DALLAS, Oct. 19, 2020 (GLOBE NEWSWIRE) -- Triumph Bancorp, Inc. (Nasdaq: TBK) (“Triumph” or the “Company”) today announced earnings and operating results for the third 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 Third Quarter Highlights

  • For the third quarter of 2020, net income available to common stockholders was $22.0 million. Diluted earnings per share were $0.89.
  • Adjusted diluted earnings per share were $0.91 for the quarter ended September 30, 2020, which exclude transaction costs related to the acquisition of Transport Financial Solutions (“TFS”), net of taxes.
  • On July 8, 2020, we acquired the transportation factoring assets (the “TFS Acquisition”) of Transport Financial Solutions (“TFS”), a wholly owned subsidiary of Covenant Logistics Group, Inc. ("CVLG"). Details of the TFS Acquisition can be found in our SEC Form 8-K filed on July 13, 2020. On September 23, 2020, we entered into an Account Management Agreement, Amendment to Purchase Agreement and Mutual Release (the “Agreement”) with Covenant Transport Solutions, LLC (“CTS”) and CVLG the details of which can be found in our SEC Form 8-K filed on September 23, 2020. The TFS Acquisition and subsequent Agreement resulted in our acquisition of $101.9 million of net factored receivables, a purchase credit deteriorated (“PCD”) allowance for credit loss (“ACL”) of $37.4 million, an indemnification asset of $31.2 million, a net deferred tax asset of $1.4 million, and $8.0 million of intangible assets including $4.5 million of goodwill. Total consideration paid was $105.1 million. Further details regarding the transaction can be found in the appendix to the accompanying investor deck.
  • For the quarter ended September 30, 2020, we recorded a $0.3 million benefit to total credit loss expense, comprised of a $0.4 million benefit to credit loss expense related to our loan portfolio and $0.1 million of credit loss expense related to held to maturity securities. Credit loss expense related to off balance sheet loan commitments was insignificant for the quarter. Regarding the $0.4 million benefit to credit loss expense on our loan portfolio:
    • Our macroeconomic forecasts did not change materially from the prior quarter and resulted in credit loss expense of approximately $0.6 million.
    • Changes in the volume and mix of our loan portfolio provided a benefit of $1.7 million to credit loss expense. Net charge offs were $0.7 million and the increase in non-purchase credit deteriorated specific reserves was $0.1 million.
    • Our ACL as a percentage of loans held for investment increased 64 basis points during the quarter to 1.88% at September 30, 2020. We recorded PCD specific reserves of $37.4 million during the quarter on the Over-Formula Advance Portfolio obtained through the TFS Acquisition, which contributed 77 basis points to the ratio at September 30, 2020. The PCD reserves were recorded through purchase accounting and had no impact on our credit loss expense for the quarter.
  • As of September 30, 2020, the Company’s balance sheet reflected short-term deferrals on outstanding loan balances of $103.0 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 September 30, 2020, these deferred balances carried accrued interest of $0.7 million.
  • As of September 30, 2020, the Company carried 2,080 PPP loans representing a balance of $223.2 million classified as commercial loans. The Company has received approximately $7.7 million in total fees from the SBA, $1.2 million and $2.6 million of which were recognized in earnings during the three and nine months ended September 30, 2020, respectively. The remaining fees will be amortized over the respective lives of the loans.
  • Net interest margin (“NIM”) was 5.83% for the quarter ended September 30, 2020.
  • Included in noninterest income for the quarter ended September 30, 2020 was a $3.1 million gain on sale of securities and a $2.0 million gain recognized on the increased value of the receivable due from CVLG resulting from the Agreement. These gains were partially offset by a $0.7 million loss recognized on the donation of a branch to a local municipality during the same period.
  • Total loans held for investment increased $459.6 million, or 10.5%, to $4.853 billion at September 30, 2020. Average loans for the quarter increased $116.4 million, or 2.6%, to $4.526 billion. The increase in total loans reflects $107.5 million of factored receivables purchased through the TFS Acquisition. Excluding the TFS Acquisition, organic growth in factored receivables was $347.2 million, or 61.8%, during the three months ended September 30, 2020.
  • Triumph Business Capital and TriumphPay processed a combined $2.920 billion in invoice payments for the quarter ended September 30, 2020.
  • The total dollar value of invoices purchased by Triumph Business Capital for the quarter ended September 30, 2020 was $1.984 billion with an average invoice size of $1,931. The transportation average invoice size for the quarter was $1,787.
  • For the quarter ended September 30, 2020, TriumphPay processed 1,364,606 invoices paying 57,953 distinct carriers a total of $1.161 billion.

Balance Sheet

Total loans held for investment increased $459.6 million, or 10.5%, during the third quarter to $4.853 billion at September 30, 2020. The national lending portfolio increased $118.9 million, or 11.1%, to $1,187.8 million, the commercial finance portfolio increased $461.9 million, or 37.7%, to $1.687 billion, and the community banking portfolio decreased $121.2 million, or 5.8%, to $1.978 billion during the quarter. The increase in total loans and the commercial finance portfolio reflects $107.5 million of factored receivables purchased through the TFS Acquisition.

Total deposits were $4.248 billion at September 30, 2020, an increase of $185.8 million, or 4.6%, in the third quarter of 2020. Non-interest-bearing deposits accounted for 31% of total deposits and non-time deposits accounted for 69% of total deposits at September 30, 2020.

Net Interest Income

We earned net interest income for the quarter ended September 30, 2020 of $74.4 million compared to $64.3 million for the quarter ended June 30, 2020.

Yields on loans for the quarter ended September 30, 2020 were up 53 bps from the prior quarter to 7.05%. The average cost of our total deposits was 0.56% for the quarter ended September 30, 2020 compared to 0.79% for the quarter ended June 30, 2020.

Asset Quality

Non-performing assets were 1.52% of total assets at September 30, 2020 compared to 1.20% of total assets at June 30, 2020. Approximately 17 basis points of this ratio at September 30, 2020 consisted of $10.0 million of the Over-Formula Advance Portfolio obtained through TFS Acquisition which represents the portion that not covered by CVLG’s indemnification.

The ratio of past due to total loans increased to 2.40% at September 30, 2020 from 1.50% at June 30, 2020. Approximately 79 basis points of this ratio at September 30, 2020 consisted of $38.5 million of past due factored receivables related to the Over-Formula Advance Portfolio. We recorded total net charge-offs of $0.7 million, or 0.02% of average loans, for the quarter ended September 30, 2020 compared to net charge-offs of $1.1 million, or 0.02% of average loans, for the quarter ended June 30, 2020.

Non-Interest Income and Expense

We earned non-interest income for the quarter ended September 30, 2020 of $10.5 million compared to $20.0 million for the quarter ended June 30, 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 September 30, 2020, non-interest expense totaled $55.3 million. Non-interest expense for the quarter ended June 30, 2020 was $52.7 million. Excluding the transaction costs related to the TFS acquisition, we incurred adjusted noninterest expense of $54.5 million for the three months ended September 30, 2020.

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, October 20, 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/tbk201020.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 August 7, 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 Nine Months Ended 
  September 30,  June 30,  March 31,  December 31,  September 30,  September 30,  September 30, 
(Dollars in thousands) 2020  2020  2020  2019  2019  2020  2019 
Financial Highlights:                            
Total assets $5,836,787  $5,617,493  $5,353,729  $5,060,297  $5,039,697  $5,836,787  $5,039,697 
Loans held for investment $4,852,911  $4,393,311  $4,320,548  $4,194,512  $4,209,417  $4,852,911  $4,209,417 
Deposits $4,248,101  $4,062,332  $3,682,015  $3,789,906  $3,697,833  $4,248,101  $3,697,833 
Net income available to common stockholders $22,005  $13,440  $(4,450) $16,709  $14,317  $30,995  $41,835 
                             
Performance Ratios - Annualized:                            
Return on average assets  1.65%  0.99%  (0.36%)  1.31%  1.17%  0.80%  1.20%
Return on average total equity  13.24%  8.86%  (2.85%)  10.24%  8.79%  6.63%  8.63%
Return on average common equity  13.61%  8.94%  (2.85%)  10.24%  8.79%  6.62%  8.63%
Return on average tangible common equity (1)  19.43%  12.96%  (4.09%)  14.54%  12.56%  9.51%  12.38%
Yield on loans(2)  7.05%  6.52%  7.22%  7.48%  7.63%  6.92%  7.85%
Cost of interest bearing deposits  0.79%  1.08%  1.34%  1.45%  1.49%  1.07%  1.39%
Cost of total deposits  0.56%  0.79%  1.05%  1.15%  1.19%  0.79%  1.11%
Cost of total funds  0.67%  0.85%  1.23%  1.35%  1.41%  0.90%  1.36%
Net interest margin(2)  5.83%  5.11%  5.63%  5.72%  5.85%  5.52%  5.99%
Net non-interest expense to average assets  3.23%  2.40%  3.88%  3.46%  3.64%  3.14%  3.67%
Adjusted net non-interest expense to average assets (1)  3.17%  3.11%  3.88%  3.46%  3.64%  3.37%  3.67%
Efficiency ratio  65.15%  62.56%  78.24%  70.15%  71.93%  68.07%  71.29%
Adjusted efficiency ratio (1)  64.18%  70.75%  78.24%  70.15%  71.93%  70.61%  71.29%
                             
Asset Quality:(3)                            
Past due to total loans(4)  2.40%  1.50%  1.99%  1.74%  1.91%  2.40%  1.91%
Non-performing loans to total loans  1.17%  1.27%  1.26%  0.97%  1.00%  1.17%  1.00%
Non-performing assets to total assets  1.52%  1.20%  1.09%  0.87%  0.91%  1.52%  0.91%
ACL to non-performing loans(5)  159.67%  97.66%  82.37%  71.63%  75.58%  159.67%  75.58%
ACL to total loans(5)  1.88%  1.24%  1.04%  0.69%  0.76%  1.88%  0.76%
Net charge-offs to average loans  0.02%  0.02%  0.04%  0.08%  0.01%  0.08%  0.09%
                             
Capital:                            
Tier 1 capital to average assets(6)  10.75%  9.98%  9.62%  10.03%  10.37%  10.75%  10.37%
Tier 1 capital to risk-weighted assets(6)  10.32%  10.57%  9.03%  10.29%  10.08%  10.32%  10.08%
Common equity tier 1 capital to risk-weighted assets(6)  8.72%  8.84%  8.24%  9.46%  9.26%  8.72%  9.26%
Total capital to risk-weighted assets(5)  12.94%  13.44%  11.63%  12.76%  11.79%  12.94%  11.79%
Total equity to total assets  11.89%  11.69%  11.01%  12.58%  12.57%  11.89%  12.57%
Tangible common stockholders' equity to tangible assets(1)  8.09%  7.84%  7.77%  9.16%  9.10%  8.09%  9.10%
                             
Per Share Amounts:                            
Book value per share $26.11  $25.28  $24.45  $25.50  $24.99  $26.11  $24.99 
Tangible book value per share (1) $18.38  $17.59  $16.64  $17.88  $17.40  $18.38  $17.40 
Basic earnings (loss) per common share $0.89  $0.56  $(0.18) $0.67  $0.56  $1.28  $1.60 
Diluted earnings (loss) per common share $0.89  $0.56  $(0.18) $0.66  $0.56  $1.27  $1.59 
Adjusted diluted earnings per common share(1) $0.91  $0.25  $(0.18) $0.66  $0.56  $0.99  $1.59 
Shares outstanding end of period  24,851,601   24,202,686   24,101,120   24,964,961   25,357,985   24,851,601   25,357,985 


Unaudited consolidated balance sheet as of:

  September 30,  June 30,  March 31,  December 31,  September 30, 
(Dollars in thousands) 2020  2020  2020  2019  2019 
ASSETS                    
Total cash and cash equivalents $288,278  $437,064  $208,414  $197,880  $115,043 
Securities - available for sale  242,802   331,126   302,122   248,820   302,917 
Securities - held to maturity  6,096   6,285   8,217   8,417   8,517 
Equity securities  6,040   6,411   5,678   5,437   5,543 
Loans held for sale  36,716   50,382   4,431   2,735   7,499 
Loans held for investment  4,852,911   4,393,311   4,320,548   4,194,512   4,209,417 
Allowance for credit losses  (90,995)  (54,613)  (44,732)  (29,092)  (31,895)
Loans, net  4,761,916   4,338,698   4,275,816   4,165,420   4,177,522 
Assets held for sale        97,895       
FHLB and other restricted stock  18,464   26,345   37,080   19,860   23,960 
Premises and equipment, net  105,455   107,736   98,363   96,595   87,112 
Other real estate owned ("OREO"), net  1,704   1,962   2,540   3,009   2,849 
Goodwill and intangible assets, net  192,041   186,162   188,208   190,286   192,440 
Bank-owned life insurance  41,440   41,298   41,122   40,954   40,724 
Deferred tax asset, net  7,716   8,544   9,457   3,812   5,971 
Other assets  128,119   75,480   74,386   77,072   69,600 
Total assets $5,836,787  $5,617,493  $5,353,729  $5,060,297  $5,039,697 
LIABILITIES                    
Non-interest bearing deposits $1,315,900  $1,120,949  $846,412  $809,696  $754,233 
Interest bearing deposits  2,932,201   2,941,383   2,835,603   2,980,210   2,943,600 
Total deposits  4,248,101   4,062,332   3,682,015   3,789,906   3,697,833 
Customer repurchase agreements  14,192   6,732   3,693   2,033   14,124 
Federal Home Loan Bank advances  435,000   455,000   850,000   430,000   530,000 
Payment Protection Program Liquidity Facility  223,713   223,809          
Subordinated notes  87,455   87,402   87,347   87,327   49,010 
Junior subordinated debentures  39,944   39,816   39,689   39,566   39,443 
Other liabilities  94,540   85,531   101,638   74,875   75,594 
Total liabilities  5,142,945   4,960,622   4,764,382   4,423,707   4,406,004 
EQUITY                    
Preferred Stock  45,000   45,000          
Common stock  279   273   272   272   272 
Additional paid-in-capital  488,094   472,795   474,441   473,251   472,368 
Treasury stock, at cost  (102,942)  (102,888)  (102,677)  (67,069)  (52,632)
Retained earnings  258,254   236,249   222,809   229,030   212,321 
Accumulated other comprehensive income (loss)  5,157   5,442   (5,498)  1,106   1,364 
Total stockholders' equity  693,842   656,871   589,347   636,590   633,693 
Total liabilities and equity $5,836,787  $5,617,493  $5,353,729  $5,060,297  $5,039,697 


Unaudited consolidated statement of income:

  For the Three Months Ended  For the Nine Months Ended 
  September 30,  June 30,  March 31,  December 31,  September 30,  September 30,  September 30, 
(Dollars in thousands) 2020  2020  2020  2019  2019  2020  2019 
Interest income:                            
Loans, including fees $48,774  $50,394  $48,323  $52,395  $50,249  $147,491  $143,253 
Factored receivables, including fees  31,468   21,101   24,292   25,573   25,570   76,861   75,684 
Securities  1,927   2,676   2,107   2,379   2,784   6,710   8,095 
FHLB and other restricted stock  122   148   204   165   209   474   547 
Cash deposits  73   79   488   659   603   640   2,403 
Total interest income  82,364   74,398   75,414   81,171   79,415   232,176   229,982 
Interest expense:                            
Deposits  5,834   7,584   9,677   10,961   11,036   23,095   29,264 
Subordinated notes  1,348   1,321   1,347   1,035   840   4,016   2,518 
Junior subordinated debentures  462   554   646   687   719   1,662   2,223 
Other borrowings  341   688   1,244   2,080   2,055   2,273   6,482 
Total interest expense  7,985   10,147   12,914   14,763   14,650   31,046   40,487 
Net interest income  74,379   64,251   62,500   66,408   64,765   201,130   189,495 
Credit loss expense (benefit)  (258)  13,609   20,298   382   2,865   33,649   7,560 
Net interest income after credit loss expense  74,637   50,642   42,202   66,026   61,900   167,481   181,935 
Non-interest income:                            
Service charges on deposits  1,470   573   1,588   1,889   1,937   3,631   5,243 
Card income  2,091   1,941   1,800   1,943   2,015   5,832   5,930 
Net OREO gains (losses) and valuation adjustments  (41)  (101)  (257)  50   (56)  (399)  301 
Net gains (losses) on sale of securities  3,109   63   38   39   19   3,210   22 
Fee income  1,402   1,304   1,686   1,686   1,624   4,392   4,755 
Insurance commissions  990   864   1,051   1,092   1,247   2,905   3,127 
Gain on sale of subsidiary     9,758            9,758    
Other  1,472   5,627   1,571   1,967   956   8,670   3,525 
Total non-interest income  10,493   20,029   7,477   8,666   7,742   37,999   22,903 
Non-interest expense:                            
Salaries and employee benefits  31,651   30,804   30,722   29,586   28,717   93,177   83,276 
Occupancy, furniture and equipment  5,574   4,964   5,182   4,667   4,505   15,720   13,529 
FDIC insurance and other regulatory assessments  360   495   315   (302)  (2)  1,170   600 
Professional fees  3,265   1,651   2,107   1,904   1,969   7,023   5,384 
Amortization of intangible assets  2,141   2,046   2,078   2,154   2,228   6,265   6,977 
Advertising and promotion  1,105   1,151   1,292   1,347   1,379   3,548   4,779 
Communications and technology  5,569   5,444   5,501   5,732   5,382   16,514   15,244 
Other  5,632   6,171   7,556   7,573   7,975   19,359   21,634 
Total non-interest expense  55,297   52,726   54,753   52,661   52,153   162,776   151,423 
Net income (loss) before income tax  29,833   17,945   (5,074)  22,031   17,489   42,704   53,415 
Income tax expense (benefit)  6,929   4,505   (624)  5,322   3,172   10,810   11,580 
Net income (loss) $22,904  $13,440  $(4,450) $16,709  $14,317  $31,894  $41,835 
Dividends on preferred stock  (899)              (899)   
Net income available to common stockholders $22,005  $13,440  $(4,450) $16,709  $14,317  $30,995  $41,835 


Earnings per share:

  For the Three Months Ended  For the Nine Months Ended 
  September 30,  June 30,  March 31,  December 31,  September 30,  September 30,  September 30, 
(Dollars in thousands) 2020  2020  2020  2019  2019  2020  2019 
Basic                            
Net income (loss) to common stockholders $22,005  $13,440  $(4,450) $16,709  $14,317  $30,995  $41,835 
Weighted average common shares outstanding  24,592,092   23,987,049   24,314,329   25,089,447   25,621,054   24,298,897   26,228,499 
Basic earnings (loss) per common share $0.89  $0.56  $(0.18) $0.67  $0.56  $1.28  $1.60 
                             
Diluted                            
Net income (loss) to common stockholders - diluted $22,005  $13,440  $(4,450) $16,709  $14,317  $30,995  $41,835 
Weighted average common shares outstanding  24,592,092   23,987,049   24,314,329   25,089,447   25,621,054   24,298,897   26,228,499 
Dilutive effects of:                            
Assumed exercises of stock options  48,102   38,627      69,865   60,068   53,232   61,054 
Restricted stock awards  67,907   37,751      70,483   45,631   65,893   40,572 
Restricted stock units  18,192   4,689      13,264   3,045   15,198   57 
Performance stock units - market based  76,095   6,326      11,803   4,673   30,995   1,558 
Performance stock units - performance based                     
Weighted average shares outstanding - diluted  24,802,388   24,074,442   24,314,329   25,254,862   25,734,471   24,464,215   26,331,740 
Diluted earnings (loss) per common share $0.89  $0.56  $(0.18) $0.66  $0.56  $1.27  $1.59 
                             
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 Nine Months Ended 
  September 30,  June 30,  March 31,  December 31,  September 30,  September 30,  September 30, 
  2020  2020  2020  2019  2019  2020  2019 
Stock options  98,513   148,528   225,055   66,019   67,023   98,513   67,023 
Restricted stock awards     109,834   147,748      3,209      3,209 
Restricted stock units     38,801   55,228            54,077 
Performance stock units - market based     76,461   67,707   55,228   55,228      55,228 
Performance stock units - performance based  261,125   262,625   254,000   254,000      261,125    


Loans held for investment summarized as of:

   September 30,  June 30,  March 31,  December 31,  September 30, 
(Dollars in thousands) 2020  2020  2020  2019  2019 
Commercial real estate $762,531  $910,261  $985,757  $1,046,961  $1,115,559 
Construction, land development, land  244,512   213,617   198,050   160,569   164,186 
1-4 family residential properties  164,785   168,707   169,703   179,425   186,405 
Farmland  110,966   125,259   133,579   154,975   161,447 
Commercial  1,536,903   1,518,656   1,412,822   1,342,683   1,369,505 
Factored receivables  1,016,337   561,576   661,100   619,986   599,651 
Consumer  17,106   18,450   20,326   21,925   24,967 
Mortgage warehouse  999,771   876,785   739,211   667,988   587,697 
Total loans $4,852,911  $4,393,311  $4,320,548  $4,194,512  $4,209,417 


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:

  September 30,  June 30,  March 31,  December 31,  September 30, 
(Dollars in thousands) 2020  2020  2020  2019  2019 
Commercial - Equipment $509,849  $487,145  $479,483  $461,555  $429,412 
Commercial - Asset-based lending  160,711   176,235   245,001   168,955   247,026 
Factored receivables  1,016,337   561,576   661,100   619,986   599,651 
Commercial finance $1,686,897  $1,224,956  $1,385,584  $1,250,496  $1,276,089 
                     
Commercial finance % of total loans  35%  28%  32%  30%  30%


National lending loans are further summarized below:

  September 30,  June 30,  March 31,  December 31,  September 30, 
(Dollars in thousands) 2020  2020  2020  2019  2019 
Mortgage warehouse $999,771  $876,785  $739,211  $667,988  $587,697 
Commercial - Liquid credit  188,034   192,118   172,380   81,353   37,386 
Commercial - Premium finance           101,015   101,562 
National lending $1,187,805  $1,068,903  $911,591  $850,356  $726,645 
                     
National lending % of total loans  24%  24%  21%  20%  17%


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

  September 30,  June 30,  March 31,  December 31,  September 30, 
(Dollars in thousands) 2020  2020  2020  2019  2019 
Average community banking $2,047,059  $2,111,615  $2,041,256  $2,170,149  $2,193,533 
Average commercial finance  1,480,593   1,259,584   1,292,749   1,260,000   1,208,823 
Average national lending  998,411   1,038,476   711,837   704,244   541,367 
Average total loans $4,526,063  $4,409,675  $4,045,842  $4,134,393  $3,943,723 
Community banking yield  5.05%  5.23%  5.67%  5.89%  5.79%
Commercial finance yield  11.23%  10.21%  11.00%  11.64%  12.31%
National lending yield  4.98%  4.67%  4.80%  4.96%  4.63%
Total loan yield  7.05%  6.52%  7.22%  7.48%  7.63%


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:

  September 30,  June 30,  March 31,  December 31,  September 30, 
  2020  2020  2020  2019  2019 
Factored receivable period end balance $948,987,000  $528,379,000  $641,366,000  $573,372,000  $562,009,000 
Yield on average receivable balance  15.65%  15.48%  16.13%  17.20%  18.23%
Rolling twelve quarter annual charge-off rate  0.43%  0.43%  0.42%  0.39%  0.36%
Factored receivables - transportation concentration  88%  85%  80%  81%  83%
                     
Interest income, including fees $30,068,000  $20,387,000  $23,497,000  $24,813,000  $24,869,000 
Non-interest income(1)  1,157,000   1,072,000   1,296,000   1,154,000   1,291,000 
Factored receivable total revenue  31,225,000   21,459,000   24,793,000   25,967,000   26,160,000 
Average net funds employed  694,170,000   477,112,000   537,138,000   524,546,000   494,198,000 
Yield on average net funds employed  17.89%  18.09%  18.56%  19.64%  21.00%
                     
Accounts receivable purchased $1,984,490,000  $1,238,465,000  $1,450,618,000  $1,489,538,000  $1,450,905,000 
Number of invoices purchased  1,027,839   812,902   878,767   896,487   890,986 
Average invoice size $1,931  $1,524  $1,651  $1,662  $1,628 
Average invoice size - transportation $1,787  $1,378  $1,481  $1,507  $1,497 
Average invoice size - non-transportation $5,181  $4,486  $4,061  $3,891  $3,467 

(1)  September 30, 2020 balance excludes the $2.0 million gain recognized on the increased value of the receivable due from CVLG resulting from the amended TFS acquisition agreement.

Deposits summarized as of:

  September 30,  June 30,  March 31,  December 31,  September 30, 
(Dollars in thousands) 2020  2020  2020  2019  2019 
Non-interest bearing demand $1,315,900  $1,120,949  $846,412  $809,696  $754,233 
Interest bearing demand  634,272   648,309   583,445   580,323   587,123 
Individual retirement accounts  94,933   97,388   101,743   104,472   108,593 
Money market  384,476   397,914   412,376   497,105   424,162 
Savings  405,954   391,624   367,163   363,270   356,368 
Certificates of deposit  857,514   937,766   1,056,012   1,084,425   1,120,850 
Brokered time deposits  344,986   258,378   314,864   350,615   346,504 
Other brokered deposits  210,066   210,004          
Total deposits $4,248,101  $4,062,332  $3,682,015  $3,789,906  $3,697,833 


Net interest margin summarized for the three months ended:

 September 30, 2020  June 30, 2020 
 Average      Average  Average      Average 
(Dollars in thousands)Balance  Interest  Rate  Balance  Interest  Rate 
Interest earning assets:                       
Interest earning cash balances$224,958  $73   0.13% $262,615  $79   0.12%
Taxable securities 259,470   1,674   2.57%  303,519   2,400   3.18%
Tax-exempt securities 39,847   253   2.53%  43,796   276   2.53%
FHLB and other restricted stock 22,121   122   2.19%  36,375   148   1.64%
Loans 4,526,063   80,242   7.05%  4,409,675   71,495   6.52%
Total interest earning assets$5,072,459  $82,364   6.46% $5,055,980  $74,398   5.92%
Non-interest earning assets:                       
Other assets 446,249           431,092         
Total assets$5,518,708          $5,487,072         
Interest bearing liabilities:                       
Deposits:                       
Interest bearing demand$635,287  $207   0.13% $630,023  $287   0.18%
Individual retirement accounts 95,962   300   1.24%  100,211   359   1.44%
Money market 385,620   263   0.27%  398,276   363   0.37%
Savings 400,102   152   0.15%  382,521   144   0.15%
Certificates of deposit 905,075   3,782   1.66%  1,008,644   5,055   2.02%
Brokered time deposits 247,928   941   1.51%  301,262   1,374   1.83%
Other brokered deposits 251,701   189   0.30%  4,670   2   0.17%
Total interest bearing deposits 2,921,675   5,834   0.79%  2,825,607   7,584   1.08%
Federal Home Loan Bank advances 255,163   143   0.22%  678,225   572   0.34%
Subordinated notes 87,425   1,348   6.13%  87,368   1,321   6.08%
Junior subordinated debentures 39,874   462   4.61%  39,745   554   5.61%
Other borrowings 236,297   198   0.33%  137,045   116   0.34%
Total interest bearing liabilities$3,540,434  $7,985   0.90% $3,767,990  $10,147   1.08%
Non-interest bearing liabilities and equity:                       
Non-interest bearing demand deposits 1,213,494           1,038,979         
Other liabilities 76,453           69,845         
Total equity 688,327           610,258         
Total liabilities and equity$5,518,708          $5,487,072         
Net interest income    $74,379          $64,251     
Interest spread         5.56%          4.84%
Net interest margin         5.83%          5.11%

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 Nine Months Ended 
(Dollars in thousands, September 30,  June 30,  March 31,  December 31,  September 30,  September 30,  September 30, 
except per share amounts) 2020  2020  2020  2019  2019  2020  2019 
Net income available to common stockholders $22,005  $13,440  $(4,450) $16,709  $14,317  $30,995  $41,835 
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 $22,635  $6,133  $(4,450) $16,709  $14,317  $24,318  $41,835 
                             
Weighted average shares outstanding - diluted  24,802,388   24,074,442   24,314,329   25,254,862   25,734,471   24,464,215   26,331,740 
Adjusted diluted earnings per common share $0.91  $0.25  $(0.18) $0.66  $0.56  $0.99  $1.59 
                             
Average total stockholders' equity $688,327  $610,258  $627,369  $647,546  $646,041  $642,151  $647,787 
Average preferred stock liquidation preference  (45,000)  (5,934)           (17,080)   
Average total common stockholders' equity  643,327   604,324   627,369   647,546   646,041   625,071   647,787 
Average goodwill and other intangibles  (192,682)  (187,255)  (189,359)  (191,551)  (193,765)  (189,776)  (196,035)
Average tangible common stockholders' equity $450,645  $417,069  $438,010  $455,995  $452,276  $435,295  $451,752 
                             
Net income available to common stockholders $22,005  $13,440  $(4,450) $16,709  $14,317  $30,995  $41,835 
Average tangible common equity  450,645   417,069   438,010   455,995   452,276   435,295   451,752 
Return on average tangible common equity  19.43%  12.96%  (4.09%)  14.54%  12.56%  9.51%  12.38%
                             
Net interest income $74,379  $64,251  $62,500  $66,408  $64,765  $201,130  $189,495 
Non-interest income  10,493   20,029   7,477   8,666   7,742   37,999   22,903 
Operating revenue  84,872   84,280   69,977   75,074   72,507   239,129   212,398 
Gain on sale of subsidiary or division     (9,758)           (9,758)   
Adjusted operating revenue $84,872  $74,522  $69,977  $75,074  $72,507  $229,371  $212,398 
Non-interest expenses $55,297  $52,726  $54,753  $52,661  $52,153  $162,776  $151,423 
Transaction costs  (827)              (827)   
Adjusted non-interest expenses $54,470  $52,726  $54,753  $52,661  $52,153  $161,949  $151,423 
Adjusted efficiency ratio  64.18%  70.75%  78.24%  70.15%  71.93%  70.61%  71.29%
                             
Adjusted net non-interest expense to average assets ratio:                            
Non-interest expenses $55,297  $52,726  $54,753  $52,661  $52,153  $162,776  $151,423 
Transaction costs  (827)              (827)   
Adjusted non-interest expenses $54,470  $52,726  $54,753  $52,661  $52,153  $161,949  $151,423 
Total non-interest income $10,493  $20,029  $7,477  $8,666  $7,742  $37,999  $22,903 
Gain on sale of subsidiary or division     (9,758)           (9,758)   
Adjusted non-interest income $10,493  $10,271  $7,477  $8,666  $7,742  $28,241  $22,903 
Adjusted net non-interest expenses $43,977  $42,455  $47,276  $43,995  $44,411  $133,708  $128,520 
Average total assets $5,518,708  $5,487,072  $4,906,547  $5,050,860  $4,840,540  $5,304,903  $4,680,234 
Adjusted net non-interest expense to average assets ratio  3.17%  3.11%  3.88%  3.46%  3.64%  3.37%  3.67%
                             
Total stockholders' equity $693,842  $656,871  $589,347  $636,590  $633,693  $693,842  $633,693 
Preferred stock liquidation preference  (45,000)  (45,000)           (45,000)   
Total common stockholders' equity  648,842   611,871   589,347   636,590   633,693   648,842   633,693 
Goodwill and other intangibles  (192,041)  (186,162)  (188,208)  (190,286)  (192,440)  (192,041)  (192,440)
Tangible common stockholders' equity $456,801  $425,709  $401,139  $446,304  $441,253  $456,801  $441,253 
Common shares outstanding  24,851,601   24,202,686   24,101,120   24,964,961   25,357,985   24,851,601   25,357,985 
Tangible book value per share $18.38  $17.59  $16.64  $17.88  $17.40  $18.38  $17.40 
                             
Total assets at end of period $5,836,787  $5,617,493  $5,353,729  $5,060,297  $5,039,697  $5,836,787  $5,039,697 
Goodwill and other intangibles  (192,041)  (186,162)  (188,208)  (190,286)  (192,440)  (192,041)  (192,440)
Tangible assets at period end $5,644,746  $5,431,331  $5,165,521  $4,870,011  $4,847,257  $5,644,746  $4,847,257 
Tangible common stockholders' equity ratio  8.09%  7.84%  7.77%  9.16%  9.10%  8.09%  9.10%


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 Nine Months Ended 
  September 30,  June 30,  March 31,  December 31,  September 30,  September 30,  September 30, 
(Dollars in thousands) 2020  2020  2020  2019  2019  2020  2019 
Loan discount accretion $4,104  $2,139  $2,134  $1,555  $1,159  $8,377  $4,013 


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