Triumph Bancorp Stories First Quarter Internet Revenue to Frequent Stockholders of $33.1 Million Nasdaq:TBK

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Triumph Bancorp Reports First Quarter Net Income to Common Stockholders of $33.1 Million Nasdaq:TBK

DALLAS, April 21, 2021 (GLOBE NEWSWIRE) — Triumph Bancorp, Inc. (Nasdaq: TBK) (“Triumph” or the “Company”) today announced earnings and operating results for the first 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 First Quarter Highlights

  • For the first quarter of 2021, net income to common shareholders was $33.1 million, and diluted earnings per share were $1.32.
  • Net interest income was $83.0 million.
  • Net interest margin was 6.06%. Yield on loans and the average cost of our total deposits were 7.24% and 0.28%, respectively.
  • Non-interest income was $14.3 million, including a $4.7 million gain on indemnification asset related to the Transport Financial Solutions (“TFS”) acquisition as described below.
  • Non-interest expense was $60.9 million.
  • Credit loss expense for the quarter ended March 31, 2021 was a benefit of $7.8 million. Components of our credit loss expense included:
    • A $9.5 million reduction in current expected losses in the loan portfolio and off balance sheet loan commitments primarily due to improvements in our macroeconomic forecasts.
    • $1.9 million expense due to net increases in specific reserves, including $2.9 million expense related to the TFS acquisition as discussed below.
  • Net charge-offs were $41.3 million, or 0.85% of average loans, for the quarter including a fully reserved $41.3 million charge-off related to the TFS acquisition; $35.6 million of which was indemnified and reimbursed to us by Covenant Logistics Group, Inc. as discussed below.
  • The total dollar value of invoices purchased by Triumph Business Capital was $2.492 billion with an average invoice size of $2,097. The transportation average invoice size for the quarter was $1,974.
  • TriumphPay processed 2,529,673 invoices paying carriers a total of $2.302 billion.
  • On March 31, 2021, we, through TriumphPay, a division of our wholly-owned subsidiary TBK Bank, SSB, entered into a definitive agreement to acquire HubTran, Inc., a cloud-based provider of automation software for the transportation industry’s back-office, for $97 million in cash subject to customary purchase price adjustments and closing conditions. The acquisition is subject to customary closing conditions, including receipt of regulatory approval, and is expected to close in the second quarter of 2021.

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. Developments related to that transaction impacted our operating results for the three months ended March 31, 2021 as follows:

  • During the quarter, new adverse developments with the largest of the three Over-Formula Advance clients caused us to charge-off the entire $41.3 million net Over-Formula Advance amount due from that client. This net charge-off had no impact on credit loss expense for the three months ended March 31, 2021 as the entire amount had been reserved in a prior period. In accordance with the amended terms of the transaction, CVLG reimbursed us for $35.6 million of this charge-off by drawing on its secured line of credit which is reflected on our March 31, 2021 Consolidated Balance Sheet as a performing equipment loan held for investment.
  • Given separate developments with the other two Over-Formula Advance clients, we reserved an additional $2.9 million reflected in credit loss expense during the three months ended March 31, 2021. At quarter end, our entire remaining over formula advance position was down from $62.1 million at December 31, 2020 to $10.6 million at March 31, 2021 and the $10.6 million balance at March 31, 2021 was fully reserved. The $2.9 million increase in required ACL as well as accretion of most of the fair value discount on the indemnification asset held at December 31, 2020 resulted in a $4.7 million gain on the indemnification asset which was recorded through non-interest income.
  • The net pretax income impact of the adjustments to credit loss expense and indemnification asset associated with the three Over-Formula Advance clients was pretax income of $1.8 million.

At March 31, 2021, the carrying value of the acquired over-formula advances was $10.6 million, the total reserve on acquired over-formula advances was $10.6 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 $5.2 million.

As of March 31, 2021 we carried a separate $19.2 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 also filed a declaratory judgment action in United States Federal District Court for the Southern District of Florida 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 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, 2021. The full amount of such receivable is reflected in non-performing and past due factored receivables as of March 31, 2021 in accordance with our policy. As of March 31, 2021, the entire $19.2 million Misdirected Payments amount was greater than 90 days past due.

Balance Sheet

Total loans held for investment increased $87.7 million, or 1.8%, during the first quarter to $5.085 billion at March 31, 2021. Average loans held for investment for the quarter decreased $24.7 million, or 0.5%, to $4.834 billion. The commercial finance portfolio increased $146.4 million, or 7.8%, to $2.021 billion, the national lending portfolio decreased $30.5 million, or 2.5%, to $1.191 billion, and the community banking portfolio decreased $28.2 million, or 1.5%, to $1.873 billion during the quarter.

Total deposits were $4.790 billion at March 31, 2021, an increase of $73.1 million, or 1.5%, in the first quarter of 2021. Non-interest-bearing deposits accounted for 34% of total deposits and non-time deposits accounted for 72% of total deposits at March 31, 2021.

Asset Quality and Allowance for Credit Loss

Our nonperforming assets ratio at March 31, 2021 was 1.15%. Approximately 2 basis points of this ratio at March 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 38 basis points of this ratio at March 31, 2021 consisted of $19.2 million of the Misdirected Payments, as discussed above.

Our past-due loan ratio at March 31, 2021 was 1.96%. Approximately 21 basis points of this ratio at March 31, 2021 consisted of $10.6 million of past due factored receivables related to the Over-Formula Advance portfolio. An additional 38 basis points of this ratio at March 31, 2021 consisted of the $19.2 million of Misdirected Payments, as discussed above.

We recorded total net charge-offs of $41.3 million, or 0.85% of average loans, for the quarter ended March 31, 2021. Net charge-offs were impacted by items related to our TFS acquisition, as discussed above.

Our ACL as a percentage of loans held for investment decreased 98 basis points during the quarter to 0.94% at March 31, 2021. In addition to the impact of an improved macroeconomic forecast, this decrease reflects a $41.3 million charge-off during the period related to the TFS acquisition as discussed above. The recorded reserves on the over-formula advance portfolio acquired from TFS constitute 21 basis points of the ACL ratio at March 31, 2021.

CARES Act and Paycheck Protection Program

As of March 31, 2021, our balance sheet reflected deferrals on outstanding loan balances of $85.3 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 March 31, 2021, these deferred balances carried accrued interest of $0.5 million.

During the three months ended March 31, 2021, we originated $83.5 million of PPP loans. As of March 31, 2021, we carried 2,670 PPP loans representing a balance of $237.3 million classified as commercial loans. We recognized $1.1 million in fees from the SBA on PPP loans during the three months ended March 31, 2021 and carry $6.6 million of deferred fees on PPP loans at quarter end. The remaining fees will be amortized over the respective lives of the loans.

Conference Call Information

Aaron P. Graft, Vice Chairman and CEO and Bryce Fowler, CFO will review the quarterly results in a conference call for investors and analysts beginning at 7:00 a.m. Central Time on Thursday, April 22, 2021. Todd Ritterbusch, Chief Lending Officer, and Geoff Brenner, Triumph Business Capital CEO, will also be available for questions.

To participate in the live conference call, please dial 1-855-940-9472 (Canada: 1-855-669-9657) and request to be joined into the Triumph Bancorp, Inc. call. A simultaneous audio-only webcast may be accessed via the Company’s website at www.triumphbancorp.com through the Investor Relations, News & Events, Webcasts and Presentations links, or through a direct link here at: https://services.choruscall.com/links/tbk210422.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 community banking, national lending, and commercial finance products through its bank subsidiary, TBK Bank, SSB. www.triumphbancorp.com

Forward-Looking Statements

This press release contains forward-looking statements. Any statements about our expectations, beliefs, plans, predictions, forecasts, objectives, assumptions or future events or performance are not historical facts and may be forward-looking. You can identify forward-looking statements by the use of forward-looking terminology such as “believes,” “expects,” “could,” “may,” “will,” “should,” “seeks,” “likely,” “intends,” “plans,” “pro forma,” “projects,” “estimates” or “anticipates” or the negative of these words and phrases or similar words or phrases that are predictions of or indicate future events or trends and that do not relate solely to historical matters. You can also identify forward-looking statements by discussions of strategy, plans or intentions. Forward-looking statements involve numerous risks and uncertainties and you should not rely on them as predictions of future events. Forward-looking statements depend on assumptions, data or methods that may be incorrect or imprecise and we may not be able to realize them. We do not guarantee that the transactions and events described will happen as described (or that they will happen at all). The following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements: business and economic conditions generally and in the bank and non-bank financial services industries, nationally and within our local market areas; 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 pending 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
(Dollars in thousands) March 31,
2021
  December 31,
2020
  September 30,
2020
  June 30,
2020
  March 31,
2020
Financial Highlights:                  
Total assets $ 6,099,628     $ 5,935,791     $ 5,836,787     $ 5,617,493     $ 5,353,729  
Loans held for investment $ 5,084,512     $ 4,996,776     $ 4,852,911     $ 4,393,311     $ 4,320,548  
Deposits $ 4,789,665     $ 4,716,600     $ 4,248,101     $ 4,062,332     $ 3,682,015  
Net income available to common stockholders $ 33,122     $ 31,328     $ 22,005     $ 13,440     $ (4,450 )
                   
Performance Ratios – Annualized:                  
Return on average assets 2.29 %   2.21 %   1.65 %   0.99 %   (0.36 %)
Return on average total equity 18.42 %   17.73 %   13.24 %   8.86 %   (2.85 %)
Return on average common equity 19.14 %   18.44 %   13.61 %   8.94 %   (2.85 %)
Return on average tangible common equity (1) 26.19 %   25.70 %   19.43 %   12.96 %   (4.09 %)
Yield on loans(2) 7.24 %   7.20 %   7.05 %   6.52 %   7.22 %
Cost of interest bearing deposits 0.41 %   0.54 %   0.79 %   1.08 %   1.34 %
Cost of total deposits 0.28 %   0.38 %   0.56 %   0.79 %   1.05 %
Cost of total funds 0.42 %   0.51 %   0.67 %   0.85 %   1.23 %
Net interest margin(2) 6.06 %   6.20 %   5.83 %   5.11 %   5.63 %
Net non-interest expense to average assets 3.14 %   2.54 %   3.23 %   2.40 %   3.88 %
Adjusted net non-interest expense to average assets (1) 3.14 %   2.54 %   3.17 %   3.11 %   3.88 %
Efficiency ratio 62.57 %   55.95 %   65.15 %   62.56 %   78.24 %
Adjusted efficiency ratio (1) 62.57 %   55.95 %   64.18 %   70.75 %   78.24 %
                   
Asset Quality:(3)                  
Past due to total loans 1.96 %   3.22 %   2.40 %   1.50 %   1.99 %
Non-performing loans to total loans 1.17 %   1.16 %   1.17 %   1.27 %   1.26 %
Non-performing assets to total assets 1.15 %   1.15 %   1.52 %   1.20 %   1.09 %
ACL to non-performing loans 80.87 %   164.98 %   159.67 %   97.66 %   82.37 %
ACL to total loans 0.94 %   1.92 %   1.88 %   1.24 %   1.04 %
Net charge-offs to average loans 0.85 %   0.03 %   0.02 %   0.02 %   0.04 %
                   
Capital:                  
Tier 1 capital to average assets(4) 10.89 %   10.80 %   10.75 %   9.98 %   9.62 %
Tier 1 capital to risk-weighted assets(4) 11.28 %   10.60 %   10.32 %   10.57 %   9.03 %
Common equity tier 1 capital to risk-weighted assets(4) 9.72 %   9.05 %   8.72 %   8.84 %   8.24 %
Total capital to risk-weighted assets 13.58 %   13.03 %   12.94 %   13.44 %   11.63 %
Total equity to total assets 12.53 %   12.24 %   11.89 %   11.69 %   11.01 %
Tangible common stockholders’ equity to tangible assets(1) 8.98 %   8.56 %   8.09 %   7.84 %   7.77 %
                   
Per Share Amounts:                  
Book value per share $ 28.90     $ 27.42     $ 26.11     $ 25.28     $ 24.45  
Tangible book value per share (1) $ 21.34     $ 19.78     $ 18.38     $ 17.59     $ 16.64  
Basic earnings (loss) per common share $ 1.34     $ 1.27     $ 0.89     $ 0.56     $ (0.18 )
Diluted earnings (loss) per common share $ 1.32     $ 1.25     $ 0.89     $ 0.56     $ (0.18 )
Adjusted diluted earnings per common share(1) $ 1.32     $ 1.25     $ 0.91     $ 0.25     $ (0.18 )
Shares outstanding end of period 24,882,929     24,868,218     24,851,601     24,202,686     24,101,120  

Unaudited consolidated balance sheet as of:

(Dollars in thousands) March 31,
2021
  December 31,
2020
  September 30,
2020
  June 30,
2020
  March 31,
2020
ASSETS                  
Total cash and cash equivalents $ 380,811     $ 314,393     $ 288,278     $ 437,064     $ 208,414  
Securities – available for sale 205,330     224,310     242,802     331,126     302,122  
Securities – held to maturity, net 5,828     5,919     6,096     6,285     8,217  
Equity securities 5,826     5,826     6,040     6,411     5,678  
Loans held for sale 22,663     24,546     36,716     50,382     4,431  
Loans held for investment 5,084,512     4,996,776     4,852,911     4,393,311     4,320,548  
Allowance for credit losses (48,024 )   (95,739 )   (90,995 )   (54,613 )   (44,732 )
Loans, net 5,036,488     4,901,037     4,761,916     4,338,698     4,275,816  
Assets held for sale                 97,895  
FHLB and other restricted stock 9,807     6,751     18,464     26,345     37,080  
Premises and equipment, net 105,390     103,404     105,455     107,736     98,363  
Other real estate owned (“OREO”), net 1,421     1,432     1,704     1,962     2,540  
Goodwill and intangible assets, net 188,006     189,922     192,041     186,162     188,208  
Bank-owned life insurance 41,805     41,608     41,440     41,298     41,122  
Deferred tax asset, net 1,260     6,427     7,716     8,544     9,457  
Indemnification asset 5,246     36,225     31,218          
Other assets 89,747     73,991     96,901     75,480     74,386  
Total assets $ 6,099,628     $ 5,935,791     $ 5,836,787     $ 5,617,493     $ 5,353,729  
LIABILITIES                  
Non-interest bearing deposits $ 1,637,653     $ 1,352,785     $ 1,315,900     $ 1,120,949     $ 846,412  
Interest bearing deposits 3,152,012     3,363,815     2,932,201     2,941,383     2,835,603  
Total deposits 4,789,665     4,716,600     4,248,101     4,062,332     3,682,015  
Customer repurchase agreements 2,668     3,099     14,192     6,732     3,693  
Federal Home Loan Bank advances 180,000     105,000     435,000     455,000     850,000  
Payment Protection Program Liquidity Facility 158,796     191,860     223,713     223,809      
Subordinated notes 87,564     87,509     87,455     87,402     87,347  
Junior subordinated debentures 40,201     40,072     39,944     39,816     39,689  
Other liabilities 76,730     64,870     94,540     85,531     101,638  
Total liabilities 5,335,624     5,209,010     5,142,945     4,960,622     4,764,382  
EQUITY                  
Preferred Stock 45,000     45,000     45,000     45,000      
Common stock 280     280     279     273     272  
Additional paid-in-capital 490,699     489,151     488,094     472,795     474,441  
Treasury stock, at cost (103,059 )   (103,052 )   (102,942 )   (102,888 )   (102,677 )
Retained earnings 322,705     289,583     258,254     236,249     222,809  
Accumulated other comprehensive income (loss) 8,379     5,819     5,157     5,442     (5,498 )
Total stockholders’ equity 764,004     726,781     693,842     656,871     589,347  
Total liabilities and equity $ 6,099,628     $ 5,935,791     $ 5,836,787     $ 5,617,493     $ 5,353,729  

Unaudited consolidated statement of income:

  For the Three Months Ended
(Dollars in thousands) March 31,
2021
  December 31,
2020
  September 30,
2020
  June 30,
2020
  March 31,
2020
Interest income:                  
Loans, including fees $ 48,706     $ 50,723     $ 48,774     $ 50,394     $ 48,323  
Factored receivables, including fees 37,795     37,573     31,468     21,101     24,292  
Securities 1,650     1,519     1,927     2,676     2,107  
FHLB and other restricted stock 76     56     122     148     204  
Cash deposits 126     68     73     79     488  
Total interest income 88,353     89,939     82,364     74,398     75,414  
Interest expense:                  
Deposits 3,372     4,308     5,834     7,584     9,677  
Subordinated notes 1,349     1,347     1,348     1,321     1,347  
Junior subordinated debentures 442     452     462     554     646  
Other borrowings 170     234     341     688     1,244  
Total interest expense 5,333     6,341     7,985     10,147     12,914  
Net interest income 83,020     83,598     74,379     64,251     62,500  
Credit loss expense (benefit) (7,845 )   4,680     (258 )   13,609     20,298  
Net interest income after credit loss expense (benefit) 90,865     78,918     74,637     50,642     42,202  
Non-interest income:                  
Service charges on deposits 1,787     1,643     1,470     573     1,588  
Card income 1,972     1,949     2,091     1,941     1,800  
Net OREO gains (losses) and valuation adjustments (80 )   (217 )   (41 )   (101 )   (257 )
Net gains (losses) on sale of securities     16     3,109     63     38  
Fee income 2,249     1,615     1,402     1,304     1,686  
Insurance commissions 1,486     1,327     990     864     1,051  
Gain on sale of subsidiary             9,758      
Other 6,877     16,053     1,472     5,627     1,571  
Total non-interest income 14,291     22,386     10,493     20,029     7,477  
Non-interest expense:                  
Salaries and employee benefits 35,980     33,798     31,651     30,804     30,722  
Occupancy, furniture and equipment 5,779     7,046     5,574     4,964     5,182  
FDIC insurance and other regulatory assessments 977     350     360     495     315  
Professional fees 2,545     2,326     3,265     1,651     2,107  
Amortization of intangible assets 1,975     2,065     2,141     2,046     2,078  
Advertising and promotion 890     1,170     1,105     1,151     1,292  
Communications and technology 5,900     5,639     5,569     5,444     5,501  
Other 6,846     6,904     5,632     6,171     7,556  
Total non-interest expense 60,892     59,298     55,297     52,726     54,753  
Net income (loss) before income tax 44,264     42,006     29,833     17,945     (5,074 )
Income tax expense (benefit) 10,341     9,876     6,929     4,505     (624 )
Net income (loss) $ 33,923     $ 32,130     $ 22,904     $ 13,440     $ (4,450 )
Dividends on preferred stock (801 )   (802 )   (899 )        
Net income available to common stockholders $ 33,122     $ 31,328     $ 22,005     $ 13,440     $ (4,450 )

Earnings per share:

  For the Three Months Ended
(Dollars in thousands) March 31,
2021
  December 31,
2020
  September 30,
2020
  June 30,
2020
  March 31,
2020
Basic                  
Net income (loss) to common stockholders $ 33,122     $ 31,328     $ 22,005     $ 13,440     $ (4,450 )
Weighted average common shares outstanding 24,675,109     24,653,099     24,592,092     23,987,049     24,314,329  
Basic earnings (loss) per common share $ 1.34     $ 1.27     $ 0.89     $ 0.56     $ (0.18 )
                   
Diluted                  
Net income (loss) to common stockholders – diluted $ 33,122     $ 31,328     $ 22,005     $ 13,440     $ (4,450 )
Weighted average common shares outstanding 24,675,109     24,653,099     24,592,092     23,987,049     24,314,329  
Dilutive effects of:                  
Assumed exercises of stock options 130,016     101,664     48,102     38,627      
Restricted stock awards 169,514     136,239     67,907     37,751      
Restricted stock units 66,714     50,156     18,192     4,689      
Performance stock units – market based 128,167     112,228     76,095     6,326      
Performance stock units – performance based                  
Employee stock purchase plan 1,418                  
Weighted average shares outstanding – diluted 25,170,938     25,053,386     24,802,388     24,074,442     24,314,329  
Diluted earnings (loss) per common share $ 1.32     $ 1.25     $ 0.89     $ 0.56     $ (0.18 )

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

  For the Three Months Ended
  March 31,
2021
  December 31,
2020
  September 30,
2020
  June 30,
2020
  March 31,
2020
Stock options         98,513     148,528     225,055  
Restricted stock awards             109,834     147,748  
Restricted stock units             38,801     55,228  
Performance stock units – market based             76,461     67,707  
Performance stock units – performance based 256,625     256,625     261,125     262,625     254,000  
Employee stock purchase plan                  

Loans held for investment summarized as of:

(Dollars in thousands) March 31,
2021
  December 31,
2020
  September 30,
2020
  June 30,
2020
  March 31,
2020
Commercial real estate $ 784,110     $ 779,158     $ 762,531     $ 910,261     $ 985,757  
Construction, land development, land 223,841     219,647     244,512     213,617     198,050  
1-4 family residential properties 142,859     157,147     164,785     168,707     169,703  
Farmland 97,835     103,685     110,966     125,259     133,579  
Commercial 1,581,125     1,562,957     1,536,903     1,518,656     1,412,822  
Factored receivables 1,208,718     1,120,770     1,016,337     561,576     661,100  
Consumer 14,332     15,838     17,106     18,450     20,326  
Mortgage warehouse 1,031,692     1,037,574     999,771     876,785     739,211  
Total loans $ 5,084,512     $ 4,996,776     $ 4,852,911     $ 4,393,311     $ 4,320,548  

Our total loans held for investment 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.

Commercial finance loans are further summarized below:

(Dollars in thousands) March 31,
2021
  December 31,
2020
  September 30,
2020
  June 30,
2020
  March 31,
2020
Commercial – Equipment $ 623,248     $ 573,163     $ 509,849     $ 487,145     $ 479,483  
Commercial – Asset-based lending 188,825     180,488     160,711     176,235     245,001  
Factored receivables 1,208,718     1,120,770     1,016,337     561,576     661,100  
Commercial finance $ 2,020,791     $ 1,874,421     $ 1,686,897     $ 1,224,956     $ 1,385,584  
                   
Commercial finance % of total loans 40 %   38 %   35 %   28 %   32 %

National lending loans are further summarized below:

(Dollars in thousands) March 31,
2021
  December 31,
2020
  September 30,
2020
  June 30,
2020
  March 31,
2020
Mortgage warehouse $ 1,031,692     $ 1,037,574     $ 999,771     $ 876,785     $ 739,211  
Commercial – Liquid credit 159,436     184,027     188,034     192,118     172,380  
National lending $ 1,191,128     $ 1,221,601     $ 1,187,805     $ 1,068,903     $ 911,591  
                   
National lending % of total loans 23 %   24 %   24 %   24 %   21 %

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,
2021
  December 31,
2020
  September 30,
2020
  June 30,
2020
  March 31,
2020
Average community banking $ 1,843,002     $ 1,963,435     $ 2,047,059     $ 2,111,615     $ 2,041,256  
Average commercial finance 1,899,264     1,798,550     1,480,593     1,259,584     1,292,749  
Average national lending 1,106,010     1,114,822     998,411     1,038,476     711,837  
Average total loans $ 4,848,276     $ 4,876,807     $ 4,526,063     $ 4,409,675     $ 4,045,842  
Community banking yield 4.90 %   5.46 %   5.05 %   5.23 %   5.67 %
Commercial finance yield 10.81 %   10.74 %   11.23 %   10.21 %   11.00 %
National lending yield 5.00 %   4.58 %   4.98 %   4.67 %   4.80 %
Total loan yield 7.24 %   7.20 %   7.05 %   6.52 %   7.22 %

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,
2021
  December 31,
2020
  September 30,
2020
  June 30,
2020
  March 31,
2020
Factored receivable period end balance $ 1,118,972,000     $ 1,036,369,000     $ 948,987,000     $ 528,379,000     $ 641,366,000  
Yield on average receivable balance 13.85 %   13.81 %   15.65 %   15.48 %   16.13 %
Current quarter charge-off rate(1) 3.95 %   0.02 %   0.09 %   0.16 %   0.23 %
Factored receivables – transportation concentration 90 %   89 %   88 %   85 %   80 %
                   
Interest income, including fees $ 35,824,000     $ 35,439,000     $ 30,068,000     $ 20,387,000     $ 23,497,000  
Non-interest income(2) 1,757,000     1,358,000     1,157,000     1,072,000     1,296,000  
Factored receivable total revenue 37,581,000     36,797,000     31,225,000     21,459,000     24,793,000  
Average net funds employed 936,528,000     924,899,000     694,170,000     477,112,000     537,138,000  
Yield on average net funds employed 16.27 %   15.83 %   17.89 %   18.09 %   18.56 %
                   
Accounts receivable purchased $ 2,492,468,000     $ 2,461,249,000     $ 1,984,490,000     $ 1,238,465,000     $ 1,450,618,000  
Number of invoices purchased 1,188,678     1,189,271     1,027,839     812,902     878,767  
Average invoice size $ 2,097     $ 2,070     $ 1,931     $ 1,524     $ 1,651  
Average invoice size – transportation $ 1,974     $ 1,943     $ 1,787     $ 1,378     $ 1,481  
Average invoice size – non-transportation $ 4,775     $ 5,091     $ 5,181     $ 4,486     $ 4,061  
(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.

Deposits summarized as of:

(Dollars in thousands) March 31,
2021
  December 31,
2020
  September 30,
2020
  June 30,
2020
  March 31,
2020
Non-interest bearing demand $ 1,637,653     $ 1,352,785     $ 1,315,900     $ 1,120,949     $ 846,412  
Interest bearing demand 729,364     688,680     634,272     648,309     583,445  
Individual retirement accounts 89,748     92,584     94,933     97,388     101,743  
Money market 402,070     393,325     384,476     397,914     412,376  
Savings 464,035     421,488     405,954     391,624     367,163  
Certificates of deposit 740,694     790,844     857,514     937,766     1,056,012  
Brokered time deposits 516,006     516,786     344,986     258,378     314,864  
Other brokered deposits 210,095     460,108     210,066     210,004      
Total deposits $ 4,789,665     $ 4,716,600     $ 4,248,101     $ 4,062,332     $ 3,682,015  

Net interest margin summarized for the three months ended:

  March 31, 2021   December 31, 2020
(Dollars in thousands) Average
Balance
  Interest   Average
Rate
  Average
Balance
  Interest   Average
Rate
Interest earning assets:                      
Interest earning cash balances $ 478,275     $ 126     0.11 %   $ 230,893     $ 68     0.12 %
Taxable securities 189,407     1,428     3.06 %   202,867     1,283     2.52 %
Tax-exempt securities 34,717     222     2.59 %   37,070     236     2.53 %
FHLB and other restricted stock 8,511     76     3.62 %   15,759     56     1.41 %
Loans 4,848,275     86,501     7.24 %   4,876,807     88,296     7.20 %
Total interest earning assets $ 5,559,185     $ 88,353     6.45 %   $ 5,363,396     $ 89,939     6.67 %
Non-interest earning assets:                      
Other assets 454,483             425,153          
Total assets $ 6,013,668             $ 5,788,549          
Interest bearing liabilities:                      
Deposits:                      
Interest bearing demand $ 701,759     $ 384     0.22 %   $ 662,458     $ 235     0.14 %
Individual retirement accounts 91,074     186     0.83 %   94,328     250     1.05 %
Money market 398,015     229     0.23 %   395,900     257     0.26 %
Savings 446,322     167     0.15 %   413,214     157     0.15 %
Certificates of deposit 765,244     1,955     1.04 %   814,954     2,633     1.29 %
Brokered time deposits 167,881     179     0.43 %   221,346     528     0.95 %
Other brokered deposits 803,009     272     0.14 %   560,805     248     0.18 %
Total interest bearing deposits 3,373,304     3,372     0.41 %   3,163,005     4,308     0.54 %
Federal Home Loan Bank advances 35,833     24     0.27 %   80,217     43     0.21 %
Subordinated notes 87,532     1,349     6.25 %   87,476     1,347     6.13 %
Junior subordinated debentures 40,125     442     4.47 %   39,996     452     4.50 %
Other borrowings 171,902     146     0.34 %   223,501     191     0.34 %
Total interest bearing liabilities $ 3,708,696     $ 5,333     0.58 %   $ 3,594,195     $ 6,341     0.70 %
Non-interest bearing liabilities and equity:                      
Non-interest bearing demand deposits 1,494,001             1,392,389          
Other liabilities 64,122             81,073          
Total equity 746,849             720,892          
Total liabilities and equity $ 6,013,668             $ 5,788,549          
Net interest income     $ 83,020             $ 83,598      
Interest spread         5.87 %           5.97 %
Net interest margin         6.06 %           6.20 %
  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.

Metrics and non-GAAP financial reconciliation:

    As of and for the Three Months Ended
(Dollars in thousands,
except per share amounts)
  March 31,
2021
  December 31,
2020
  September 30,
2020
  June 30,
2020
  March 31,
2020
Net income available to common stockholders   $ 33,122       $ 31,328       $ 22,005       $ 13,440       $ (4,450 )  
Transaction costs               827                
Gain on sale of subsidiary or division                     (9,758 )        
Tax effect of adjustments               (197 )     2,451          
Adjusted net income available to common stockholders – diluted   $ 33,122       $ 31,328       $ 22,635       $ 6,133       $ (4,450 )  
                     
Weighted average shares outstanding – diluted   25,170,938       25,053,386       24,802,388       24,074,442       24,314,329    
Adjusted diluted earnings per common share   $ 1.32       $ 1.25       $ 0.91       $ 0.25       $ (0.18 )  
                     
Average total stockholders’ equity   $ 746,849       $ 720,892       $ 688,327       $ 610,258       $ 627,369    
Average preferred stock liquidation preference   (45,000 )     (45,000 )     (45,000 )     (5,934 )        
Average total common stockholders’ equity   701,849       675,892       643,327       604,324       627,369    
Average goodwill and other intangibles   (188,980 )     (191,017 )     (192,682 )     (187,255 )     (189,359 )  
Average tangible common stockholders’ equity   $ 512,869       $ 484,875       $ 450,645       $ 417,069       $ 438,010    
                     
Net income available to common stockholders   $ 33,122       $ 31,328       $ 22,005       $ 13,440       $ (4,450 )  
Average tangible common equity   512,869       484,875       450,645       417,069       438,010    
Return on average tangible common equity   26.19   %   25.70   %   19.43   %   12.96   %   (4.09   %)
                     
Net interest income   $ 83,020       $ 83,598       $ 74,379       $ 64,251       $ 62,500    
Non-interest income   14,291       22,386       10,493       20,029       7,477    
Operating revenue   97,311       105,984       84,872       84,280       69,977    
Gain on sale of subsidiary or division                     (9,758 )        
Adjusted operating revenue   $ 97,311       $ 105,984       $ 84,872       $ 74,522       $ 69,977    
Non-interest expenses   $ 60,892       $ 59,298       $ 55,297       $ 52,726       $ 54,753    
Transaction costs               (827 )              
Adjusted non-interest expenses   $ 60,892       $ 59,298       $ 54,470       $ 52,726       $ 54,753    
Adjusted efficiency ratio   62.57   %   55.95   %   64.18   %   70.75   %   78.24   %
                     
Adjusted net non-interest expense to average assets ratio:                    
Non-interest expenses   $ 60,892       $ 59,298       $ 55,297       $ 52,726       $ 54,753    
Transaction costs               (827 )              
Adjusted non-interest expenses   $ 60,892       $ 59,298       $ 54,470       $ 52,726       $ 54,753    
Total non-interest income   $ 14,291       $ 22,386       $ 10,493       $ 20,029       $ 7,477    
Gain on sale of subsidiary or division                     (9,758 )        
Adjusted non-interest income   $ 14,291       $ 22,386       $ 10,493       $ 10,271       $ 7,477    
Adjusted net non-interest expenses   $ 46,601       $ 36,912       $ 43,977       $ 42,455       $ 47,276    
Average total assets   $ 6,013,668       $ 5,788,549       $ 5,518,708       $ 5,487,072       $ 4,906,547    
Adjusted net non-interest expense to average assets ratio   3.14   %   2.54   %   3.17   %   3.11   %   3.88   %
                     
Total stockholders’ equity   $ 764,004       $ 726,781       $ 693,842       $ 656,871       $ 589,347    
Preferred stock liquidation preference   (45,000 )     (45,000 )     (45,000 )     (45,000 )        
Total common stockholders’ equity   719,004       681,781       648,842       611,871       589,347    
Goodwill and other intangibles   (188,006 )     (189,922 )     (192,041 )     (186,162 )     (188,208 )  
Tangible common stockholders’ equity   $ 530,998       $ 491,859       $ 456,801       $ 425,709       $ 401,139    
Common shares outstanding   24,882,929       24,868,218       24,851,601       24,202,686       24,101,120    
Tangible book value per share   $ 21.34       $ 19.78       $ 18.38       $ 17.59       $ 16.64    
                     
Total assets at end of period   $ 6,099,628       $ 5,935,791       $ 5,836,787       $ 5,617,493       $ 5,353,729    
Goodwill and other intangibles   (188,006 )     (189,922 )     (192,041 )     (186,162 )     (188,208 )  
Tangible assets at period end   $ 5,911,622       $ 5,745,869       $ 5,644,746       $ 5,431,331       $ 5,165,521    
Tangible common stockholders’ equity ratio   8.98   %   8.56   %   8.09   %   7.84   %   7.77   %
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,
2021
  December 31,
2020
  September 30,
2020
  June 30,
2020
  March 31,
2020
Loan discount accretion $ 3,501     $ 2,334     $ 4,104     $ 2,139     $ 2,134  
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