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

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

News Highlights

DALLAS, April 21, 2021 (News) — Triumph Bancorp, Inc. (Nasdaq: TBK) (“Triumph” or the “Company”) today announced earnings and operating results for the first quarter of 2021.

As part of how we measure our results, we use certain non-GAAP financial measures to ascertain performance. These non-GAAP financial measures are reconciled in the section labeled “Metrics and non-GAAP financial reconciliation” at the end of this press release.

2021 First Quarter Highlights

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

Items related to our July 2020 acquisition of TFS

As disclosed on our SEC Forms 8-K filed on July 8, 2020 and September 23, 2020, we acquired the transportation factoring assets of TFS, a wholly owned subsidiary of Covenant Logistics Group, Inc. (“CVLG”), and subsequently amended the terms of that transaction. Developments related to that transaction impacted our operating results for the three months ended March 31, 2021 as follows:

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

At March 31, 2021, the carrying value of the acquired over-formula advances was $10.6 million, the total reserve on acquired over-formula advances was $10.6 million and the balance of our indemnification asset, the value of the payment that would be due to us from CVLG in the event that these over-advances are charged off, was $5.2 million.

As of March 31, 2021 we carried a separate $19.2 million receivable (the “Misdirected Payments”) payable by the United States Postal Service (“USPS”) arising from accounts factored to the largest over-formula advance carrier. This amount is separate from the acquired Over-Formula Advances. The amounts represented by this receivable were paid by the USPS directly to such customer in contravention of notices of assignment delivered to, and previously honored by, the USPS, which amount was then not remitted back to us by such customer as required. The USPS disputes their obligation to make such payment, citing purported deficiencies in the notices delivered to them. In addition to commencing litigation against such customer, we have also filed a declaratory judgment action in United States Federal District Court for the Southern District of Florida seeking a ruling that the USPS was obligated to make the payments represented by this receivable directly to us. Based on our legal analysis and discussions with our counsel advising us on this matter, we believe it is probable that we will prevail in such action and that the USPS will have the capacity to make payment on such receivable. Consequently, we have not reserved for such balance as of March 31, 2021. The full amount of such receivable is reflected in non-performing and past due factored receivables as of March 31, 2021 in accordance with our policy. As of March 31, 2021, the entire $19.2 million Misdirected Payments amount was greater than 90 days past due.

Balance Sheet

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

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

Asset Quality and Allowance for Credit Loss

Our nonperforming assets ratio at March 31, 2021 was 1.15%. Approximately 2 basis points of this ratio at March 31, 2021 consisted of $1.4 million of the acquired Over-Formula Advance portfolio which represents the portion that is not covered by CVLG’s indemnification. An additional 38 basis points of this ratio at March 31, 2021 consisted of $19.2 million of the Misdirected Payments, as discussed above.

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

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

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

CARES Act and Paycheck Protection Program

As of March 31, 2021, our balance sheet reflected deferrals on outstanding loan balances of $85.3 million to assist customers impacted by COVID-19. Modifications related to the COVID-19 pandemic and qualifying under the provisions of Section 4013 of the CARES Act are not considered troubled debt restructurings. As of March 31, 2021, these deferred balances carried accrued interest of $0.5 million.

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

Conference Call Information

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

To participate in the live conference call, please dial 1-855-940-9472 (Canada: 1-855-669-9657) and request to be joined into the Triumph Bancorp, Inc. call. A simultaneous audio-only webcast may be accessed via the Company’s website at www.triumphbancorp.com through the Investor Relations, News & Events, Webcasts and Presentations links, or through a direct link here at: https://services.choruscall.com/links/tbk210422.html. An archive of this conference call will subsequently be available at this same location on the Company’s website.

About Triumph

Triumph Bancorp, Inc. (Nasdaq: TBK) is a financial holding company headquartered in Dallas, Texas. Triumph offers a diversified line of community banking, national lending, and commercial finance products through its bank subsidiary, TBK Bank, SSB. www.triumphbancorp.com

Forward-Looking Statements

This press release contains forward-looking statements. Any statements about our expectations, beliefs, plans, predictions, forecasts, objectives, assumptions or future events or performance are not historical facts and may be forward-looking. You can identify forward-looking statements by the use of forward-looking terminology such as “believes,” “expects,” “could,” “may,” “will,” “should,” “seeks,” “likely,” “intends,” “plans,” “pro forma,” “projects,” “estimates” or “anticipates” or the negative of these words and phrases or similar words or phrases that are predictions of or indicate future events or trends and that do not relate solely to historical matters. You can also identify forward-looking statements by discussions of strategy, plans or intentions. Forward-looking statements involve numerous risks and uncertainties and you should not rely on them as predictions of future events. Forward-looking statements depend on assumptions, data or methods that may be incorrect or imprecise and we may not be able to realize them. We do not guarantee that the transactions and events described will happen as described (or that they will happen at all). The following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements: business and economic conditions generally and in the bank and non-bank financial services industries, nationally and within our local market areas; the impact of COVID-19 on our business, including the impact of the actions taken by governmental authorities to try and contain the virus or address the impact of the virus on the United States economy (including, without limitation, the CARES Act), and the resulting effect of all of such items on our operations, liquidity and capital position, and on the financial condition of our borrowers and other customers; our ability to mitigate our risk exposures; our ability to maintain our historical earnings trends; changes in management personnel; interest rate risk; concentration of our products and services in the transportation industry; credit risk associated with our loan portfolio; lack of seasoning in our loan portfolio; deteriorating asset quality and higher loan charge-offs; time and effort necessary to resolve nonperforming assets; inaccuracy of the assumptions and estimates we make in establishing reserves for probable loan losses and other estimates; risks related to the integration of acquired businesses, including our pending acquisition of HubTran Inc. and developments related to our acquisition of Transport Financial Solutions and the related over-formula advances, and any future acquisitions; our ability to successfully identify and address the risks associated with our possible future acquisitions, and the risks that our prior and possible future acquisitions make it more difficult for investors to evaluate our business, financial condition and results of operations, and impairs our ability to accurately forecast our future performance; lack of liquidity; fluctuations in the fair value and liquidity of the securities we hold for sale; impairment of investment securities, goodwill, other intangible assets or deferred tax assets; our risk management strategies; environmental liability associated with our lending activities; increased competition in the bank and non-bank financial services industries, nationally, regionally or locally, which may adversely affect pricing and terms; the accuracy of our financial statements and related disclosures; material weaknesses in our internal control over financial reporting; system failures or failures to prevent breaches of our network security; the institution and outcome of litigation and other legal proceedings against us or to which we become subject; changes in carry-forwards of net operating losses; changes in federal tax law or policy; the impact of recent and future legislative and regulatory changes, including changes in banking, securities and tax laws and regulations, such as the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) and their application by our regulators; governmental monetary and fiscal policies; changes in the scope and cost of FDIC, insurance and other coverages; failure to receive regulatory approval for future acquisitions; and increases in our capital requirements.

While forward-looking statements reflect our good-faith beliefs, they are not guarantees of future performance. All forward-looking statements are necessarily only estimates of future results. Accordingly, actual results may differ materially from those expressed in or contemplated by the particular forward-looking statement, and, therefore, you are cautioned not to place undue reliance on such statements. Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events or circumstances, except as required by applicable law. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see “Risk Factors” and the forward-looking statement disclosure contained in Triumph’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission on February 12, 2021.

Non-GAAP Financial Measures

This press release includes certain non‐GAAP financial measures intended to supplement, not substitute for, comparable GAAP measures. Reconciliations of non‐GAAP financial measures to GAAP financial measures are provided at the end of this press release.

The following table sets forth key metrics used by Triumph to monitor our operations. Footnotes in this table can be found in our definitions of non-GAAP financial measures at the end of this document.

 As of and for the Three Months Ended
(Dollars in thousands)March 31,2021 December 31,2020 September 30,2020 June 30,2020 March 31,2020
Financial Highlights:         
Total assets$6,099,628  $5,935,791  $5,836,787  $5,617,493  $5,353,729 
Loans held for investment$5,084,512  $4,996,776  $4,852,911  $4,393,311  $4,320,548 
Deposits$4,789,665  $4,716,600  $4,248,101  $4,062,332  $3,682,015 
Net income available to common stockholders$33,122  $31,328  $22,005  $13,440  $(4,450)
          
Performance Ratios – Annualized:         
Return on average assets2.29% 2.21% 1.65% 0.99% (0.36%)
Return on average total equity18.42% 17.73% 13.24% 8.86% (2.85%)
Return on average common equity19.14% 18.44% 13.61% 8.94% (2.85%)
Return on average tangible common equity (1)26.19% 25.70% 19.43% 12.96% (4.09%)
Yield on loans(2)7.24% 7.20% 7.05% 6.52% 7.22%
Cost of interest bearing deposits0.41% 0.54% 0.79% 1.08% 1.34%
Cost of total deposits0.28% 0.38% 0.56% 0.79% 1.05%
Cost of total funds0.42% 0.51% 0.67% 0.85% 1.23%
Net interest margin(2)6.06% 6.20% 5.83% 5.11% 5.63%
Net non-interest expense to average assets3.14% 2.54% 3.23% 2.40% 3.88%
Adjusted net non-interest expense to average assets (1)3.14% 2.54% 3.17% 3.11% 3.88%
Efficiency ratio62.57% 55.95% 65.15% 62.56% 78.24%
Adjusted efficiency ratio (1)62.57% 55.95% 64.18% 70.75% 78.24%
          
Asset Quality:(3)         
Past due to total loans1.96% 3.22% 2.40% 1.50% 1.99%
Non-performing loans to total loans1.17% 1.16% 1.17% 1.27% 1.26%
Non-performing assets to total assets1.15% 1.15% 1.52% 1.20% 1.09%
ACL to non-performing loans80.87% 164.98% 159.67% 97.66% 82.37%
ACL to total loans0.94% 1.92% 1.88% 1.24% 1.04%
Net charge-offs to average loans0.85% 0.03% 0.02% 0.02% 0.04%
          
Capital:         
Tier 1 capital to average assets(4)10.89% 10.80% 10.75% 9.98% 9.62%
Tier 1 capital to risk-weighted assets(4)11.28% 10.60% 10.32% 10.57% 9.03%
Common equity tier 1 capital to risk-weighted assets(4)9.72% 9.05% 8.72% 8.84% 8.24%
Total capital to risk-weighted assets13.58% 13.03% 12.94% 13.44% 11.63%
Total equity to total assets12.53% 12.24% 11.89% 11.69% 11.01%
Tangible common stockholders’ equity to tangible assets(1)8.98% 8.56% 8.09% 7.84% 7.77%
          
Per Share Amounts:         
Book value per share$28.90  $27.42  $26.11  $25.28  $24.45 
Tangible book value per share (1)$21.34  $19.78  $18.38  $17.59  $16.64 
Basic earnings (loss) per common share$1.34  $1.27  $0.89  $0.56  $(0.18)
Diluted earnings (loss) per common share$1.32  $1.25  $0.89  $0.56  $(0.18)
Adjusted diluted earnings per common share(1)$1.32  $1.25  $0.91  $0.25  $(0.18)
Shares outstanding end of period24,882,929  24,868,218  24,851,601  24,202,686  24,101,120 

Unaudited consolidated balance sheet as of:

(Dollars in thousands)March 31,2021 December 31,2020 September 30,2020 June 30,2020 March 31,2020
ASSETS         
Total cash and cash equivalents$380,811  $314,393  $288,278  $437,064  $208,414 
Securities – available for sale205,330  224,310  242,802  331,126  302,122 
Securities – held to maturity, net5,828  5,919  6,096  6,285  8,217 
Equity securities5,826  5,826  6,040  6,411  5,678 
Loans held for sale22,663  24,546  36,716  50,382  4,431 
Loans held for investment5,084,512  4,996,776  4,852,911  4,393,311  4,320,548 
Allowance for credit losses(48,024) (95,739) (90,995) (54,613) (44,732)
Loans, net5,036,488  4,901,037  4,761,916  4,338,698  4,275,816 
Assets held for sale        97,895 
FHLB and other restricted stock9,807  6,751  18,464  26,345  37,080 
Premises and equipment, net105,390  103,404  105,455  107,736  98,363 
Other real estate owned (“OREO”), net1,421  1,432  1,704  1,962  2,540 
Goodwill and intangible assets, net188,006  189,922  192,041  186,162  188,208 
Bank-owned life insurance41,805  41,608  41,440  41,298  41,122 
Deferred tax asset, net1,260  6,427  7,716  8,544  9,457 
Indemnification asset5,246  36,225  31,218     
Other assets89,747  73,991  96,901  75,480  74,386 
Total assets$6,099,628  $5,935,791  $5,836,787  $5,617,493  $5,353,729 
LIABILITIES         
Non-interest bearing deposits$1,637,653  $1,352,785  $1,315,900  $1,120,949  $846,412 
Interest bearing deposits3,152,012  3,363,815  2,932,201  2,941,383  2,835,603 
Total deposits4,789,665  4,716,600  4,248,101  4,062,332  3,682,015 
Customer repurchase agreements2,668  3,099  14,192  6,732  3,693 
Federal Home Loan Bank advances180,000  105,000  435,000  455,000  850,000 
Payment Protection Program Liquidity Facility158,796  191,860  223,713  223,809   
Subordinated notes87,564  87,509  87,455  87,402  87,347 
Junior subordinated debentures40,201  40,072  39,944  39,816  39,689 
Other liabilities76,730  64,870  94,540  85,531  101,638 
Total liabilities5,335,624  5,209,010  5,142,945  4,960,622  4,764,382 
EQUITY         
Preferred Stock45,000  45,000  45,000  45,000   
Common stock280  280  279  273  272 
Additional paid-in-capital490,699  489,151  488,094  472,795  474,441 
Treasury stock, at cost(103,059) (103,052) (102,942) (102,888) (102,677)
Retained earnings322,705  289,583  258,254  236,249  222,809 
Accumulated other comprehensive income (loss)8,379  5,819  5,157  5,442  (5,498)
Total stockholders’ equity764,004  726,781  693,842  656,871  589,347 
Total liabilities and equity$6,099,628  $5,935,791  $5,836,787  $5,617,493  $5,353,729 

Unaudited consolidated statement of income:

 For the Three Months Ended
(Dollars in thousands)March 31,2021 December 31,2020 September 30,2020 June 30,2020 March 31,2020
Interest income:         
Loans, including fees$48,706  $50,723  $48,774  $50,394  $48,323 
Factored receivables, including fees37,795  37,573  31,468  21,101  24,292 
Securities1,650  1,519  1,927  2,676  2,107 
FHLB and other restricted stock76  56  122  148  204 
Cash deposits126  68  73  79  488 
Total interest income88,353  89,939  82,364  74,398  75,414 
Interest expense:         
Deposits3,372  4,308  5,834  7,584  9,677 
Subordinated notes1,349  1,347  1,348  1,321  1,347 
Junior subordinated debentures442  452  462  554  646 
Other borrowings170  234  341  688  1,244 
Total interest expense5,333  6,341  7,985  10,147  12,914 
Net interest income83,020  83,598  74,379  64,251  62,500 
Credit loss expense (benefit)(7,845) 4,680  (258) 13,609  20,298 
Net interest income after credit loss expense (benefit)90,865  78,918  74,637  50,642  42,202 
Non-interest income:         
Service charges on deposits1,787  1,643  1,470  573  1,588 
Card income1,972  1,949  2,091  1,941  1,800 
Net OREO gains (losses) and valuation adjustments(80) (217) (41) (101) (257)
Net gains (losses) on sale of securities  16  3,109  63  38 
Fee income2,249  1,615  1,402  1,304  1,686 
Insurance commissions1,486  1,327  990  864  1,051 
Gain on sale of subsidiary      9,758   
Other6,877  16,053  1,472  5,627  1,571 
Total non-interest income14,291  22,386  10,493  20,029  7,477 
Non-interest expense:         
Salaries and employee benefits35,980  33,798  31,651  30,804  30,722 
Occupancy, furniture and equipment5,779  7,046  5,574  4,964  5,182 
FDIC insurance and other regulatory assessments977  350  360  495  315 
Professional fees2,545  2,326  3,265  1,651  2,107 
Amortization of intangible assets1,975  2,065  2,141  2,046  2,078 
Advertising and promotion890  1,170  1,105  1,151  1,292 
Communications and technology5,900  5,639  5,569  5,444  5,501 
Other6,846  6,904  5,632  6,171  7,556 
Total non-interest expense60,892  59,298  55,297  52,726  54,753 
Net income (loss) before income tax44,264  42,006  29,833  17,945  (5,074)
Income tax expense (benefit)10,341  9,876  6,929  4,505  (624)
Net income (loss)$33,923  $32,130  $22,904  $13,440  $(4,450)
Dividends on preferred stock(801) (802) (899)    
Net income available to common stockholders$33,122  $31,328  $22,005  $13,440  $(4,450)

Earnings per share:

 For the Three Months Ended
(Dollars in thousands)March 31,2021 December 31,2020 September 30,2020 June 30,2020 March 31,2020
Basic         
Net income (loss) to common stockholders$33,122  $31,328  $22,005  $13,440  $(4,450)
Weighted average common shares outstanding24,675,109  24,653,099  24,592,092  23,987,049  24,314,329 
Basic earnings (loss) per common share$1.34  $1.27  $0.89  $0.56  $(0.18)
          
Diluted         
Net income (loss) to common stockholders – diluted$33,122  $31,328  $22,005  $13,440  $(4,450)
Weighted average common shares outstanding24,675,109  24,653,099  24,592,092  23,987,049  24,314,329 
Dilutive effects of:         
Assumed exercises of stock options130,016  101,664  48,102  38,627   
Restricted stock awards169,514  136,239  67,907  37,751   
Restricted stock units66,714  50,156  18,192  4,689   
Performance stock units – market based128,167  112,228  76,095  6,326   
Performance stock units – performance based         
Employee stock purchase plan1,418         
Weighted average shares outstanding – diluted25,170,938  25,053,386  24,802,388  24,074,442  24,314,329 
Diluted earnings (loss) per common share$1.32  $1.25  $0.89  $0.56  $(0.18)

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

 For the Three Months Ended
 March 31,2021 December 31,2020 September 30,2020 June 30,2020 March 31,2020
Stock options    98,513  148,528  225,055 
Restricted stock awards      109,834  147,748 
Restricted stock units      38,801  55,228 
Performance stock units – market based      76,461  67,707 
Performance stock units – performance based256,625  256,625  261,125  262,625  254,000 
Employee stock purchase plan         

Loans held for investment summarized as of:

(Dollars in thousands)March 31,2021 December 31,2020 September 30,2020 June 30,2020 March 31,2020
Commercial real estate$784,110  $779,158  $762,531  $910,261  $985,757 
Construction, land development, land223,841  219,647  244,512  213,617  198,050 
1-4 family residential properties142,859  157,147  164,785  168,707  169,703 
Farmland97,835  103,685  110,966  125,259  133,579 
Commercial1,581,125  1,562,957  1,536,903  1,518,656  1,412,822 
Factored receivables1,208,718  1,120,770  1,016,337  561,576  661,100 
Consumer14,332  15,838  17,106  18,450  20,326 
Mortgage warehouse1,031,692  1,037,574  999,771  876,785  739,211 
Total loans$5,084,512  $4,996,776  $4,852,911  $4,393,311  $4,320,548 

Our total loans held for investment portfolio consists of traditional community bank loans as well as commercial finance product lines focused on businesses that require specialized financial solutions and national lending product lines that further diversify our lending operations.

Commercial finance loans are further summarized below:

(Dollars in thousands)March 31,2021 December 31,2020 September 30,2020 June 30,2020 March 31,2020
Commercial – Equipment$623,248  $573,163  $509,849  $487,145  $479,483 
Commercial – Asset-based lending188,825  180,488  160,711  176,235  245,001 
Factored receivables1,208,718  1,120,770  1,016,337  561,576  661,100 
Commercial finance$2,020,791  $1,874,421  $1,686,897  $1,224,956  $1,385,584 
          
Commercial finance % of total loans40% 38% 35% 28% 32%

National lending loans are further summarized below:

(Dollars in thousands)March 31,2021 December 31,2020 September 30,2020 June 30,2020 March 31,2020
Mortgage warehouse$1,031,692  $1,037,574  $999,771  $876,785  $739,211 
Commercial – Liquid credit159,436  184,027  188,034  192,118  172,380 
National lending$1,191,128  $1,221,601  $1,187,805  $1,068,903  $911,591 
          
National lending % of total loans23% 24% 24% 24% 21%

Additional information pertaining to our loan portfolio, including loans held for investment and loans held for sale, summarized for the quarters ended:

(Dollars in thousands)March 31,2021 December 31,2020 September 30,2020 June 30,2020 March 31,2020
Average community banking$1,843,002  $1,963,435  $2,047,059  $2,111,615  $2,041,256 
Average commercial finance1,899,264  1,798,550  1,480,593  1,259,584  1,292,749 
Average national lending1,106,010  1,114,822  998,411  1,038,476  711,837 
Average total loans$4,848,276  $4,876,807  $4,526,063  $4,409,675  $4,045,842 
Community banking yield4.90% 5.46% 5.05% 5.23% 5.67%
Commercial finance yield10.81% 10.74% 11.23% 10.21% 11.00%
National lending yield5.00% 4.58% 4.98% 4.67% 4.80%
Total loan yield7.24% 7.20% 7.05% 6.52% 7.22%

Information pertaining to our factoring segment, which includes only factoring originated by our Triumph Business Capital subsidiary, summarized as of and for the quarters ended:

 March 31,2021 December 31,2020 September 30,2020 June 30,2020 March 31,2020
Factored receivable period end balance$1,118,972,000  $1,036,369,000  $948,987,000  $528,379,000  $641,366,000 
Yield on average receivable balance13.85% 13.81% 15.65% 15.48% 16.13%
Current quarter charge-off rate(1)3.95% 0.02% 0.09% 0.16% 0.23%
Factored receivables – transportation concentration90% 89% 88% 85% 80%
          
Interest income, including fees$35,824,000  $35,439,000  $30,068,000  $20,387,000  $23,497,000 
Non-interest income(2)1,757,000  1,358,000  1,157,000  1,072,000  1,296,000 
Factored receivable total revenue37,581,000  36,797,000  31,225,000  21,459,000  24,793,000 
Average net funds employed936,528,000  924,899,000  694,170,000  477,112,000  537,138,000 
Yield on average net funds employed16.27% 15.83% 17.89% 18.09% 18.56%
          
Accounts receivable purchased$2,492,468,000  $2,461,249,000  $1,984,490,000  $1,238,465,000  $1,450,618,000 
Number of invoices purchased1,188,678  1,189,271  1,027,839  812,902  878,767 
Average invoice size$2,097  $2,070  $1,931  $1,524  $1,651 
Average invoice size – transportation$1,974  $1,943  $1,787  $1,378  $1,481 
Average invoice size – non-transportation$4,775  $5,091  $5,181  $4,486  $4,061 
(1)March 31, 2021 includes a $41.3 million charge-off related to the TFS acquisition, which contributed approximately 3.94% to the net charge-off rate for the quarter.
  
(2)Total factoring segment non-interest income was $6.4 million, $15.5 million, and $3.2 million for the three months ended March 31, 2021, December 31, 2020 and September 30, 2020.

March 31, 2021 non-interest income used to calculate yield on average net funds employed excludes a $4.7 million gain on our indemnification asset.

December 31, 2020 non-interest income used to calculate yield on average net funds employed excludes a gain of $8.9 million related to CVLG’s delivery of proceeds resulting from the liquidation of its acquired stock and a $5.3 million gain on our indemnification asset.

September 30, 2020 non-interest income used to calculate yield on average net funds employed excludes a $2.0 million gain recognized on the increased value of the receivable due from CVLG resulting from the amended TFS acquisition agreement.

Deposits summarized as of:

(Dollars in thousands)March 31,2021 December 31,2020 September 30,2020 June 30,2020 March 31,2020
Non-interest bearing demand$1,637,653  $1,352,785  $1,315,900  $1,120,949  $846,412 
Interest bearing demand729,364  688,680  634,272  648,309  583,445 
Individual retirement accounts89,748  92,584  94,933  97,388  101,743 
Money market402,070  393,325  384,476  397,914  412,376 
Savings464,035  421,488  405,954  391,624  367,163 
Certificates of deposit740,694  790,844  857,514  937,766  1,056,012 
Brokered time deposits516,006  516,786  344,986  258,378  314,864 
Other brokered deposits210,095  460,108  210,066  210,004   
Total deposits$4,789,665  $4,716,600  $4,248,101  $4,062,332  $3,682,015 

Net interest margin summarized for the three months ended:

 March 31, 2021 December 31, 2020
(Dollars in thousands)AverageBalance Interest AverageRate AverageBalance Interest AverageRate
Interest earning assets:           
Interest earning cash balances$478,275  $126  0.11% $230,893  $68  0.12%
Taxable securities189,407  1,428  3.06% 202,867  1,283  2.52%
Tax-exempt securities34,717  222  2.59% 37,070  236  2.53%
FHLB and other restricted stock8,511  76  3.62% 15,759  56  1.41%
Loans4,848,275  86,501  7.24% 4,876,807  88,296  7.20%
Total interest earning assets$5,559,185  $88,353  6.45% $5,363,396  $89,939  6.67%
Non-interest earning assets:           
Other assets454,483      425,153     
Total assets$6,013,668      $5,788,549     
Interest bearing liabilities:           
Deposits:           
Interest bearing demand$701,759  $384  0.22% $662,458  $235  0.14%
Individual retirement accounts91,074  186  0.83% 94,328  250  1.05%
Money market398,015  229  0.23% 395,900  257  0.26%
Savings446,322  167  0.15% 413,214  157  0.15%
Certificates of deposit765,244  1,955  1.04% 814,954  2,633  1.29%
Brokered time deposits167,881  179  0.43% 221,346  528  0.95%
Other brokered deposits803,009  272  0.14% 560,805  248  0.18%
Total interest bearing deposits3,373,304  3,372  0.41% 3,163,005  4,308  0.54%
Federal Home Loan Bank advances35,833  24  0.27% 80,217  43  0.21%
Subordinated notes87,532  1,349  6.25% 87,476  1,347  6.13%
Junior subordinated debentures40,125  442  4.47% 39,996  452  4.50%
Other borrowings171,902  146  0.34% 223,501  191  0.34%
Total interest bearing liabilities$3,708,696  $5,333  0.58% $3,594,195  $6,341  0.70%
Non-interest bearing liabilities and equity:           
Non-interest bearing demand deposits1,494,001      1,392,389     
Other liabilities64,122      81,073     
Total equity746,849      720,892     
Total liabilities and equity$6,013,668      $5,788,549     
Net interest income  $83,020      $83,598   
Interest spread    5.87%     5.97%
Net interest margin    6.06%     6.20%
 Loan balance totals include respective nonaccrual assets.Net interest spread is the yield on average interest earning assets less the rate on interest bearing liabilities.Net interest margin is the ratio of net interest income to average interest earning assets.Average rates have been annualized.

Metrics and non-GAAP financial reconciliation:

  As of and for the Three Months Ended
(Dollars in thousands,except per share amounts) March 31,2021 December 31,2020 September 30,2020 June 30,2020 March 31,2020
Net income available to common stockholders $33,122   $31,328   $22,005   $13,440   $(4,450) 
Transaction costs       827        
Gain on sale of subsidiary or division          (9,758)    
Tax effect of adjustments       (197)  2,451     
Adjusted net income available to common stockholders – diluted $33,122   $31,328   $22,635   $6,133   $(4,450) 
           
Weighted average shares outstanding – diluted 25,170,938   25,053,386   24,802,388   24,074,442   24,314,329  
Adjusted diluted earnings per common share $1.32   $1.25   $0.91   $0.25   $(0.18) 
           
Average total stockholders’ equity $746,849   $720,892   $688,327   $610,258   $627,369  
Average preferred stock liquidation preference (45,000)  (45,000)  (45,000)  (5,934)    
Average total common stockholders’ equity 701,849   675,892   643,327   604,324   627,369  
Average goodwill and other intangibles (188,980)  (191,017)  (192,682)  (187,255)  (189,359) 
Average tangible common stockholders’ equity $512,869   $484,875   $450,645   $417,069   $438,010  
           
Net income available to common stockholders $33,122   $31,328   $22,005   $13,440   $(4,450) 
Average tangible common equity 512,869   484,875   450,645   417,069   438,010  
Return on average tangible common equity 26.19 % 25.70 % 19.43 % 12.96 % (4.09 %)
           
Net interest income $83,020   $83,598   $74,379   $64,251   $62,500  
Non-interest income 14,291   22,386   10,493   20,029   7,477  
Operating revenue 97,311   105,984   84,872   84,280   69,977  
Gain on sale of subsidiary or division          (9,758)    
Adjusted operating revenue $97,311   $105,984   $84,872   $74,522   $69,977  
Non-interest expenses $60,892   $59,298   $55,297   $52,726   $54,753  
Transaction costs       (827)       
Adjusted non-interest expenses $60,892   $59,298   $54,470   $52,726   $54,753  
Adjusted efficiency ratio 62.57 % 55.95 % 64.18 % 70.75 % 78.24 %
           
Adjusted net non-interest expense to average assets ratio:          
Non-interest expenses $60,892   $59,298   $55,297   $52,726   $54,753  
Transaction costs       (827)       
Adjusted non-interest expenses $60,892   $59,298   $54,470   $52,726   $54,753  
Total non-interest income $14,291   $22,386   $10,493   $20,029   $7,477  
Gain on sale of subsidiary or division          (9,758)    
Adjusted non-interest income $14,291   $22,386   $10,493   $10,271   $7,477  
Adjusted net non-interest expenses $46,601   $36,912   $43,977   $42,455   $47,276  
Average total assets $6,013,668   $5,788,549   $5,518,708   $5,487,072   $4,906,547  
Adjusted net non-interest expense to average assets ratio 3.14 % 2.54 % 3.17 % 3.11 % 3.88 %
           
Total stockholders’ equity $764,004   $726,781   $693,842   $656,871   $589,347  
Preferred stock liquidation preference (45,000)  (45,000)  (45,000)  (45,000)    
Total common stockholders’ equity 719,004   681,781   648,842   611,871   589,347  
Goodwill and other intangibles (188,006)  (189,922)  (192,041)  (186,162)  (188,208) 
Tangible common stockholders’ equity $530,998   $491,859   $456,801   $425,709   $401,139  
Common shares outstanding 24,882,929   24,868,218   24,851,601   24,202,686   24,101,120  
Tangible book value per share $21.34   $19.78   $18.38   $17.59   $16.64  
           
Total assets at end of period $6,099,628   $5,935,791   $5,836,787   $5,617,493   $5,353,729  
Goodwill and other intangibles (188,006)  (189,922)  (192,041)  (186,162)  (188,208) 
Tangible assets at period end $5,911,622   $5,745,869   $5,644,746   $5,431,331   $5,165,521  
Tangible common stockholders’ equity ratio 8.98 % 8.56 % 8.09 % 7.84 % 7.77 %
1)Triumph uses certain non-GAAP financial measures to provide meaningful supplemental information regarding Triumph’s operational performance and to enhance investors’ overall understanding of such financial performance. The non-GAAP measures used by Triumph include the following:
  • “Adjusted diluted earnings per common share” is defined as adjusted net income available to common stockholders divided by adjusted weighted average diluted common shares outstanding. Excluded from net income available to common stockholders are material gains and expenses related to merger and acquisition-related activities, including divestitures, net of tax. In our judgment, the adjustments made to net income available to common stockholders allow management and investors to better assess our performance in relation to our core net income by removing the volatility associated with certain acquisition-related items and other discrete items that are unrelated to our core business. Weighted average diluted common shares outstanding are adjusted as a result of changes in their dilutive properties given the gain and expense adjustments described herein.
  • “Tangible common stockholders’ equity” is defined as common stockholders’ equity less goodwill and other intangible assets.
  • “Total tangible assets” is defined as total assets less goodwill and other intangible assets.
  • “Tangible book value per share” is defined as tangible common stockholders’ equity divided by total common shares outstanding. This measure is important to investors interested in changes from period-to-period in book value per share exclusive of changes in intangible assets.
  • “Tangible common stockholders’ equity ratio” is defined as the ratio of tangible common stockholders’ equity divided by total tangible assets. We believe that this measure is important to many investors in the marketplace who are interested in relative changes from period-to period in common equity and total assets, each exclusive of changes in intangible assets.
  • “Return on Average Tangible Common Equity” is defined as net income available to common stockholders divided by average tangible common stockholders’ equity.
  • “Adjusted efficiency ratio” is defined as non-interest expenses divided by our operating revenue, which is equal to net interest income plus non-interest income. Also excluded are material gains and expenses related to merger and acquisition-related activities, including divestitures. In our judgment, the adjustments made to operating revenue and non-interest expense allow management and investors to better assess our performance in relation to our core operating revenue by removing the volatility associated with certain acquisition-related items and other discrete items that are unrelated to our core business.
  • “Adjusted net non-interest expense to average total assets” is defined as non-interest expenses net of non-interest income divided by total average assets. Excluded are material gains and expenses related to merger and acquisition-related activities, including divestitures. This metric is used by our management to better assess our operating efficiency.
2)Performance ratios include discount accretion on purchased loans for the periods presented as follows:
 For the Three Months Ended
(Dollars in thousands)March 31,2021 December 31,2020 September 30,2020 June 30,2020 March 31,2020
Loan discount accretion$3,501  $2,334  $4,104  $2,139  $2,134 
3)Asset quality ratios exclude loans held for sale, except for non-performing assets to total assets.
  
4)Current quarter ratios are preliminary.

Source: Triumph Bancorp, Inc.

Investor Relations:Luke WyseSenior Vice President, Finance & Investor Relationslwyse@tbkbank.com214-365-6936

Media Contact:Amanda TavackoliSenior Vice President, Director of Corporate Communicationatavackoli@tbkbank.com214-365-6930

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