TBK - Triumph Bancorp Reports Second Quarter Net Income to Common Stockholders of $13.4 Million

July, 20 2020 04:07 PM Triumph Bancorp Inc.

DALLAS, July 20, 2020 (GLOBE NEWSWIRE) -- Triumph Bancorp, Inc. (Nasdaq: TBK) (“Triumph” or the “Company”) today announced earnings and operating results for the second 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 Second Quarter Highlights

For the second quarter of 2020, net income available to common stockholders was $13.4 million. Diluted earnings per share were $0.56.
Adjusted diluted earnings per share were $0.25 for the quarter ended June 30, 2020, which exclude the gain on sale of Triumph Premium Finance, net of taxes.
For the quarter ended June 30, 2020, we recorded $13.6 million of total credit loss expense, including $11.0 million of credit loss expense related to our loan portfolio, $0.9 million of credit loss expense related to off balance sheet loan commitments, and $1.7 million of credit loss expense related to held to maturity securities. Regarding the $11.0 million credit loss expense on our loan portfolio:

° Further deterioration in our macroeconomic forecasts to reflect expected economic impact of COVID-19 resulted in approximately $12.2 million of credit loss expense.

° Changes in the volume and mix of our loan portfolio provided a benefit of $4.0 million to credit loss expense. Net charge offs were $1.1 million and the increase in specific reserves was $1.7 million.

° Our ACL as a percentage of loans held for investment increased 20 basis points during the quarter to 1.24% at June 30, 2020.

As of June 30, 2020, the Company’s balance sheet reflected short-term deferrals on outstanding loan balances of $571.8 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 June 30, 2020, these deferred balances carried accrued interest of $6.0 million.
As of June 30, 2020, the Company has closed 1,937 PPP loans representing a balance of $219.1 million classified as commercial loans at June 30, 2020. The Company has received approximately $7.3 million in total fees from the SBA, $1.4 million of which were recognized in earnings during the three months ended June 30, 2020. The remaining fees will be amortized over the respective lives of the loans.
Net interest margin (“NIM”) was 5.11% for the quarter ended June 30, 2020.
Total loans held for investment increased $72.8 million, or 1.7%, to $4.393 billion at June 30, 2020. Average loans for the quarter increased $363.8 million, or 9.0%, to $4.410 billion.
The total dollar value of invoices purchased by Triumph Business Capital for the quarter ended June 30, 2020 was $1.238 billion with an average invoice size of $1,524. The transportation average invoice size for the quarter was $1,378.
For the quarter ended June 30, 2020, TriumphPay processed 767,180 invoices paying 51,331 distinct carriers a total of $667.4 million.
On June 19, 2020, we issued 45,000 shares of 7.125% Series C Fixed-Rate Non-Cumulative Perpetual Preferred Stock, par value $0.01 per share, with a liquidation preference of $1,000 per share through an underwritten public offering of 1,800,000 depository shares, each representing a 1/40^th ownership interest in a share of the Series C Preferred Stock. Total gross proceeds from the preferred stock offering were $45.0 million. Net proceeds after underwriting discounts and offering expenses were $42.4 million. The net proceeds will be used for general corporate purposes. This transaction as well as current period earnings improved our capital ratios at June 30, 2020 as compared to the prior quarter.
On April 20, 2020, we entered into an agreement to sell the assets (the “Disposal Group”) of Triumph Premium Finance (“TPF”) and exit our premium finance line of business. The transaction closed on June 30, 2020, and the assets of the Disposal Group, consisting primarily of $84.5 million of premium finance loans, were sold for a gain on sale of $9.8 million, or $7.3 million net of taxes.

Balance Sheet

Total loans held for investment increased $72.8 million, or 1.7%, during the second quarter to $4.393 billion at June 30, 2020. The national lending portfolio increased $157.3 million, or 17.3%, to $1,068.9 million, the community banking portfolio increased $76.1 million, or 3.8%, to $2.099 billion, and the commercial finance portfolio decreased $160.6 million, or 11.6%, to $1.225 billion during the quarter.

Total deposits were $4.062 billion at June 30, 2020, an increase of $380.3 million, or 10.3%, in the second quarter of 2020. Non-interest-bearing deposits accounted for 28% of total deposits and non-time deposits accounted for 68% of total deposits at June 30, 2020.

Net Interest Income

We earned net interest income for the quarter ended June 30, 2020 of $64.3 million compared to $62.5 million for the quarter ended March 31, 2020.

Yields on loans for the quarter ended June 30, 2020 were down 70 bps from the prior quarter to 6.52%. The average cost of our total deposits was 0.79% for the quarter ended June 30, 2020 compared to 1.05% for the quarter ended March 31, 2020.

Asset Quality

Non-performing assets were 1.20% of total assets at June 30, 2020 compared to 1.09% of total assets at March 31, 2020. Approximately 14 basis points of this ratio at June 30, 2020 consists of $8.1 million of held to maturity investments in the subordinated notes of collateralized loan obligation that were placed on nonaccrual during the quarter.

The ratio of past due to total loans decreased to 1.50% at June 30, 2020 from 1.99% at March 31, 2020. We recorded total net charge-offs of $1.1 million, or 0.02% of average loans, for the quarter ended June 30, 2020 compared to net charge-offs of $1.5 million, or 0.04% of average loans, for the quarter ended March 31, 2020.

Non-Interest Income and Expense

We earned non-interest income for the quarter ended June 30, 2020 of $20.0 million compared to $7.5 million for the quarter ended March 31, 2020. Excluding the gain on sale of TPF, we earned adjusted noninterest income of $10.2 million for the three months ended June 30, 2020.

For the quarter ended June 30, 2020, non-interest expense totaled $52.7 million. Non-interest expense for the quarter ended March 31, 2020 was $54.8 million.

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 Tuesday, July 21, 2020. 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/tbk200721.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 and any future acquisitions; our ability to successfully identify and address the risks associated with our possible future acquisitions, and the risks that our prior and possible future acquisitions make it more difficult for investors to evaluate our business, financial condition and results of operations, and impairs our ability to accurately forecast our future performance; lack of liquidity; fluctuations in the fair value and liquidity of the securities we hold for sale; impairment of investment securities, goodwill, other intangible assets or deferred tax assets; our risk management strategies; environmental liability associated with our lending activities; increased competition in the bank and non-bank financial services industries, nationally, regionally or locally, which may adversely affect pricing and terms; the accuracy of our financial statements and related disclosures; material weaknesses in our internal control over financial reporting; system failures or failures to prevent breaches of our network security; the institution and outcome of litigation and other legal proceedings against us or to which we become subject; changes in carry-forwards of net operating losses; changes in federal tax law or policy; the impact of recent and future legislative and regulatory changes, including changes in banking, securities and tax laws and regulations, such as the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) and their application by our regulators; governmental monetary and fiscal policies; changes in the scope and cost of FDIC, insurance and other coverages; failure to receive regulatory approval for future acquisitions; and increases in our capital requirements.

While forward-looking statements reflect our good-faith beliefs, they are not guarantees of future performance. All forward-looking statements are necessarily only estimates of future results. Accordingly, actual results may differ materially from those expressed in or contemplated by the particular forward-looking statement, and, therefore, you are cautioned not to place undue reliance on such statements. Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events or circumstances, except as required by applicable law. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see "Risk Factors" and the forward-looking statement disclosure contained in Triumph’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission on February 11, 2020 and its Quarterly Report on Form 10-Q, filed with the SEC on April 21, 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 Six Months Ended


June 30,


March 31,


December 31,


September 30,


June 30,


June 30,


June 30,

(Dollars in thousands)
2020


2020


2019


2019


2019


2020


2019

Financial Highlights:



























Total assets
$
5,617,493


$
5,353,729


$
5,060,297


$
5,039,697


$
4,783,189


$
5,617,493


$
4,783,189

Loans held for investment
$
4,393,311


$
4,320,548


$
4,194,512


$
4,209,417


$
3,835,903


$
4,393,311


$
3,835,903

Deposits
$
4,062,332


$
3,682,015


$
3,789,906


$
3,697,833


$
3,658,978


$
4,062,332


$
3,658,978

Net income available to common stockholders
$
13,440


$
(4,450
)

$
16,709


$
14,317


$
12,730


$
8,990


$
27,518





























Performance Ratios - Annualized:



























Return on average assets

0.99
%


(0.36
%)


1.31
%


1.17
%


1.09
%


0.35
%


1.21
%
Return on average total equity

8.86
%


(2.85
%)


10.24
%


8.79
%


7.83
%


2.92
%


8.55
%
Return on average common equity

8.94
%


(2.85
%)


10.24
%


8.79
%


7.83
%


2.94
%


8.55
%
Return on average tangible common equity ⁽¹⁾

12.96
%


(4.09
%)


14.54
%


12.56
%


11.19
%


4.23
%


12.29
%
Yield on loans⁽²⁾

6.52
%


7.22
%


7.48
%


7.63
%


7.95
%


6.85
%


7.97
%
Cost of interest bearing deposits

1.08
%


1.34
%


1.45
%


1.49
%


1.42
%


1.21
%


1.33
%
Cost of total deposits

0.79
%


1.05
%


1.15
%


1.19
%


1.14
%


0.92
%


1.07
%
Cost of total funds

0.85
%


1.23
%


1.35
%


1.41
%


1.40
%


1.03
%


1.34
%
Net interest margin⁽²⁾

5.11
%


5.63
%


5.72
%


5.85
%


5.99
%


5.36
%


6.07
%
Net non-interest expense to average assets

2.40
%


3.88
%


3.46
%


3.64
%


3.68
%


3.09
%


3.69
%
Adjusted net non-interest expense to average assets ⁽¹⁾

3.11
%


3.88
%


3.46
%


3.64
%


3.68
%


3.47
%


3.69
%
Efficiency ratio

62.56
%


78.24
%


70.15
%


71.93
%


71.37
%


69.68
%


70.96
%
Adjusted efficiency ratio⁽¹⁾

70.75
%


78.24
%


70.15
%


71.93
%


71.37
%


74.38
%


70.96
%




























Asset Quality:⁽³⁾



























Past due to total loans⁽⁴⁾

1.50
%


1.99
%


1.74
%


1.91
%


1.60
%


1.50
%


1.60
%
Non-performing loans to total loans

1.27
%


1.26
%


0.97
%


1.00
%


0.96
%


1.27
%


0.96
%
Non-performing assets to total assets

1.20
%


1.09
%


0.87
%


0.91
%


0.86
%


1.20
%


0.86
%
ACL to non-performing loans⁽⁵⁾

97.66
%


82.37
%


71.63
%


75.58
%


79.91
%


97.66
%


79.91
%
ACL to total loans⁽⁵⁾

1.24
%


1.04
%


0.69
%


0.76
%


0.77
%


1.24
%


0.77
%
Net charge-offs to average loans

0.02
%


0.04
%


0.08
%


0.01
%


0.05
%


0.06
%


0.08
%




























Capital:



























Tier 1 capital to average assets⁽⁶⁾

9.98
%


9.62
%


10.03
%


10.37
%


10.84
%


9.98
%


10.84
%
Tier 1 capital to risk-weighted assets⁽⁶⁾

10.57
%


9.03
%


10.29
%


10.08
%


11.08
%


10.57
%


11.08
%
Common equity tier 1 capital to risk-weighted assets⁽⁶⁾

8.84
%


8.24
%


9.46
%


9.26
%


10.19
%


8.84
%


10.19
%
Total capital to risk-weighted assets⁽⁵⁾

13.44
%


11.63
%


12.76
%


11.79
%


12.88
%


13.44
%


12.88
%
Total equity to total assets

11.69
%


11.01
%


12.58
%


12.57
%


13.45
%


11.69
%


13.45
%
Tangible common stockholders' equity to tangible assets⁽¹⁾

7.84
%


7.77
%


9.16
%


9.10
%


9.78
%


7.84
%


9.78
%




























Per Share Amounts:



























Book value per share
$
25.28


$
24.45


$
25.50


$
24.99


$
24.56


$
25.28


$
24.56

Tangible book value per share⁽¹⁾
$
17.59


$
16.64


$
17.88


$
17.40


$
17.13


$
17.59


$
17.13

Basic earnings (loss) per common share
$
0.56


$
(0.18
)

$
0.67


$
0.56


$
0.48


$
0.37


$
1.04

Diluted earnings (loss) per common share
$
0.56


$
(0.18
)

$
0.66


$
0.56


$
0.48


$
0.37


$
1.03

Adjusted diluted earnings per common share⁽¹⁾
$
0.25


$
(0.18
)

$
0.66


$
0.56


$
0.48


$
0.07


$
1.03

Shares outstanding end of period

24,202,686



24,101,120



24,964,961



25,357,985



26,198,308



24,202,686



26,198,308

Unaudited consolidated balance sheet as of:

















June 30,


March 31,


December 31,


September 30,


June 30,

(Dollars in thousands)
2020


2020


2019


2019


2019

ASSETS



















Total cash and cash equivalents
$
437,064


$
208,414


$
197,880


$
115,043


$
209,305

Securities - available for sale

331,126



302,122



248,820



302,917



329,991

Securities - held to maturity

6,285



8,217



8,417



8,517



8,573

Equity securities

6,411



5,678



5,437



5,543



5,479

Loans held for sale

50,382



4,431



2,735



7,499



2,877

Loans held for investment

4,393,311



4,320,548



4,194,512



4,209,417



3,835,903

Allowance for credit losses

(54,613
)


(44,732
)


(29,092
)


(31,895
)


(29,416
)
Loans, net

4,338,698



4,275,816



4,165,420



4,177,522



3,806,487

Assets held for sale

—



97,895



—



—



—

FHLB and other restricted stock

26,345



37,080



19,860



23,960



18,037

Premises and equipment, net

107,736



98,363



96,595



87,112



84,998

Other real estate owned ("OREO"), net

1,962



2,540



3,009



2,849



3,351

Goodwill and intangible assets, net

186,162



188,208



190,286



192,440



194,668

Bank-owned life insurance

41,298



41,122



40,954



40,724



40,847

Deferred tax asset, net

8,544



9,457



3,812



5,971



7,278

Other assets

75,480



74,386



77,072



69,600



71,298

Total assets
$
5,617,493


$
5,353,729


$
5,060,297


$
5,039,697


$
4,783,189

LIABILITIES



















Non-interest bearing deposits
$
1,120,949


$
846,412


$
809,696


$
754,233


$
684,223

Interest bearing deposits

2,941,383



2,835,603



2,980,210



2,943,600



2,974,755

Total deposits

4,062,332



3,682,015



3,789,906



3,697,833



3,658,978

Customer repurchase agreements

6,732



3,693



2,033



14,124



12,788

Federal Home Loan Bank advances

455,000



850,000



430,000



530,000



305,000

Payment Protection Program Liquidity Facility

223,809



—



—



—



—

Subordinated notes

87,402



87,347



87,327



49,010



48,983

Junior subordinated debentures

39,816



39,689



39,566



39,443



39,320

Other liabilities

85,531



101,638



74,875



75,594



74,758

Total liabilities

4,960,622



4,764,382



4,423,707



4,406,004



4,139,827

EQUITY



















Preferred Stock

45,000



—



—



—



—

Common stock

273



272



272



272



271

Additional paid-in-capital

472,795



474,441



473,251



472,368



471,145

Treasury stock, at cost

(102,888
)


(102,677
)


(67,069
)


(52,632
)


(27,468
)
Retained earnings

236,249



222,809



229,030



212,321



198,004

Accumulated other comprehensive income (loss)

5,442



(5,498
)


1,106



1,364



1,410

Total stockholders' equity

656,871



589,347



636,590



633,693



643,362

Total liabilities and equity
$
5,617,493


$
5,353,729


$
5,060,297


$
5,039,697


$
4,783,189

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)
2020


2020


2019


2019


2019


2020


2019

Interest income:



























Loans, including fees
$
50,394


$
48,323


$
52,395


$
50,249


$
47,910


$
98,717


$
93,004

Factored receivables, including fees

21,101



24,292



25,573



25,570



25,558



45,393



50,114

Securities

2,676



2,107



2,379



2,784



2,667



4,783



5,311

FHLB and other restricted stock

148



204



165



209



146



352



338

Cash deposits

79



488



659



603



1,022



567



1,800

Total interest income

74,398



75,414



81,171



79,415



77,303



149,812



150,567

Interest expense:



























Deposits

7,584



9,677



10,961



11,036



10,010



17,261



18,228

Subordinated notes

1,321



1,347



1,035



840



839



2,668



1,678

Junior subordinated debentures

554



646



687



719



744



1,200



1,504

Other borrowings

688



1,244



2,080



2,055



2,291



1,932



4,427

Total interest expense

10,147



12,914



14,763



14,650



13,884



23,061



25,837

Net interest income

64,251



62,500



66,408



64,765



63,419



126,751



124,730

Credit loss expense

13,609



20,298



382



2,865



3,681



33,907



4,695

Net interest income after credit loss expense

50,642



42,202



66,026



61,900



59,738



92,844



120,035

Non-interest income:



























Service charges on deposits

573



1,588



1,889



1,937



1,700



2,161



3,306

Card income

1,941



1,800



1,943



2,015



2,071



3,741



3,915

Net OREO gains (losses) and valuation adjustments

(101
)


(257
)


50



(56
)


148



(358
)


357

Net gains (losses) on sale of securities

63



38



39



19



14



101



3

Fee income

1,304



1,686



1,686



1,624



1,519



2,990



3,131

Insurance commissions

864



1,051



1,092



1,247



961



1,915



1,880

Gain on sale of subsidiary

9,758



—



—



—



—



9,758



—

Other

5,627



1,571



1,967



956



1,210



7,198



2,569

Total non-interest income

20,029



7,477



8,666



7,742



7,623



27,506



15,161

Non-interest expense:



























Salaries and employee benefits

30,804



30,722



29,586



28,717



28,120



61,526



54,559

Occupancy, furniture and equipment

4,964



5,182



4,667



4,505



4,502



10,146



9,024

FDIC insurance and other regulatory assessments

495



315



(302
)


(2
)


303



810



602

Professional fees

1,651



2,107



1,904



1,969



1,550



3,758



3,415

Amortization of intangible assets

2,046



2,078



2,154



2,228



2,347



4,124



4,749

Advertising and promotion

1,151



1,292



1,347



1,379



1,796



2,443



3,400

Communications and technology

5,444



5,501



5,732



5,382



4,988



10,945



9,862

Other

6,171



7,556



7,573



7,975



7,098



13,727



13,659

Total non-interest expense

52,726



54,753



52,661



52,153



50,704



107,479



99,270

Net income (loss) before income tax

17,945



(5,074
)


22,031



17,489



16,657



12,871



35,926

Income tax expense (benefit)

4,505



(624
)


5,322



3,172



3,927



3,881



8,408

Net income (loss)
$
13,440


$
(4,450
)

$
16,709


$
14,317


$
12,730


$
8,990


$
27,518

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)
2020


2020


2019


2019


2019


2020


2019

Basic



























Net income (loss) to common stockholders
$
13,440


$
(4,450
)

$
16,709


$
14,317


$
12,730


$
8,990


$
27,518

Weighted average common shares outstanding

23,987,049



24,314,329



25,089,447



25,621,054



26,396,351



24,150,689



26,537,255

Basic earnings (loss) per common share
$
0.56


$
(0.18
)

$
0.67


$
0.56


$
0.48


$
0.37


$
1.04





























Diluted



























Net income (loss) to common stockholders - diluted
$
13,440


$
(4,450
)

$
16,709


$
14,317


$
12,730


$
8,990


$
27,518

Weighted average common shares outstanding

23,987,049



24,314,329



25,089,447



25,621,054



26,396,351



24,150,689



26,537,255

Dilutive effects of:



























Assumed exercises of stock options

38,627



—



69,865



60,068



59,962



55,753



61,819

Restricted stock awards

37,751



—



70,483



45,631



30,110



66,364



39,352

Restricted stock units

4,689



—



13,264



3,045



—



13,255



—

Performance stock units - market based

6,326



—



11,803



4,673



—



8,446



—

Performance stock units - performance based

—



—



—



—



—



—



—

Weighted average shares outstanding - diluted

24,074,442



24,314,329



25,254,862



25,734,471



26,486,423



24,294,507



26,638,426

Diluted earnings (loss) per common share
$
0.56


$
(0.18
)

$
0.66


$
0.56


$
0.48


$
0.37


$
1.03





























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,


2020


2020


2019


2019


2019


2020


2019

Stock options

148,528



225,055



66,019



67,023



70,037



98,956



70,037

Restricted stock awards

109,834



147,748



—



3,209



—



—



—

Restricted stock units

38,801



55,228



—



—



58,400



—



58,400

Performance stock units - market based

76,461



67,707



55,228



55,228



70,879



76,461



70,879

Performance stock units - performance based

262,625



254,000



254,000



—



—



262,625



—

Loans held for investment summarized as of:

















June 30,


March 31,


December 31,


September 30,


June 30,

(Dollars in thousands)
2020


2020


2019


2019


2019

Commercial real estate
$
910,261


$
985,757


$
1,046,961


$
1,115,559


$
1,098,279

Construction, land development, land

213,617



198,050



160,569



164,186



157,861

1-4 family residential properties

168,707



169,703



179,425



186,405



186,070

Farmland

125,259



133,579



154,975



161,447



144,594

Commercial

1,518,656



1,412,822



1,342,683



1,369,505



1,257,330

Factored receivables

561,576



661,100



619,986



599,651



583,131

Consumer

18,450



20,326



21,925



24,967



26,048

Mortgage warehouse

876,785



739,211



667,988



587,697



382,590

Total loans
$
4,393,311


$
4,320,548


$
4,194,512


$
4,209,417


$
3,835,903

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)
2020


2020


2019


2019


2019

Commercial - Equipment
$
487,145


$
479,483


$
461,555


$
429,412


$
395,094

Commercial - Asset-based lending

176,235



245,001



168,955



247,026



208,896

Factored receivables

561,576



661,100



619,986



599,651



583,131

Commercial finance
$
1,224,956


$
1,385,584


$
1,250,496


$
1,276,089


$
1,187,121





















Commercial finance % of total loans

28
%


32
%


30
%


30
%


31
%

National lending loans are further summarized below:

















June 30,


March 31,


December 31,


September 30,


June 30,

(Dollars in thousands)
2020


2020


2019


2019


2019

Mortgage warehouse
$
876,785


$
739,211


$
667,988


$
587,697


$
382,590

Commercial - Liquid credit

192,118



172,380



81,353



37,386



21,758

Commercial - Premium finance

—



—



101,015



101,562



72,898

National lending
$
1,068,903


$
911,591


$
850,356


$
726,645


$
477,246





















National lending % of total loans

24
%


21
%


20
%


17
%


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)
2020


2020


2019


2019


2019

Average community banking
$
2,111,615


$
2,041,256


$
2,170,149


$
2,193,533


$
2,166,122

Average commercial finance

1,259,584



1,292,749



1,260,000



1,208,823



1,168,110

Average national lending

1,038,476



711,837



704,244



541,367



373,755

Average total loans
$
4,409,675


$
4,045,842


$
4,134,393


$
3,943,723


$
3,707,987

Community banking yield

5.23
%


5.67
%


5.89
%


5.79
%


5.88
%
Commercial finance yield

10.21
%


11.00
%


11.64
%


12.31
%


12.52
%
National lending yield

4.67
%


4.80
%


4.96
%


4.63
%


5.62
%
Total loan yield

6.52
%


7.22
%


7.48
%


7.63
%


7.95
%

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,


2020


2020


2019


2019


2019

Factored receivable period end balance
$
528,379,000


$
641,366,000


$
573,372,000


$
562,009,000


$
544,601,000

Yield on average receivable balance

15.48
%


16.13
%


17.20
%


18.23
%


18.73
%
Rolling twelve quarter annual charge-off rate

0.43
%


0.42
%


0.39
%


0.36
%


0.40
%
Factored receivables - transportation concentration

85
%


80
%


81
%


83
%


83
%




















Interest income, including fees
$
20,387,000


$
23,497,000


$
24,813,000


$
24,869,000


$
24,762,000

Non-interest income

1,072,000



1,296,000



1,154,000



1,291,000



1,205,000

Factored receivable total revenue

21,459,000



24,793,000



25,967,000



26,160,000



25,967,000

Average net funds employed

477,112,000



537,138,000



524,546,000



494,198,000



483,203,000

Yield on average net funds employed

18.09
%


18.56
%


19.64
%


21.00
%


21.55
%




















Accounts receivable purchased
$
1,238,465,000


$
1,450,618,000


$
1,489,538,000


$
1,450,905,000


$
1,408,982,000

Number of invoices purchased

812,902



878,767



896,487



890,986



874,248

Average invoice size
$
1,524


$
1,651


$
1,662


$
1,628


$
1,612

Average invoice size - transportation
$
1,378


$
1,481


$
1,507


$
1,497


$
1,492

Average invoice size - non-transportation
$
4,486


$
4,061


$
3,891


$
3,467


$
3,047

Deposits summarized as of:

















June 30,


March 31,


December 31,


September 30,


June 30,

(Dollars in thousands)
2020


2020


2019


2019


2019

Non-interest bearing demand
$
1,120,949


$
846,412


$
809,696


$
754,233


$
684,223

Interest bearing demand

648,309



583,445



580,323



587,123



587,164

Individual retirement accounts

97,388



101,743



104,472



108,593



111,328

Money market

397,914



412,376



497,105



424,162



440,289

Savings

391,624



367,163



363,270



356,368



362,594

Certificates of deposit

937,766



1,056,012



1,084,425



1,120,850



1,122,873

Brokered time deposits

258,378



314,864



350,615



346,504



350,507

Other brokered deposits

210,004



—



—



—



—

Total deposits
$
4,062,332


$
3,682,015


$
3,789,906


$
3,697,833


$
3,658,978

Net interest margin summarized for the three months ended:








June 30, 2020


March 31, 2020


Average






Average


Average






Average

(Dollars in thousands)
Balance


Interest


Rate


Balance


Interest


Rate

Interest earning assets:























Interest earning cash balances
$
262,615


$
79



0.12
%

$
141,123


$
488



1.39
%
Taxable securities

303,519



2,400



3.18
%


228,996



1,955



3.43
%
Tax-exempt securities

43,796



276



2.53
%


25,925



152



2.36
%
FHLB and other restricted stock

36,375



148



1.64
%


21,098



204



3.89
%
Loans

4,409,675



71,495



6.52
%


4,045,842



72,615



7.22
%
Total interest earning assets
$
5,055,980


$
74,398



5.92
%

$
4,462,984


$
75,414



6.80
%
Non-interest earning assets:























Other assets

431,092











443,563









Total assets
$
5,487,072










$
4,906,547









Interest bearing liabilities:























Deposits:























Interest bearing demand
$
630,023


$
287



0.18
%

$
586,671


$
344



0.24
%
Individual retirement accounts

100,211



359



1.44
%


103,351



402



1.56
%
Money market

398,276



363



0.37
%


441,815



1,031



0.94
%
Savings

382,521



144



0.15
%


363,888



124



0.14
%
Certificates of deposit

1,008,644



5,055



2.02
%


1,068,023



6,006



2.26
%
Brokered time deposits

301,262



1,374



1.83
%


344,847



1,770



2.06
%
Other brokered deposits

4,670



2



0.17
%


—



—



—

Total interest bearing deposits

2,825,607



7,584



1.08
%


2,908,595



9,677



1.34
%
Federal Home Loan Bank advances

678,225



572



0.34
%


359,286



1,243



1.39
%
Subordinated notes

87,368



1,321



6.08
%


87,323



1,347



6.20
%
Junior subordinated debentures

39,745



554



5.61
%


39,609



646



6.56
%
Other borrowings

137,045



116



0.34
%


2,710



1



0.15
%
Total interest bearing liabilities
$
3,767,990


$
10,147



1.08
%

$
3,397,523


$
12,914



1.53
%
Non-interest bearing liabilities and equity:























Non-interest bearing demand deposits

1,038,979











810,654









Other liabilities

69,845











71,001









Total equity

610,258











627,369









Total liabilities and equity
$
5,487,072










$
4,906,547









Net interest income




$
64,251










$
62,500





Interest spread









4.84
%










5.27
%
Net interest margin









5.11
%










5.63
%

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 Six Months Ended

(Dollars in thousands,

June 30,


March 31,


December 31,


September 30,


June 30,


June 30,


June 30,

except per share amounts)

2020


2020


2019


2019


2019


2020


2019

Net income available to common stockholders

$
13,440


$
(4,450
)

$
16,709


$
14,317


$
12,730


$
8,990


$
27,518

Gain on sale of subsidiary or division


(9,758
)


—



—



—



—



(9,758
)


—

Tax effect of adjustments


2,451



—



—



—



—



2,451



—

Adjusted net income available to common stockholders - diluted

$
6,133


$
(4,450
)

$
16,709


$
14,317


$
12,730


$
1,683


$
27,518






























Weighted average shares outstanding - diluted


24,074,442



24,314,329



25,254,862



25,734,471



26,486,423



24,294,507



26,638,426

Adjusted diluted earnings per common share

$
0.25


$
(0.18
)

$
0.66


$
0.56


$
0.48


$
0.07


$
1.03






























Average total stockholders' equity

$
610,258


$
627,369


$
647,546


$
646,041


$
652,347


$
618,808


$
648,674

Average preferred stock liquidation preference


(5,934
)


—



—



—



—



(2,967
)


—

Average total common stockholders' equity


604,324



627,369



647,546



646,041



652,347



615,841



648,674

Average goodwill and other intangibles


(187,255
)


(189,359
)


(191,551
)


(193,765
)


(196,001
)


(188,307
)


(197,189
)
Average tangible common stockholders' equity

$
417,069


$
438,010


$
455,995


$
452,276


$
456,346


$
427,534


$
451,485






























Net income (loss)

$
13,440


$
(4,450
)

$
16,709


$
14,317


$
12,730


$
8,990


$
27,518

Average tangible common equity


417,069



438,010



455,995



452,276



456,346



427,534



451,485

Return on average tangible common equity


12.96
%


(4.09
%)


14.54
%


12.56
%


11.19
%


4.23
%


12.29
%





























Net interest income

$
64,251


$
62,500


$
66,408


$
64,765


$
63,419


$
126,751


$
124,730

Non-interest income


20,029



7,477



8,666



7,742



7,623



27,506



15,161

Operating revenue


84,280



69,977



75,074



72,507



71,042



154,257



139,891

Gain on sale of subsidiary or division


(9,758
)


—



—



—



—



(9,758
)


—

Adjusted operating revenue

$
74,522


$
69,977


$
75,074


$
72,507


$
71,042


$
144,499


$
139,891

Non-interest expenses

$
52,726


$
54,753


$
52,661


$
52,153


$
50,704


$
107,479


$
99,270

Adjusted efficiency ratio


70.75
%


78.24
%


70.15
%


71.93
%


71.37
%


74.38
%


70.96
%





























Adjusted net non-interest expense to average assets ratio:




























Non-interest expenses

$
52,726


$
54,753


$
52,661


$
52,153


$
50,704


$
107,479


$
99,270






























Total non-interest income

$
20,029


$
7,477


$
8,666


$
7,742


$
7,623


$
27,506


$
15,161

Gain on sale of subsidiary or division


(9,758
)


—



—



—



—



(9,758
)


—

Adjusted non-interest income

$
10,271


$
7,477


$
8,666


$
7,742


$
7,623


$
17,748


$
15,161

Adjusted net non-interest expenses

$
42,455


$
47,276


$
43,995


$
44,411


$
43,081


$
89,731


$
84,109

Average total assets

$
5,487,072


$
4,906,547


$
5,050,860


$
4,840,540


$
4,694,647


$
5,196,815


$
4,598,735

Adjusted net non-interest expense to average assets ratio


3.11
%


3.88
%


3.46
%


3.64
%


3.68
%


3.47
%


3.69
%





























Total stockholders' equity

$
656,871


$
589,347


$
636,590


$
633,693


$
643,362


$
656,871


$
643,362

Preferred stock liquidation preference


(45,000
)


—



—



—



—



(45,000
)


—

Total common stockholders' equity


611,871



589,347



636,590



633,693



643,362



611,871



643,362

Goodwill and other intangibles


(186,162
)


(188,208
)


(190,286
)


(192,440
)


(194,668
)


(186,162
)


(194,668
)
Tangible common stockholders' equity

$
425,709


$
401,139


$
446,304


$
441,253


$
448,694


$
425,709


$
448,694

Common shares outstanding


24,202,686



24,101,120



24,964,961



25,357,985



26,198,308



24,202,686



26,198,308

Tangible book value per share

$
17.59


$
16.64


$
17.88


$
17.40


$
17.13


$
17.59


$
17.13






























Total assets at end of period

$
5,617,493


$
5,353,729


$
5,060,297


$
5,039,697


$
4,783,189


$
5,617,493


$
4,783,189

Goodwill and other intangibles


(186,162
)


(188,208
)


(190,286
)


(192,440
)


(194,668
)


(186,162
)


(194,668
)
Tangible assets at period end

$
5,431,331


$
5,165,521


$
4,870,011


$
4,847,257


$
4,588,521


$
5,431,331


$
4,588,521

Tangible common stockholders' equity ratio


7.84
%


7.77
%


9.16
%


9.10
%


9.78
%


7.84
%


9.78
%

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)
2020


2020


2019


2019


2019


2020


2019

Loan discount accretion
$
2,139


$
2,134


$
1,555


$
1,159


$
1,297


$
4,273


$
2,854

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

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

Twitter