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Triumph Bancorp Reports Second Quarter Net Income to Common Stockholders of $9.5 Million and Diluted Earnings per Share of $0.51

DALLAS, July 19, 2017 (GLOBE NEWSWIRE) -- Triumph Bancorp, Inc. (NASDAQ:TBK) today announced earnings and operating results for the second quarter of 2017.

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.

2017 Second Quarter Highlights

  • For the second quarter of 2017, net income was $9.7 million and net income available to common stockholders was $9.5 million, compared to net income of $10.5 million and net income available to common stockholders of $10.3 million for the quarter ended March 31, 2017. The first quarter of 2017 included a pre-tax gain on the sale of our asset management subsidiary, Triumph Capital Advisors, LLC (“TCA”) of $20.9 million. Adjusted net income available to common stockholders excluding the gain on sale of TCA and transaction related costs was $0.3 million for the quarter ended March 31, 2017.

  • Diluted earnings per share were $0.51 for the quarter ended June 30, 2017, compared to $0.55 for the quarter ended March 31, 2017. Adjusted diluted earnings per share, excluding the gain on sale of TCA and transaction related costs, were $0.02 for the quarter ended March 31, 2017.

  • Total loans held for investment increased $259.9 million, or 12.8%, to $2.295 billion at June 30, 2017, compared to $2.035 billion at March 31, 2017.

  • Non-performing assets to total assets decreased to 1.50% at June 30, 2017 from 1.92% at March 31, 2017. Net charge-offs to average loans decreased to 0.03% for the quarter ended June 30, 2017, compared to 0.20% for the quarter ended March 31, 2017.

  • Net interest margin (“NIM”) was 6.16% for the quarter ended June 30, 2017, compared to 5.37% for the quarter ended March 31, 2017. Adjusted NIM, which excludes loan discount accretion, was 5.70% for the quarter ended June 30, 2017, compared to 5.19% for the quarter ended March 31, 2017.

Balance Sheet

Total loans held for investment were $2.295 billion at June 30, 2017. Our commercial finance loans, which comprise 35% of the loan portfolio, were $801.7 million at June 30, 2017, compared to $713.6 million at March 31, 2017. This is an increase of $88.0 million, or 12.3%, in the second quarter of 2017, and includes a $51.5 million, or 21.3%, increase in factored receivables. We also experienced $43.1 million of growth in our commercial real estate portfolio and a $107.4 million increase in our mortgage warehouse facilities in the quarter ended June 30, 2017.

Total deposits were $2.072 billion at June 30, 2017, an increase of $47.9 million or 2.4% for the second quarter of 2017. Non-interest-bearing deposits accounted for 18% of total deposits and non-time deposits accounted for 54% of total deposits at June 30, 2017.

Net Interest Income

We earned net interest income for the quarter ended June 30, 2017 of $38.6 million compared to $31.8 million for the quarter ended March 31, 2017. Net interest income for the quarter ended June 30, 2017 includes accelerated purchase discount accretion of $1.8 million associated with previously acquired loans that were prepaid during the quarter.

Yields on loans for the quarter ended June 30, 2017 were up 64 bps from the prior quarter to 7.79% (up 32 bps from the prior quarter to 7.25% adjusted to exclude loan discount accretion). The average cost of our total deposits was 0.60% for the quarter ended June 30, 2017 compared to 0.58% for the quarter ended March 31, 2017, on an annualized basis.

Asset Quality

Non-performing assets decreased 42 bps from March 31, 2017 to 1.50% of total assets at June 30, 2017. The ratio of past due to total loans decreased to 2.51% at June 30, 2017 from 3.16% at March 31, 2017. We recorded total net charge-offs of $0.7 million for the quarter ended June 30, 2017 compared to net charge-offs of $4.0 million for the quarter ended March 31, 2017. We recorded a provision for loan losses of $1.4 million for the quarter ended June 30, 2017 compared to a provision of $7.7 million for the quarter ended March 31, 2017. From March 31, 2017 to June 30, 2017, our ALLL increased from $19.1 million or 0.94% of total loans to $19.8 million or 0.86% of total loans.

Non-interest Income and Expense

We earned non-interest income for the quarter ended June 30, 2017 of $5.2 million compared to $27.3 million (or $6.4 million excluding the gain on sale of TCA) for the quarter ended March 31, 2017. Subsequent to the sale of TCA, we no longer earn asset management fee income, which was $1.7 million for the quarter ended March 31, 2017.

For the quarter ended June 30, 2017, non-interest expense totaled $27.3 million compared to $34.8 million (or $29.7 million excluding the transaction related costs associated with the sale of TCA) for the quarter ended March 31, 2017.

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 Thursday, July 20, 2017. Dan Karas, Chief Lending Officer, will also be available for questions.

To participate in the live conference call, please dial 1-855-940-9472 (Canada: 1-855-669-9657) and request to be joined into the Triumph Bancorp, Inc. (TBK) call. A simultaneous audio-only webcast may be accessed via our website at www.triumphbancorp.com through the Investor Relations, News & Events, Webcasts and Presentations links, or through a direct link here at http://services.choruscall.com/links/tbk170720.html. An archive of this conference call will subsequently be available at this same location on our 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 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: 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 (including our pending acquisition of nine branches from Independent Bank in Colorado) 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; 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 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 17, 2017 and in Triumph’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2017, filed with the Securities and Exchange Commission on April 26, 2017.

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 Six Months
Ended
June 30, March 31, December 31, September 30, June 30, June 30, June 30,
(Dollars in thousands) 2017 2017 2016 2016 2016 2017 2016
Financial Highlights:
Total assets $2,836,684 $2,635,358 $2,641,067 $2,575,490 $1,783,395 $2,836,684 $1,783,395
Loans held for investment $2,295,100 $2,035,236 $2,027,624 $1,959,855 $1,410,518 $2,295,100 $1,410,518
Deposits $2,072,181 $2,024,288 $2,015,785 $1,950,677 $1,275,154 $2,072,181 $1,275,154
Net income available to common stockholders $9,467 $10,281 $6,064 $4,506 $4,431 $19,748 $9,243
Performance Ratios - Annualized:
Return on average assets 1.42% 1.62% 0.96% 0.84% 1.07% 1.52% 1.13%
Return on average total equity 12.60% 14.44% 8.58% 6.63% 6.69% 13.49% 7.04%
Return on average common equity 12.75% 14.66% 8.60% 6.51% 6.64% 13.67% 7.00%
Return on average tangible common equity (1) 14.94% 17.49% 10.32% 7.60% 7.37% 16.17% 7.80%
Yield on loans 7.79% 7.15% 7.36% 7.42% 8.50% 7.49% 8.18%
Adjusted yield on loans (1) 7.25% 6.93% 6.82% 7.10% 7.81% 7.10% 7.65%
Cost of interest bearing deposits 0.74% 0.71% 0.66% 0.68% 0.72% 0.73% 0.73%
Cost of total deposits 0.60% 0.58% 0.54% 0.57% 0.63% 0.59% 0.64%
Cost of total funds 0.83% 0.79% 0.73% 0.61% 0.68% 0.81% 0.68%
Net interest margin 6.16% 5.37% 5.60% 5.79% 6.53% 5.78% 6.22%
Adjusted net interest margin (1) 5.70% 5.19% 5.15% 5.53% 5.98% 5.45% 5.79%
Net non-interest expense to average assets 3.26% 1.17% 3.16% 3.43% 3.85% 2.24% 3.73%
Adjusted net non-interest expense to average assets (1) 3.26% 3.60% 3.16% 3.15% 3.85% 3.43% 3.73%
Efficiency ratio 62.44% 58.94% 67.70% 70.63% 68.74% 60.43% 70.84%
Adjusted efficiency ratio (1) 62.44% 77.65% 67.70% 66.20% 68.74% 69.53% 70.84%
Asset Quality:(2)
Past due to total loans 2.51% 3.16% 3.61% 3.86% 2.80% 2.51% 2.80%
Non-performing loans to total loans 1.36% 1.80% 2.23% 2.25% 1.56% 1.36% 1.56%
Non-performing assets to total assets 1.50% 1.92% 1.98% 2.05% 1.60% 1.50% 1.60%
ALLL to non-performing loans 63.56% 52.18% 34.00% 33.78% 62.60% 63.56% 62.60%
ALLL to total loans 0.86% 0.94% 0.76% 0.76% 0.98% 0.86% 0.98%
Net charge-offs to average loans 0.03% 0.20% 0.10% 0.10% 0.02% 0.23% 0.02%
Capital:
Tier 1 capital to average assets(3) 11.28% 11.32% 10.85% 12.04% 16.02% 11.28% 16.02%
Tier 1 capital to risk-weighted assets(3) 11.30% 12.05% 11.85% 11.94% 17.14% 11.30% 17.14%
Common equity tier 1 capital to risk-weighted assets(3) 9.73% 10.32% 10.18% 10.24% 15.19% 9.73% 15.19%
Total capital to risk-weighted assets(3) 13.87% 14.87% 14.60% 14.77% 18.01% 13.87% 18.01%
Total equity to total assets 10.94% 11.40% 10.96% 11.05% 15.69% 10.94% 15.69%
Tangible common stockholders' equity to tangible assets 9.22% 9.51% 8.98% 8.99% 13.88% 9.22% 13.88%
Per Share Amounts:
Book value per share $16.59 $16.08 $15.47 $15.18 $14.91 $16.59 $14.91
Tangible book value per share (1) $14.20 $13.63 $12.89 $12.55 $13.47 $14.20 $13.47
Basic earnings per common share $0.53 $0.57 $0.34 $0.25 $0.25 $1.10 $0.52
Diluted earnings per common share $0.51 $0.55 $0.33 $0.25 $0.25 $1.07 $0.51
Adjusted diluted earnings per common share(1) $0.51 $0.02 $0.33 $0.32 $0.25 $0.54 $0.51
Shares outstanding end of period 18,132,585 18,078,769 18,078,247 18,106,978 18,107,493 18,132,585 18,107,493

Unaudited consolidated balance sheet as of:

June 30, March 31, December 31, September 30, June 30,
(Dollars in thousands) 2017 2017 2016 2016 2016
ASSETS
Total cash and cash equivalents $117,502 $126,084 $114,514 $104,725 $61,750
Securities - available for sale 227,206 254,452 275,029 286,574 159,790
Securities - held to maturity 26,036 28,882 29,352 29,316 27,502
Loans held for sale 9,623
Loans held for investment 2,295,100 2,035,236 2,027,624 1,959,855 1,410,518
Allowance for loan and lease losses (19,797) (19,093) (15,405) (14,912) (13,772)
Loans, net 2,275,303 2,016,143 2,012,219 1,944,943 1,396,746
FHLB stock 14,566 7,167 8,430 8,397 6,368
Premises and equipment, net 43,957 44,630 45,460 45,050 19,629
Other real estate owned ("OREO"), net 10,740 11,638 6,077 8,061 6,074
Goodwill and intangible assets, net 43,321 44,233 46,531 47,449 26,160
Bank-owned life insurance 36,852 36,679 36,509 36,347 29,786
Deferred tax asset, net 15,111 15,678 18,825 20,042 15,042
Other assets 26,090 49,772 48,121 34,963 34,548
Total assets $2,836,684 $2,635,358 $2,641,067 $2,575,490 $1,783,395
LIABILITIES
Non-interest bearing deposits $381,042 $382,009 $363,351 $339,999 $170,834
Interest bearing deposits 1,691,139 1,642,279 1,652,434 1,610,678 1,104,320
Total deposits 2,072,181 2,024,288 2,015,785 1,950,677 1,275,154
Customer repurchase agreements 14,959 10,468 10,490 15,329 13,635
Federal Home Loan Bank advances 340,000 200,000 230,000 230,000 180,500
Subordinated notes 48,780 48,757 48,734 48,676
Junior subordinated debentures 32,943 32,840 32,740 32,640 24,823
Other liabilities 17,354 18,580 13,973 13,647 9,520
Total liabilities 2,526,217 2,334,933 2,351,722 2,290,969 1,503,632
EQUITY
Preferred stock series A 4,550 4,550 4,550 4,550 4,550
Preferred stock series B 5,108 5,196 5,196 5,196 5,196
Common stock 182 182 182 182 182
Additional paid-in-capital 198,570 197,866 197,157 196,306 195,711
Treasury stock, at cost (1,759) (1,494) (1,374) (751) (741)
Retained earnings 103,658 94,191 83,910 77,846 73,340
Accumulated other comprehensive income 158 (66) (276) 1,192 1,525
Total equity 310,467 300,425 289,345 284,521 279,763
Total liabilities and equity $2,836,684 $2,635,358 $2,641,067 $2,575,490 $1,783,395

Unaudited consolidated statement of income:

For the Three Months Ended For the Six Months
Ended
June 30, March 31, December 31, September 30, June 30, June 30, June 30,
(Dollars in thousands) 2017 2017 2016 2016 2016 2017 2016
Interest income:
Loans, including fees $ 30,663 $ 25,185 $26,486 $23,123 $ 18,547 $ 55,848 $ 34,635
Factored receivables, including fees 10,812 9,167 9,731 9,021 8,639 19,979 16,461
Securities 1,738 1,611 1,368 1,218 958 3,349 1,723
FHLB stock 36 42 34 16 13 78 23
Cash deposits 289 327 155 93 197 616 405
Total interest income 43,538 36,332 37,774 33,471 28,354 79,870 53,247
Interest expense:
Deposits 3,057 2,869 2,735 2,408 2,020 5,926 4,013
Subordinated notes 836 835 835 1,671
Junior subordinated debentures 475 465 431 382 312 940 614
Other borrowings 613 344 229 263 115 957 224
Total interest expense 4,981 4,513 4,230 3,053 2,447 9,494 4,851
Net interest income 38,557 31,819 33,544 30,418 25,907 70,376 48,396
Provision for loan losses 1,447 7,678 2,446 2,819 1,939 9,125 1,428
Net interest income after provision for loan losses 37,110 24,141 31,098 27,599 23,968 61,251 46,968
Non-interest income:
Service charges on deposits 977 980 1,109 984 695 1,957 1,354
Card income 917 827 842 767 577 1,744 1,123
Net OREO gains (losses) and valuation adjustments (112) 11 (275) 63 (1,204) (101) (1,215)
Net gains (losses) on sale of securities 7 (68) 5
Net gains on sale of loans 4 16
Fee income 637 583 547 655 504 1,220 1,038
Asset management fees 1,717 1,787 1,553 1,605 1,717 3,234
Gain on sale of subsidiary 20,860 20,860
Other 2,783 2,307 2,191 2,145 1,487 5,090 3,094
Total non-interest income 5,202 27,285 6,208 6,099 3,668 32,487 8,649
Non-interest expense:
Salaries and employee benefits 16,012 21,958 15,351 14,699 12,229 37,970 24,481
Occupancy, furniture and equipment 2,348 2,359 2,353 1,921 1,534 4,707 3,027
FDIC insurance and other regulatory assessments 270 226 265 143 281 496 505
Professional fees 1,238 1,968 1,481 1,874 1,101 3,206 2,174
Amortization of intangible assets 911 1,111 1,130 958 717 2,022 1,694
Advertising and promotion 911 938 790 779 628 1,849 1,147
Communications and technology 2,233 2,174 1,830 1,966 1,263 4,407 2,695
Other 3,398 4,103 3,711 3,452 2,578 7,501 4,686
Total non-interest expense 27,321 34,837 26,911 25,792 20,331 62,158 40,409
Net income before income tax 14,991 16,589 10,395 7,906 7,305 31,580 15,208
Income tax expense 5,331 6,116 4,134 3,099 2,679 11,447 5,576
Net income $9,660 $10,473 $6,261 $4,807 $4,626 $20,133 $9,632
Dividends on preferred stock (193) (192) (197) (301) (195) (385) (389)
Net income available to common stockholders $9,467 $10,281 $6,064 $4,506 $4,431 $19,748 $9,243

Earnings per share:

For the Three Months Ended For the Six Months
Ended
June 30, March 31, December 31, September 30, June 30, June 30, June 30,
(Dollars in thousands) 2017 2017 2016 2016 2016 2017 2016
Basic
Net income to common stockholders $9,467 $10,281 $6,064 $4,506 $4,431 $19,748 $9,243
Weighted average common shares outstanding 18,012,905 17,955,144 17,890,781 17,859,604 17,859,604 17,984,184 17,838,267
Basic earnings per common share $0.53 $0.57 $0.34 $0.25 $0.25 $1.10 $0.52
Diluted
Net income to common stockholders $9,467 $10,281 $6,064 $4,506 $4,431 $19,748 $9,243
Dilutive effect of preferred stock 193 192 197 385
Net income to common stockholders - diluted $9,660 $10,473 $6,261 $4,506 $4,431 $20,133 $9,243
Weighted average common shares outstanding 18,012,905 17,955,144 17,890,781 17,859,604 17,859,604 17,984,184 17,838,267
Dilutive effects of:
Restricted stock 47,521 87,094 66,613 148,977 112,880 67,308 113,334
Assumed exercises of stock warrants 129,896 145,896 118,285 93,095 70,101 137,896 60,330
Assumed exercises of stock options 32,592 47,873 12,511 40,233
Assumed conversion of Preferred A 315,773 315,773 315,773 315,773
Assumed conversion of Preferred B 354,471 360,578 360,578 354,471
Weighted average shares outstanding - diluted 18,893,158 18,912,358 18,764,541 18,101,676 18,042,585 18,899,865 18,011,931
Diluted earnings per common share $0.51 $0.55 $0.33 $0.25 $0.25 $1.07 $0.51
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 Six Months
Ended
June 30, March 31, December 31, September 30, June 30, June 30, June 30,
2017 2017 2016 2016 2016 2017 2016
Assumed conversion of Preferred A 315,773 315,773 315,773
Assumed conversion of Preferred B 360,578 360,578 360,578
Restricted stock awards 35,270 76,362 35,270 76,362
Stock options 58,442 164,175 164,175 58,442 164,175

Loans held for investment summarized as of:

June 30, March 31, December 31, September 30, June 30,
(Dollars in thousands) 2017 2017 2016 2016 2016
Commercial real estate $541,217 $498,099 $442,237 $420,742 $298,991
Construction, land development, land 120,253 109,849 109,812 101,169 36,498
1-4 family residential properties 101,833 105,230 104,974 108,721 74,121
Farmland 136,258 136,537 141,615 139,109 35,795
Commercial 842,715 792,764 778,643 777,806 574,508
Factored receivables 293,633 242,098 238,198 213,955 237,520
Consumer 29,497 28,415 29,764 25,602 17,339
Mortgage warehouse 229,694 122,244 182,381 172,751 135,746
Total loans $ 2,295,100 $ 2,035,236 $2,027,624 $1,959,855 $ 1,410,518

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:

June 30, March 31, December 31, September 30, June 30,
(Dollars in thousands) 2017 2017 2016 2016 2016
Equipment $ 219,904 $ 203,251 $190,393 $181,987 $ 167,000
Asset based lending (General) 188,257 166,917 161,454 129,501 114,632
Asset based lending (Healthcare) 68,606 78,208 79,668 84,900 81,664
Premium finance 31,274 23,162 23,971 27,573 6,117
Factored receivables 293,633 242,098 238,198 213,955 237,520
Commercial finance $801,674 $713,636 $693,684 $637,916 $606,933
Commercial finance % of total loans 35% 35% 34% 33% 43%
Yield on commercial finance loans 11.42% 10.25% 10.54% 10.57% 11.40%

Deposits summarized as of:

June 30, March 31, December 31, September 30, June 30,
(Dollars in thousands) 2017 2017 2016 2016 2016
Non-interest bearing demand $381,042 $382,009 $363,351 $339,999 $170,834
Interest bearing demand 350,966 329,201 340,362 311,351 235,877
Individual retirement accounts 99,694 100,436 103,022 103,007 64,204
Money market 205,243 203,686 213,253 209,572 120,929
Savings 173,137 173,258 171,354 171,665 77,625
Certificates of deposit 777,459 767,602 756,351 765,093 555,710
Brokered deposits 84,640 68,096 68,092 49,990 49,975
Total deposits $ 2,072,181 $ 2,024,288 $2,015,785 $1,950,677 $ 1,275,154


Net interest margin summarized for the three months ended:

June 30, 2017 March 31, 2017
Average Average Average Average
(Dollars in thousands)Balance Interest Rate Balance Interest Rate
Interest earning assets:
Interest earning cash balances$99,918 $289 1.16% $153,621 $327 0.86%
Taxable securities 240,725 1,653 2.75% 266,591 1,527 2.32%
Tax-exempt securities 25,389 85 1.34% 26,190 84 1.30%
FHLB stock 10,395 36 1.39% 8,536 42 2.00%
Loans 2,135,346 41,475 7.79% 1,947,483 34,352 7.15%
Total interest earning assets$2,511,773 $43,538 6.95% $2,402,421 $36,332 6.13%
Non-interest earning assets:
Other assets 211,530 216,861
Total assets$2,723,303 $2,619,282
Interest bearing liabilities:
Deposits:
Interest bearing demand$342,947 $136 0.16% $325,589 $111 0.14%
Individual retirement accounts 100,505 303 1.21% 101,484 291 1.16%
Money market 206,163 120 0.23% 209,216 118 0.23%
Savings 171,602 27 0.06% 171,828 34 0.08%
Certificates of deposit 773,178 2,224 1.15% 756,606 2,079 1.11%
Brokered deposits 67,852 247 1.46% 68,086 236 1.41%
Total deposits 1,662,247 3,057 0.74% 1,632,809 2,869 0.71%
Subordinated notes 48,767 836 6.88% 48,743 835 6.95%
Junior subordinated debentures 32,878 475 5.79% 32,780 465 5.75%
Other borrowings 271,136 613 0.91% 222,561 344 0.63%
Total interest bearing liabilities$2,015,028 $4,981 0.99% $1,936,893 $4,513 0.94%
Non-interest bearing liabilities and equity:
Non-interest bearing demand deposits 387,877 377,769
Other liabilities 12,808 10,384
Total equity 307,590 294,236
Total liabilities and equity$ 2,723,303 $ 2,619,282
Net interest income $ 38,557 $ 31,819
Interest spread 5.96% 5.19%
Net interest margin 6.16% 5.37%


Metrics and non-GAAP financial reconciliation:

As of and for the Three Months Ended As of and for the Six
Months Ended
(Dollars in thousands, June 30, March 31, December 31, September 30, June 30, June 30, June 30,
except per share amounts) 2017 2017 2016 2016 2016 2017 2016
Net income available to common stockholders $9,467 $10,281 $6,064 $4,506 $4,431 $19,748 $9,243
Gain on sale of subsidiary (20,860) (20,860)
Incremental bonus related to transaction 4,814 4,814
Transaction related costs 325 1,618 325
Tax effect of adjustments 5,754 (251) 5,754
Adjusted net income available to common stockholders $9,467 $314 $6,064 $5,873 $4,431 $9,781 $9,243
Dilutive effect of convertible preferred stock 193 197 197
Adjusted net income available to common stockholders - diluted $9,660 $314 $6,261 $6,070 $4,431 $9,781 $9,243
Weighted average shares outstanding - diluted 18,893,158 18,912,358 18,764,541 18,101,676 18,042,585 18,899,865 18,011,931
Adjusted effects of assumed Preferred Stock conversion (676,351) 676,351 (670,244)
Adjusted weighted average shares outstanding - diluted 18,893,158 18,236,007 18,764,541 18,778,027 18,042,585 18,229,621 18,011,931
Adjusted diluted earnings per common share $0.51 $0.02 $0.33 $0.32 $0.25 $0.54 $0.51
Net income available to common stockholders $9,467 $10,281 $6,064 $4,506 $4,431 $19,748 $9,243
Average tangible common equity 254,088 238,405 233,733 235,938 241,666 246,290 238,420
Return on average tangible common equity 14.94% 17.49% 10.32% 7.60% 7.37% 16.17% 7.80%
Adjusted efficiency ratio:
Net interest income $38,557 $31,819 $33,544 $30,418 $25,907 $70,376 $48,396
Non-interest income 5,202 27,285 6,208 6,099 3,668 32,487 8,649
Operating revenue 43,759 59,104 39,752 36,517 29,575 102,863 57,045
Gain on sale of subsidiary (20,860) (20,860)
Adjusted operating revenue $43,759 $38,244 $39,752 $36,517 $29,575 $82,003 $57,045
Non-interest expenses $27,321 $34,837 $26,911 $25,792 $20,331 $62,158 $40,409
Incremental bonus related to transaction (4,814) (4,814)
Transaction related costs (325) (1,618) (325)
Adjusted non-interest expenses $27,321 $29,698 $26,911 $24,174 $20,331 $57,019 $40,409
Adjusted efficiency ratio 62.44% 77.65% 67.70% 66.20% 68.74% 69.53% 70.84%
Adjusted net non-interest expense to average assets ratio:
Non-interest expenses $27,321 $34,837 $26,911 $25,792 $20,331 $62,158 $40,409
Incremental bonus related to transaction (4,814) (4,814)
Transaction related costs (325) (1,618) (325)
Adjusted non-interest expenses $27,321 $29,698 $26,911 $24,174 $20,331 $57,019 $40,409
Total non-interest income $5,202 $27,285 $6,208 $6,099 $3,668 $32,487 $8,649
Gain on sale of subsidiary (20,860) (20,860)
Adjusted non-interest income $5,202 $6,425 $6,208 $6,099 $3,668 $11,627 $8,649
Adjusted net non-interest expenses $22,119 $23,273 $20,703 $18,075 $16,663 $45,392 $31,760
Average total assets $2,723,303 $2,619,282 $2,603,226 $2,282,279 $1,742,942 $2,671,580 $1,712,783
Adjusted net non-interest expense to average assets ratio 3.26% 3.60% 3.16% 3.15% 3.85% 3.43% 3.73%


As of and for the Three Months Ended As of and for the Six Months
Ended
(Dollars in thousands, June 30, March 31, December 31, September 30, June 30, June 30, June 30,
except per share amounts) 2017 2017 2016 2016 2016 2017 2016
Reported yield on loans 7.79% 7.15% 7.36% 7.42% 8.50% 7.49% 8.18%
Effect of accretion income on acquired loans (0.54%) (0.22%) (0.54%) (0.32%) (0.69%) (0.39%) (0.53%)
Adjusted yield on loans 7.25% 6.93% 6.82% 7.10% 7.81% 7.10% 7.65%
Reported net interest margin 6.16% 5.37% 5.60% 5.79% 6.53% 5.78% 6.22%
Effect of accretion income on acquired loans (0.46%) (0.18%) (0.45%) (0.26%) (0.55%) (0.33%) (0.43%)
Adjusted net interest margin 5.70% 5.19% 5.15% 5.53% 5.98% 5.45% 5.79%
Total stockholders' equity $310,467 $300,425 $289,345 $284,521 $279,763 $310,467 $279,763
Preferred stock liquidation preference (9,658) (9,746) (9,746) (9,746) (9,746) (9,658) (9,746)
Total common stockholders' equity 300,809 290,679 279,599 274,775 270,017 300,809 270,017
Goodwill and other intangibles (43,321) (44,233) (46,531) (47,449) (26,160) (43,321) (26,160)
Tangible common stockholders' equity $257,488 $246,446 $233,068 $227,326 $243,857 $257,488 $243,857
Common shares outstanding 18,132,585 18,078,769 18,078,247 18,106,978 18,107,493 18,132,585 18,107,493
Tangible book value per share $14.20 $13.63 $12.89 $12.55 $13.47 $14.20 $13.47
Total assets at end of period $2,836,684 $2,635,358 $2,641,067 $2,575,490 $1,783,395 $2,836,684 $1,783,395
Goodwill and other intangibles (43,321) (44,233) (46,531) (47,449) (26,160) (43,321) (26,160)
Adjusted total assets at period end $2,793,363 $2,591,125 $2,594,536 $2,528,041 $1,757,235 $2,793,363 $1,757,235
Tangible common stockholders' equity ratio 9.22% 9.51% 8.98% 8.99% 13.88% 9.22% 13.88%

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 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) Asset quality ratios exclude loans held for sale.

3) Current quarter ratios are preliminary.

Investor Relations: Luke Wyse Senior 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.