Triumph Bancorp Stories Fourth Quarter Web Revenue to Widespread Stockholders of $31.Three Million Nasdaq:TBK

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Triumph Bancorp Reports Fourth Quarter Net Income to Common Stockholders of $31.3 Million Nasdaq:TBK

DALLAS, Jan. 21, 2021 (GLOBE NEWSWIRE) — Triumph Bancorp, Inc. (Nasdaq: TBK) (“Triumph” or the “Company”) today announced earnings and operating results for the fourth quarter of 2020.

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.

2020 Fourth Quarter Highlights

  • For the fourth quarter of 2020, net income to common shareholders was $31.3 million, and diluted earnings per share were $1.25.
  • Net interest income was $83.6 million.
  • Net interest margin was 6.20%. Yield on loans and the average cost of our total deposits were 7.20% and 0.38%, respectively.
  • Non-interest income was $22.4 million, including $14.2 million related to the Transport Financial Solutions (“TFS”) acquisition as described below.
  • Non-interest expense was $59.3 million. Our occupancy, furniture and equipment expense includes $1.4 million related to our decision to consolidate part of our El Paso, TX factoring operations to our TBC headquarters in Coppell, TX.
  • Credit loss expense for the quarter ended December 31, 2020 was $4.7 million. Components of our credit loss expense included:
    • An $8.0 million reduction in current expected losses in the loan portfolio and off balance sheet loan commitments due to improvements in our macroeconomic forecasts.
    • $11.6 million expense due to net increases in specific reserves, including $11.5 million related to the TFS acquisition as discussed below.
    • Net charge-offs of $1.3 million.
  • Triumph Business Capital and TriumphPay processed a combined $4.034 billion in transportation invoice payments.
  • The total dollar value of invoices purchased by Triumph Business Capital was $2.461 billion with an average invoice size of $2,070. The transportation average invoice size for the quarter was $1,943.
  • TriumphPay processed 1,758,865 invoices paying carriers a total of $1.815 billion.

Balance Sheet

Total loans held for investment increased $143.9 million, or 3.0%, during the fourth quarter to $4.997 billion at December 31, 2020. Average loans for the quarter increased $350.7 million, or 7.7%, to $4.877 billion. The commercial finance portfolio increased $187.5 million, or 11.1%, to $1.874 billion, the national lending portfolio increased $33.8 million, or 2.8%, to $1.222 billion, and the community banking portfolio decreased $77.5 million, or 3.9%, to $1.901 billion during the quarter.

Total deposits were $4.717 billion at December 31, 2020, an increase of $468.5 million, or 11.0%, in the fourth quarter of 2020. Non-interest-bearing deposits accounted for 29% of total deposits and non-time deposits accounted for 70% of total deposits at December 31, 2020.  

Asset Quality and Allowance for Credit Loss

Non-performing assets were 1.15% of total assets at December 31, 2020 compared to 1.52% of total assets at September 30, 2020. The ratio of past due to total loans increased to 3.22% at December 31, 2020 from 2.40% at September 30, 2020. These ratios were impacted by items related to our TFS acquisition, as discussed below.

We recorded total net charge-offs of $1.3 million, or 0.03% of average loans, for the quarter ended December 31, 2020. Net charge-offs for the year ended December 31, 2020 were 0.10% of average loans.

Our ACL as a percentage of loans held for investment increased 4 basis points during the quarter to 1.92% at December 31, 2020. The recorded reserves on the acquired over-formula advance portfolio contributed 97 basis points to the ratio at December 31, 2020.

CARES Act and Paycheck Protection Program

As of December 31, 2020, our balance sheet reflected deferrals on outstanding loan balances of $104.6 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, 2020, these deferred balances carried accrued interest of $0.7 million.

As of December 31, 2020, we carried 1,913 PPP loans representing a balance of $189.9 million classified as commercial loans. We have received approximately $7.7 million in total fees from the SBA, $2.0 million and $4.6 million of which were recognized in earnings during the three and twelve months ended December 31, 2020, respectively. The remaining fees will be amortized over the respective lives 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. Developments related to that transaction impacted our operating results for the three months ended December 31, 2020, as well as our asset quality statistics for December 31, 2020, as follows:

  • We recognized $8.9 million of non-interest income for the three months ended December 31, 2020 related to CVLG’s delivery of proceeds to us resulting from the liquidation of its acquired stock in connection with the September 23, 2020 Account Management Agreement, Amendment to Purchase Agreement and Mutual Release.
  • We recorded $11.5 million in credit loss expense to increase the specific reserve on over-advances to the largest over-formula advance carrier. This expense was partially offset by a $5.3 million increase in our indemnification asset, which was recorded to other noninterest income.
  • Approximately 17 basis points of our 1.15% nonperforming assets ratio at December 31, 2020 consisted of $10.0 million of the acquired over-formula advance portfolio which represents the portion that is not covered by CVLG’s indemnification. An additional 10 basis points of this ratio at December 31, 2020 consisted of $6.0 million of the Misdirected Payments, as discussed below.
  • Approximately 1.24% of our 3.22% past-due loan ratio at December 31, 2020 consisted of $62.2 million of past due factored receivables related to the over-formula advance portfolio. An additional 39 basis points of this ratio at December 31, 2020 consisted of the $19.6 million of Misdirected Payments, as discussed below.
  • At year end, the face value of the acquired over-formula advances was $62.1 million, the total reserve on acquired over-formula advances was $48.5 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 $35.8 million.

As of December 31, 2020 we carry a separate $19.6 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 aforementioned 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 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 December 31, 2020. The full amount of such receivable is reflected as past due factored receivables as of December 31, 2020, and $6.0 million of such receivable, reflecting the portion of such receivable that was greater than 90 days past due, is included in our non-performing asset calculation as of December 31, 2020 in accordance with our policy.

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 Friday, January 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/tbk210122.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 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 (including related to our pending litigation with the United States Postal Service and a counterparty relating to certain misdirected payments) 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 11, 2020 and its Quarterly Report on Form 10-Q, filed with the SEC on October 20, 2020.

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 Years Ended  
    December 31,     September 30,     June 30,     March 31,     December 31,     December 31,     December 31,  
(Dollars in thousands)   2020     2020     2020     2020     2019     2020     2019  
Financial Highlights:                                                        
Total assets   $ 5,935,791     $ 5,836,787     $ 5,617,493     $ 5,353,729     $ 5,060,297     $ 5,935,791     $ 5,060,297  
Loans held for investment   $ 4,996,776     $ 4,852,911     $ 4,393,311     $ 4,320,548     $ 4,194,512     $ 4,996,776     $ 4,194,512  
Deposits   $ 4,716,600     $ 4,248,101     $ 4,062,332     $ 3,682,015     $ 3,789,906     $ 4,716,600     $ 3,789,906  
Net income available to common stockholders   $ 31,328     $ 22,005     $ 13,440     $ (4,450 )   $ 16,709     $ 62,323     $ 58,544  
                                                         
Performance Ratios – Annualized:                                                        
Return on average assets     2.21 %     1.65 %     0.99 %     (0.36 %)     1.31 %     1.18 %     1.23 %
Return on average total equity     17.73 %     13.24 %     8.86 %     (2.85 %)     10.24 %     9.67 %     9.04 %
Return on average common equity     18.44 %     13.61 %     8.94 %     (2.85 %)     10.24 %     9.77 %     9.04 %
Return on average tangible common equity (1)     25.70 %     19.43 %     12.96 %     (4.09 %)     14.54 %     13.92 %     12.93 %
Yield on loans(2)     7.20 %     7.05 %     6.52 %     7.22 %     7.48 %     7.00 %     7.75 %
Cost of interest bearing deposits     0.54 %     0.79 %     1.08 %     1.34 %     1.45 %     0.93 %     1.40 %
Cost of total deposits     0.38 %     0.56 %     0.79 %     1.05 %     1.15 %     0.67 %     1.12 %
Cost of total funds     0.51 %     0.67 %     0.85 %     1.23 %     1.35 %     0.80 %     1.36 %
Net interest margin(2)     6.20 %     5.83 %     5.11 %     5.63 %     5.72 %     5.71 %     5.92 %
Net non-interest expense to average assets     2.54 %     3.23 %     2.40 %     3.88 %     3.46 %     2.98 %     3.61 %
Adjusted net non-interest expense to average assets (1)     2.54 %     3.17 %     3.11 %     3.88 %     3.46 %     3.14 %     3.61 %
Efficiency ratio     55.95 %     65.15 %     62.56 %     78.24 %     70.15 %     64.35 %     70.99 %
Adjusted efficiency ratio (1)     55.95 %     64.18 %     70.75 %     78.24 %     70.15 %     65.97 %     70.99 %
                                                         
Asset Quality:(3)                                                        
Past due to total loans(4)     3.22 %     2.40 %     1.50 %     1.99 %     1.74 %     3.22 %     1.74 %
Non-performing loans to total loans     1.16 %     1.17 %     1.27 %     1.26 %     0.97 %     1.16 %     0.97 %
Non-performing assets to total assets     1.15 %     1.52 %     1.20 %     1.09 %     0.87 %     1.15 %     0.87 %
ACL to non-performing loans(5)     164.98 %     159.67 %     97.66 %     82.37 %     71.63 %     164.98 %     71.63 %
ACL to total loans(5)     1.92 %     1.88 %     1.24 %     1.04 %     0.69 %     1.92 %     0.69 %
Net charge-offs to average loans     0.03 %     0.02 %     0.02 %     0.04 %     0.08 %     0.10 %     0.17 %
                                                         
Capital:                                                        
Tier 1 capital to average assets(6)     10.80 %     10.75 %     9.98 %     9.62 %     10.03 %     10.80 %     10.03 %
Tier 1 capital to risk-weighted assets(6)     10.60 %     10.32 %     10.57 %     9.03 %     10.29 %     10.60 %     10.29 %
Common equity tier 1 capital to risk-weighted assets(6)     9.05 %     8.72 %     8.84 %     8.24 %     9.46 %     9.05 %     9.46 %
Total capital to risk-weighted assets(5)     13.03 %     12.94 %     13.44 %     11.63 %     12.76 %     13.03 %     12.76 %
Total equity to total assets     12.24 %     11.89 %     11.69 %     11.01 %     12.58 %     12.24 %     12.58 %
Tangible common stockholders’ equity to tangible assets(1)     8.56 %     8.09 %     7.84 %     7.77 %     9.16 %     8.56 %     9.16 %
                                                         
Per Share Amounts:                                                        
Book value per share   $ 27.42     $ 26.11     $ 25.28     $ 24.45     $ 25.50     $ 27.42     $ 25.50  
Tangible book value per share (1)   $ 19.78     $ 18.38     $ 17.59     $ 16.64     $ 17.88     $ 19.78     $ 17.88  
Basic earnings (loss) per common share   $ 1.27     $ 0.89     $ 0.56     $ (0.18 )   $ 0.67     $ 2.56     $ 2.26  
Diluted earnings (loss) per common share   $ 1.25     $ 0.89     $ 0.56     $ (0.18 )   $ 0.66     $ 2.53     $ 2.25  
Adjusted diluted earnings per common share(1)   $ 1.25     $ 0.91     $ 0.25     $ (0.18 )   $ 0.66     $ 2.26     $ 2.25  
Shares outstanding end of period     24,868,218       24,851,601       24,202,686       24,101,120       24,964,961       24,868,218       24,964,961  
                                                         

Unaudited consolidated balance sheet as of:

    December 31,     September 30,     June 30,     March 31,     December 31,  
(Dollars in thousands)   2020     2020     2020     2020     2019  
ASSETS                                        
Total cash and cash equivalents   $ 314,393     $ 288,278     $ 437,064     $ 208,414     $ 197,880  
Securities – available for sale     224,310       242,802       331,126       302,122       248,820  
Securities – held to maturity, net     5,919       6,096       6,285       8,217       8,417  
Equity securities     5,826       6,040       6,411       5,678       5,437  
Loans held for sale     24,546       36,716       50,382       4,431       2,735  
Loans held for investment     4,996,776       4,852,911       4,393,311       4,320,548       4,194,512  
Allowance for credit losses     (95,739 )     (90,995 )     (54,613 )     (44,732 )     (29,092 )
Loans, net     4,901,037       4,761,916       4,338,698       4,275,816       4,165,420  
Assets held for sale                       97,895        
FHLB and other restricted stock     6,751       18,464       26,345       37,080       19,860  
Premises and equipment, net     103,404       105,455       107,736       98,363       96,595  
Other real estate owned (“OREO”), net     1,432       1,704       1,962       2,540       3,009  
Goodwill and intangible assets, net     189,922       192,041       186,162       188,208       190,286  
Bank-owned life insurance     41,608       41,440       41,298       41,122       40,954  
Deferred tax asset, net     6,427       7,716       8,544       9,457       3,812  
Indemnification asset     36,225       31,218                    
Other assets     73,991       96,901       75,480       74,386       77,072  
Total assets   $ 5,935,791     $ 5,836,787     $ 5,617,493     $ 5,353,729     $ 5,060,297  
LIABILITIES                                        
Non-interest bearing deposits   $ 1,352,785     $ 1,315,900     $ 1,120,949     $ 846,412     $ 809,696  
Interest bearing deposits     3,363,815       2,932,201       2,941,383       2,835,603       2,980,210  
Total deposits     4,716,600       4,248,101       4,062,332       3,682,015       3,789,906  
Customer repurchase agreements     3,099       14,192       6,732       3,693       2,033  
Federal Home Loan Bank advances     105,000       435,000       455,000       850,000       430,000  
Payment Protection Program Liquidity Facility     191,860       223,713       223,809              
Subordinated notes     87,509       87,455       87,402       87,347       87,327  
Junior subordinated debentures     40,072       39,944       39,816       39,689       39,566  
Other liabilities     64,870       94,540       85,531       101,638       74,875  
Total liabilities     5,209,010       5,142,945       4,960,622       4,764,382       4,423,707  
EQUITY                                        
Preferred Stock     45,000       45,000       45,000              
Common stock     280       279       273       272       272  
Additional paid-in-capital     489,151       488,094       472,795       474,441       473,251  
Treasury stock, at cost     (103,052 )     (102,942 )     (102,888 )     (102,677 )     (67,069 )
Retained earnings     289,583       258,254       236,249       222,809       229,030  
Accumulated other comprehensive income (loss)     5,819       5,157       5,442       (5,498 )     1,106  
Total stockholders’ equity     726,781       693,842       656,871       589,347       636,590  
Total liabilities and equity   $ 5,935,791     $ 5,836,787     $ 5,617,493     $ 5,353,729     $ 5,060,297  
                                         

Unaudited consolidated statement of income:

    For the Three Months Ended     For the Years Ended  
    December 31,     September 30,     June 30,     March 31,     December 31,     December 31,     December 31,  
(Dollars in thousands)   2020     2020     2020     2020     2019     2020     2019  
Interest income:                                                        
Loans, including fees   $ 50,723     $ 48,774     $ 50,394     $ 48,323     $ 52,395     $ 198,214     $ 195,648  
Factored receivables, including fees     37,573       31,468       21,101       24,292       25,573       114,434       101,257  
Securities     1,519       1,927       2,676       2,107       2,379       8,229       10,474  
FHLB and other restricted stock     56       122       148       204       165       530       712  
Cash deposits     68       73       79       488       659       708       3,062  
Total interest income     89,939       82,364       74,398       75,414       81,171       322,115       311,153  
Interest expense:                                                        
Deposits     4,308       5,834       7,584       9,677       10,961       27,403       40,225  
Subordinated notes     1,347       1,348       1,321       1,347       1,035       5,363       3,553  
Junior subordinated debentures     452       462       554       646       687       2,114       2,910  
Other borrowings     234       341       688       1,244       2,080       2,507       8,562  
Total interest expense     6,341       7,985       10,147       12,914       14,763       37,387       55,250  
Net interest income     83,598       74,379       64,251       62,500       66,408       284,728       255,903  
Credit loss expense (benefit)     4,680       (258 )     13,609       20,298       382       38,329       7,942  
Net interest income after credit loss expense     78,918       74,637       50,642       42,202       66,026       246,399       247,961  
Non-interest income:                                                        
Service charges on deposits     1,643       1,470       573       1,588       1,889       5,274       7,132  
Card income     1,949       2,091       1,941       1,800       1,943       7,781       7,873  
Net OREO gains (losses) and valuation adjustments     (217 )     (41 )     (101 )     (257 )     50       (616 )     351  
Net gains (losses) on sale of securities     16       3,109       63       38       39       3,226       61  
Fee income     1,615       1,402       1,304       1,686       1,686       6,007       6,441  
Insurance commissions     1,327       990       864       1,051       1,092       4,232       4,219  
Gain on sale of subsidiary                 9,758                   9,758        
Other     16,053       1,472       5,627       1,571       1,967       24,723       5,492  
Total non-interest income     22,386       10,493       20,029       7,477       8,666       60,385       31,569  
Non-interest expense:                                                        
Salaries and employee benefits     33,798       31,651       30,804       30,722       29,586       126,975       112,862  
Occupancy, furniture and equipment     7,046       5,574       4,964       5,182       4,667       22,766       18,196  
FDIC insurance and other regulatory assessments     350       360       495       315       (302 )     1,520       298  
Professional fees     2,326       3,265       1,651       2,107       1,904       9,349       7,288  
Amortization of intangible assets     2,065       2,141       2,046       2,078       2,154       8,330       9,131  
Advertising and promotion     1,170       1,105       1,151       1,292       1,347       4,718       6,126  
Communications and technology     5,639       5,569       5,444       5,501       5,732       22,153       20,976  
Other     6,904       5,632       6,171       7,556       7,573       26,263       29,207  
Total non-interest expense     59,298       55,297       52,726       54,753       52,661       222,074       204,084  
Net income (loss) before income tax     42,006       29,833       17,945       (5,074 )     22,031       84,710       75,446  
Income tax expense (benefit)     9,876       6,929       4,505       (624 )     5,322       20,686       16,902  
Net income (loss)   $ 32,130     $ 22,904     $ 13,440     $ (4,450 )   $ 16,709     $ 64,024     $ 58,544  
Dividends on preferred stock     (802 )     (899 )                       (1,701 )      
Net income available to common stockholders   $ 31,328     $ 22,005     $ 13,440     $ (4,450 )   $ 16,709     $ 62,323     $ 58,544  
                                                         

Earnings per share:

    For the Three Months Ended     For the Years Ended  
    December 31,     September 30,     June 30,     March 31,     December 31,     December 31,     December 31,  
(Dollars in thousands)   2020     2020     2020     2020     2019     2020     2019  
Basic                                                        
Net income (loss) to common stockholders   $ 31,328     $ 22,005     $ 13,440     $ (4,450 )   $ 16,709     $ 62,323     $ 58,544  
Weighted average common shares outstanding     24,653,099       24,592,092       23,987,049       24,314,329       25,089,447       24,387,932       25,941,395  
Basic earnings (loss) per common share   $ 1.27     $ 0.89     $ 0.56     $ (0.18 )   $ 0.67     $ 2.56     $ 2.26  
                                                         
Diluted                                                        
Net income (loss) to common stockholders – diluted   $ 31,328     $ 22,005     $ 13,440     $ (4,450 )   $ 16,709     $ 62,323     $ 58,544  
Weighted average common shares outstanding     24,653,099       24,592,092       23,987,049       24,314,329       25,089,447       24,387,932       25,941,395  
Dilutive effects of:                                                        
Assumed exercises of stock options     101,664       48,102       38,627             69,865       64,104       63,808  
Restricted stock awards     136,239       67,907       37,751             70,483       86,498       47,242  
Restricted stock units     50,156       18,192       4,689             13,264       25,978       3,441  
Performance stock units – market based     112,228       76,095       6,326             11,803       51,304       4,119  
Performance stock units – performance based                                          
Weighted average shares outstanding – diluted     25,053,386       24,802,388       24,074,442       24,314,329       25,254,862       24,615,816       26,060,005  
Diluted earnings (loss) per common share   $ 1.25     $ 0.89     $ 0.56     $ (0.18 )   $ 0.66     $ 2.53     $ 2.25  
                                                         
Shares that were not considered in computing diluted earnings per common share because they were antidilutive are as follows:  
                                                         
    For the Three Months Ended     For the Years Ended  
    December 31,     September 30,     June 30,     March 31,     December 31,     December 31,     December 31,  
    2020     2020     2020     2020     2019     2020     2019  
Stock options           98,513       148,528       225,055       66,019       64,947       66,019  
Restricted stock awards                 109,834       147,748                    
Restricted stock units                 38,801       55,228                    
Performance stock units – market based                 76,461       67,707       55,228             55,228  
Performance stock units – performance based     256,625       261,125       262,625       254,000       254,000       256,625       254,000  
                                                         

Loans held for investment summarized as of:

    December 31,     September 30,     June 30,     March 31,     December 31,  
(Dollars in thousands)   2020     2020     2020     2020     2019  
Commercial real estate   $ 779,158     $ 762,531     $ 910,261     $ 985,757     $ 1,046,961  
Construction, land development, land     219,647       244,512       213,617       198,050       160,569  
1-4 family residential properties     157,147       164,785       168,707       169,703       179,425  
Farmland     103,685       110,966       125,259       133,579       154,975  
Commercial     1,562,957       1,536,903       1,518,656       1,412,822       1,342,683  
Factored receivables     1,120,770       1,016,337       561,576       661,100       619,986  
Consumer     15,838       17,106       18,450       20,326       21,925  
Mortgage warehouse     1,037,574       999,771       876,785       739,211       667,988  
Total loans   $ 4,996,776     $ 4,852,911     $ 4,393,311     $ 4,320,548     $ 4,194,512  
                                         

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:

    December 31,     September 30,     June 30,     March 31,     December 31,  
(Dollars in thousands)   2020     2020     2020     2020     2019  
Commercial – Equipment   $ 573,163     $ 509,849     $ 487,145     $ 479,483     $ 461,555  
Commercial – Asset-based lending     180,488       160,711       176,235       245,001       168,955  
Factored receivables     1,120,770       1,016,337       561,576       661,100       619,986  
Commercial finance   $ 1,874,421     $ 1,686,897     $ 1,224,956     $ 1,385,584     $ 1,250,496  
                                         
Commercial finance % of total loans     38 %     35 %     28 %     32 %     30 %

National lending loans are further summarized below:

    December 31,     September 30,     June 30,     March 31,     December 31,  
(Dollars in thousands)   2020     2020     2020     2020     2019  
Mortgage warehouse   $ 1,037,574     $ 999,771     $ 876,785     $ 739,211     $ 667,988  
Commercial – Liquid credit     184,027       188,034       192,118       172,380       81,353  
Commercial – Premium finance                             101,015  
National lending   $ 1,221,601     $ 1,187,805     $ 1,068,903     $ 911,591     $ 850,356  
                                         
National lending % of total loans     24 %     24 %     24 %     21 %     20 %

Additional information pertaining to our loan portfolio, summarized for the quarters ended:

    December 31,     September 30,     June 30,     March 31,     December 31,  
(Dollars in thousands)   2020     2020     2020     2020     2019  
Average community banking   $ 1,963,435     $ 2,047,059     $ 2,111,615     $ 2,041,256     $ 2,170,149  
Average commercial finance     1,798,550       1,480,593       1,259,584       1,292,749       1,260,000  
Average national lending     1,114,822       998,411       1,038,476       711,837       704,244  
Average total loans   $ 4,876,807     $ 4,526,063     $ 4,409,675     $ 4,045,842     $ 4,134,393  
Community banking yield     5.46 %     5.05 %     5.23 %     5.67 %     5.89 %
Commercial finance yield     10.74 %     11.23 %     10.21 %     11.00 %     11.64 %
National lending yield     4.58 %     4.98 %     4.67 %     4.80 %     4.96 %
Total loan yield     7.20 %     7.05 %     6.52 %     7.22 %     7.48 %

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,     September 30,     June 30,     March 31,     December 31,  
    2020     2020     2020     2020     2019  
Factored receivable period end balance   $ 1,036,369,000     $ 948,987,000     $ 528,379,000     $ 641,366,000     $ 573,372,000  
Yield on average receivable balance     13.81 %     15.65 %     15.48 %     16.13 %     17.20 %
Rolling twelve quarter annual charge-off rate     0.37 %     0.43 %     0.43 %     0.42 %     0.39 %
Factored receivables – transportation concentration     89 %     88 %     85 %     80 %     81 %
                                         
Interest income, including fees   $ 35,439,000     $ 30,068,000     $ 20,387,000     $ 23,497,000     $ 24,813,000  
Non-interest income(1)     1,358,000       1,157,000       1,072,000       1,296,000       1,154,000  
Factored receivable total revenue     36,797,000       31,225,000       21,459,000       24,793,000       25,967,000  
Average net funds employed     924,899,000       694,170,000       477,112,000       537,138,000       524,546,000  
Yield on average net funds employed     15.83 %     17.89 %     18.09 %     18.56 %     19.64 %
                                         
Accounts receivable purchased   $ 2,461,249,000     $ 1,984,490,000     $ 1,238,465,000     $ 1,450,618,000     $ 1,489,538,000  
Number of invoices purchased     1,189,271       1,027,839       812,902       878,767       896,487  
Average invoice size   $ 2,070     $ 1,931     $ 1,524     $ 1,651     $ 1,662  
Average invoice size – transportation   $ 1,943     $ 1,787     $ 1,378     $ 1,481     $ 1,507  
Average invoice size – non-transportation   $ 5,091     $ 5,181     $ 4,486     $ 4,061     $ 3,891  

(1)  Total factoring segment non-interest income was $15.5 million and $3.2 million for the three months ended December 31, 2020 and September 30, 2020, respectively. December 31, 2020 non-interest income used to calculate yield on average net funds employed excludes a gain of $8.9 million during the quarter then ended related to CVLG’s delivery of proceeds resulting from the liquidation of its acquired stock. Also excluded from noninterest income used to calculate yield on average net funds employed for the quarter ended December 31, 2020 is a $5.3 million increase in the value of 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 during the quarter then ended on the increased value of the receivable due from CVLG.

Deposits summarized as of:

    December 31,     September 30,     June 30,     March 31,     December 31,  
(Dollars in thousands)   2020     2020     2020     2020     2019  
Non-interest bearing demand   $ 1,352,785     $ 1,315,900     $ 1,120,949     $ 846,412     $ 809,696  
Interest bearing demand     688,680       634,272       648,309       583,445       580,323  
Individual retirement accounts     92,584       94,933       97,388       101,743       104,472  
Money market     393,325       384,476       397,914       412,376       497,105  
Savings     421,488       405,954       391,624       367,163       363,270  
Certificates of deposit     790,844       857,514       937,766       1,056,012       1,084,425  
Brokered time deposits     516,786       344,986       258,378       314,864       350,615  
Other brokered deposits     460,108       210,066       210,004              
Total deposits   $ 4,716,600     $ 4,248,101     $ 4,062,332     $ 3,682,015     $ 3,789,906  
                                         

Net interest margin summarized for the three months ended:

    December 31, 2020     September 30, 2020  
    Average             Average     Average             Average  
(Dollars in thousands)   Balance     Interest     Rate     Balance     Interest     Rate  
Interest earning assets:                                                
Interest earning cash balances   $ 230,893     $ 68       0.12 %   $ 224,958     $ 73       0.13 %
Taxable securities     202,867       1,283       2.52 %     259,470       1,674       2.57 %
Tax-exempt securities     37,070       236       2.53 %     39,847       253       2.53 %
FHLB and other restricted stock     15,759       56       1.41 %     22,121       122       2.19 %
Loans     4,876,807       88,296       7.20 %     4,526,063       80,242       7.05 %
Total interest earning assets   $ 5,363,396     $ 89,939       6.67 %   $ 5,072,459     $ 82,364       6.46 %
Non-interest earning assets:                                                
Other assets     425,153                       446,249                  
Total assets   $ 5,788,549                     $ 5,518,708                  
Interest bearing liabilities:                                                
Deposits:                                                
Interest bearing demand   $ 662,458     $ 235       0.14 %   $ 635,287     $ 207       0.13 %
Individual retirement accounts     94,328       250       1.05 %     95,962       300       1.24 %
Money market     395,900       257       0.26 %     385,620       263       0.27 %
Savings     413,214       157       0.15 %     400,102       152       0.15 %
Certificates of deposit     814,954       2,633       1.29 %     905,075       3,782       1.66 %
Brokered time deposits     221,346       528       0.95 %     247,928       941       1.51 %
Other brokered deposits     560,805       248       0.18 %     251,701       189       0.30 %
Total interest bearing deposits     3,163,005       4,308       0.54 %     2,921,675       5,834       0.79 %
Federal Home Loan Bank advances     80,217       43       0.21 %     255,163       143       0.22 %
Subordinated notes     87,476       1,347       6.13 %     87,425       1,348       6.13 %
Junior subordinated debentures     39,996       452       4.50 %     39,874       462       4.61 %
Other borrowings     223,501       191       0.34 %     236,297       198       0.33 %
Total interest bearing liabilities   $ 3,594,195     $ 6,341       0.70 %   $ 3,540,434     $ 7,985       0.90 %
Non-interest bearing liabilities and equity:                                                
Non-interest bearing demand deposits     1,392,389                       1,213,494                  
Other liabilities     81,073                       76,453                  
Total equity     720,892                       688,327                  
Total liabilities and equity   $ 5,788,549                     $ 5,518,708                  
Net interest income           $ 83,598                     $ 74,379          
Interest spread                     5.97 %                     5.56 %
Net interest margin                     6.20 %                     5.83 %
                                                 

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     As of and for the Years Ended  
(Dollars in thousands,   December 31,     September 30,     June 30,     March 31,     December 31,     December 31,     December 31,  
except per share amounts)   2020     2020     2020     2020     2019     2020     2019  
Net income available to common stockholders   $ 31,328     $ 22,005     $ 13,440     $ (4,450 )   $ 16,709     $ 62,323     $ 58,544  
Transaction costs           827                         827        
Gain on sale of subsidiary or division                 (9,758 )                 (9,758 )      
Tax effect of adjustments           (197 )     2,451                   2,254        
Adjusted net income available to common stockholders – diluted   $ 31,328     $ 22,635     $ 6,133     $ (4,450 )   $ 16,709     $ 55,646     $ 58,544  
                                                         
Weighted average shares outstanding – diluted     25,053,386       24,802,388       24,074,442       24,314,329       25,254,862       24,615,816       26,060,005  
Adjusted diluted earnings per common share   $ 1.25     $ 0.91     $ 0.25     $ (0.18 )   $ 0.66     $ 2.26     $ 2.25  
                                                         
Average total stockholders’ equity   $ 720,892     $ 688,327     $ 610,258     $ 627,369     $ 647,546     $ 661,942     $ 647,726  
Average preferred stock liquidation preference     (45,000 )     (45,000 )     (5,934 )                 (24,099 )      
Average total common stockholders’ equity     675,892       643,327       604,324       627,369       647,546       637,843       647,726  
Average goodwill and other intangibles     (191,017 )     (192,682 )     (187,255 )     (189,359 )     (191,551 )     (190,088 )     (194,905 )
Average tangible common stockholders’ equity   $ 484,875     $ 450,645     $ 417,069     $ 438,010     $ 455,995     $ 447,755     $ 452,821  
                                                         
Net income available to common stockholders   $ 31,328     $ 22,005     $ 13,440     $ (4,450 )   $ 16,709     $ 62,323     $ 58,544  
Average tangible common equity     484,875       450,645       417,069       438,010       455,995       447,755       452,821  
Return on average tangible common equity     25.70 %     19.43 %     12.96 %     (4.09 %)     14.54 %     13.92 %     12.93 %
                                                         
Net interest income   $ 83,598     $ 74,379     $ 64,251     $ 62,500     $ 66,408     $ 284,728     $ 255,903  
Non-interest income     22,386       10,493       20,029       7,477       8,666       60,385       31,569  
Operating revenue     105,984       84,872       84,280       69,977       75,074       345,113       287,472  
Gain on sale of subsidiary or division                 (9,758 )                 (9,758 )      
Adjusted operating revenue   $ 105,984     $ 84,872     $ 74,522     $ 69,977     $ 75,074     $ 335,355     $ 287,472  
Non-interest expenses   $ 59,298     $ 55,297     $ 52,726     $ 54,753     $ 52,661     $ 222,074     $ 204,084  
Transaction costs           (827 )                       (827 )      
Adjusted non-interest expenses   $ 59,298     $ 54,470     $ 52,726     $ 54,753     $ 52,661     $ 221,247     $ 204,084  
Adjusted efficiency ratio     55.95 %     64.18 %     70.75 %     78.24 %     70.15 %     65.97 %     70.99 %
                                                         
Adjusted net non-interest expense to average assets ratio:                                                        
Non-interest expenses   $ 59,298     $ 55,297     $ 52,726     $ 54,753     $ 52,661     $ 222,074     $ 204,084  
Transaction costs           (827 )                       (827 )      
Adjusted non-interest expenses   $ 59,298     $ 54,470     $ 52,726     $ 54,753     $ 52,661     $ 221,247     $ 204,084  
Total non-interest income   $ 22,386     $ 10,493     $ 20,029     $ 7,477     $ 8,666     $ 60,385     $ 31,569  
Gain on sale of subsidiary or division                 (9,758 )                 (9,758 )      
Adjusted non-interest income   $ 22,386     $ 10,493     $ 10,271     $ 7,477     $ 8,666     $ 50,627     $ 31,569  
Adjusted net non-interest expenses   $ 36,912     $ 43,977     $ 42,455     $ 47,276     $ 43,995     $ 170,620     $ 172,515  
Average total assets   $ 5,788,549     $ 5,518,708     $ 5,487,072     $ 4,906,547     $ 5,050,860     $ 5,426,469     $ 4,773,652  
Adjusted net non-interest expense to average assets ratio     2.54 %     3.17 %     3.11 %     3.88 %     3.46 %     3.14 %     3.61 %
                                                         
Total stockholders’ equity   $ 726,781     $ 693,842     $ 656,871     $ 589,347     $ 636,590     $ 726,781     $ 636,590  
Preferred stock liquidation preference     (45,000 )     (45,000 )     (45,000 )                 (45,000 )      
Total common stockholders’ equity     681,781       648,842       611,871       589,347       636,590       681,781       636,590  
Goodwill and other intangibles     (189,922 )     (192,041 )     (186,162 )     (188,208 )     (190,286 )     (189,922 )     (190,286 )
Tangible common stockholders’ equity   $ 491,859     $ 456,801     $ 425,709     $ 401,139     $ 446,304     $ 491,859     $ 446,304  
Common shares outstanding     24,868,218       24,851,601       24,202,686       24,101,120       24,964,961       24,868,218       24,964,961  
Tangible book value per share   $ 19.78     $ 18.38     $ 17.59     $ 16.64     $ 17.88     $ 19.78     $ 17.88  
                                                         
Total assets at end of period   $ 5,935,791     $ 5,836,787     $ 5,617,493     $ 5,353,729     $ 5,060,297     $ 5,935,791     $ 5,060,297  
Goodwill and other intangibles     (189,922 )     (192,041 )     (186,162 )     (188,208 )     (190,286 )     (189,922 )     (190,286 )
Tangible assets at period end   $ 5,745,869     $ 5,644,746     $ 5,431,331     $ 5,165,521     $ 4,870,011     $ 5,745,869     $ 4,870,011  
Tangible common stockholders’ equity ratio     8.56 %     8.09 %     7.84 %     7.77 %     9.16 %     8.56 %     9.16 %
                                                         

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 Years Ended  
    December 31,     September 30,     June 30,     March 31,     December 31,     December 31,     December 31,  
(Dollars in thousands)   2020     2020     2020     2020     2019     2020     2019  
Loan discount accretion   $ 2,334     $ 4,104     $ 2,139     $ 2,134     $ 1,555     $ 10,711     $ 5,568  

3) Asset quality ratios exclude loans held for sale, except for non-performing assets to total assets.

4) Past due ratio has been revised to exclude nonaccrual loans with contractual payments less than 30 days past due.

5) Beginning January 1, 2020, the allowance for credit losses was calculated in accordance with Accounting Standards Codification Topic 326, “Financial Instruments – Credit Losses” (“ASC 326”).

6) 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