UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): April 21, 2021
(Exact name of registrant as specified in its charter)
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||||||
(Address of Principal Executive Offices) | (Zip Code) | |||||||
(214 ) 365-6900
(Registrant’s telephone number, including area code)
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2b) | |||||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4c) | |||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Item 2.02.Results of Operations and Financial Condition
On April 21, 2021, Triumph Bancorp, Inc. (the “Company”) issued a press release that announced its 2021 first quarter earnings. A copy of the press release is attached hereto as Exhibit 99.1 and incorporated by reference herein. This press release includes certain non-GAAP financial measures. A reconciliation of those measures to the most directly comparable GAAP measures is included as a table in the press release. The information in this Item 2.02, including Exhibit 99.1, shall be considered furnished for purposes of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and shall not be deemed “filed” for any purpose.
Item 7.01.Regulation FD Disclosure
In addition, this Form 8-K includes a copy of the Company’s presentation to analysts and investors for its quarter ended March 31, 2021, which is attached hereto as Exhibit 99.2. The information in this Item 7.01, including Exhibit 99.2, shall be considered furnished for purposes of the Exchange Act and shall not be deemed “filed” for any purpose.
Forward-Looking Statements
This Current Report on Form 8-K 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 (“SEC”) on February 12, 2021.
Item 9.01.Financial Statements and Exhibits
(d)Exhibits.
| Exhibit | Description | ||||
| 99.1 | |||||
| 99.2 | |||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | ||||
EXHIBIT INDEX
| Exhibit | Description | ||||
| 99.1 | |||||
| 99.2 | |||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | ||||
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.
TRIUMPH BANCORP, INC. | |||||
| By: | /s/ Adam D. Nelson | ||||
| Name: Adam D. Nelson Title: Executive Vice President & General Counsel | |||||
Date: April 21, 2021
Exhibit 99.1
Triumph Bancorp Reports First Quarter Net Income to Common Stockholders of $33.1 million
DALLAS – April 21, 2021 (GLOBE NEWSWIRE) – 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:
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•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.
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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
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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.
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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 assets | 2.29 | % | 2.21 | % | 1.65 | % | 0.99 | % | (0.36 | %) | |||||||||||||||||||
| Return on average total equity | 18.42 | % | 17.73 | % | 13.24 | % | 8.86 | % | (2.85 | %) | |||||||||||||||||||
| Return on average common equity | 19.14 | % | 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 deposits | 0.41 | % | 0.54 | % | 0.79 | % | 1.08 | % | 1.34 | % | |||||||||||||||||||
| Cost of total deposits | 0.28 | % | 0.38 | % | 0.56 | % | 0.79 | % | 1.05 | % | |||||||||||||||||||
| Cost of total funds | 0.42 | % | 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 assets | 3.14 | % | 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 ratio | 62.57 | % | 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 loans | 1.96 | % | 3.22 | % | 2.40 | % | 1.50 | % | 1.99 | % | |||||||||||||||||||
| Non-performing loans to total loans | 1.17 | % | 1.16 | % | 1.17 | % | 1.27 | % | 1.26 | % | |||||||||||||||||||
| Non-performing assets to total assets | 1.15 | % | 1.15 | % | 1.52 | % | 1.20 | % | 1.09 | % | |||||||||||||||||||
| ACL to non-performing loans | 80.87 | % | 164.98 | % | 159.67 | % | 97.66 | % | 82.37 | % | |||||||||||||||||||
| ACL to total loans | 0.94 | % | 1.92 | % | 1.88 | % | 1.24 | % | 1.04 | % | |||||||||||||||||||
| Net charge-offs to average loans | 0.85 | % | 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 assets | 13.58 | % | 13.03 | % | 12.94 | % | 13.44 | % | 11.63 | % | |||||||||||||||||||
| Total equity to total assets | 12.53 | % | 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 period | 24,882,929 | 24,868,218 | 24,851,601 | 24,202,686 | 24,101,120 | ||||||||||||||||||||||||
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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 sale | 205,330 | 224,310 | 242,802 | 331,126 | 302,122 | ||||||||||||||||||||||||
| Securities - held to maturity, net | 5,828 | 5,919 | 6,096 | 6,285 | 8,217 | ||||||||||||||||||||||||
| Equity securities | 5,826 | 5,826 | 6,040 | 6,411 | 5,678 | ||||||||||||||||||||||||
| Loans held for sale | 22,663 | 24,546 | 36,716 | 50,382 | 4,431 | ||||||||||||||||||||||||
| Loans held for investment | 5,084,512 | 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, net | 5,036,488 | 4,901,037 | 4,761,916 | 4,338,698 | 4,275,816 | ||||||||||||||||||||||||
| Assets held for sale | — | — | — | — | 97,895 | ||||||||||||||||||||||||
| FHLB and other restricted stock | 9,807 | 6,751 | 18,464 | 26,345 | 37,080 | ||||||||||||||||||||||||
| Premises and equipment, net | 105,390 | 103,404 | 105,455 | 107,736 | 98,363 | ||||||||||||||||||||||||
| Other real estate owned ("OREO"), net | 1,421 | 1,432 | 1,704 | 1,962 | 2,540 | ||||||||||||||||||||||||
| Goodwill and intangible assets, net | 188,006 | 189,922 | 192,041 | 186,162 | 188,208 | ||||||||||||||||||||||||
| Bank-owned life insurance | 41,805 | 41,608 | 41,440 | 41,298 | 41,122 | ||||||||||||||||||||||||
| Deferred tax asset, net | 1,260 | 6,427 | 7,716 | 8,544 | 9,457 | ||||||||||||||||||||||||
| Indemnification asset | 5,246 | 36,225 | 31,218 | — | — | ||||||||||||||||||||||||
| Other assets | 89,747 | 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 deposits | 3,152,012 | 3,363,815 | 2,932,201 | 2,941,383 | 2,835,603 | ||||||||||||||||||||||||
| Total deposits | 4,789,665 | 4,716,600 | 4,248,101 | 4,062,332 | 3,682,015 | ||||||||||||||||||||||||
| Customer repurchase agreements | 2,668 | 3,099 | 14,192 | 6,732 | 3,693 | ||||||||||||||||||||||||
| Federal Home Loan Bank advances | 180,000 | 105,000 | 435,000 | 455,000 | 850,000 | ||||||||||||||||||||||||
| Payment Protection Program Liquidity Facility | 158,796 | 191,860 | 223,713 | 223,809 | — | ||||||||||||||||||||||||
| Subordinated notes | 87,564 | 87,509 | 87,455 | 87,402 | 87,347 | ||||||||||||||||||||||||
| Junior subordinated debentures | 40,201 | 40,072 | 39,944 | 39,816 | 39,689 | ||||||||||||||||||||||||
| Other liabilities | 76,730 | 64,870 | 94,540 | 85,531 | 101,638 | ||||||||||||||||||||||||
| Total liabilities | 5,335,624 | 5,209,010 | 5,142,945 | 4,960,622 | 4,764,382 | ||||||||||||||||||||||||
| EQUITY | |||||||||||||||||||||||||||||
| Preferred Stock | 45,000 | 45,000 | 45,000 | 45,000 | — | ||||||||||||||||||||||||
| Common stock | 280 | 280 | 279 | 273 | 272 | ||||||||||||||||||||||||
| Additional paid-in-capital | 490,699 | 489,151 | 488,094 | 472,795 | 474,441 | ||||||||||||||||||||||||
| Treasury stock, at cost | (103,059) | (103,052) | (102,942) | (102,888) | (102,677) | ||||||||||||||||||||||||
| Retained earnings | 322,705 | 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' equity | 764,004 | 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 | |||||||||||||||||||
6
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 fees | 37,795 | 37,573 | 31,468 | 21,101 | 24,292 | ||||||||||||||||||||||||
| Securities | 1,650 | 1,519 | 1,927 | 2,676 | 2,107 | ||||||||||||||||||||||||
| FHLB and other restricted stock | 76 | 56 | 122 | 148 | 204 | ||||||||||||||||||||||||
| Cash deposits | 126 | 68 | 73 | 79 | 488 | ||||||||||||||||||||||||
| Total interest income | 88,353 | 89,939 | 82,364 | 74,398 | 75,414 | ||||||||||||||||||||||||
| Interest expense: | |||||||||||||||||||||||||||||
| Deposits | 3,372 | 4,308 | 5,834 | 7,584 | 9,677 | ||||||||||||||||||||||||
| Subordinated notes | 1,349 | 1,347 | 1,348 | 1,321 | 1,347 | ||||||||||||||||||||||||
| Junior subordinated debentures | 442 | 452 | 462 | 554 | 646 | ||||||||||||||||||||||||
| Other borrowings | 170 | 234 | 341 | 688 | 1,244 | ||||||||||||||||||||||||
| Total interest expense | 5,333 | 6,341 | 7,985 | 10,147 | 12,914 | ||||||||||||||||||||||||
| Net interest income | 83,020 | 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 deposits | 1,787 | 1,643 | 1,470 | 573 | 1,588 | ||||||||||||||||||||||||
| Card income | 1,972 | 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 income | 2,249 | 1,615 | 1,402 | 1,304 | 1,686 | ||||||||||||||||||||||||
| Insurance commissions | 1,486 | 1,327 | 990 | 864 | 1,051 | ||||||||||||||||||||||||
| Gain on sale of subsidiary | — | — | — | 9,758 | — | ||||||||||||||||||||||||
| Other | 6,877 | 16,053 | 1,472 | 5,627 | 1,571 | ||||||||||||||||||||||||
| Total non-interest income | 14,291 | 22,386 | 10,493 | 20,029 | 7,477 | ||||||||||||||||||||||||
| Non-interest expense: | |||||||||||||||||||||||||||||
| Salaries and employee benefits | 35,980 | 33,798 | 31,651 | 30,804 | 30,722 | ||||||||||||||||||||||||
| Occupancy, furniture and equipment | 5,779 | 7,046 | 5,574 | 4,964 | 5,182 | ||||||||||||||||||||||||
| FDIC insurance and other regulatory assessments | 977 | 350 | 360 | 495 | 315 | ||||||||||||||||||||||||
| Professional fees | 2,545 | 2,326 | 3,265 | 1,651 | 2,107 | ||||||||||||||||||||||||
| Amortization of intangible assets | 1,975 | 2,065 | 2,141 | 2,046 | 2,078 | ||||||||||||||||||||||||
| Advertising and promotion | 890 | 1,170 | 1,105 | 1,151 | 1,292 | ||||||||||||||||||||||||
| Communications and technology | 5,900 | 5,639 | 5,569 | 5,444 | 5,501 | ||||||||||||||||||||||||
| Other | 6,846 | 6,904 | 5,632 | 6,171 | 7,556 | ||||||||||||||||||||||||
| Total non-interest expense | 60,892 | 59,298 | 55,297 | 52,726 | 54,753 | ||||||||||||||||||||||||
| Net income (loss) before income tax | 44,264 | 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) | |||||||||||||||||||
7
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 outstanding | 24,675,109 | 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 outstanding | 24,675,109 | 24,653,099 | 24,592,092 | 23,987,049 | 24,314,329 | ||||||||||||||||||||||||
| Dilutive effects of: | |||||||||||||||||||||||||||||
| Assumed exercises of stock options | 130,016 | 101,664 | 48,102 | 38,627 | — | ||||||||||||||||||||||||
| Restricted stock awards | 169,514 | 136,239 | 67,907 | 37,751 | — | ||||||||||||||||||||||||
| Restricted stock units | 66,714 | 50,156 | 18,192 | 4,689 | — | ||||||||||||||||||||||||
| Performance stock units - market based | 128,167 | 112,228 | 76,095 | 6,326 | — | ||||||||||||||||||||||||
| Performance stock units - performance based | — | — | — | — | — | ||||||||||||||||||||||||
| Employee stock purchase plan | 1,418 | — | — | — | — | ||||||||||||||||||||||||
| Weighted average shares outstanding - diluted | 25,170,938 | 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 based | 256,625 | 256,625 | 261,125 | 262,625 | 254,000 | ||||||||||||||||||||||||
| Employee stock purchase plan | — | — | — | — | — | ||||||||||||||||||||||||
8
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, land | 223,841 | 219,647 | 244,512 | 213,617 | 198,050 | ||||||||||||||||||||||||
| 1-4 family residential properties | 142,859 | 157,147 | 164,785 | 168,707 | 169,703 | ||||||||||||||||||||||||
| Farmland | 97,835 | 103,685 | 110,966 | 125,259 | 133,579 | ||||||||||||||||||||||||
| Commercial | 1,581,125 | 1,562,957 | 1,536,903 | 1,518,656 | 1,412,822 | ||||||||||||||||||||||||
| Factored receivables | 1,208,718 | 1,120,770 | 1,016,337 | 561,576 | 661,100 | ||||||||||||||||||||||||
| Consumer | 14,332 | 15,838 | 17,106 | 18,450 | 20,326 | ||||||||||||||||||||||||
| Mortgage warehouse | 1,031,692 | 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 lending | 188,825 | 180,488 | 160,711 | 176,235 | 245,001 | ||||||||||||||||||||||||
| Factored receivables | 1,208,718 | 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 loans | 40 | % | 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 credit | 159,436 | 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 loans | 23 | % | 24 | % | 24 | % | 24 | % | 21 | % | |||||||||||||||||||
9
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 finance | 1,899,264 | 1,798,550 | 1,480,593 | 1,259,584 | 1,292,749 | ||||||||||||||||||||||||
| Average national lending | 1,106,010 | 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 yield | 4.90 | % | 5.46 | % | 5.05 | % | 5.23 | % | 5.67 | % | |||||||||||||||||||
| Commercial finance yield | 10.81 | % | 10.74 | % | 11.23 | % | 10.21 | % | 11.00 | % | |||||||||||||||||||
| National lending yield | 5.00 | % | 4.58 | % | 4.98 | % | 4.67 | % | 4.80 | % | |||||||||||||||||||
| Total loan yield | 7.24 | % | 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 balance | 13.85 | % | 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 concentration | 90 | % | 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 revenue | 37,581,000 | 36,797,000 | 31,225,000 | 21,459,000 | 24,793,000 | ||||||||||||||||||||||||
| Average net funds employed | 936,528,000 | 924,899,000 | 694,170,000 | 477,112,000 | 537,138,000 | ||||||||||||||||||||||||
| Yield on average net funds employed | 16.27 | % | 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 purchased | 1,188,678 | 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.
10
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 demand | 729,364 | 688,680 | 634,272 | 648,309 | 583,445 | ||||||||||||||||||||||||
| Individual retirement accounts | 89,748 | 92,584 | 94,933 | 97,388 | 101,743 | ||||||||||||||||||||||||
| Money market | 402,070 | 393,325 | 384,476 | 397,914 | 412,376 | ||||||||||||||||||||||||
| Savings | 464,035 | 421,488 | 405,954 | 391,624 | 367,163 | ||||||||||||||||||||||||
| Certificates of deposit | 740,694 | 790,844 | 857,514 | 937,766 | 1,056,012 | ||||||||||||||||||||||||
| Brokered time deposits | 516,006 | 516,786 | 344,986 | 258,378 | 314,864 | ||||||||||||||||||||||||
| Other brokered deposits | 210,095 | 460,108 | 210,066 | 210,004 | — | ||||||||||||||||||||||||
| Total deposits | $ | 4,789,665 | $ | 4,716,600 | $ | 4,248,101 | $ | 4,062,332 | $ | 3,682,015 | |||||||||||||||||||
11
Net interest margin summarized for the three months ended:
| March 31, 2021 | December 31, 2020 | ||||||||||||||||||||||||||||||||||
| (Dollars in thousands) | Average Balance | Interest | Average Rate | Average Balance | Interest | Average Rate | |||||||||||||||||||||||||||||
| Interest earning assets: | |||||||||||||||||||||||||||||||||||
| Interest earning cash balances | $ | 478,275 | $ | 126 | 0.11 | % | $ | 230,893 | $ | 68 | 0.12 | % | |||||||||||||||||||||||
| Taxable securities | 189,407 | 1,428 | 3.06 | % | 202,867 | 1,283 | 2.52 | % | |||||||||||||||||||||||||||
| Tax-exempt securities | 34,717 | 222 | 2.59 | % | 37,070 | 236 | 2.53 | % | |||||||||||||||||||||||||||
| FHLB and other restricted stock | 8,511 | 76 | 3.62 | % | 15,759 | 56 | 1.41 | % | |||||||||||||||||||||||||||
| Loans | 4,848,275 | 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 assets | 454,483 | 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 accounts | 91,074 | 186 | 0.83 | % | 94,328 | 250 | 1.05 | % | |||||||||||||||||||||||||||
| Money market | 398,015 | 229 | 0.23 | % | 395,900 | 257 | 0.26 | % | |||||||||||||||||||||||||||
| Savings | 446,322 | 167 | 0.15 | % | 413,214 | 157 | 0.15 | % | |||||||||||||||||||||||||||
| Certificates of deposit | 765,244 | 1,955 | 1.04 | % | 814,954 | 2,633 | 1.29 | % | |||||||||||||||||||||||||||
| Brokered time deposits | 167,881 | 179 | 0.43 | % | 221,346 | 528 | 0.95 | % | |||||||||||||||||||||||||||
| Other brokered deposits | 803,009 | 272 | 0.14 | % | 560,805 | 248 | 0.18 | % | |||||||||||||||||||||||||||
| Total interest bearing deposits | 3,373,304 | 3,372 | 0.41 | % | 3,163,005 | 4,308 | 0.54 | % | |||||||||||||||||||||||||||
| Federal Home Loan Bank advances | 35,833 | 24 | 0.27 | % | 80,217 | 43 | 0.21 | % | |||||||||||||||||||||||||||
| Subordinated notes | 87,532 | 1,349 | 6.25 | % | 87,476 | 1,347 | 6.13 | % | |||||||||||||||||||||||||||
| Junior subordinated debentures | 40,125 | 442 | 4.47 | % | 39,996 | 452 | 4.50 | % | |||||||||||||||||||||||||||
| Other borrowings | 171,902 | 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 deposits | 1,494,001 | 1,392,389 | |||||||||||||||||||||||||||||||||
| Other liabilities | 64,122 | 81,073 | |||||||||||||||||||||||||||||||||
| Total equity | 746,849 | 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.
12
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 | ||||||||||||||||||||||
13
| 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.
###
14
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
15
April 21, 2021 Q1 2021 Earnings Release Exhibit 99.2
PAGE 2 DISCLAIMER FORWARD-LOOKING STATEMENTS This presentation 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 (including related to our pending litigation with the United States Postal Service and a counterparty relating to certain misdirected payments) and other legal proceedings against us or to which we become subject; changes in carry-forwards of net operating losses; changes in federal tax law or policy; the impact of recent and future legislative and regulatory changes, including changes in banking, securities and tax laws and regulations, such as the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) and their application by our regulators; governmental monetary and fiscal policies; changes in the scope and cost of FDIC, insurance and other coverages; failure to receive regulatory approval for future acquisitions; and increases in our capital requirements. While forward-looking statements reflect our good-faith beliefs, they are not guarantees of future performance. All forward-looking statements are necessarily only estimates of future results. Accordingly, actual results may differ materially from those expressed in or contemplated by the particular forward-looking statement, and, therefore, you are cautioned not to place undue reliance on such statements. Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events or circumstances, except as required by applicable law. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see “Risk Factors” and the forward-looking statement disclosure contained in Triumph’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission on February 12, 2021. Non-GAAP Financial Measures This presentation 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 the presentation. Numbers in this presentation may not sum due to rounding. Unless otherwise referenced, all data presented is as of March 31, 2021.
PAGE 3 COMPANY OVERVIEW Triumph Bancorp, Inc. (NASDAQ: TBK) (“Triumph”) 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 TOTAL ASSETS $6.1 billion MARKET CAP(1) $2.3 billion TOTAL LOANS $5.1 billion TOTAL DEPOSITS $4.8 billion Data is as of March 31, 2021, except as noted below (1) Data is as of April 19, 2021
PAGE 4 Q1 2021 RESULTS • Diluted earnings per share of $1.32 for the quarter • Total loans held for investment increased $87.7 million ◦ The commercial finance portfolio increased $146.4 million, the national lending portfolio decreased $30.5 million, and the community banking portfolio decreased $28.2 million • Total deposits increased $73.1 million, or 1.5%. Noninterest bearing demand deposits grew $284.9 million, or 21.1% • Credit loss expense was a benefit of $7.8 million driven by: ◦ A $9.5 million reduction in ACL due to improvements in economic forecasts. ◦ $1.9 million increase in ACL due to increases in specific reserves, including $2.9 million expense related to the TFS acquisition • Net charge-offs were $41.3 million, including a fully reserved $41.3 million charge-off related to the TFS acquisition; $35.6 million of which was indemnified by Covenant Logistics Group, Inc. • The $2.9 million increase in required ACL as well as accretion of most of the fair value discount on the indemnification asset resulted in a $4.7 million pre-tax gain on the indemnification asset which was recorded through non-interest income. $33.1 million Net income to common stockholders LOAN GROWTH 1.8% Loans Held for Investment NIM 6.06% Net Interest Margin1 ROATCE 26.19% Return on Average Tangible Common Equity2 TCE/TA 8.98% Tangible Common Equity / Tangible Assets2 1 Includes discount accretion on purchased loans of $3,501 in Q1 2021 (dollars in thousands) 2 Reconciliations of non-GAAP financial measures can be found at the end of the presentation
PAGE 5 LOAN PORTFOLIO TOTAL LOANS (in millions) COMMUNITY BANKING Focused on core deposit generation and business lending in the communities we serve NATIONAL LENDING Mortgage warehouse to provide portfolio diversification and liquid credit to opportunistically supplement our loan portfolio $5,107.2 Total loans include $5.7 million of 1-4 residential mortgage loans held for sale and $16.9 million of liquid credit loans held for sale 37% 39% 24% $2,020.8 $1,878.3 $1,208.1 COMMERCIAL FINANCE Factoring, asset based lending, and equipment finance produce top tier return on assets
PAGE 6 LOAN PORTFOLIO DETAIL COMMUNITY BANKING 37% of Total Portfolio NATIONAL LENDING 24% of Total Portfolio COMMERCIAL FINANCE 39% of Total Portfolio $1,878.3 $1,208.1$2,020.8 Chart data labels – dollars in millions (1) Includes $5.7 million of 1-4 residential mortgage loans held for sale (2) Includes $16.9 million of liquid credit loans held for sale 67% 32% 1% REAL ESTATE Commercial Real Estate $ 784.1 Construction, Land & Development $ 223.8 1-4 Family Residential(1) $ 148.6 Farmland $ 97.8 COMMERCIAL Agriculture $ 83.9 Paycheck Protection Program $ 237.3 General $ 288.5 CONSUMER $ 14.3 60% 31% 9% 85% 15% FACTORED RECEIVABLES Triumph Business Capital $ 1,119.0 Other Factored Receivables $ 89.7 EQUIPMENT FINANCE $ 623.3 ASSET-BASED LENDING $ 188.8 MORTGAGE WAREHOUSE $ 1,031.7 LIQUID CREDIT(2) $ 176.4
PAGE 7 TRANSPORTATION FINANCE Gross transportation revenue consists of factoring revenue from transportation clients, interest and fees from commercial loans to borrowers in transportation industries, transportation related insurance commissions, and revenue from TriumphPay. Total gross revenue consists of total interest income and noninterest income. Transportation assets include transportation related factored receivables and commercial loans to borrowers in transportation industries. By proudly banking the trucking industry, we intend to be a leading player in a large industry that is a profitable sector for a well-positioned bank. Products we offer to transportation clients include: ◦ Checking ◦ Treasury management ◦ Factoring ◦ Equipment finance ◦ Commercial lending ◦ Fuel cards ◦ Insurance brokerage ◦ TriumphPay Gross Transportation Revenue as a percent of Total Gross Reveue Transportation Assets as a percent of Total Assets 1Q20 2Q20 3Q20 4Q20 1Q21 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%
PAGE 8 TRIUMPH BUSINESS CAPITAL FACTORING • Yield of 13.85% in the current quarter • Net charge-off rate of 3.95% in the current quarter* On July 8, 2020, we acquired $107.5 million of factored receivables from Transport Financial Solutions. On June 2, 2018, we acquired $131.0 million of transportation factoring assets via the acquisition of Interstate Capital Corporation and certain of its affiliates [Pie Chart] Transportation Non-Transportation 89% 11% [Bar/Line Chart] Total Purchases Number of Invoices Purchased [Bar Chart] Average Invoice Size CLIENT PORTFOLIO MIX 90% 10% Transportation Non-Transportation T o ta l P u r c h a s e s ( in th o u s a n d s ) N u m b e r o f In v o ic e s P u r c h a s e d Total Amount Purchased Number of Invoices Purchased 4 Q 14 3 Q 15 2 Q 16 1Q 17 4 Q 17 3 Q 18 2 Q 19 1Q 2 0 4 Q 2 0 $0 $300,000 $600,000 $900,000 $1,200,000 $1,500,000 $1,800,000 $2,100,000 $2,400,000 0 300,000 600,000 900,000 1,200,000 1,500,000 1,800,000 2,100,000 2,400,000 T o ta l P u r c h a s e s Average Invoice Size Average Transportation Invoice Size 4 Q 14 3 Q 15 2 Q 16 1Q 17 4 Q 17 3 Q 18 2 Q 19 1Q 2 0 4 Q 2 0 $0 $500 $1,000 $1,500 $2,000 $2,500 * Includes $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. The charge-off contributed approximately 3.94% to the net charge-off rate for the quarter
PAGE 9 CARRIER PAYMENT PLATFORM CLIENTS ON PLATFORM [Bar/Line Chart] Invoice and Payment Trends Number of Invoices Payment Amounts Processed Total payment amounts processed (annualized) Total invoices processed (annualized) N u m b e r o f In v o ic e s (i n t h o u s a n d s ) P a y m e n t A m o u n ts P r o c e s s e d (in m illio n s ) INVOICE AND PAYMENT TRENDS Total payment amounts processed (annualized) Total invoices processed (annualized) 1Q20 2Q20 3Q20 4Q20 1Q21 — 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 11,000 $— $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 $9,000 $10,000
PAGE 10 Manual Process Email Paperwork Upload Paperwork Via Portal Carrier Doctype Associate with load and carrier Send Check Verification Phone Call Pay Status Call 30-45 Days Application Phone Call Phone Calls Doctype Associate with debtor and carrier Verification Phone Call Email Paperwork Pay Status Call Receive in Lockbox Post Payment Application Phone Call Purchase Decision Factor Broker / 3PL CURRENT MANUAL PROCESS
PAGE 11 Factor Portal Submit Paperwork Factor Specific Load Data Submit Paperwork Paperwork Status • Receive and Post Payment Approve • Doctype • Carrier • Load Funds drafted once per day Load Data Carrier/Load Mapping Load/Invoice Mapping Payment/Invoice Mapping Carrier/Load Mapping Manual Process Phone Calls Carrier Factor Broker / 3PL THE NETWORK IN ACTION
PAGE 12 THE ROADMAP PRESENTMENT SETTLEMENT PAYMENT TriumphPay HubTran P Carriers submitting paperwork to brokers for payment P Image capture on mobile devices P Upload in web portal P Email delivery in unstructured data format P Structured data integration into TMS, HubTran or accounting system Å Network factors submitting paperwork and receiving automated feedback from brokers Å Notice of Assignment and Letter of Release automation P Ability to settle the final charges on a load P Workflow tools for brokers to process paperwork P Email and unstructured data ingestion P Export data back into broker’s TMS and/or accounting system Å Automated approval engine (WIP) Å Factor automation for approval and verification of invoices (in production) P Remittance of funds from payor to carrier via ACH, wire, or check P Accelerated payment for a discount with rebate to payor Å Automated payment exports Å Factor automated cash application P Completed Å In Process
PAGE 13 ASSET QUALITY N e t C h a n g e s o ff s NCOs / AVERAGE LOANS 1Q20 2Q20 3Q20 4Q20 1Q21* 0.00% 0.15% 0.30% 0.45% 0.60% 0.75% 0.90% N o n -p e r fo r m in g A s s e ts NPAs / TOTAL ASSETS 1Q20 2Q20 3Q20 4Q20 1Q21 0.0% 0.3% 0.6% 0.9% 1.2% 1.5% 1.8% 2.1% 2.4% P A S T D U E PAST DUE / TOTAL LOANS 1Q20 2Q20 3Q20 4Q20 1Q21 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% A C L ACL / TOTAL LOANS 1Q20 2Q20 3Q20 4Q20 1Q21 0.00% 0.50% 1.00% 1.50% 2.00% * Includes $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. The charge-off contributed approximately 0.85% to the net charge-off rate for the quarter
PAGE 14 COVID-19 EXPOSURE INDUSTRY TOTAL EXPOSURE 1 (MILLIONS) % OF GROSS LOANS LOANS IN DEFERRAL (MILLIONS) Retail $188.0 3.7% $— Hospitality $120.6 2.4% $22.2 Energy $80.5 1.6% $— Health Care/Senior Care $39.2 0.8% $— Restaurants $29.2 0.6% $6.7 ENERGY TOTAL EXPOSURE 1 (MILLIONS) RETAIL TOTAL EXPOSURE1 (MILLIONS) Equipment finance $40.7 Vehicle lending (DFP) $64.5 Factoring $26.6 Retail real estate $50.0 Asset-based lending $4.7 Factoring $26.6 Other $8.5 Grocery and sundries2 $26.2 No exposure to E&P or reserve-based lending Other $20.7 Exposure to industries most impacted by COVID-19 as of March 31, 2021 1 On balance sheet loans and unfunded commitments to lend; excludes Paycheck Protection Program loans. 2 Includes exposure to grocery, pharmacy, gas stations, convenience stores and pet stores.
PAGE 15 COVID-19 LOAN DEFERRALS (Dollars in millions) BALANCE OF LOANS IN DEFERRAL TOTAL LOANS % OF PORTFOLIO 4Q20 1Q21 1Q21 1Q21 Commercial real estate $70.0 $71.7 $784.1 9% Construction, land development, land $18.8 $1.3 $223.8 1% 1-4 family residential $1.1 $1.2 $142.9 1% Farmland $— $— $97.8 —% Commercial $14.6 $11.1 $1,581.1 1% Factored receivables $— $— $1,208.7 —% Consumer $0.1 $— $14.3 —% Mortgage warehouse $— $— $1,031.7 —% Total $104.6 $85.3 $5,084.5 2% Loans modified for borrowers impacted by the COVID-19 pandemic have decreased from the prior quarter.
PAGE 16 DEPOSIT MIX (1) June 30, 2019 is the quarter end prior to the strategic shift we announced during the second half of 2019. Non-interest bearing demand Interest bearing demand Individual retirement accounts Money market Savings Certificates of deposit Brokered time deposits Other brokered deposits 29% 14% 2% 8% 9% 17% 11% 10% Cost of interest bearing deposits 0.54% Cost of total funds 0.51% Non-interest bearing demand 35% Interest bearing demand 15% Individual retirement accounts 2% Money market 8% Savings 10% Certificates of deposit 15% Brokered time deposits 11% Other brokered deposits 4% March 31, 2021 Changes From June 30, 2019 (1) to March 31, 2021: Non-interest bearing demand up $953 million from 19% to 34% of deposit base CD balances down from 31% to 15% with an average cost of 1.04% in the current quarter Cost of total deposits down by 75% from 1.14% to 0.28%
PAGE 17 FINANCIAL HIGHLIGHTS 1) Reconciliations of non-GAAP financial measures can be found at the end of the presentation. Adjusted metrics exclude material gains and expenses related to acquisition-related activities, net of tax where applicable. 2) Includes discount accretion on purchased loans of $3,501 in 1Q21, $2,334 in 4Q20, $4,104 in 3Q20, $2,139 in 2Q20, and $2,134 in 1Q20 (dollars in thousands). 3) Asset quality ratios exclude loans held for sale, except for nonperforming assets. 4) Current quarter ratios are preliminary As of and for the Three Months Ended Key Metrics March 31, 2021 December 31, 2020 September 30, 2020 June 30, 2020 March 31, 2020 Performance ratios - annualized Return on average assets 2.29% 2.21% 1.65% 0.99% (0.36%) Return on average tangible common equity (ROATCE) (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 total deposits 0.28% 0.38% 0.56% 0.79% 1.05% Net interest margin(2) 6.06% 6.20% 5.83% 5.11% 5.63% Net non-interest expense to average assets 3.14% 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 ratio 62.57% 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) Non-performing assets to total assets 1.15% 1.15% 1.52% 1.20% 1.09% ACL to total loans 0.94% 1.92% 1.88% 1.24% 1.04% Net charge-offs to average loans 0.85% 0.03% 0.02% 0.02% 0.04% Capital(4) Tier 1 capital to average assets 10.89% 10.80% 10.75% 9.98% 9.62% Tier 1 capital to risk-weighted assets 11.28% 10.60% 10.32% 10.57% 9.03% Common equity tier 1 capital to risk-weighted assets 9.72% 9.05% 8.72% 8.84% 8.24% Total capital to risk-weighted assets 13.58% 13.03% 12.94% 13.44% 11.63% 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)
PAGE 18 PLATFORM OVERVIEW – BRANCH NETWORK 63 TOTAL BRANCHES • 38 in Colorado • 15 in Illinois • 3 in Iowa • 3 in New Mexico • 2 in Kansas • 2 in Texas BRANCH LOCATIONS as of March 31, 2021
PAGE 19 PLATFORM OVERVIEW – LENDING 24% Texas GEOGRAPHIC LENDING CONCENTRATIONS1 as of March 31, 2021 17% Colorado 1% Kansas 6% Iowa 13% Illinois 2% New Mexico 1 States with a physical branch presence. Excludes factored receivables
PAGE 20 COVID-19 RESPONSE We are supporting our customers and communities affected by the COVID-19 pandemic. Loan payment deferral program and participation in the Paycheck Protection Program (PPP). • As of March 31, 2021, our balance sheet reflected short-term deferrals on outstanding loan balances of $85.3 million to assist customers impacted by COVID-19. These deferred balances carried accrued interest of $0.5 million and the modifications were not considered troubled debt restructurings. • 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 with a total 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. We continue to invest in, serve, and care for our communities. Local teams have made donations and purchased meals for those in need, including first responders. Most branches remain open with drive-through access and newly re-opened lobby access. The majority of our non-retail staff team members are working from home with minimal impact to our operations and service levels.
PAGE 21 NON-GAAP FINANCIAL RECONCILIATION Metrics and non-GAAP financial reconciliation As of and for the Three Months Ended December 31, September 30, June 30, March 31, December 31, (Dollars in thousands, except per share amounts) 2020 2020 2020 2020 2019 Net income available to common stockholders $31,328 $22,005 $13,440 $(4,450) $16,709 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 $31,328 $22,635 $6,133 $(4,450) $16,709 Weighted average shares outstanding - diluted 25,053,386 24,802,388 24,074,442 24,314,329 25,254,862 Adjusted diluted earnings per common share $1.25 $0.91 $0.25 $(0.18) $0.66 Average total stockholders' equity $720,892 $688,327 $610,258 $627,369 $647,546 Average preferred stock liquidation preference (45,000) (45,000) (5,934) — — Average total common stockholders' equity 675,892 643,327 604,324 627,369 647,546 Average goodwill and other intangibles (191,017) (192,682) (187,255) (189,359) (191,551) Average tangible common stockholders' equity $484,875 $450,645 $417,069 $438,010 $455,995 Net income (loss) $31,328 $22,005 $13,440 $(4,450) $16,709 Average tangible common equity 484,875 450,645 417,069 438,010 455,995 Return on average tangible common equity 25.70% 19.43% 12.96% (4.09%) 14.54% Adjusted efficiency ratio: Net interest income $83,598 $74,379 $64,251 $62,500 $66,408 Non-interest income 22,386 10,493 20,029 7,477 8,666 Operating revenue 105,984 84,872 84,280 69,977 75,074 Gain on sale of subsidiary or division — — (9,758) — — Adjusted operating revenue $105,984 $84,872 $74,522 $69,977 $75,074 Non-interest expenses $59,298 $55,297 $52,726 $54,753 $52,661 Transaction costs — (827) — — — Adjusted non-interest expense $59,298 $54,470 $52,726 $54,753 $52,661 Adjusted efficiency ratio 55.95% 64.18% 70.75% 78.24% 70.15% 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 $ 33,122 $ 31,328 $ 22,635 $ 6,133 $ (4,450) Weighted average shares outstanding - diluted 25,171 25,053 24,802 24,074 24,314 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 (loss) $ 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) % Adjusted efficiency ratio: 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 expense $ 60,892 $ 59,298 $ 54,470 $ 52,726 $ 54,753 Adjusted efficiency ratio 62.57 % 55.95 % 64.18 % 70.75 % 78.24 %
PAGE 22 NON-GAAP FINANCIAL RECONCILIATION Metrics and non-GAAP financial reconciliation (cont'd) As of and for the Three Months Ended December 31, September 30, June 30, March 31, December 31, (Dollars in thousands, except per share amounts) 2020 2020 2020 2020 2019 Adjusted net non-interest expense to average assets ratio: Non-interest expenses $59,298 $55,297 $52,726 $54,753 $52,661 Transaction costs — (827) — — — Adjusted non-interest expense 59,298 54,470 52,726 54,753 52,661 Total non-interest income 22,386 10,493 20,029 7,477 8,666 Gain on sale of subsidiary or division — — (9,758) — — Adjusted non-interest income $22,386 $10,493 $10,271 $7,477 $8,666 Adjusted net non-interest expenses $36,912 $43,977 $42,455 $47,276 $43,995 Average total assets $5,788,549 $5,518,708 $5,487,072 $4,906,547 $5,050,860 Adjusted net non-interest expense to average assets ratio 2.54% 3.17% 3.11% 3.88% 3.46% Total stockholders' equity $726,781 $693,842 $656,871 $589,347 $636,590 Preferred stock liquidation preference (45,000) (45,000) (45,000) — — Total common stockholders' equity 681,781 648,842 611,871 589,347 636,590 Goodwill and other intangibles (189,922) (192,041) (186,162) (188,208) (190,286) Tangible common stockholders' equity $491,859 $456,801 $425,709 $401,139 $446,304 Common shares outstanding at end of period 24,868,218 24,851,601 24,202,686 24,101,120 24,964,961 Tangible book value per share $19.78 $18.38 $17.59 $16.64 $17.88 Total assets at end of period $5,935,791 $5,836,787 $5,617,493 $5,353,729 $5,060,297 Goodwill and other intangibles (189,922) (192,041) (186,162) (188,208) (190,286) Tangible assets at period end $5,745,869 $5,644,746 $5,431,331 $5,165,521 $4,870,011 Tangible common stockholders' equity ratio 8.56% 8.09% 7.84% 7.77% 9.16% Metrics and non-GAAP financial reconciliation (cont’d) 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 (Dollars in thousands, except per share amounts) 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 expense 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 at end of period 24,883 24,868 24,852 24,203 24,101 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%