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Triumph Bancorp Reports First Quarter Net Income to Common Stockholders of $13.9 Million

DALLAS, April 29, 2015 (GLOBE NEWSWIRE) -- Triumph Bancorp, Inc. (Nasdaq:TBK) today announced earnings and operating results for the first quarter of 2015.

"Our first quarter 2015 results reflect our opportunistic approach to our business," said Aaron P. Graft, Chief Executive Officer, Triumph Bancorp, Inc. "Our acquisition of Doral Money, Inc. added approximately $700 million to our asset management business and generated a profit for our investors, in addition to core earnings for the quarter."

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 document.

First Quarter Highlights

  • For the first quarter of 2015, net income was $14.0 million and net income available to common stockholders was $13.9 million, compared to net income of $2.8 million and net income available to common stockholders of $2.0 million for the quarter ended December 31, 2014.
  • Triumph Capital Advisors ("TCA") completed the acquisition of Doral Money, Inc. ("DMI"). This transaction added two active collateralized loan obligation ("CLO") management contracts to TCA's portfolio, which increased assets under management by approximately $700 million. Triumph recorded a preliminary bargain purchase gain associated with this transaction of $12.5 million.
  • Fully diluted earnings per share were $0.76 for the quarter ended March 31, 2015, compared to $0.14 for the quarter ended December 31, 2014. Excluding the impact of the net contribution of the DMI acquisition, fully diluted earnings per share were $0.14 for the quarter ended March 31, 2015.
  • For the quarter ended March 31, 2015, excluding the DMI transaction, our annualized return on average common equity and return on average assets were 4.29% and 0.69%, compared to 4.30% and 0.78%, respectively, for the quarter ended December 31, 2014.

Doral Money, Inc. Transaction Summary

Set forth below is a summary of the estimated acquisition date fair value of the assets acquired as part of the DMI acquisition, the consideration transferred, and the resulting bargain purchase gain recorded from the acquisition. As previously disclosed, TCA financed a portion of the consideration paid in the acquisition with the proceeds of a credit facility in an amount equal to the value of the acquired CLO securities, which was repaid immediately following the closing through transfer of the acquired CLO securities to the lender.

Acquisition
Summary
(Dollars in thousands)
Cash $ 8,273
CLO securities 98,316
SNC loans 36,765
Prepaid income tax 3,014
Other assets/liabilities 87
Fair value of DMI net assets $ 146,455
Fair value of CLO contracts 1,918
Net fair value of acquired assets $ 148,373
Consideration transferred (135,864)
Bargain purchase gain, nontaxable $ 12,509
Transaction costs, net of tax (158)
Incremental bonus, net of tax (1,138)
Escrow recovery from Doral Healthcare, net of tax 195
Net contribution of acquisition $ 11,408

In addition to the delivery of the CLO securities to the lender as described above, the shared national credit ("SNC") loan portfolio was sold to third parties shortly following the closing at its acquisition date fair value. There were no material gains or losses associated with this liquidation. Following the delivery of the CLO securities to the lender and the sale of the SNC loan portfolio, the remaining primary assets resulting from the acquisition consist of the cash, prepaid tax asset and CLO contracts set forth above. In conjunction with the transaction, the Company incurred direct transaction expenses of $243 thousand.

Also as a result of the transaction, the Company recognized $300 thousand in other income due to the release of cash previously held in escrow but controlled by DMI as part of the Company's June 2014 purchase agreement to acquire Doral Healthcare Finance, and accrued $1.8 million in incremental bonus expense for the anticipated amount expected to be paid to team members to recognize their contribution to this transaction.

Balance Sheet

Total loans held for investment were $1.011 billion at March 31, 2015, an increase of $5.6 million or 0.6% during the first quarter. This increase was primarily due to continued growth in our commercial finance loan portfolio, which consists of factored receivables, asset based and equipment loans originated under our Triumph Commercial Finance brand, and healthcare asset based loans originated under our Triumph Healthcare Finance brand. Our commercial finance loan portfolio totaled $385.8 million as of March 31, 2015, an increase of $10.4 million or 2.8% in the first quarter of 2015.

Total deposits were $1.174 billion at March 31, 2015, an increase of $8.5 million or 0.7% for the first quarter of 2015. Noninterest-bearing deposits accounted for 14.3% of total deposits and non-time deposits accounted for 50.6% of total deposits. The average cost of our interest-bearing deposits was 0.64% for the quarter ended March 31, 2015 compared to 0.61% for the quarter ended December 31, 2014, on an annualized basis.

Net Interest Income

We earned net interest income for the quarter ended March 31, 2015, of $19.7 million compared to $21.3 million for the quarter ended December 31, 2014. Yields on loans for the quarter ended March 31, 2015 were down 0.48% to 8.50% (8.04% adjusted for loan discount accretion) compared to 8.98% (8.29% adjusted for loan discount accretion) for the quarter ended December 31, 2014. Net interest margin ("NIM") decreased 0.47% to 6.11% for the quarter ended March 31, 2015 from 6.58% for the quarter ended December 31, 2014. Net interest margin adjusted for loan discount accretion was 5.76% for the quarter ended March 31, 2015 compared to 6.05% for the quarter ended December 31, 2014. The decrease in adjusted loan yield and adjusted NIM is largely attributable to the change in the mix of our loan portfolio between higher yielding factored receivables and mortgage warehouse loans during the quarter.

Asset Quality

Our provision for loan losses was $0.6 million for the quarter ended March 31, 2015 compared to $1.8 million for the quarter ended December 31, 2014. We experienced net charge-offs of $0.2 million for the quarter ended March 31, 2015 compared to net charge-offs of $0.3 million for the quarter ended December 31, 2014. From December 31, 2014 to March 31, 2015, our allowance for loan and lease losses ("ALLL") increased from $8.8 million or 0.88% of total loans to $9.3 million or 0.92% of total loans. Nonperforming Assets ("NPAs") improved 11 bps from December 31, 2014 to March 31, 2015 to 1.62% of total assets.

Noninterest Income and Expense

We earned noninterest income for the quarter ended March 31, 2015 of $16.7 million (or $3.9 million excluding the DMI transaction) compared to $3.7 million for the quarter ended December 31, 2014.

For the quarter ended March 31, 2015, noninterest expense totaled $20.8 million (or $18.8 million excluding the DMI transaction), compared to $19.7 million for the quarter ended December 31, 2014, an increase of $1.1 million.

Conference Call Information

Aaron P. Graft, Vice Chairman and CEO and Bryce Fowler, CFO will review the quarterly results in a conference call for investors and analysts beginning at 8:00 a.m. Central Time on Thursday, April 30th, 2015. Dan Karas, Chief Lending Officer of Triumph Savings Bank and Gibran Mahmud, Senior Managing Director at Triumph Capital Advisors will also be available for questions.

To participate in the live conference call, please dial 1 (855) 779-1042 (U.S. and Canada) and enter Conference ID # 21869542. A simultaneous audio-only webcast may be accessed via the Company's website at www.triumphbancorp.com through the Investor Relations, Webcasts and Presentations links, or through a direct link here at http://edge.media-server.com/m/p/c9f3zyrb/lan/en. An archive of this conference call will subsequently be available at this same location on the Company's website.

About Triumph

Headquartered in Dallas, Texas, Triumph Bancorp, Inc. (Nasdaq:TBK) is a financial holding company with a diversified line of community banking, commercial finance and asset management activities. 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: our limited operating history as an integrated company; business and economic conditions generally and in the bank and non-bank financial services industries, nationally and within our local market area; our ability to mitigate our risk exposures; our ability to maintain our historical earnings trends; risks related to the integration of acquired businesses and any future acquisitions; changes in management personnel; interest rate risk; concentration of our factoring services in the transportation industry; credit risk associated with our loan portfolio; lack of seasoning in our loan portfolio; deteriorating asset quality and higher loan charge-offs; time and effort necessary to resolve nonperforming assets; inaccuracy of the assumptions and estimates we make in establishing reserves for probable loan losses and other estimates; lack of liquidity; fluctuations in the fair value and liquidity of the securities we hold for sale; impairment of investment securities, goodwill, other intangible assets or deferred tax assets; risks related to our asset management business; 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 obligations associated with being a public company; the accuracy of our financial statements and related disclosures; material weaknesses in our internal control over financial reporting; system failures or failures to prevent breaches of our network security; the institution and outcome of litigation and other legal proceedings against us or to which we become subject; changes in carry-forwards of net operating losses; changes in federal tax law or policy; the impact of recent and future legislative and regulatory changes, including changes in banking, securities and tax laws and regulations, such as the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act") and their application by our regulators; governmental monetary and fiscal policies; changes in the scope and cost of the Federal Deposit Insurance Corporation insurance and other coverages; failure to receive regulatory approval for future acquisitions; increases in our capital requirements; and risk retention requirements under the Dodd-Frank Act.

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 March 6, 2015.

Non-GAAP Financial Measures

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

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

As of and For the Three Months Ended

Key Metrics
Mar 31,
2015
Dec 31,
2014
Sep 30,
2014
Jun 30,
2014
Mar 31,
2014
Financial Highlights (in thousands)
Total assets $ 1,472,743 $ 1,447,898 $ 1,347,798 $ 1,407,072 $ 1,297,110
Total loans held for investment 1,011,446 1,005,878 977,139 939,517 800,667
Total deposits 1,173,679 1,165,229 1,105,624 1,108,254 1,050,312
Net income available to common stockholders $ 13,852 $ 2,021 $ 9,495 $ 2,285 $ 3,148
Performance ratios - annualized
Return on average assets 3.93% 0.78% 3.01% 0.88% 1.19%
Return on average common equity (1) 23.95% 4.30% 26.84% 7.05% 10.10%
Return on average tangible common equity (ROATCE) (1) 27.38% 5.11% 34.26% 8.98% 13.00%
Return on average total equity 23.31% 5.02% 23.16% 7.18% 9.26%
Yield on loans 8.50% 8.98% 8.66% 8.83% 9.17%
Adjusted yield on loans (1) 8.04% 8.29% 8.03% 7.75% 7.73%
Cost of interest bearing deposits 0.64% 0.61% 0.56% 0.50% 0.50%
Cost of total deposits 0.55% 0.52% 0.48% 0.42% 0.43%
Cost of total funds 0.63% 0.65% 0.59% 0.53% 0.56%
Net interest margin (1) 6.11% 6.58% 6.69% 6.58% 6.85%
Adjusted net interest margin (1) 5.76% 6.05% 6.19% 5.74% 5.73%
Net noninterest expense to average assets (1) 4.18% 4.44% 4.48% 3.99% 3.92%
Efficiency ratio (1) 79.70% 78.58% 78.29% 71.78% 69.40%
Asset Quality(2)
Past due to total loans 2.91% 2.57% 2.61% 2.82% 2.99%
Nonperforming loans to total loans 1.66% 1.66% 1.80% 1.54% 1.32%
Nonperforming assets to total assets 1.62% 1.73% 2.05% 1.82% 1.86%
ALLL to nonperforming loans 55.28% 53.02% 41.68% 43.16% 43.92%
ALLL to total loans 0.92% 0.88% 0.75% 0.67% 0.58%
Net charge-offs to average loans 0.02% 0.03% 0.03% 0.01% (0.01%)
Capital(3)
Tier 1 capital to average assets 17.32% 15.92% 12.20% 11.00% 11.89%
Tier 1 capital to risk-weighted assets 20.68% 19.56% 14.59% 12.66% 14.32%
Common equity tier 1 capital to risk-weighted assets 18.32% N/A N/A N/A N/A
Total capital to risk-weighted assets 21.47% 20.35% 15.27% 13.22% 14.78%
Total equity to total assets 17.16% 16.40% 13.05% 11.79% 12.66%
Total stockholders' equity to total assets 17.16% 16.40% 11.12% 9.95% 10.58%
Tangible common stockholders' equity to tangible assets 14.75% 14.00% 8.38% 7.21% 7.85%
Per Share Amounts
Book value per share $ 13.52 $ 12.68 $ 14.18 $ 13.23 $ 12.94
Tangible book value per share (1) $ 11.84 $ 11.06 $ 11.17 $ 10.08 $ 10.12
Basic earnings per common share $ 0.78 $ 0.14 $ 0.96 $ 0.23 $ 0.32
Diluted earnings per common share $ 0.76 $ 0.14 $ 0.91 $ 0.23 $ 0.32
Shares outstanding end of period 17,963,783 17,963,783 9,886,778 9,845,819 9,846,096

Unaudited consolidated balance sheet as of:

(Dollars in thousands) Mar 31,
2015
Dec 31,
2014
Sep 30,
2014
Jun 30,
2014
Mar 31,
2014
ASSETS
Total cash and cash equivalents $ 178,442 $ 160,888 $ 75,625 $ 85,716 $ 106,951
Securities - available for sale 161,360 162,024 165,489 168,694 165,276
Securities - held to maturity 746 745 745 744 744
Loans held for sale 3,401 3,288 7,295 4,088 4,902
Loans held for investment 1,011,446 1,005,878 977,139 939,517 800,667
Allowance for loan and lease losses (9,286) (8,843) (7,320) (6,253) (4,631)
Loans, net 1,002,160 997,035 969,819 933,264 796,036
Branch assets held for sale 80,331 88,692
FHLB and FRB stock 4,466 4,903 5,826 7,976 5,233
Premises and equipment, net 21,716 21,933 21,744 20,708 20,502
Other real estate owned (OREO) 6,991 8,423 10,019 11,103 13,575
Goodwill and intangible assets, net 30,211 29,057 29,783 31,043 27,792
Bank-owned life insurance 29,193 29,083 28,955 28,829 28,695
Other assets 34,057 30,519 32,498 34,576 38,712
Total assets $ 1,472,743 $ 1,447,898 $ 1,347,798 $ 1,407,072 $ 1,297,110
LIABILITIES
Noninterest bearing deposits $ 167,538 $ 179,848 $ 154,750 $ 176,245 $ 155,879
Interest bearing deposits 1,006,141 985,381 950,874 932,009 894,433
Total deposits 1,173,679 1,165,229 1,105,624 1,108,254 1,050,312
Customer repurchase agreements 8,666 9,282 15,644 15,313 17,670
Federal Home Loan Bank advances 3,000 70,000 20,750
Senior secured note 11,630 11,944 12,259
Junior subordinated debentures 24,487 24,423 24,359 24,296 24,233
Other liabilities 13,234 8,455 14,713 11,341 7,705
Total liabilities 1,220,066 1,210,389 1,171,970 1,241,148 1,132,929
EQUITY
Preferred stock series A 4,550 4,550 4,550 4,550 4,550
Preferred stock series B 5,196 5,196 5,196 5,196 5,196
Common stock 180 180 99 98 98
Additional paid-in-capital 191,745 191,049 105,304 104,827 104,744
Treasury stock (161) (161) (68) (4)
Retained earnings 49,596 35,744 34,014 24,519 22,111
Accumulated other comprehensive income 1,571 951 836 841 485
Total stockholders' equity 252,677 237,509 149,931 140,027 137,184
Noncontrolling interests 25,897 25,897 26,997
Total equity 252,677 237,509 175,828 165,924 164,181
Total liabilities and equity $ 1,472,743 $ 1,447,898 $ 1,347,798 $ 1,407,072 $ 1,297,110

Unaudited consolidated statement of income for the three months ended:

(Dollars in thousands) Mar 31,
2015
Dec 31,
2014
Sep 30,
2014
Jun 30,
2014
Mar 31,
2014
Interest income:
Loans, including fees $ 13,239 $ 14,138 $ 13,706 $ 13,860 $ 14,376
Factored receivables, including fees 7,509 8,367 7,681 6,838 5,272
Taxable securities 678 644 666 663 657
Tax exempt securities 12 14 15 15 16
Cash deposits 141 117 50 77 58
Total interest income 21,579 23,280 22,118 21,453 20,379
Interest expense:
Deposits 1,570 1,498 1,289 1,141 1,108
Federal Home Loan Bank advances 1 2 19 20 4
Senior secured note 173 134 137 140
Junior subordinated debentures 272 276 276 272 271
Other 11 2 5 2 1
Total interest expense 1,854 1,951 1,723 1,572 1,524
Net interest income 19,725 21,329 20,395 19,881 18,855
Provision for loan losses 645 1,811 1,375 1,747 925
Net interest income after provision for loan losses 19,080 19,518 19,020 18,134 17,930
Noninterest income:
Service charges on deposits 612 647 811 813 738
Card income 523 516 544 548 490
Net realized gains/(losses) & valuation adjustments on OREO 26 (242) (11) (252) (77)
Net gains on sale of securities 62 10 16
Net gains on sale of loans 542 437 484 319 255
Fee income 422 553 448 421 398
Gain on branch sale 12,619
Bargain purchase gain 12,509
Asset management fees 958 486 374 129
Other 1,067 1,262 525 655 789
Total noninterest income 16,659 3,721 15,804 2,633 2,609
Noninterest expense:
Salaries and employee benefits 13,269 12,752 11,032 9,471 8,876
Occupancy, furniture and equipment 1,572 1,429 1,319 1,336 1,390
FDIC insurance assessment 263 221 280 280 261
Carrying costs for OREO 79 68 73 100 132
Professional fees 1,327 1,146 1,043 793 592
Amortization of intangible assets 764 727 746 724 726
Advertising and promotion 543 366 1,102 683 443
Communications and technology 886 961 954 945 888
Other 2,080 2,015 1,912 1,828 1,588
Total noninterest expense 20,783 19,685 18,461 16,160 14,896
Net income before income tax 14,956 3,554 16,363 4,607 5,643
Income tax expense 912 747 6,089 1,626 1,916
Net income $ 14,044 $ 2,807 $ 10,274 $ 2,981 $ 3,727
Effect of noncontrolling interests and preferred shares (192) (786) (779) (696) (579)
Net income to common stockholders $ 13,852 $ 2,021 $ 9,495 $ 2,285 $ 3,148

Loans held for investment summarized for the most recent five quarters:

(Dollars in thousands) Mar 31,
2015
Dec 31,
2014
Sep 30,
2014
Jun 30,
2014
Mar 31,
2014
Commercial real estate $ 236,659 $ 249,164 $ 261,836 $ 265,129 $ 268,863
Construction, land development, land 52,203 42,914 45,996 43,040 39,230
1-4 family residential properties 73,605 78,738 80,419 81,187 79,542
Farmland 24,805 22,496 20,059 19,644 20,114
Commercial 371,614 364,567 340,316 328,361 234,986
Factored receivables 171,452 180,910 169,112 156,272 129,531
Consumer 11,201 11,941 12,527 13,525 13,515
Mortgage warehouse 69,907 55,148 46,874 32,359 14,886
Total loans $ 1,011,446 $ 1,005,878 $ 977,139 $ 939,517 $ 800,667

A portion of our total loan portfolio consists of commercial finance products offered on a nationwide basis, as further summarized below:

(Dollars in thousands) Mar 31,
2015
Dec 31,
2014
Sep 30,
2014
Jun 30,
2014
Mar 31,
2014
Equipment* $ 118,273 $ 106,354 $ 94,460 $ 71,198 $ 58,737
Asset based lending (General)* 36,511 46,388 50,046 48,699 39,643
Asset based lending (Healthcare)* 59,572 41,770 40,885 45,751
Factored receivables 171,452 180,910 169,112 156,272 129,531
Commercial finance $ 385,808 $ 375,422 $ 354,503 $ 321,920 $ 227,911
Total loans held for investment $ 1,011,446 $ 1,005,878 $ 977,139 $ 939,517 $ 800,667
Commercial finance as a % of total 38% 37% 36% 34% 28%
Community banking as a % of total 62% 63% 64% 66% 72%

*Denotes equipment loans offered under our Triumph Commercial Finance brand, general asset based loans offered under our Triumph Commercial Finance brand and healthcare asset based loan products offered under our Triumph Healthcare Finance brand.

Deposits summarized for the most recent five quarters:

(Dollars in thousands) Mar 31,
2015
Dec 31,
2014
Sep 30,
2014
Jun 30,
2014
Mar 31,
2014
Noninterest bearing demand $ 167,538 $ 179,848 $ 154,750 $ 176,245 $ 155,879
Interest-bearing demand 231,718 236,525 209,491 248,992 209,170
Individual retirement accounts 55,773 55,034 54,378 53,856 54,709
Money market 120,001 117,514 125,371 138,204 142,522
Savings 74,236 70,407 72,012 73,207 73,011
Certificates of deposit 474,413 455,901 439,603 367,731 356,844
Brokered deposits 50,000 50,000 50,019 50,019 58,177
Total deposits $ 1,173,679 $ 1,165,229 $ 1,105,624 $ 1,108,254 $ 1,050,312

Net interest margin summarized for the most recent two quarters:

For the three months ended
March 31, 2015 December 31, 2014
(Dollars in thousands) Average
Balance

Interest
Average
Rate
Average
Balance

Interest
Average
Rate
Interest earning assets:
Interest earning cash balances $ 154,615 $ 141 0.37% $ 121,935 $ 117 0.38%
Taxable securities 154,810 627 1.64% 157,294 590 1.49%
Tax-exempt securities 5,910 12 0.82% 6,401 14 0.87%
FHLB & Fed Reserve stock 4,538 51 4.56% 5,203 54 4.12%
Total loans 990,450 20,748 8.50% 994,633 22,505 8.98%
Total interest earning assets $ 1,310,323 $ 21,579 6.68% $ 1,285,466 $ 23,280 7.19%
Noninterest earning assets:
Other assets 139,468 142,009
Total assets $ 1,449,791 $ 1,427,475
Interest bearing liabilities:
Deposits:
Interest bearing deposits $ 230,455 $ 33 0.06% $ 232,784 $ 35 0.06%
Individual retirement accounts 55,369 156 1.14% 53,381 154 1.14%
Money market 119,199 67 0.23% 121,242 71 0.23%
Savings deposits 72,034 9 0.05% 72,956 9 0.05%
Certificates of deposit 468,573 1,181 1.02% 449,166 1,103 0.97%
Brokered deposits 50,003 124 1.01% 50,190 126 1.00%
Total deposits 995,633 1,570 0.64% 979,719 1,498 0.61%
Short-term borrowings 15,229 12 0.32% 18,696 4 0.08%
Senior secured note 0.00% 5,337 173 12.86%
Junior subordinated debentures 24,449 272 4.51% 24,388 276 4.49%
Total interest bearing liabilities $ 1,035,311 $ 1,854 0.73% $ 1,028,140 $ 1,951 0.75%
Noninterest bearing liabilities and equity:
Noninterest bearing demand deposits 160,875 164,369
Other liabilities 9,304 13,268
Total equity 244,301 221,698
Total liabilities and equity $ 1,449,791 $ 1,427,475
Net interest income $ 19,725 $ 21,329
Interest spread 5.95% 6.44%
Net interest margin on a fully tax-equivalent basis 6.11% 6.58%
Cost of total deposits 0.55% 0.52%
Cost of total funds 0.63% 0.65%

Metrics and non-GAAP financial reconciliation As of and For the Three Months Ended
(Dollars in thousands, except per share amounts) Mar 31,
2015
Dec 31,
2014
Sep 30,
2014
Jun 30,
2014
Mar 31,
2014
Net income available to common stockholders $ 13,852 $ 2,021 $ 9,495 $ 2,285 $ 3,148
Dilutive effect of preferred stock 192
Less: gain on branch sale, net of tax 7,892
Less: bargain purchase gain, nontaxable 12,509
Add: merger and acquisition expenses, net of tax 158
Add: incremental bonus accrual, net of tax 1,138
Less: escrow recovery from Doral Healthcare Finance, net of tax 195
Adjusted net income available to common stockholders $ 2,444 $ 2,021 $ 1,603 $ 2,285 $ 3,340
Weighted average shares outstanding - diluted 18,428,663 14,261,717 10,602,155 9,910,507 10,544,902
Less: adjusted effects of assumed Preferred Stock conversion 676,351 676,351
Adjusted weighted average shares outstanding - diluted 17,752,312 14,261,717 9,925,804 9,910,507 10,544,902
Adjusted diluted earnings per common share $ 0.14 $ 0.14 $ 0.16 $ 0.23 $ 0.32
Average common equity $ 234,555 N/A N/A N/A N/A
Less: average contribution impact of Doral Money, Inc transaction 3,549 N/A N/A N/A N/A
Adjusted average common equity 231,006 N/A N/A N/A N/A
Adjusted return on average common equity 4.29% N/A N/A N/A N/A
Average total assets $ 1,449,791 N/A N/A N/A N/A
Less: average contribution impact of Doral Money, Inc transaction 3,549 N/A N/A N/A N/A
Adjusted average total assets 1,446,242 N/A N/A N/A N/A
Adjusted return on average total assets 0.69% N/A N/A N/A N/A
Net income available to common stockholders $ 13,852 $ 2,021 $ 9,495 $ 2,285 $ 3,148
Average tangible common equity 205,204 156,888 109,944 102,107 98,198
Return on average tangible common equity (ROATCE) 27.38% 5.11% 34.26% 8.98% 13.00%
Efficiency ratio:
Net interest income $ 19,725 $ 21,329 $ 20,395 $ 19,881 $ 18,855
Noninterest income 16,659 3,721 15,804 2,633 2,609
Operating revenue 36,384 25,050 36,199 22,514 21,464
Less: gain on branch sale 12,619
Less: bargain purchase gain 12,509
Less: escrow recovery from Doral Healthcare Finance 300
Adjusted operating revenue $ 23,575 $ 25,050 $ 23,580 $ 22,514 $ 21,464
Total noninterest expenses $ 20,783 $ 19,685 $ 18,461 $ 16,160 $ 14,896
Less: merger and acquisition expenses 243
Less: incremental bonus accrual 1,750
Adjusted noninterest expenses $ 18,790 $ 19,685 $ 18,461 $ 16,160 $ 14,896
Efficiency ratio 79.70% 78.58% 78.29% 71.78% 69.40%
Net noninterest expense to average assets ratio:
Total noninterest expenses $ 20,783 $ 19,685 $ 18,461 $ 16,160 $ 14,896
Less: merger and acquisition expenses 243
Less: incremental bonus accrual 1,750
Less: noninterest income, excluding gain on branch sale and bargain purchase gain 4,150 3,721 3,185 2,633 2,609
Add: escrow recovery from Doral Healthcare Finance 300
Adjusted net noninterest expenses $ 14,940 $ 15,964 $ 15,276 $ 13,527 $ 12,287
Average total assets 1,449,791 1,427,475 1,354,207 1,359,503 1,271,024
Net noninterest expense to average assets ratio 4.18% 4.44% 4.48% 3.99% 3.92%
Reported yield on loans 8.50% 8.98% 8.66% 8.83% 9.17%
Effect of accretion income on acquired loans (0.46%) (0.69%) (0.63%) (1.08%) (1.44%)
Adjusted yield on loans 8.04% 8.29% 8.03% 7.75% 7.73%
Reported net interest margin 6.11% 6.58% 6.69% 6.58% 6.85%
Effect of accretion income on acquired loans (0.35%) (0.53%) (0.50%) (0.84%) (1.12%)
Adjusted net interest margin 5.76% 6.05% 6.19% 5.74% 5.73%
Total stockholders' equity $ 252,677 $ 237,509 $ 149,931 $ 140,027 $ 137,184
Less: Preferred stock liquidation preference 9,746 9,746 9,746 9,746 9,746
Total common stockholders' equity 242,931 227,763 140,185 130,281 127,438
Less: Goodwill and other intangibles 30,211 29,057 29,783 31,043 27,792
Tangible common stockholders' equity $ 212,720 $ 198,706 $ 110,402 $ 99,238 $ 99,646
Common shares outstanding 17,963,783 17,963,783 9,886,778 9,845,819 9,846,096
Tangible book value per share $ 11.84 $ 11.06 $ 11.17 $ 10.08 $ 10.12
Total assets at end of period $ 1,472,743 $ 1,447,898 $ 1,347,798 $ 1,407,072 $ 1,297,110
Less: Goodwill and other intangibles 30,211 29,057 29,783 31,043 27,792
Adjusted total assets at period end $ 1,442,532 $ 1,418,841 $ 1,318,015 $ 1,376,029 $ 1,269,318
Tangible common stockholders' equity ratio 14.75% 14.00% 8.38% 7.21% 7.85%

1) The Company uses certain non-GAAP financial measures to provide meaningful supplemental information regarding the Company's operational performance and to enhance investors' overall understanding of such financial performance. The non-GAAP measures used by the Company include the following:

  • "Common stockholders' equity" is defined as total stockholders' equity at end of period less the liquidation preference value of the preferred stock.
  • "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, 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.
  • "Adjusted average common equity" is defined as average common equity less the average bargain purchase gain.
  • "Adjusted average total assets" is defined as average total assets less the average bargain purchase gain.
  • "Adjusted return on average common equity" is defined as adjusted net income available to common stockholders divided by adjusted average common equity.
  • "Adjusted return on average total assets" is defined as adjusted net income available to common stockholders divided by adjusted average total assets.
  • "Net interest margin" is defined as net interest income divided by average interest-earning assets.
  • "Tangible common stockholders' equity" is 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.
  • "Efficiency ratio" is defined as noninterest expenses divided by our operating revenue, which is equal to net interest income plus noninterest 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 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.
  • "Net noninterest expense to average total assets" is defined as noninterest expenses net of noninterest 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.
  • "Adjusted yield on loans" is our yield on loans after excluding loan accretion from our acquired loan portfolio. Our management uses this metric to better assess the impact of purchase accounting on our yield on loans, as the effect of loan discount accretion is expected to decrease as the acquired loans roll off of our balance sheet.
  • "Adjusted net interest margin" is net interest margin after excluding loan accretion from the acquired loan portfolio. Our management uses this metric to better assess the impact of purchase accounting on net interest margin, as the effect of loan discount accretion is expected to decrease as the acquired loans mature or roll off of our balance sheet.

2) Asset quality ratios exclude loans held for sale.

3) Current quarter ratios are preliminary and, beginning January 1, 2015, are calculated under the requirements of Basel III.

CONTACT: Investor Relations: Luke Wyse Vice President, Finance & Investor Relations lwyse@triumphllc.com 214-365-6936 Media Contact: Amanda Tavackoli Vice President, Marketing & Communication atavackoli@triumphllc.com 214-365-6930

Source:Triumph Bancorp, Inc.