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Triumph Bancorp Reports Fourth Quarter Net Income to Common Stockholders of $6.1 Million and 2016 Annual Net Income to Common Stockholders of $19.8 Million

DALLAS, Jan. 23, 2017 (GLOBE NEWSWIRE) -- Triumph Bancorp, Inc. (NASDAQ:TBK) today announced earnings and operating results for the fourth quarter and full year of 2016.

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.

2016 Fourth Quarter Highlights

  • For the fourth quarter of 2016, net income was $6.3 million and net income available to common stockholders was $6.1 million, compared to net income of $4.8 million and net income available to common stockholders of $4.5 million for the quarter ended September 30, 2016.

  • Diluted earnings per share were $0.33 for the quarter ended December 31, 2016, compared to $0.25 for the quarter ended September 30, 2016. Adjusted diluted earnings per share, which excluded acquisition-related costs, were $0.32 for the quarter ended September 30, 2016.

  • For the quarter ended December 31, 2016, our annualized return on average common equity and return on average assets were 8.60% and 0.96%, respectively, compared to an annualized return on average common equity and return on average assets of 6.51% and 0.84%, respectively, for the quarter ended September 30, 2016. Our ratio of tangible common stockholders’ equity to tangible assets was 8.98% as of December 31, 2016.

  • Net interest margin (“NIM”) was 5.60% for the quarter ended December 31, 2016, compared to 5.79% for the quarter ended September 30, 2016.

  • Total loans held for investment increased $67.8 million or 3.5% to $2.028 billion at December 31, 2016.

  • We completed the core system conversion and operating integration associated with our acquisition of ColoEast Bankshares, Inc.

2016 Annual Highlights

  • For the year ended December 31, 2016, net income was $20.7 million and net income available to common stockholders was $19.8 million, compared to net income of $29.1 million and net income to common stockholders of $28.4 million for the year ended December 31, 2015. The financial results for the year ended December 31, 2015 included a net benefit of $14.0 million realized on our acquisition of Doral Money, Inc.

  • Fully diluted earnings per share were $1.10 for the year ended December 31, 2016, compared to $1.57 for the year ended December 31, 2015. Adjusted fully diluted earnings per share were $1.17 for the year ended December 31, 2016, compared to $0.80 for the year ended December 31, 2015.

  • Return on average common equity was 7.29% and return on average assets was 1.00% for the year ended December 31, 2016, compared to 11.44% and 1.89%, respectively, for the year ended December 31, 2015.

  • Net interest margin was 5.91% for the year ended December 31, 2016, compared to 6.49% for the year ended December 31, 2015.

Balance Sheet

Average loans outstanding for the fourth quarter of 2016 were $1.957 billion, an increase of $233.3 million, or 13.5%, from the average balance for the quarter ended September 30, 2016. Total loans held for investment were $2.028 billion at December 31, 2016, an increase of $67.8 million or 3.5% in the fourth quarter and $735.7 million or 57.0% for the year ended December 31, 2016. Our commercial finance loan portfolio totaled $693.7 million as of December 31, 2016, an increase of $55.8 million or 8.7% in the fourth quarter and $172.7 million or 33.1% for the year ended December 31, 2016.

Total deposits were $2.016 billion at December 31, 2016, an increase of $65.1 million or 3.3% for the fourth quarter of 2016 and an increase of $766.8 million or 61.4% for the year ended December 31, 2016. Non-interest-bearing deposits accounted for 18% of total deposits and non-time deposits accounted for 54% of total deposits at December 31, 2016. The average cost of our total deposits was 0.54% for the quarter ended December 31, 2016 compared to 0.57% for the quarter ended September 30, 2016, on an annualized basis.

Net Interest Income

We earned net interest income for the quarter ended December 31, 2016 of $33.5 million compared to $30.4 million for the quarter ended September 30, 2016. Yields on loans for the quarter ended December 31, 2016 were down 6 bps from the prior quarter to 7.36% (down 28 bps from the prior quarter to 6.82% adjusted to exclude loan discount accretion). NIM adjusted to exclude loan discount accretion was 5.15% for the quarter ended December 31, 2016 compared to 5.53% for the quarter ended September 30, 2016.

We earned net interest income of $112.4 million for the year ended December 31, 2016, compared to $90.7 million for the year ended December 31, 2015.

Asset Quality

Non-performing assets decreased 7 bps from September 30, 2016 to 1.98% of total assets at December 31, 2016. The ratio of past due to total loans decreased to 3.61% at December 31, 2016 from 3.86% at September 30, 2016. We recorded net charge-offs of $1.95 million for the quarter ended December 31, 2016 compared to net charge-offs of $1.68 million for the quarter ended September 30, 2016. We recorded a provision for loan losses of $2.4 million for the quarter ended December 31, 2016 compared to a provision of $2.8 million for the quarter ended September 30, 2016. From September 30, 2016 to December 31, 2016, our allowance for loan and lease losses (“ALLL”) increased from $14.9 million or 0.76% of total loans to $15.4 million or 0.76% of total loans.

We recorded net charge-offs of $3.9 million for the year ended December 31, 2016 compared to net charge-offs of $0.8 million for the year ended December 31, 2015. We recorded a provision for loan losses of $6.7 million for the year ended December 31, 2016 compared to a provision of $4.5 million for the year ended December 31, 2015.

Non-interest Income and Expense

We earned non-interest income for the quarter ended December 31, 2016 of $6.2 million compared to $6.1 million for the quarter ended September 30, 2016. We earned non-interest income of $21.0 million for the year ended December 31, 2016, compared to $33.3 million for the year ended December 31, 2015. Non-interest income for the year ended December 31, 2015 included a $15.1 million bargain purchase gain realized on the acquisition of Doral Money, Inc.

For the quarter ended December 31, 2016, non-interest expense totaled $26.9 million, compared to $25.8 million for the quarter ended September 30, 2016. We incurred non-interest expense of $93.1 million for the year ended December 31, 2016, compared to $81.9 million for the year ended December 31, 2015.

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 8:30 a.m. Central Time on Tuesday, January 24, 2017. Dan Karas, Chief Lending Officer, 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 # 50738513. A simultaneous audio-only webcast may be accessed via our 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/jufcx4kr. An archive of this conference call will subsequently be available at this same location on our 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 non-performing 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 February 26, 2016.

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 As of and for the Years Ended
December 31, September 30, June 30, March 31, December 31, December 31, December 31,
2016 2016 2016 2016 2015 2016 2015
Financial Highlights (Dollars in thousands):
Total assets $2,641,067 $2,575,490 $1,783,395 $1,687,795 $1,691,313 $2,641,067 $1,691,313
Loans held for investment $2,027,624 $1,959,855 $1,410,518 $1,245,840 $1,291,885 $2,027,624 $1,291,885
Deposits $2,015,785 $1,950,677 $1,275,154 $1,260,393 $1,248,950 $2,015,785 $1,248,950
Net income available to common stockholders $6,064 $4,506 $4,431 $4,812 $4,312 $19,813 $28,353
Performance Ratios - Annualized:
Return on average assets 0.96% 0.84% 1.07% 1.20% 1.10% 1.00% 1.89%
Return on average total equity 8.58% 6.63% 6.69% 7.39% 6.68% 7.33% 11.31%
Return on average common equity (1) 8.60% 6.51% 6.64% 7.37% 6.63% 7.29% 11.44%
Return on average tangible common equity (1) 10.32% 7.60% 7.37% 8.23% 7.45% 8.37% 12.98%
Yield on loans 7.36% 7.42% 8.50% 7.84% 8.17% 7.71% 8.62%
Adjusted yield on loans (1) 6.82% 7.10% 7.81% 7.47% 7.84% 7.23% 8.20%
Cost of interest bearing deposits 0.66% 0.68% 0.72% 0.74% 0.71% 0.70% 0.67%
Cost of total deposits 0.54% 0.57% 0.63% 0.64% 0.61% 0.59% 0.58%
Cost of total funds 0.73% 0.61% 0.68% 0.69% 0.66% 0.68% 0.64%
Net interest margin 5.60% 5.79% 6.53% 5.90% 6.20% 5.91% 6.49%
Adjusted net interest margin (1) 5.15% 5.53% 5.98% 5.61% 5.94% 5.52% 6.16%
Net non-interest expense to average assets 3.16% 3.43% 3.85% 3.61% 3.74% 3.47% 3.16%
Adjusted net non-interest expense to average assets (1)(2) 3.16% 3.15% 3.85% 3.61% 3.96% 3.39% 4.03%
Efficiency ratio 67.70% 70.63% 68.74% 73.09% 73.03% 69.84% 66.05%
Adjusted efficiency ratio (1)(2) 67.70% 66.20% 68.74% 73.09% 75.40% 68.63% 73.59%
Asset Quality:(3)
Past due to total loans 3.61% 3.86% 2.80% 3.61% 2.41% 3.61% 2.41%
Non-performing loans to total loans 2.23% 2.25% 1.56% 1.70% 1.03% 2.23% 1.03%
Non-performing assets to total assets 1.98% 2.05% 1.60% 1.72% 1.10% 1.98% 1.10%
ALLL to non-performing loans 34.00% 33.78% 62.60% 56.96% 94.10% 34.00% 94.10%
ALLL to total loans 0.76% 0.76% 0.98% 0.97% 0.97% 0.76% 0.97%
Net charge-offs to average loans 0.10% 0.10% 0.02% 0.00% 0.01% 0.25% 0.07%
Capital:
Tier 1 capital to average assets(4) 10.85% 12.04% 16.02% 16.24% 16.56% 10.85% 16.56%
Tier 1 capital to risk-weighted assets(4) 11.85% 11.94% 17.14% 18.79% 18.23% 11.85% 18.23%
Common equity tier 1 capital to risk-weighted assets(4) 10.18% 10.24% 15.19% 16.62% 16.23% 10.18% 16.23%
Total capital to risk-weighted assets(4) 14.60% 14.77% 18.01% 19.65% 19.11% 14.60% 19.11%
Total equity to total assets 10.96% 11.05% 15.69% 16.24% 15.85% 10.96% 15.85%
Tangible common stockholders' equity to tangible assets 8.98% 8.99% 13.88% 14.30% 13.85% 8.98% 13.85%
Per Share Amounts:
Book value per share $15.47 $15.18 $14.91 $14.67 $14.34 $15.47 $14.34
Tangible book value per share (1) $12.89 $12.55 $13.47 $13.18 $12.79 $12.89 $12.79
Basic earnings per common share $0.34 $0.25 $0.25 $0.27 $0.24 $1.11 $1.60
Diluted earnings per common share $0.33 $0.25 $0.25 $0.27 $0.24 $1.10 $1.57
Adjusted diluted earnings per common share(1)(2) $0.33 $0.32 $0.25 $0.27 $0.19 $1.17 $0.80
Shares outstanding end of period 18,078,247 18,106,978 18,107,493 18,015,423 18,018,200 18,078,247 18,018,200

Unaudited consolidated balance sheet as of:

December 31, September 30, June 30, March 31, December 31,
(Dollars in thousands) 2016 2016 2016 2016 2015
ASSETS
Total cash and cash equivalents $114,514 $104,725 $61,750 $123,715 $105,277
Securities - available for sale 275,029 286,574 159,790 161,517 163,169
Securities - held to maturity 29,352 29,316 27,502 25,796
Loans held for sale 9,623 3,043 1,341
Loans held for investment 2,027,624 1,959,855 1,410,518 1,245,840 1,291,885
Allowance for loan and lease losses (15,405) (14,912) (13,772) (12,093) (12,567)
Loans, net 2,012,219 1,944,943 1,396,746 1,233,747 1,279,318
FHLB stock 8,430 8,397 6,368 4,234 3,818
Premises and equipment, net 45,460 45,050 19,629 19,934 22,227
Other real estate owned ("OREO"), net 6,077 8,061 6,074 7,478 5,177
Goodwill and intangible assets, net 46,531 47,449 26,160 26,877 27,854
Bank-owned life insurance 36,509 36,347 29,786 29,658 29,535
Deferred tax asset, net 18,825 20,042 15,042 15,240 15,945
Other assets 48,121 34,963 34,548 36,556 37,652
Total assets $2,641,067 $2,575,490 $1,783,395 $1,687,795 $1,691,313
LIABILITIES
Non-interest bearing deposits $363,351 $339,999 $170,834 $160,818 $168,264
Interest bearing deposits 1,652,434 1,610,678 1,104,320 1,099,575 1,080,686
Total deposits 2,015,785 1,950,677 1,275,154 1,260,393 1,248,950
Customer repurchase agreements 10,490 15,329 13,635 9,641 9,317
Federal Home Loan Bank advances 230,000 230,000 180,500 110,000 130,000
Junior subordinated debentures 32,740 32,640 24,823 24,754 24,687
Subordinated notes 48,734 48,676
Other liabilities 13,973 13,647 9,520 8,893 10,321
Total liabilities 2,351,722 2,290,969 1,503,632 1,413,681 1,423,275
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 182 182 182 181 181
Additional paid-in-capital 197,157 196,306 195,711 194,687 194,297
Treasury stock, at cost (1,374) (751) (741) (597) (560)
Retained earnings 83,910 77,846 73,340 68,909 64,097
Accumulated other comprehensive income (276) 1,192 1,525 1,188 277
Total equity 289,345 284,521 279,763 274,114 268,038
Total liabilities and equity $2,641,067 $2,575,490 $1,783,395 $1,687,795 $1,691,313

Unaudited consolidated statement of income:

For the Three Months Ended For the Years Ended
December 31, September 30, June 30, March 31, December 31, December 31, December 31,
(Dollars in thousands) 2016 2016 2016 2016 2015 2016 2015
Interest income:
Loans, including fees $26,486 $23,123 $18,547 $16,088 $15,524 $84,244 $61,637
Factored receivables, including fees 9,731 9,021 8,639 7,822 8,952 35,213 33,944
Taxable securities 1,317 1,154 965 768 669 4,204 2,655
Tax exempt securities 85 80 6 7 14 178 59
Cash deposits 155 93 197 208 122 653 465
Total interest income 37,774 33,471 28,354 24,893 25,281 124,492 98,760
Interest expense:
Deposits 2,735 2,408 2,020 1,993 1,905 9,156 6,906
Junior subordinated debentures 431 382 312 302 288 1,427 1,121
Subordinated notes 835 835
Other borrowings 229 263 115 109 38 716 82
Total interest expense 4,230 3,053 2,447 2,404 2,231 12,134 8,109
Net interest income 33,544 30,418 25,907 22,489 23,050 112,358 90,651
Provision for loan losses 2,446 2,819 1,939 (511) 1,178 6,693 4,529
Net interest income after provision for loan losses 31,098 27,599 23,968 23,000 21,872 105,665 86,122
Non-interest income:
Service charges on deposits 1,109 984 695 659 744 3,447 2,732
Card income 842 767 577 546 559 2,732 2,234
Net OREO gains (losses) and valuation adjustments (275) 63 (1,204) (11) (128) (1,427) (108)
Net gains (losses) on sale of securities 7 (68) 5 2 (56) 259
Net gains on sale of loans 4 12 234 16 1,630
Fee income 547 655 504 534 465 2,240 1,931
Bargain purchase gain 900 15,117
Asset management fees 1,787 1,553 1,605 1,629 1,670 6,574 5,646
Other 2,191 2,145 1,487 1,607 1,125 7,430 3,856
Total non-interest income 6,208 6,099 3,668 4,981 5,571 20,956 33,297
Non-interest expense:
Salaries and employee benefits 15,351 14,699 12,229 12,252 12,448 54,531 50,175
Occupancy, furniture and equipment 2,353 1,921 1,534 1,493 1,546 7,301 6,259
FDIC insurance and other regulatory assessments 265 143 281 224 300 913 1,086
Professional fees 1,481 1,874 1,101 1,073 906 5,529 4,429
Amortization of intangible assets 1,130 958 717 977 1,141 3,782 3,979
Advertising and promotion 790 779 628 519 374 2,716 2,061
Communications and technology 1,830 1,966 1,263 1,432 1,596 6,491 4,360
Other 3,711 3,452 2,578 2,108 2,591 11,849 9,516
Total non-interest expense 26,911 25,792 20,331 20,078 20,902 93,112 81,865
Net income before income tax 10,395 7,906 7,305 7,903 6,541 33,509 37,554
Income tax expense 4,134 3,099 2,679 2,897 2,032 12,809 8,421
Net income $6,261 $4,807 $4,626 $5,006 $4,509 $20,700 $29,133
Dividends on preferred stock (197) (301) (195) (194) (197) (887) (780)
Net income available to common stockholders $6,064 $4,506 $4,431 $4,812 $4,312 $19,813 $28,353

Earnings per share:

For the Three Months Ended For the Years Ended
December 31, September 30, June 30, March 31, December 31, December 31, December 31,
(Dollars in thousands) 2016 2016 2016 2016 2015 2016 2015
Basic
Net income to common stockholders $6,064 $4,506 $4,431 $4,812 $4,312 $19,813 $28,353
Weighted average common shares outstanding 17,890,781 17,859,604 17,859,604 17,816,930 17,747,043 17,856,828 17,720,479
Basic earnings per common share $0.34 $0.25 $0.25 $0.27 $0.24 $1.11 $1.60
Diluted
Net income to common stockholders $6,064 $4,506 $4,431 $4,812 $4,312 $19,813 $28,353
Dilutive effect of preferred stock 197 780
Net income to common stockholders - diluted $6,261 $4,506 $4,431 $4,812 $4,312 $19,813 $29,133
Weighted average common shares outstanding 17,890,781 17,859,604 17,859,604 17,816,930 17,747,043 17,856,828 17,720,479
Dilutive effects of:
Restricted stock 66,613 148,977 112,880 113,788 86,508 110,565 79,821
Assumed exercises of stock warrants 118,285 93,095 70,101 50,558 82,700 83,010 48,238
Assumed exercises of stock options 12,511 3,128
Assumed conversion of Preferred A 315,773 315,773
Assumed conversion of Preferred B 360,578 360,578
Weighted average shares outstanding - diluted 18,764,541 18,101,676 18,042,585 17,981,276 17,916,251 18,053,531 18,524,889
Diluted earnings per common share $0.33 $0.25 $0.25 $0.27 $0.24 $1.10 $1.57
Shares that were not considered in computing diluted earnings per common share because they were antidilutive are as follows:
For the Three Months Ended For the Years Ended
December 31, September 30, June 30, March 31, December 31, December 31, December 31,
2016 2016 2016 2016 2015 2016 2015
Assumed conversion of Preferred A 315,773 315,773 315,773 315,773 315,773
Assumed conversion of Preferred B 360,578 360,578 360,578 360,578 360,578
Restricted stock awards 76,362
Stock options 164,175 164,175

Loans held for investment summarized as of:

December 31, September 30, June 30, March 31, December 31,
(Dollars in thousands) 2016 2016 2016 2016 2015
Commercial real estate $442,237 $420,742 $298,991 $293,485 $291,819
Construction, land development, land 109,812 101,169 36,498 41,622 43,876
1-4 family residential properties 104,974 108,721 74,121 76,973 78,244
Farmland 141,615 139,109 35,795 33,250 33,573
Commercial 778,643 777,806 574,508 509,433 495,356
Factored receivables 238,198 213,955 237,520 199,532 215,088
Consumer 29,764 25,602 17,339 13,530 13,050
Mortgage warehouse 182,381 172,751 135,746 78,015 120,879
Total loans $2,027,624 $1,959,855 $1,410,518 $1,245,840 $1,291,885

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

December 31, September 30, June 30, March 31, December 31,
(Dollars in thousands) 2016 2016 2016 2016 2015
Equipment $190,393 $181,987 $167,000 $159,755 $148,951
Asset based lending (General) 161,454 129,501 114,632 85,739 75,134
Asset based lending (Healthcare) 79,668 84,900 81,664 79,580 80,200
Premium finance 23,971 27,573 6,117 3,506 1,612
Factored receivables 238,198 213,955 237,520 199,532 215,088
Commercial finance $693,684 $637,916 $606,933 $528,112 $520,985
Commercial finance % of total loans 34% 33% 43% 42% 40%
Yield on commercial finance loans 10.54% 10.57% 11.40% 11.11% 11.62%

Deposits summarized as of:

December 31, September 30, June 30, March 31, December 31,
(Dollars in thousands) 2016 2016 2016 2016 2015
Non-interest bearing demand $363,351 $339,999 $170,834 $160,818 $168,264
Interest bearing demand 340,362 311,351 235,877 227,002 238,833
Individual retirement accounts 103,022 103,007 64,204 63,265 60,971
Money market 213,253 209,572 120,929 111,578 112,214
Savings 171,354 171,665 77,625 77,969 74,759
Certificates of deposit 756,351 765,093 555,710 569,820 543,909
Brokered deposits 68,092 49,990 49,975 49,941 50,000
Total deposits $2,015,785 $1,950,677 $1,275,154 $1,260,393 $1,248,950

Net interest margin summarized for the three months ended:

December 31, 2016 September 30, 2016
Average Average Average Average
(Dollars in thousands) Balance Interest Rate Balance Interest Rate
Interest earning assets:
Interest earning cash balances $109,898 $155 0.56% $73,022 $93 0.51%
Taxable securities 280,764 1,283 1.82% 253,690 1,138 1.78%
Tax exempt securities 28,116 85 1.20% 28,239 80 1.13%
FHLB stock 8,466 34 1.60% 9,627 16 0.66%
Loans 1,957,167 36,217 7.36% 1,723,896 32,144 7.42%
Total interest earning assets $2,384,411 $37,774 6.30% $2,088,474 $33,471 6.38%
Non-interest earning assets:
Other assets 218,815 193,805
Total assets $2,603,226 $2,282,279
Interest bearing liabilities:
Deposits:
Interest bearing demand $333,327 $91 0.11% $280,689 $71 0.10%
Individual retirement accounts 101,860 286 1.12% 87,723 253 1.15%
Money market 208,674 102 0.19% 182,124 96 0.21%
Savings 171,175 20 0.05% 140,338 23 0.07%
Certificates of deposit 762,644 2,062 1.08% 670,372 1,839 1.09%
Brokered deposits 61,293 174 1.13% 49,964 126 1.00%
Total deposits 1,638,973 2,735 0.66% 1,411,210 2,408 0.68%
Junior subordinated debentures 32,685 431 5.25% 29,977 382 5.07%
Subordinated notes 48,695 835 6.82%
Other borrowings 218,105 229 0.42% 257,358 263 0.41%
Total interest bearing liabilities $1,938,458 $4,230 0.87% $1,698,545 $3,053 0.72%
Non-interest bearing liabilities and equity:
Non-interest bearing demand deposits 361,292 283,128
Other liabilities 13,061 11,986
Total equity 290,415 288,620
Total liabilities and equity $2,603,226 $2,282,279
Net interest income $33,544 $30,418
Interest spread 5.43% 5.66%
Net interest margin 5.60% 5.79%

Metrics and non-GAAP financial reconciliation:

As of and for the Three Months Ended As of and for the Years Ended
(Dollars in thousands, December 31, September 30, June 30, March 31, December 31, December 31, December 31,
except per share amounts) 2016 2016 2016 2016 2015 2016 2015
Net income available to common stockholders $6,064 $4,506 $4,431 $4,812 $4,312 $19,813 $28,353
Bargain purchase gain, non-taxable (900) (15,117)
Acquisition related costs 1,618 1,618 243
Incremental bonus related to acquisition 1,750
Escrow recovery from DHF (300)
Tax effect of acquisition related costs (251) (251) (592)
Adjusted net income available to common stockholders $6,064 $5,873 $4,431 $4,812 $3,412 $21,180 $14,337
Dilutive effect of convertible preferred stock 197 197 783
Adjusted net income available to common stockholders - diluted $6,261 $6,070 $4,431 $4,812 $3,412 $21,963 $14,337
Weighted average shares outstanding - diluted 18,764,541 18,101,676 18,042,585 17,981,276 17,916,251 18,053,530 18,524,889
Adjusted effects of assumed Preferred Stock conversion 676,351 676,351 (676,351)
Adjusted weighted average shares outstanding - diluted 18,764,541 18,778,027 18,042,585 17,981,276 17,916,251 18,729,881 17,848,538
Adjusted diluted earnings per common share $0.33 $0.32 $0.25 $0.27 $0.19 $1.17 $0.80
Net income available to common stockholders $6,064 $4,506 $4,431 $4,812 $4,312 $19,813 $28,353
Average tangible common equity 233,733 235,938 241,666 235,192 229,636 236,660 218,392
Return on average tangible common equity 10.32% 7.60% 7.37% 8.23% 7.45% 8.37% 12.98%
Adjusted efficiency ratio:
Net interest income $33,544 $30,418 $25,907 $22,489 $23,050 $112,358 $90,651
Non-interest income 6,208 6,099 3,668 4,981 5,571 20,956 33,297
Operating revenue 39,752 36,517 29,575 27,470 28,621 133,314 123,948
Bargain purchase gain (900) (15,117)
Escrow recovery from DHF (300)
Adjusted operating revenue $39,752 $36,517 $29,575 $27,470 $27,721 $133,314 $108,531
Non-interest expenses $26,911 $25,792 $20,331 $20,078 $20,902 $93,112 $81,865
Acquisition related costs (1,618) (1,618) (243)
Incremental bonus related to acquisition (1,750)
Adjusted non-interest expenses $26,911 $24,174 $20,331 $20,078 $20,902 $91,494 $79,872
Adjusted efficiency ratio 67.70% 66.20% 68.74% 73.09% 75.40% 68.63% 73.59%
Adjusted net non-interest expense to average assets ratio:
Non-interest expenses $26,911 $25,792 $20,331 $20,078 $20,902 $93,112 $81,865
Acquisition related costs (1,618) (1,618) (243)
Incremental bonus related to acquisition (1,750)
Adjusted non-interest expenses $26,911 $24,174 $20,331 $20,078 $20,902 $91,494 $79,872
Total non-interest income $6,208 $6,099 $3,668 $4,981 $5,571 $20,956 $33,297
Bargain purchase gain (900) (15,117)
Escrow recovery from DHF (300)
Adjusted non-interest income $6,208 $6,099 $3,668 $4,981 $4,671 $20,956 $17,880
Adjusted net non-interest expenses $20,703 $18,075 $16,663 $15,097 $16,231 $70,538 $61,992
Average total assets $2,603,226 $2,282,279 $1,742,942 $1,682,640 $1,624,891 $2,079,756 $1,537,856
Adjusted net non-interest expense to average assets ratio 3.16% 3.15% 3.85% 3.61% 3.96% 3.39% 4.03%


As of and for the Three Months Ended As of and for the Years Ended
(Dollars in thousands, December 31, September 30, June 30, March 31, December 31, December 31, December 31,
except per share amounts) 2016 2016 2016 2016 2015 2016 2015
Reported yield on loans 7.36% 7.42% 8.50% 7.84% 8.17% 7.71% 8.62%
Effect of accretion income on acquired loans (0.54%) (0.32%) (0.69%) (0.37%) (0.33%) (0.48%) (0.42%)
Adjusted yield on loans 6.82% 7.10% 7.81% 7.47% 7.84% 7.23% 8.20%
Reported net interest margin 5.60% 5.79% 6.53% 5.90% 6.20% 5.91% 6.49%
Effect of accretion income on acquired loans (0.45%) (0.26%) (0.55%) (0.29%) (0.26%) (0.39%) (0.33%)
Adjusted net interest margin 5.15% 5.53% 5.98% 5.61% 5.94% 5.52% 6.16%
Total stockholders' equity $289,345 $284,521 $279,763 $274,114 $268,038 $289,345 $268,038
Preferred stock liquidation preference (9,746) (9,746) (9,746) (9,746) (9,746) (9,746) (9,746)
Total common stockholders' equity 279,599 274,775 270,017 264,368 258,292 279,599 258,292
Goodwill and other intangibles (46,531) (47,449) (26,160) (26,877) (27,854) (46,531) (27,854)
Tangible common stockholders' equity $233,068 $227,326 $243,857 $237,491 $230,438 $233,068 $230,438
Common shares outstanding 18,078,247 18,106,978 18,107,493 18,015,423 18,018,200 18,078,247 18,018,200
Tangible book value per share $12.89 $12.55 $13.47 $13.18 $12.79 $12.89 $12.79
Total assets at end of period $2,641,067 $2,575,490 $1,783,395 $1,687,795 $1,691,313 $2,641,067 $1,691,313
Goodwill and other intangibles (46,531) (47,449) (26,160) (26,877) (27,854) (46,531) (27,854)
Adjusted total assets at period end $2,594,536 $2,528,041 $1,757,235 $1,660,918 $1,663,459 $2,594,536 $1,663,459
Tangible common stockholders' equity ratio 8.98% 8.99% 13.88% 14.30% 13.85% 8.98% 13.85%

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.

  • "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.

  • "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.

  • "Adjusted yield on loans" is our yield on loans after excluding loan discount 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 pay down or mature and are removed from 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 pay down or mature and are removed from our balance sheet.

2) Adjusted to exclude material gains and expenses related to merger and acquisition-related activities, net of tax where applicable.

3) Asset quality ratios exclude loans held for sale.

4) Current quarter ratios are preliminary.


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

Source:Triumph Bancorp, Inc.