TBK - Triumph Bancorp Reports Second Quarter Net Income to Common Stockholders of $12.7 Million

July, 17 2019 04:07 PM Triumph Bancorp Inc.

DALLAS, July 17, 2019 (GLOBE NEWSWIRE) -- Triumph Bancorp, Inc. (Nasdaq: TBK) (“Triumph” or the “Company”) today announced earnings and operating results for the second quarter of 2019.

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.

2019 Second Quarter Highlights and Recent Developments

For the second quarter of 2019, net income available to common stockholders was $12.7 million. Diluted earnings per share were $0.48.
Net interest margin (“NIM”) was 5.99% for the quarter ended June 30, 2019.
Total loans held for investment increased $223.0 million, or 6.2%, to $3.836 billion at June 30, 2019. Average loans for the quarter increased $172.9 million, or 4.9%, to $3.708 billion.
Triumph Business Capital grew period-end clients to 6,455 clients, which is an increase of 73 clients, or 1.1%. The total dollar value of invoices purchased for the quarter ended June 30, 2019 was $1.409 billion with an average invoice price of $1,612.
At June 30, 2019, there were 146 clients utilizing the TriumphPay platform, which is an increase of 16 clients, or 12.3%, during the quarter. For the quarter ended June 30, 2019, TriumphPay processed 149,734 invoices paying 28,126 distinct carriers a total of $168.8 million.
During the quarter ended June 30, 2019, the Company repurchased 590,829 shares into treasury stock under its stock repurchase program at an average price of $29.42, for a total of $17.4 million. During the six months ended June 30, 2019, the Company has repurchased 838,141 shares into treasury stock under its stock repurchase program at an average price of $29.74, for a total of $24.9 million, completing its previously announced $25.0 million stock repurchase program.

Repurchase Program Authorization

On July 17, 2019 the Company’s board of directors authorized the Company to repurchase up to an additional $25.0 million of the Company’s outstanding common stock. The Company may repurchase these shares from time to time in open market transactions or through privately negotiated transactions at the Company’s discretion. The amount, timing and nature of any share repurchases will be based on a variety of factors, including the trading price of the Company’s common stock, applicable securities laws restrictions, regulatory limitations and market and economic factors. This repurchase program is authorized for a period of up to one year and does not require the Company to repurchase any specific number of shares. The repurchase program may be modified, suspended or discontinued at any time, at the Company’s discretion.

Balance Sheet

Total loans held for investment increased $223.0 million, or 6.2%, during the second quarter to $3.836 billion at June 30, 2019. The commercial finance portfolio increased $77.6 million, or 7.0%, to $1.187 billion at June 30, 2019. The national lending portfolio increased $91.5 million, or 23.7%, to $477.2 million at June 30, 2019. The community banking portfolio increased $53.9 million, or 2.5%, to $2.172 billion at June 30, 2019.

Total deposits were $3.659 billion at June 30, 2019, an increase of $344.5 million or 10.4% in the second quarter of 2019. Non-interest-bearing deposits accounted for 19% of total deposits and non-time deposits accounted for 57% of total deposits at June 30, 2019.

Net Interest Income

We earned net interest income for the quarter ended June 30, 2019 of $63.4 million compared to $61.3 million for the quarter ended March 31, 2019.

Yields on loans for the quarter ended June 30, 2019 were down 4 bps from the prior quarter to 7.95%. The average cost of our total deposits was 1.14% for the quarter ended June 30, 2019 compared to 0.99% for the quarter ended March 31, 2019.

Asset Quality

Non-performing assets were 0.86% of total assets at June 30, 2019 compared to 0.84% of total assets at March 31, 2019. The ratio of past due to total loans decreased to 1.90% at June 30, 2019 from 2.33% at March 31, 2019. We recorded total net charge-offs of $1.9 million, or 0.05% of average loans, for the quarter ended June 30, 2019 compared to net charge-offs of $1.0 million, or 0.03% of average loans, for the quarter ended March 31, 2019.

We recorded a provision for loan losses of $3.7 million for the quarter ended June 30, 2019 compared to a provision of $1.0 million for the quarter ended March 31, 2019. From March 31, 2019 to June 30, 2019, our ALLL increased from $27.6 million or 0.76% of total loans to $29.4 million or 0.77% of total loans.

Non-Interest Income and Expense

We earned non-interest income for the quarter ended June 30, 2019 of $7.6 million compared to $7.5 million for the quarter ended March 31, 2019.

For the quarter ended June 30, 2019, non-interest expense totaled $50.7 million, compared to $48.6 million for the quarter ended March 31, 2019.

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, July 18, 2019. Todd Ritterbusch, Chief Lending Officer, 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/tbk190718.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; our ability to mitigate our risk exposures; our ability to maintain our historical earnings trends; risks related to the integration of acquired businesses (including our acquisitions of First Bancorp of Durango, Inc., Southern Colorado Corp., and the operating assets of Interstate Capital Corporation and certain of its affiliates) and any future acquisitions; changes in management personnel; interest rate risk; concentration of our factoring 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; 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 the Federal Deposit Insurance Corporation 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, 2019.

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 its 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 Six Months Ended



June 30,


March 31,


December 31,


September 30,


June 30,


June 30,


June 30,

(Dollars in thousands)

2019


2019


2018


2018


2018


2019


2018

Financial Highlights:




























Total assets

$
4,783,189


$
4,529,783


$
4,559,779


$
4,537,102


$
3,794,631


$
4,783,189


$
3,794,631

Loans held for investment

$
3,835,903


$
3,612,869


$
3,608,644


$
3,512,143


$
3,196,462


$
3,835,903


$
3,196,462

Deposits

$
3,658,978


$
3,314,440


$
3,450,349


$
3,439,049


$
2,624,942


$
3,658,978


$
2,624,942

Net income available to common stockholders

$
12,730


$
14,788


$
18,085


$
8,975


$
12,192


$
27,518


$
24,070






























Performance Ratios - Annualized:




























Return on average assets


1.09
%


1.33
%


1.60
%


0.90
%


1.37
%


1.21
%


1.40
%
Return on average total equity


7.83
%


9.30
%


11.35
%


5.88
%


8.53
%


8.55
%


10.01
%
Return on average common equity


7.83
%


9.30
%


11.40
%


5.85
%


8.54
%


8.55
%


10.05
%
Return on average tangible common equity⁽¹⁾


11.19
%


13.43
%


16.73
%


7.57
%


9.95
%


12.29
%


11.85
%
Yield on loans⁽²⁾


7.95
%


7.99
%


8.14
%


8.33
%


8.09
%


7.97
%


7.88
%
Cost of interest bearing deposits


1.42
%


1.24
%


1.15
%


1.08
%


0.93
%


1.33
%


0.89
%
Cost of total deposits


1.14
%


0.99
%


0.91
%


0.85
%


0.73
%


1.07
%


0.70
%
Cost of total funds


1.40
%


1.28
%


1.14
%


1.16
%


1.06
%


1.34
%


1.00
%
Net interest margin⁽²⁾


5.99
%


6.15
%


6.34
%


6.59
%


6.36
%


6.07
%


6.21
%
Net non-interest expense to average assets


3.68
%


3.70
%


3.55
%


4.19
%


3.59
%


3.69
%


3.51
%
Adjusted net non-interest expense to average assets⁽¹⁾


3.68
%


3.70
%


3.55
%


3.62
%


3.47
%


3.69
%


3.51
%
Efficiency ratio


71.37
%


70.54
%


65.52
%


72.15
%


64.26
%


70.96
%


64.65
%
Adjusted efficiency ratio⁽¹⁾


71.37
%


70.54
%


65.52
%


63.49
%


62.38
%


70.96
%


64.29
%





























Asset Quality:⁽³⁾




























Past due to total loans


1.90
%


2.33
%


2.41
%


2.23
%


2.54
%


1.90
%


2.54
%
Non-performing loans to total loans


0.96
%


0.95
%


1.00
%


1.13
%


1.43
%


0.96
%


1.43
%
Non-performing assets to total assets


0.86
%


0.84
%


0.84
%


0.93
%


1.28
%


0.86
%


1.28
%
ALLL to non-performing loans


79.91
%


80.70
%


76.47
%


68.82
%


53.57
%


79.91
%


53.57
%
ALLL to total loans


0.77
%


0.76
%


0.76
%


0.78
%


0.77
%


0.77
%


0.77
%
Net charge-offs to average loans


0.05
%


0.03
%


0.05
%


0.12
%


0.01
%


0.08
%


0.06
%





























Capital:




























Tier 1 capital to average assets⁽⁴⁾


10.84
%


11.32
%


11.08
%


11.75
%


15.00
%


10.84
%


15.00
%
Tier 1 capital to risk-weighted assets⁽⁴⁾


11.09
%


11.76
%


11.49
%


11.16
%


14.68
%


11.09
%


14.68
%
Common equity tier 1 capital to risk-weighted assets⁽⁴⁾


10.19
%


10.81
%


10.55
%


9.96
%


13.32
%


10.19
%


13.32
%
Total capital to risk-weighted assets⁽⁴⁾


12.88
%


13.62
%


13.35
%


13.05
%


16.73
%


12.88
%


16.73
%
Total equity to total assets


13.45
%


14.27
%


13.96
%


13.59
%


16.00
%


13.45
%


16.00
%
Tangible common stockholders' equity to tangible assets⁽¹⁾


9.78
%


10.37
%


10.03
%


9.35
%


13.05
%


9.78
%


13.05
%





























Per Share Amounts:




























Book value per share

$
24.56


$
24.19


$
23.62


$
23.10


$
22.76


$
24.56


$
22.76

Tangible book value per share⁽¹⁾

$
17.13


$
16.82


$
16.22


$
15.42


$
18.27


$
17.13


$
18.27

Basic earnings per common share

$
0.48


$
0.55


$
0.68


$
0.34


$
0.48


$
1.04


$
1.04

Diluted earnings per common share

$
0.48


$
0.55


$
0.67


$
0.34


$
0.47


$
1.03


$
1.02

Adjusted diluted earnings per common share⁽¹⁾

$
0.48


$
0.55


$
0.67


$
0.51


$
0.50


$
1.03


$
1.02

Shares outstanding end of period


26,198,308



26,709,411



26,949,936



26,279,761



26,260,785



26,198,308



26,260,785

Unaudited consolidated balance sheet as of:



















June 30,


March 31,


December 31,


September 30,


June 30,

(Dollars in thousands)

2019


2019


2018


2018


2018

ASSETS




















Total cash and cash equivalents

$
209,305


$
171,950


$
234,939


$
282,409


$
133,365

Securities - available for sale


329,991



339,465



336,423



355,981



183,184

Securities - held to maturity


8,573



8,499



8,487



8,403



8,673

Equity securities


5,479



5,183



5,044



4,981



5,025

Loans held for sale


2,877



610



2,106



683



—

Loans held for investment


3,835,903



3,612,869



3,608,644



3,512,143



3,196,462

Allowance for loan and lease losses


(29,416
)


(27,605
)


(27,571
)


(27,256
)


(24,547
)
Loans, net


3,806,487



3,585,264



3,581,073



3,484,887



3,171,915

FHLB stock


18,037



21,191



15,943



23,109



19,223

Premises and equipment, net


84,998



84,931



83,392



82,935



68,313

Other real estate owned ("OREO"), net


3,351



3,073



2,060



2,442



2,528

Goodwill and intangible assets, net


194,668



197,015



199,417



201,842



117,777

Bank-owned life insurance


40,847



40,667



40,509



40,339



40,168

Deferred tax asset, net


7,278



7,608



8,438



8,137



8,810

Other assets


71,298



64,327



41,948



40,954



35,650

Total assets

$
4,783,189


$
4,529,783


$
4,559,779


$
4,537,102


$
3,794,631

LIABILITIES




















Non-interest bearing deposits

$
684,223


$
667,597


$
724,527


$
697,903


$
561,033

Interest bearing deposits


2,974,755



2,646,843



2,725,822



2,741,146



2,063,909

Total deposits


3,658,978



3,314,440



3,450,349



3,439,049



2,624,942

Customer repurchase agreements


12,788



3,727



4,485



13,248



10,509

Federal Home Loan Bank advances


305,000



405,000



330,000



330,000



420,000

Subordinated notes


48,983



48,956



48,929



48,903



48,878

Junior subordinated debentures


39,320



39,200



39,083



38,966



38,849

Other liabilities


74,758



72,244



50,326



50,295



44,228

Total liabilities


4,139,827



3,883,567



3,923,172



3,920,461



3,187,406

EQUITY




















Preferred stock series A


—



—



—



4,550



4,550

Preferred stock series B


—



—



—



5,108



5,108

Common stock


271



271



271



264



264

Additional paid-in-capital


471,145



470,292



469,341



458,920



457,980

Treasury stock, at cost


(27,468
)


(9,881
)


(2,288
)


(2,285
)


(2,254
)
Retained earnings


198,004



185,274



170,486



152,401



143,426

Accumulated other comprehensive income


1,410



260



(1,203
)


(2,317
)


(1,849
)
Total equity


643,362



646,216



636,607



616,641



607,225

Total liabilities and equity

$
4,783,189


$
4,529,783


$
4,559,779


$
4,537,102


$
3,794,631

Unaudited consolidated statement of income:










For the Three Months Ended


For the Six Months Ended



June 30,


March 31,


December 31,


September 30,


June 30,


June 30,


June 30,

(Dollars in thousands)

2019


2019


2018


2018


2018


2019


2018

Interest income:




























Loans, including fees

$
47,910


$
45,094


$
44,435


$
41,257


$
38,148


$
93,004


$
75,031

Factored receivables, including fees


25,558



24,556



28,070



27,939



20,791



50,114



36,094

Securities


2,667



2,644



2,314



1,551



1,179



5,311



2,489

FHLB stock


146



192



154



147



101



338



206

Cash deposits


1,022



778



877



865



1,030



1,800



1,547

Total interest income


77,303



73,264



75,850



71,759



61,249



150,567



115,367

Interest expense:




























Deposits


10,010



8,218



7,931



6,219



4,631



18,228



8,908

Subordinated notes


839



839



839



837



838



1,678



1,675

Junior subordinated debentures


744



760



717



714



713



1,504



1,310

Other borrowings


2,291



2,136



1,482



2,207



1,810



4,427



3,087

Total interest expense


13,884



11,953



10,969



9,977



7,992



25,837



14,980

Net interest income


63,419



61,311



64,881



61,782



53,257



124,730



100,387

Provision for loan losses


3,681



1,014



1,910



6,803



4,906



4,695



7,454

Net interest income after provision for loan losses


59,738



60,297



62,971



54,979



48,351



120,035



92,933

Non-interest income:




























Service charges on deposits


1,700



1,606



1,702



1,412



1,210



3,306



2,355

Card income


2,071



1,844



1,999



1,877



1,394



3,915



2,638

Net OREO gains (losses) and valuation adjustments


148



209



37



65



(528
)


357



(616
)
Net gains (losses) on sale of securities


14



(11
)


—



—



—



3



(272
)
Fee income


1,519



1,612



1,636



1,593



1,121



3,131



1,921

Insurance commissions


961



919



846



1,113



819



1,880



1,533

Gain on sale of subsidiary


—



—



—



—



—



—



1,071

Other


1,210



1,359



574



(1
)


929



2,569



1,487

Total non-interest income


7,623



7,538



6,794



6,059



4,945



15,161



10,117

Non-interest expense:




























Salaries and employee benefits


28,120



26,439



25,586



24,695



20,527



54,559



39,931

Occupancy, furniture and equipment


4,502



4,522



4,402



3,553



3,014



9,024



6,068

FDIC insurance and other regulatory assessments


303



299



184



363



383



602



582

Professional fees


1,550



1,865



1,837



3,384



2,078



3,415



3,718

Amortization of intangible assets


2,347



2,402



2,438



2,064



1,361



4,749



2,478

Advertising and promotion


1,796



1,604



1,036



1,609



1,300



3,400



2,329

Communications and technology


4,988



4,874



4,388



7,252



3,271



9,862



6,630

Other


7,098



6,561



7,091



6,026



5,469



13,659



9,709

Total non-interest expense


50,704



48,566



46,962



48,946



37,403



99,270



71,445

Net income before income tax


16,657



19,269



22,803



12,092



15,893



35,926



31,605

Income tax expense


3,927



4,481



4,718



2,922



3,508



8,408



7,152

Net income

$
12,730


$
14,788


$
18,085


$
9,170


$
12,385


$
27,518


$
24,453

Dividends on preferred stock


—



—



—



(195
)


(193
)


—



(383
)
Net income available to common stockholders

$
12,730


$
14,788


$
18,085


$
8,975


$
12,192


$
27,518


$
24,070

Earnings per share:










For the Three Months Ended


For the Six Months Ended



June 30,


March 31,


December 31,


September 30,


June 30,


June 30,


June 30,

(Dollars in thousands)

2019


2019


2018


2018


2018


2019


2018

Basic




























Net income to common stockholders

$
12,730


$
14,788


$
18,085


$
8,975


$
12,192


$
27,518


$
24,070

Weighted average common shares outstanding


26,396,351



26,679,724



26,666,554



26,178,194



25,519,108



26,537,255



23,133,489

Basic earnings per common share

$
0.48


$
0.55


$
0.68


$
0.34


$
0.48


$
1.04


$
1.04






























Diluted




























Net income to common stockholders

$
12,730


$
14,788


$
18,085


$
8,975


$
12,192


$
27,518


$
24,070

Dilutive effect of preferred stock


—



—



—



195



193



—



383

Net income to common stockholders - diluted

$
12,730


$
14,788


$
18,085


$
9,170


$
12,385


$
27,518


$
24,453

Weighted average common shares outstanding


26,396,351



26,679,724



26,666,554



26,178,194



25,519,108



26,537,255



23,133,489

Dilutive effects of:




























Assumed conversion of Preferred A


—



—



89,240



315,773



315,773



—



315,773

Assumed conversion of Preferred B


—



—



100,176



354,471



354,471



—



354,471

Assumed exercises of stock options


59,962



64,166



76,219



90,320



86,821



61,819



85,123

Restricted stock awards


30,110



49,795



46,457



45,796



37,417



39,352



60,425

Restricted stock units


—



—



1,303



7,276



2,288



—



862

Performance stock units


—



—



—



—



—



—



—

Weighted average shares outstanding - diluted


26,486,423



26,793,685



26,979,949



26,991,830



26,315,878



26,638,426



23,950,143

Diluted earnings per common share

$
0.48


$
0.55


$
0.67


$
0.34


$
0.47


$
1.03


$
1.02



























































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 Six Months Ended



June 30,


March 31,


December 31,


September 30,


June 30,


June 30,


June 30,



2019


2019


2018


2018


2018


2019


2018

Assumed conversion of Preferred A


—



—



—



—



—



—



—

Assumed conversion of Preferred B


—



—



—



—



—



—



—

Stock options


70,037



50,752



51,952



51,952



51,952



70,037



51,952

Restricted stock awards


—



13,290



14,513



14,513



—



—



—

Restricted stock units


58,400



58,400



—



—



—



58,400



—

Performance stock units


70,879



58,400



59,658



59,658



59,658



70,879



59,658

Loans held for investment summarized as of:



















June 30,


March 31,


December 31,


September 30,


June 30,

(Dollars in thousands)

2019


2019


2018


2018


2018

Commercial real estate

$
1,098,279


$
1,093,882


$
992,080


$
906,494


$
766,839

Construction, land development, land


157,861



145,002



179,591



190,920



147,852

1-4 family residential properties


186,070



194,067



190,185



194,752



122,653

Farmland


144,594



156,299



170,540



177,313



177,060

Commercial


1,257,330



1,117,640



1,114,971



1,123,598



1,006,443

Factored receivables


583,131



570,663



617,791



611,285



603,812

Consumer


26,048



27,941



29,822



31,423



28,775

Mortgage warehouse


382,590



307,375



313,664



276,358



343,028

Total loans

$
3,835,903


$
3,612,869


$
3,608,644


$
3,512,143


$
3,196,462

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:



















June 30,


March 31,


December 31,


September 30,


June 30,

(Dollars in thousands)

2019


2019


2018


2018


2018

Commercial - Equipment

$
395,094


$
364,447


$
352,037


$
323,832


$
290,314

Commercial - Asset-based lending


208,896



174,447



214,110



273,096



261,412

Factored receivables


583,131



570,663



617,791



611,285



603,812

Commercial finance

$
1,187,121


$
1,109,557


$
1,183,938


$
1,208,213


$
1,155,538






















Commercial finance % of total loans


31
%


31
%


33
%


34
%


36
%

National lending loans are further summarized below:



















June 30,


March 31,


December 31,


September 30,


June 30,

(Dollars in thousands)

2019


2019


2018


2018


2018

Mortgage warehouse

$
382,590


$
307,375


$
313,664


$
276,358


$
343,028

Commercial - Liquid credit


21,758



960



963



966



968

Commercial - Premium finance


72,898



77,389



72,302



75,293



51,416

National lending

$
477,246


$
385,724


$
386,929


$
352,617


$
395,412






















National lending % of total loans


12
%


11
%


11
%


10
%


12
%

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



















June 30,


March 31,


December 31,


September 30,


June 30,

(Dollars in thousands)

2019


2019


2018


2018


2018

Average community banking

$
2,166,122


$
2,103,816


$
2,012,255


$
1,748,936


$
1,658,654

Average commercial finance


1,168,110



1,123,978



1,190,586



1,184,064



978,239

Average national lending


373,755



307,249



329,630



360,719



285,155

Average total loans

$
3,707,987


$
3,535,043


$
3,532,471


$
3,293,719


$
2,922,047

Community banking yield


5.88
%


5.91
%


5.82
%


5.75
%


5.97
%
Commercial finance yield


12.52
%


12.50
%


12.82
%


13.00
%


12.48
%
National lending yield


5.62
%


5.73
%


5.44
%


5.54
%


5.35
%
Total loan yield


7.95
%


7.99
%


8.14
%


8.33
%


8.09
%

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:



















June 30,


March 31,


December 31,


September 30,


June 30,



2019


2019


2018


2018


2018

Factored receivable period end balance

$
544,601,000


$
534,420,000


$
588,750,000


$
579,985,000


$
577,548,000

Yield on average receivable balance


18.73
%


17.96
%


18.24
%


18.96
%


18.70
%
Rolling twelve quarter annual charge-off rate


0.40
%


0.39
%


0.37
%


0.38
%


0.41
%
Factored receivables - transportation concentration


83
%


81
%


83
%


83
%


84
%





















Interest income, including fees

$
24,762,000


$
23,803,000


$
27,578,000


$
27,420,000


$
20,314,000

Non-interest income


1,205,000



1,077,000



1,032,000



942,000



920,000

Factored receivable total revenue


25,967,000



24,880,000



28,610,000



28,362,000



21,234,000

Average net funds employed


483,203,000



490,241,000



547,996,000



525,499,000



398,096,000

Yield on average net funds employed


21.55
%


20.58
%


20.71
%


21.41
%


21.39
%





















Accounts receivable purchased

$
1,408,982,000


$
1,325,140,000


$
1,541,332,000


$
1,503,049,000


$
1,162,810,000

Number of invoices purchased


874,248



789,838



882,042



836,771



656,429

Average invoice size

$
1,612


$
1,678


$
1,747


$
1,796


$
1,771

Average invoice size - transportation

$
1,492


$
1,541


$
1,625


$
1,666


$
1,695

Average invoice size - non-transportation

$
3,047


$
3,276


$
3,209


$
3,267


$
2,522






















Net new clients


73



191



259



422



2,072

Period end clients


6,455



6,382



6,191



5,932



5,510

Deposits summarized as of:



















June 30,


March 31,


December 31,


September 30,


June 30,

(Dollars in thousands)

2019


2019


2018


2018


2018

Non-interest bearing demand

$
684,223


$
667,597


$
724,527


$
697,903


$
561,033

Interest bearing demand


587,164



602,088



615,704



608,775



358,246

Individual retirement accounts


111,328



112,696



115,583



118,459



101,380

Money market


440,289



372,109



443,663



413,402



268,699

Savings


362,594



372,914



369,389



373,062



239,127

Certificates of deposit


1,122,873



851,411



835,127



854,048



751,290

Brokered deposits


350,507



335,625



346,356



373,400



345,167

Total deposits

$
3,658,978


$
3,314,440


$
3,450,349


$
3,439,049


$
2,624,942

Net interest margin summarized for the three months ended:










June 30, 2019


March 31, 2019



Average






Average


Average






Average

(Dollars in thousands)

Balance


Interest


Rate


Balance


Interest


Rate

Interest earning assets:
























Interest earning cash balances

$
166,426


$
1,022



2.46
%

$
126,372


$
778



2.50
%
Taxable securities


287,607



2,317



3.23
%


275,642



2,169



3.19
%
Tax-exempt securities


61,712



350



2.28
%


88,667



475



2.17
%
FHLB stock


21,851



146



2.67
%


17,860



192



4.36
%
Loans


3,707,987



73,468



7.95
%


3,535,043



69,650



7.99
%
Total interest earning assets

$
4,245,583


$
77,303



7.30
%

$
4,043,584


$
73,264



7.35
%
Non-interest earning assets:
























Other assets


449,064











458,176









Total assets

$
4,694,647










$
4,501,760









Interest bearing liabilities:
























Deposits:
























Interest bearing demand

$
592,593


$
391



0.26
%

$
606,096


$
374



0.25
%
Individual retirement accounts


111,962



437



1.57
%


113,636



405



1.45
%
Money market


419,066



1,473



1.41
%


408,953



1,331



1.32
%
Savings


366,953



120



0.13
%


370,067



123



0.13
%
Certificates of deposit


1,006,950



5,568



2.22
%


834,515



3,965



1.93
%
Brokered deposits


337,086



2,021



2.40
%


353,829



2,020



2.32
%
Total deposits


2,834,610



10,010



1.42
%


2,687,096



8,218



1.24
%
Subordinated notes


48,967



839



6.87
%


48,940



839



6.95
%
Junior subordinated debentures


39,241



744



7.60
%


39,125



760



7.88
%
Other borrowings


368,455



2,291



2.49
%


336,667



2,136



2.57
%
Total interest bearing liabilities

$
3,291,273


$
13,884



1.69
%

$
3,111,828


$
11,953



1.56
%
Non-interest bearing liabilities and equity:
























Non-interest bearing demand deposits


686,923











679,538









Other liabilities


64,104











65,434









Total equity


652,347











644,960









Total liabilities and equity

$
4,694,647










$
4,501,760









Net interest income





$
63,419










$
61,311





Interest spread










5.61
%










5.79
%
Net interest margin










5.99
%










6.15
%

Metrics and non-GAAP financial reconciliation:










As of and for the Three Months Ended


As of and for the Six Months Ended

(Dollars in thousands,

June 30,


March 31,


December 31,


September 30,


June 30,


June 30,


June 30,

except per share amounts)

2019


2019


2018


2018


2018


2019


2018

Net income available to common stockholders

$
12,730


$
14,788


$
18,085


$
8,975


$
12,192


$
27,518


$
24,070

Gain on sale of subsidiary or division


—



—



—



—



—



—



(1,071
)
Transaction related costs


—



—



—



5,871



1,094



—



1,094

Tax effect of adjustments


—



—



—



(1,392
)


(257
)


—



(9
)
Adjusted net income available to common stockholders

$
12,730


$
14,788


$
18,085


$
13,454


$
13,029


$
27,518


$
24,084

Dilutive effect of convertible preferred stock


—



—



—



195



193



—



383

Adjusted net income available to common stockholders - diluted

$
12,730


$
14,788


$
18,085


$
13,649


$
13,222


$
27,518


$
24,467






























Weighted average shares outstanding - diluted


26,486,423



26,793,685



26,979,949



26,991,830



26,315,878



26,638,426



23,950,143

Adjusted effects of assumed Preferred Stock conversion


—



—



—



—



—



—



—

Adjusted weighted average shares outstanding - diluted


26,486,423



26,793,685



26,979,949



26,991,830



26,315,878



26,638,426



23,950,143

Adjusted diluted earnings per common share

$
0.48


$
0.55


$
0.67


$
0.51


$
0.50


$
1.03


$
1.02






























Net income available to common stockholders

$
12,730


$
14,788


$
18,085


$
8,975


$
12,192


$
27,518


$
24,070

Average tangible common equity


456,346



446,571



428,748



470,553



491,492



451,485



409,509

Return on average tangible common equity


11.19
%


13.43
%


16.73
%


7.57
%


9.95
%


12.29
%


11.85
%





























Adjusted efficiency ratio:




























Net interest income

$
63,419


$
61,311


$
64,881


$
61,782


$
53,257


$
124,730


$
100,387

Non-interest income


7,623



7,538



6,794



6,059



4,945



15,161



10,117

Operating revenue


71,042



68,849



71,675



67,841



58,202



139,891



110,504

Gain on sale of subsidiary or division


—



—



—



—



—



—



(1,071
)
Adjusted operating revenue

$
71,042


$
68,849


$
71,675


$
67,841


$
58,202


$
139,891


$
109,433

Non-interest expenses

$
50,704


$
48,566


$
46,962


$
48,946


$
37,403


$
99,270


$
71,445

Transaction related costs


—



—



—



(5,871
)


(1,094
)


—



(1,094
)
Adjusted non-interest expenses

$
50,704


$
48,566


$
46,962


$
43,075


$
36,309


$
99,270


$
70,351

Adjusted efficiency ratio


71.37
%


70.54
%


65.52
%


63.49
%


62.38
%


70.96
%


64.29
%





























Adjusted net non-interest expense to average assets ratio:




























Non-interest expenses

$
50,704


$
48,566


$
46,962


$
48,946


$
37,403


$
99,270


$
71,445

Transaction related costs


—



—



—



(5,871
)


(1,094
)


—



(1,094
)
Adjusted non-interest expenses

$
50,704


$
48,566


$
46,962


$
43,075


$
36,309


$
99,270


$
70,351






























Total non-interest income

$
7,623


$
7,538


$
6,794


$
6,059


$
4,945


$
15,161


$
10,117

Gain on sale of subsidiary or division


—



—



—



—



—



—



(1,071
)
Adjusted non-interest income

$
7,623


$
7,538


$
6,794


$
6,059


$
4,945


$
15,161


$
9,046

Adjusted net non-interest expenses

$
43,081


$
41,028


$
40,168


$
37,016


$
31,364


$
84,109


$
61,305

Average total assets

$
4,694,647


$
4,501,760


$
4,488,918


$
4,060,560


$
3,628,960


$
4,598,735


$
3,520,522

Adjusted net non-interest expense to average assets ratio


3.68
%


3.70
%


3.55
%


3.62
%


3.47
%


3.69
%


3.51
%





























Total stockholders' equity

$
643,362


$
646,216


$
636,607


$
616,641


$
607,225


$
643,362


$
607,225

Preferred stock liquidation preference


—



—



—



(9,658
)


(9,658
)


—



(9,658
)
Total common stockholders' equity


643,362



646,216



636,607



606,983



597,567



643,362



597,567

Goodwill and other intangibles


(194,668
)


(197,015
)


(199,417
)


(201,842
)


(117,777
)


(194,668
)


(117,777
)
Tangible common stockholders' equity

$
448,694


$
449,201


$
437,190


$
405,141


$
479,790


$
448,694


$
479,790

Common shares outstanding


26,198,308



26,709,411



26,949,936



26,279,761



26,260,785



26,198,308



26,260,785

Tangible book value per share

$
17.13


$
16.82


$
16.22


$
15.42


$
18.27


$
17.13


$
18.27






























Total assets at end of period

$
4,783,189


$
4,529,783


$
4,559,779


$
4,537,102


$
3,794,631


$
4,783,189


$
3,794,631

Goodwill and other intangibles


(194,668
)


(197,015
)


(199,417
)


(201,842
)


(117,777
)


(194,668
)


(117,777
)
Tangible assets at period end

$
4,588,521


$
4,332,768


$
4,360,362


$
4,335,260


$
3,676,854


$
4,588,521


$
3,676,854

Tangible common stockholders' equity ratio


9.78
%


10.37
%


10.03
%


9.35
%


13.05
%


9.78
%


13.05
%

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 Six Months Ended



June 30,


March 31,


December 31,


September 30,


June 30,


June 30,


June 30,

(Dollars in thousands)

2019


2019


2018


2018


2018


2019


2018

Loan discount accretion

$
1,297


$
1,557


$
1,411


$
1,271


$
3,637


$
2,854


$
5,614

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, Marketing & Communication
atavackoli@tbkbank.com
214-365-6930

Company Name:	Triumph Bancorp Inc.
Stock Symbol:	TBK
Market:	NASDAQ

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