 89,264   98,449   111,208   100,088   89,747 
Total assets$6,076,434  $5,956,250  $6,024,535  $6,015,877  $6,099,628 
LIABILITIES         
Non-interest bearing deposits$1,859,376  $1,925,370  $2,020,984  $1,803,552  $1,637,653 
Interest bearing deposits 2,472,410   2,721,309   2,801,591   2,921,898   3,152,012 
Total deposits 4,331,786   4,646,679   4,822,575   4,725,450   4,789,665 
Deposits held for sale 377,698             
Customer repurchase agreements 2,868   2,103   11,990   9,243   2,668 
Federal Home Loan Bank advances 230,000   180,000   30,000   130,000   180,000 
Payment Protection Program Liquidity Facility    27,144   97,554   139,673   158,796 
Subordinated notes 107,169   106,957   106,755   87,620   87,564 
Junior subordinated debentures 40,737   40,602   40,467   40,333   40,201 
Deferred tax liability, net       982   3,333    
Other liabilities 99,511   93,901   93,538   87,837   76,730 
Total liabilities 5,189,769   5,097,386   5,203,861   5,223,489   5,335,624 
EQUITY         
Preferred Stock 45,000   45,000   45,000   45,000   45,000 
Common stock 283   283   282   282   280 
Additional paid-in-capital 516,551   510,939   499,282   494,224   490,699 
Treasury stock, at cost (106,105)  (104,743)  (104,600)  (104,486)  (103,059)
Retained earnings 422,879   399,351   373,512   349,885   322,705 
Accumulated other comprehensive income (loss) 8,057   8,034   7,198   7,483   8,379 
Total stockholders' equity 886,665   858,864   820,674   792,388   764,004 
Total liabilities and equity$6,076,434  $5,956,250  $6,024,535  $6,015,877  $6,099,628 
                    

Unaudited consolidated statement of income:

 For the Three Months Ended
(Dollars in thousands)March 31,
2022
 December 31,
2021
 September 30,
2021
 June 30,
2021
 March 31,
2021
Interest income:         
Loans, including fees$40,847  $43,979  $44,882  $45,988  $48,706 
Factored receivables, including fees 61,206   62,196   50,516   47,328   37,795 
Securities 1,178   1,438   1,126   1,187   1,650 
FHLB and other restricted stock 76   25   28   27   76 
Cash deposits 128   141   183   158   126 
Total interest income 103,435   107,779   96,735   94,688   88,353 
Interest expense:         
Deposits 1,561   1,907   1,948   2,470   3,372 
Subordinated notes 1,299   1,297   2,449   1,350   1,349 
Junior subordinated debentures 454   444   443   446   442 
Other borrowings 42   74   124   140   170 
Total interest expense 3,356   3,722   4,964   4,406   5,333 
Net interest income 100,079   104,057   91,771   90,282   83,020 
Credit loss expense (benefit) 501   2,008   (1,187)  (1,806)  (7,845)
Net interest income after credit loss expense (benefit) 99,578   102,049   92,958   92,088   90,865 
Non-interest income:         
Service charges on deposits 1,963   2,050   2,030   1,857   1,787 
Card income 2,011   2,470   2,144   2,225   1,972 
Net OREO gains (losses) and valuation adjustments (132)  29   (9)  (287)  (80)
Net gains (losses) on sale of securities       4   1    
Fee income 5,703   5,711   5,198   4,470   2,249 
Insurance commissions 1,672   1,138   1,231   1,272   1,486 
Other (96)  2,861   1,457   4,358   6,877 
Total non-interest income 11,121   14,259   12,055   13,896   14,291 
Non-interest expense:         
Salaries and employee benefits 46,284   52,544   43,769   41,658   35,980 
Occupancy, furniture and equipment 6,436   6,194   6,388   6,112   5,779 
FDIC insurance and other regulatory assessments 411   288   353   500   977 
Professional fees 3,659   2,633   2,362   5,052   2,545 
Amortization of intangible assets 3,108   3,199   3,274   2,428   1,975 
Advertising and promotion 1,202   1,640   1,403   1,241   890 
Communications and technology 9,112   7,844   7,090   6,028   5,900 
Other 8,352   8,662   8,174   7,779   6,846 
Total non-interest expense 78,564   83,004   72,813   70,798   60,892 
Net income before income tax 32,135   33,304   32,200   35,186   44,264 
Income tax expense 7,806   6,664   7,771   7,204   10,341 
Net income$24,329  $26,640  $24,429  $27,982  $33,923 
Dividends on preferred stock (801)  (801)  (802)  (802)  (801)
Net income available to common stockholders$23,528  $25,839  $23,627  $27,180  $33,122 
                    

Earnings per share:

 For the Three Months Ended
(Dollars in thousands)March 31,
2022
 December 31,
2021
 September 30,
2021
 June 30,
2021
 March 31,
2021
Basic         
Net income to common stockholders$23,528 $25,839 $23,627 $27,180 $33,122
Weighted average common shares outstanding 24,800,771  24,786,720  24,759,419  24,724,128  24,675,109
Basic earnings per common share$0.95 $1.04 $0.95 $1.10 $1.34
          
Diluted         
Net income to common stockholders - diluted$23,528 $25,839 $23,627 $27,180 $33,122
Weighted average common shares outstanding 24,800,771  24,786,720  24,759,419  24,724,128  24,675,109
Dilutive effects of:         
Assumed exercises of stock options 107,359  124,462  121,110  134,358  130,016
Restricted stock awards 237,305  236,251  141,204  139,345  169,514
Restricted stock units 86,099  87,605  74,268  73,155  66,714
Performance stock units - market based 139,563  150,969  131,346  134,313  128,167
Performance stock units - performance based         
Employee stock purchase plan 771  4,726  616  3,708  1,418
Weighted average shares outstanding - diluted 25,371,868  25,390,733  25,227,963  25,209,007  25,170,938
Diluted earnings per common share$0.93 $1.02 $0.94 $1.08 $1.32
               

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
 March 31,
2022
 December 31,
2021
 September 30,
2021
 June 30,
2021
 March 31,
2021
Stock options12,911  16,939 16,939 
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 based258,635 259,383 259,383 265,625 256,625
Employee stock purchase plan    
          

Loans held for investment summarized as of:

(Dollars in thousands)March 31,
2022
 December 31,
2021
 September 30,
2021
 June 30,
2021
 March 31,
2021
Commercial real estate$625,763 $632,775 $630,106 $701,576 $784,110
Construction, land development, land 119,560  123,464  171,814  185,444  223,841
1-4 family residential properties 117,534  123,115  127,073  135,288  142,859
Farmland 17,910  77,394  82,990  91,122  97,835
Commercial 1,375,044  1,430,429  1,398,497  1,453,583  1,581,125
Factored receivables 1,764,590  1,699,537  1,607,028  1,398,299  1,208,718
Consumer 9,276  10,885  12,677  12,389  14,332
Mortgage warehouse 694,401  769,973  752,545  853,514  1,031,692
Total loans$4,724,078 $4,867,572 $4,782,730 $4,831,215 $5,084,512
               

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)March 31,
2022
 December 31,
2021
 September 30,
2021
 June 30,
2021
 March 31,
2021
Commercial real estate$625,763 $632,775 $630,106 $701,576 $784,110
Construction, land development, land 119,560  123,464  171,814  185,444  223,841
1-4 family residential 117,534  123,115  127,073  135,288  142,859
Farmland 17,910  77,394  82,990  91,122  97,835
Commercial - General 286,936  295,662  289,242  290,562  288,458
Commercial - Paycheck Protection Program 12,090  27,197  87,413  135,307  237,299
Commercial - Agriculture 15,887  70,127  77,263  76,346  83,859
Commercial - Equipment 612,277  621,437  588,105  604,396  623,248
Commercial - Asset-based lending 284,808  281,659  213,927  181,394  188,825
Commercial - Liquid Credit 163,046  134,347  142,547  165,578  159,436
Consumer 9,276  10,885  12,677  12,389  14,332
Mortgage Warehouse 694,401  769,973  752,545  853,514  1,031,692
Total banking loans held for investment$2,959,488 $3,168,035 $3,175,702 $3,432,916 $3,875,794
               

The following table presents the Company’s operating segments:

(Dollars in thousands)          
Three months ended March 31, 2022 Banking Factoring Payments Corporate Consolidated
Total interest income $42,183  $56,374  $4,832  $46  $103,435
Intersegment interest allocations  1,857   (1,775)  (82)     
Total interest expense  1,603         1,753   3,356
Net interest income (expense)  42,437   54,599   4,750   (1,707)  100,079
Credit loss expense (benefit)  (2,870)  1,949   354   1,068   501
Net interest income after credit loss expense  45,307   52,650   4,396   (2,775)  99,578
Noninterest income  5,995   1,871   3,242   13   11,121
Noninterest expense  41,708   21,389   14,333   1,134   78,564
Operating income (loss) $9,594  $33,132  $(6,695) $(3,896) $32,135
                    


(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
                   

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:

 March 31,
2022
 December 31,
2021
 September 30,
2021
 June 30,
2021
 March 31,
2021
Factored receivable period end balance$1,666,530,000  $1,546,361,000  $1,479,989,000  $1,284,314,000  $1,118,988,000 
Yield on average receivable balance 14.16%  14.42%  13.75%  14.99%  13.85%
Current quarter charge-off rate(1) 0.04%  0.01%  0.24%  0.04%  3.95%
Factored receivables - transportation concentration 90%  90%  90%  91%  90%
          
Interest income, including fees$56,374,000  $58,042,000  $47,222,000  $44,653,000  $35,824,000 
Non-interest income(2) 1,871,000   2,295,000   1,557,000   2,742,000   1,757,000 
Factored receivable total revenue 58,245,000   60,337,000   48,779,000   47,395,000   37,581,000 
Average net funds employed 1,451,984,000   1,442,551,000   1,235,610,000   1,072,405,000   936,528,000 
Yield on average net funds employed 16.27%  16.59%  15.66%  17.73%  16.27%
          
Accounts receivable purchased$4,041,883,000  $4,032,585,000  $3,531,811,000  $3,068,262,000  $2,492,468,000 
Number of invoices purchased 1,604,012   1,669,387   1,535,321   1,401,695   1,188,678 
Average invoice size$2,520  $2,416  $2,300  $2,189  $2,097 
Average invoice size - transportation$2,401  $2,291  $2,195  $2,090  $1,974 
Average invoice size - non-transportation$5,495  $5,648  $4,944  $4,701  $4,775 
Metrics above include assets and deposits held for sale.


(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 for the three months ended March 31, 2021.
  
 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.
  

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

 March 31,
2022
 December 31,
2021
 September 30,
2021
 June 30,
2021
 March 31,
2021
Factored receivable period end balance$178,879,000  $153,176,000  $127,039,000  $113,985,000  $89,730,000 
          
Interest income$4,832,000  $4,154,000  $3,295,000  $2,675,000  $1,969,000 
Noninterest income 3,242,000   3,209,000   3,086,000   1,083,000   73,000 
Total revenue$8,074,000  $7,363,000  $6,381,000  $3,758,000  $2,042,000 
          
Pre-tax operating income (loss)$(6,695,000) $(5,997,000) $(5,184,000) $(7,441,000) $(2,552,000)
Interest expense 82,000   94,000   111,000   139,000   167,000 
Depreciation and software amortization expense 108,000   57,000   77,000   68,000   65,000 
Intangible amortization expense 1,490,000   1,489,000   1,490,000   497,000    
Earnings (losses) before interest, taxes, depreciation, and amortization$(5,015,000) $(4,357,000) $(3,506,000) $(6,737,000) $(2,320,000)
Transaction costs          2,992,000    
Adjusted earnings (losses) before interest, taxes, depreciation, and amortization(1)$(5,015,000) $(4,357,000) $(3,506,000) $(3,745,000) $(2,320,000)
          
Number of invoices processed 3,978,174   4,027,680   3,760,948   3,165,119   2,529,673 
Amount of payments processed$5,700,849,000  $5,242,051,000  $4,191,424,000  $3,426,808,000  $2,301,632,000 

(1)   Earnings (losses) before interest, taxes, depreciation, and amortization ("EBITDA") is a non-GAAP financial measure used as a supplemental measure to evaluate the performance of our Payments segment. Adjusted EBITDA 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)March 31,
2022
 December 31,
2021
 September 30,
2021
 June 30,
2021
 March 31,
2021
Non-interest bearing demand$1,859,376 $1,925,370 $2,020,984 $1,803,552 $1,637,653
Interest bearing demand 782,859  830,019  795,234  760,874  729,364
Individual retirement accounts 70,311  83,410  86,012  87,052  89,748
Money market 526,324  520,358  472,242  395,035  402,070
Savings 448,878  504,146  483,946  474,163  464,035
Certificates of deposit 431,243  533,206  574,539  612,730  740,694
Brokered time deposits 2,752  40,125  117,064  306,975  516,006
Other brokered deposits 210,043  210,045  272,554  285,069  210,095
Total deposits$4,331,786 $4,646,679 $4,822,575 $4,725,450 $4,789,665
               

Net interest margin summarized for the three months ended:

 March 31, 2022 December 31, 2021
(Dollars in thousands)Average
Balance
 Interest Average
Rate
 Average
Balance
 Interest Average
Rate
Interest earning assets:           
Interest earning cash balances$273,742 $128  0.19% $361,059 $141 0.15%
Taxable securities 170,051  1,083  2.58%  142,658  1,266 3.52%
Tax-exempt securities 14,789  95  2.61%  26,691  172 2.56%
FHLB and other restricted stock 9,993  76  3.08%  5,170  25 1.92%
Loans 4,813,857  102,053  8.60%  4,851,171  106,175 8.68%
Total interest earning assets$5,282,432 $103,435  7.94% $5,386,749 $107,779 7.94%
Non-interest earning assets:           
Other assets 560,887      593,013    
    Total assets$5,843,319     $5,979,762    
Interest bearing liabilities:           
Deposits:           
Interest bearing demand$833,297 $443  0.22% $825,784 $486 0.23%
Individual retirement accounts 82,692  104  0.51%  84,966  115 0.54%
Money market 538,553  282  0.21%  486,939  261 0.21%
Savings 509,728  191  0.15%  493,796  190 0.15%
Certificates of deposit 518,399  584  0.46%  550,746  647 0.47%
Brokered time deposits 1,668    %  33,263  9 0.11%
Other brokered deposits 231,378  (43) (0.08%)  299,290  199 0.26%
Total interest bearing deposits 2,715,715  1,561  0.23%  2,774,784  1,907 0.27%
Federal Home Loan Bank advances 63,889  41  0.26%  38,967  24 0.24%
Subordinated notes 107,039  1,299  4.92%  106,847  1,297 4.82%
Junior subordinated debentures 40,661  454  4.53%  40,530  444 4.35%
Other borrowings 5,090  1  0.08%  62,143  50 0.32%
Total interest bearing liabilities$2,932,394 $3,356  0.46% $3,023,271 $3,722 0.49%
Non-interest bearing liabilities and equity:           
Non-interest bearing demand deposits 1,938,667      2,022,973    
Other liabilities 91,309      81,835    
Total equity 880,949      851,683    
    Total liabilities and equity$5,843,319     $5,979,762    
Net interest income  $100,079      $104,057  
Interest spread    7.48%     7.45%
Net interest margin    7.68%     7.66%

(1) Loan balance totals include respective nonaccrual assets.
(2) Net interest spread is the yield on average interest earning assets less the rate on interest bearing liabilities.
(3) Net interest margin is the ratio of net interest income to average interest earning assets.
(4) 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)March 31,
2022
 December 31,
2021
 September 30,
2021
 June 30,
2021
 March 31,
2021
Average Banking loans$3,032,745  $3,112,072  $3,299,152  $3,516,747  $3,722,895 
Average Factoring receivables 1,614,462   1,597,091   1,362,856   1,195,209   1,048,968 
Average Payments receivables 166,650   142,008   115,401   102,094   76,412 
Average total loans$4,813,857  $4,851,171  $4,777,409  $4,814,050  $4,848,275 
Banking yield 5.46%  5.61%  5.40%  5.25%  5.31%
Factoring yield 14.16%  14.42%  13.75%  14.99%  13.85%
Payments yield 11.76%  11.61%  11.33%  10.51%  10.45%
Total loan yield 8.60%  8.68%  7.92%  7.77%  7.24%
                    

Metrics and non-GAAP financial reconciliation:

  As of and for the Three Months Ended
(Dollars in thousands,
except per share amounts)
 March 31,
2022
 December 31,
2021
 September 30,
2021
 June 30,
2021
 March 31,
2021
Net income available to common stockholders $23,528  $25,839  $23,627  $27,180  $33,122 
Transaction costs           2,992    
Tax effect of adjustments           (715)   
Adjusted net income available to common stockholders - diluted $23,528  $25,839  $23,627  $29,457  $33,122 
           
Weighted average shares outstanding - diluted  25,371,868   25,390,733   25,227,963   25,209,007   25,170,938 
Adjusted diluted earnings per common share $0.93  $1.02  $0.94  $1.17  $1.32 
           
Average total stockholders' equity $880,949  $851,683  $818,022  $786,404  $746,849 
Average preferred stock liquidation preference  (45,000)  (45,000)  (45,000)  (45,000)  (45,000)
Average total common stockholders' equity  835,949   806,683   773,022   741,404   701,849 
Average goodwill and other intangibles  (275,378)  (278,528)  (284,970)  (220,310)  (188,980)
Average tangible common stockholders' equity $560,571  $528,155  $488,052  $521,094  $512,869 
           
Net income available to common stockholders $23,528  $25,839  $23,627  $27,180  $33,122 
Average tangible common equity  560,571   528,155   488,052   521,094   512,869 
Return on average tangible common equity  17.02%  19.41%  19.21%  20.92%  26.19%
           
Net interest income $100,079  $104,057  $91,771  $90,282  $83,020 
Non-interest income  11,121   14,259   12,055   13,896   14,291 
Operating revenue $111,200  $118,316  $103,826  $104,178  $97,311 
Non-interest expenses $78,564  $83,004  $72,813  $70,798  $60,892 
Transaction costs           (2,992)   
Adjusted non-interest expenses $78,564  $83,004  $72,813  $67,806  $60,892 
Adjusted efficiency ratio  70.65%  70.16%  70.13%  65.09%  62.57%
           
Adjusted net non-interest expense to average assets ratio:          
Non-interest expenses $78,564  $83,004  $72,813  $70,798  $60,892 
Transaction costs           (2,992)   
Adjusted non-interest expenses $78,564  $83,004  $72,813  $67,806  $60,892 
Total non-interest income $11,121  $14,259  $12,055  $13,896  $14,291 
Adjusted net non-interest expenses $67,443  $68,745  $60,758  $53,910  $46,601 
Average total assets $5,843,319  $5,979,762  $6,020,631  $6,093,805  $6,013,668 
Adjusted net non-interest expense to average assets ratio  4.68%  4.56%  4.00%  3.55%  3.14%
           
Total stockholders' equity $886,665  $858,864  $820,674  $792,388  $764,004 
Preferred stock liquidation preference  (45,000)  (45,000)  (45,000)  (45,000)  (45,000)
Total common stockholders' equity  841,665   813,864   775,674   747,388   719,004 
Goodwill and other intangibles  (269,119)  (276,856)  (280,055)  (286,567)  (188,006)
Tangible common stockholders' equity $572,546  $537,008  $495,619  $460,821  $530,998 
Common shares outstanding  25,161,690   25,158,879   25,123,342   25,109,703   24,882,929 
Tangible book value per share $22.75  $21.34  $19.73  $18.35  $21.34 
           
Total assets at end of period $6,076,434  $5,956,250  $6,024,535  $6,015,877  $6,099,628 
Goodwill and other intangibles  (269,119)  (276,856)  (280,055)  (286,567)  (188,006)
Tangible assets at period end $5,807,315  $5,679,394  $5,744,480  $5,729,310  $5,911,622 
Tangible common stockholders' equity ratio  9.86%  9.46%  8.63%  8.04%  8.98%

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
(Dollars in thousands)March 31,
2022
 December 31,
2021
 September 30,
2021
 June 30,
2021
 March 31,
2021
Loan discount accretion$1,536 $1,674 $1,953 $2,161 $3,501

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