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Triumph Bancorp Reports Third Quarter Net Income to Common Stockholders of $9.6 Million and Diluted Earnings per Share of $0.47

DALLAS, Oct. 18, 2017 (GLOBE NEWSWIRE) -- Triumph Bancorp, Inc. (Nasdaq:TBK) (“Triumph”) today announced earnings and operating results for the third 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 press release.

2017 Third Quarter Highlights

  • For the third quarter of 2017, net income was $9.8 million and net income available to common stockholders was $9.6 million, compared to net income of $9.7 million and net income available to common stockholders of $9.5 million for the quarter ended June 30, 2017.

  • Diluted earnings per share were $0.47 for the quarter ended September 30, 2017, compared to $0.51 for the quarter ended June 30, 2017. Earnings per share were impacted by our public offering of 2.53 million shares of our common stock on August 1, 2017. Our net proceeds from the offering, after deducting the underwriting discount and offering expenses, were $65.5 million.

  • Total loans held for investment increased $130.4 million, or 5.7%, to $2.425 billion at September 30, 2017, compared to $2.295 billion at June 30, 2017.

  • Non-performing assets to total assets decreased to 1.42% at September 30, 2017 from 1.50% at June 30, 2017. Net charge-offs to average loans decreased to 0.00% for the quarter ended September 30, 2017, compared to 0.03% for the quarter ended June 30, 2017.

  • Net interest margin (“NIM”) was 5.90% for the quarter ended September 30, 2017, compared to 6.16% for the quarter ended June 30, 2017. Adjusted NIM, which excludes loan discount accretion, was 5.69% for the quarter ended September 30, 2017, compared to 5.70% for the quarter ended June 30, 2017.

Balance Sheet

Total loans held for investment were $2.425 billion at September 30, 2017. Our commercial finance loans, which comprise 37% of the loan portfolio, were $886.9 million at September 30, 2017, compared to $801.7 million at June 30, 2017. This is an increase of $85.2 million, or 10.6%, in the third quarter of 2017, and includes a $48.2 million, or 16.4%, increase in factored receivables.

Total deposits were $2.013 billion at September 30, 2017, a decrease of $59.6 million or 2.9% for the third quarter of 2017. The decrease in deposits was due in part to our intentional plan to reduce our reliance on the use of public funds. Non-interest-bearing deposits accounted for 20% of total deposits and non-time deposits accounted for 51% of total deposits at September 30, 2017.

Net Interest Income

We earned net interest income for the quarter ended September 30, 2017 of $39.5 million compared to $38.6 million for the quarter ended June 30, 2017.

Yields on loans for the quarter ended September 30, 2017 were down 35 bps from the prior quarter to 7.44% (down 5 bps from the prior quarter to 7.20% adjusted to exclude loan discount accretion). The average cost of our total deposits was 0.64% for the quarter ended September 30, 2017 compared to 0.60% for the quarter ended June 30, 2017, on an annualized basis.

Asset Quality

Non-performing assets decreased 8 bps from June 30, 2017 to 1.42% of total assets at September 30, 2017. The ratio of past due to total loans decreased to 2.22% at September 30, 2017 from 2.51% at June 30, 2017. We recorded total net charge-offs of $0.0 million for the quarter ended September 30, 2017 compared to net charge-offs of $0.7 million for the quarter ended June 30, 2017. We recorded a provision for loan losses of $0.6 million for the quarter ended September 30, 2017 compared to a provision of $1.4 million for the quarter ended June 30, 2017. From June 30, 2017 to September 30, 2017, our ALLL increased from $19.8 million or 0.86% of total loans to $20.4 million or 0.84% of total loans.

Non-interest Income and Expense

We earned non-interest income for the quarter ended September 30, 2017 of $4.2 million compared to $5.2 million for the quarter ended June 30, 2017. Non-interest income for the quarter ended June 30, 2017 included $1.0 million of income from our CLO warehouse investment. The CLO associated with our CLO warehouse investment was closed and our invested funds were returned in June 2017.

For the quarter ended September 30, 2017, non-interest expense totaled $28.2 million compared to $27.3 million for the quarter ended June 30, 2017.

Branch Acquisition

As previously announced, we closed our acquisition of 9 branches in Colorado from Independent Bank Group, Inc.’s banking subsidiary Independent Bank on October 6, 2017. TBK Bank purchased approximately $99 million in loans and assumed approximately $162 million in deposits associated with the branches.

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, October 19, 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/tbk171019.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 acquisition of nine branches from Independent Bank in Colorado and our pending acquisition of Valley Bancorp, Inc.) 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 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; and increases in our capital requirements.

While forward-looking statements reflect our good-faith beliefs, they are not guarantees of future performance. All forward-looking statements are necessarily only estimates of future results. Accordingly, actual results may differ materially from those expressed in or contemplated by the particular forward-looking statement, and, therefore, you are cautioned not to place undue reliance on such statements. Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events or circumstances, except as required by applicable law. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see "Risk Factors" and the forward-looking statement disclosure contained in Triumph’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission on February 17, 2017 and Triumph’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2017, filed with the Securities and Exchange Commission on July 21, 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 Nine Months
Ended
September 30, June 30, March 31, December 31, September 30, September 30, September 30,
(Dollars in thousands) 2017 2017 2017 2016 2016 2017 2016
Financial Highlights:
Total assets $2,906,161 $2,836,684 $2,635,358 $2,641,067 $2,575,490 $2,906,161 $2,575,490
Loans held for investment $2,425,463 $2,295,100 $2,035,236 $2,027,624 $1,959,855 $2,425,463 $1,959,855
Deposits $2,012,545 $2,072,181 $2,024,288 $2,015,785 $1,950,677 $2,012,545 $1,950,677
Net income available to common stockholders $9,587 $9,467 $10,281 $6,064 $4,506 $29,335 $13,749
Performance Ratios - Annualized:
Return on average assets 1.36% 1.42% 1.62% 0.96% 0.84% 1.46% 1.01%
Return on average total equity 10.71% 12.60% 14.44% 8.58% 6.63% 12.44% 6.89%
Return on average common equity 10.79% 12.75% 14.66% 8.60% 6.51% 12.58% 6.83%
Return on average tangible common equity (1) 12.28% 14.94% 17.49% 10.32% 7.60% 14.65% 7.73%
Yield on loans 7.44% 7.79% 7.15% 7.36% 7.42% 7.47% 7.87%
Adjusted yield on loans (1) 7.20% 7.25% 6.93% 6.82% 7.10% 7.14% 7.42%
Cost of interest bearing deposits 0.80% 0.74% 0.71% 0.66% 0.68% 0.75% 0.71%
Cost of total deposits 0.64% 0.60% 0.58% 0.54% 0.57% 0.61% 0.61%
Cost of total funds 0.90% 0.83% 0.79% 0.73% 0.61% 0.84% 0.65%
Net interest margin 5.90% 6.16% 5.37% 5.60% 5.79% 5.82% 6.05%
Adjusted net interest margin (1) 5.69% 5.70% 5.19% 5.15% 5.53% 5.54% 5.69%
Net non-interest expense to average assets 3.35% 3.26% 1.17% 3.16% 3.43% 2.63% 3.61%
Adjusted net non-interest expense to average assets (1) 3.35% 3.26% 3.60% 3.16% 3.15% 3.40% 3.50%
Efficiency ratio 64.61% 62.44% 58.94% 67.70% 70.63% 61.68% 70.76%
Adjusted efficiency ratio (1) 64.61% 62.44% 77.65% 67.70% 66.20% 67.82% 69.03%
Asset Quality:(2)
Past due to total loans 2.22% 2.51% 3.16% 3.61% 3.86% 2.22% 3.86%
Non-performing loans to total loans 1.25% 1.36% 1.80% 2.23% 2.25% 1.25% 2.25%
Non-performing assets to total assets 1.42% 1.50% 1.92% 1.98% 2.05% 1.42% 2.05%
ALLL to non-performing loans 67.33% 63.56% 52.18% 34.00% 33.78% 67.33% 33.78%
ALLL to total loans 0.84% 0.86% 0.94% 0.76% 0.76% 0.84% 0.76%
Net charge-offs to average loans 0.00% 0.03% 0.20% 0.10% 0.10% 0.22% 0.13%
Capital:
Tier 1 capital to average assets(3) 13.50% 11.28% 11.32% 10.85% 12.04% 13.50% 12.04%
Tier 1 capital to risk-weighted assets(3) 13.45% 11.30% 12.05% 11.85% 11.94% 13.45% 11.94%
Common equity tier 1 capital to risk-weighted assets(3) 11.95% 9.73% 10.32% 10.18% 10.24% 11.95% 10.24%
Total capital to risk-weighted assets(3) 15.91% 13.87% 14.87% 14.60% 14.77% 15.91% 14.77%
Total equity to total assets 13.29% 10.94% 11.40% 10.96% 11.05% 13.29% 11.05%
Tangible common stockholders' equity to tangible assets 11.66% 9.22% 9.51% 8.98% 8.99% 11.66% 8.99%
Per Share Amounts:
Book value per share $18.08 $16.59 $16.08 $15.47 $15.18 $18.08 $15.18
Tangible book value per share (1) $16.04 $14.20 $13.63 $12.89 $12.55 $16.04 $12.55
Basic earnings per common share $0.48 $0.53 $0.57 $0.34 $0.25 $1.58 $0.77
Diluted earnings per common share $0.47 $0.51 $0.55 $0.33 $0.25 $1.53 $0.76
Adjusted diluted earnings per common share(1) $0.47 $0.51 $0.02 $0.33 $0.32 $1.02 $0.84
Shares outstanding end of period 20,820,900 18,132,585 18,078,769 18,078,247 18,106,978 20,820,900 18,106,978

Unaudited consolidated balance sheet as of:

September 30, June 30, March 31, December 31, September 30,
(Dollars in thousands) 2017 2017 2017 2016 2016
ASSETS
Total cash and cash equivalents $80,557 $117,502 $126,084 $114,514 $104,725
Securities - available for sale 209,326 227,206 254,452 275,029 286,574
Securities - held to maturity 17,999 26,036 28,882 29,352 29,316
Loans held for sale 9,623
Loans held for investment 2,425,463 2,295,100 2,035,236 2,027,624 1,959,855
Allowance for loan and lease losses (20,367) (19,797) (19,093) (15,405) (14,912)
Loans, net 2,405,096 2,275,303 2,016,143 2,012,219 1,944,943
FHLB stock 16,076 14,566 7,167 8,430 8,397
Premises and equipment, net 43,678 43,957 44,630 45,460 45,050
Other real estate owned ("OREO"), net 10,753 10,740 11,638 6,077 8,061
Goodwill and intangible assets, net 42,452 43,321 44,233 46,531 47,449
Bank-owned life insurance 37,025 36,852 36,679 36,509 36,347
Deferred tax asset, net 14,130 15,111 15,678 18,825 20,042
Other assets 29,069 26,090 49,772 48,121 34,963
Total assets $2,906,161 $2,836,684 $2,635,358 $2,641,067 $2,575,490
LIABILITIES
Non-interest bearing deposits $403,643 $381,042 $382,009 $363,351 $339,999
Interest bearing deposits 1,608,902 1,691,139 1,642,279 1,652,434 1,610,678
Total deposits 2,012,545 2,072,181 2,024,288 2,015,785 1,950,677
Customer repurchase agreements 19,869 14,959 10,468 10,490 15,329
Federal Home Loan Bank advances 385,000 340,000 200,000 230,000 230,000
Subordinated notes 48,804 48,780 48,757 48,734 48,676
Junior subordinated debentures 33,047 32,943 32,840 32,740 32,640
Other liabilities 20,799 17,354 18,580 13,973 13,647
Total liabilities 2,520,064 2,526,217 2,334,933 2,351,722 2,290,969
EQUITY
Preferred stock series A 4,550 4,550 4,550 4,550 4,550
Preferred stock series B 5,108 5,108 5,196 5,196 5,196
Common stock 209 182 182 182 182
Additional paid-in-capital 264,531 198,570 197,866 197,157 196,306
Treasury stock, at cost (1,760) (1,759) (1,494) (1,374) (751)
Retained earnings 113,245 103,658 94,191 83,910 77,846
Accumulated other comprehensive income 214 158 (66) (276) 1,192
Total equity 386,097 310,467 300,425 289,345 284,521
Total liabilities and equity $2,906,161 $2,836,684 $2,635,358 $2,641,067 $2,575,490

Unaudited consolidated statement of income:

For the Three Months Ended For the Nine Months Ended
September 30, June 30, March 31, December 31, September 30, September 30, September 30,
(Dollars in thousands) 2017 2017 2017 2016 2016 2017 2016
Interest income:
Loans, including fees $30,863 $30,663 $25,185 $26,486 $23,123 $86,711 $57,758
Factored receivables, including fees 12,198 10,812 9,167 9,731 9,021 32,177 25,482
Securities 1,655 1,738 1,611 1,368 1,218 5,004 2,941
FHLB stock 51 36 42 34 16 129 39
Cash deposits 370 289 327 155 93 986 498
Total interest income 45,137 43,538 36,332 37,774 33,471 125,007 86,718
Interest expense:
Deposits 3,272 3,057 2,869 2,735 2,408 9,198 6,421
Subordinated notes 837 836 835 835 2,508
Junior subordinated debentures 495 475 465 431 382 1,435 996
Other borrowings 1,021 613 344 229 263 1,978 487
Total interest expense 5,625 4,981 4,513 4,230 3,053 15,119 7,904
Net interest income 39,512 38,557 31,819 33,544 30,418 109,888 78,814
Provision for loan losses 572 1,447 7,678 2,446 2,819 9,697 4,247
Net interest income after provision for loan losses 38,940 37,110 24,141 31,098 27,599 100,191 74,567
Non-interest income:
Service charges on deposits 1,046 977 980 1,109 984 3,003 2,338
Card income 956 917 827 842 767 2,700 1,890
Net OREO gains (losses) and valuation adjustments 15 (112) 11 (275) 63 (86) (1,152)
Net gains (losses) on sale of securities 35 7 (68) 35 (63)
Net gains on sale of loans 16
Fee income 625 637 583 547 655 1,845 1,693
Asset management fees 1,717 1,787 1,553 1,717 4,787
Gain on sale of subsidiary 20,860 20,860
Other 1,494 2,783 2,307 2,191 2,145 6,584 5,239
Total non-interest income 4,171 5,202 27,285 6,208 6,099 36,658 14,748
Non-interest expense:
Salaries and employee benefits 16,717 16,012 21,958 15,351 14,699 54,687 39,180
Occupancy, furniture and equipment 2,398 2,348 2,359 2,353 1,921 7,105 4,948
FDIC insurance and other regulatory assessments 294 270 226 265 143 790 648
Professional fees 1,465 1,238 1,968 1,481 1,874 4,671 4,048
Amortization of intangible assets 870 911 1,111 1,130 958 2,892 2,652
Advertising and promotion 804 911 938 790 779 2,653 1,926
Communications and technology 2,145 2,233 2,174 1,830 1,966 6,552 4,661
Other 3,532 3,398 4,103 3,711 3,452 11,033 8,138
Total non-interest expense 28,225 27,321 34,837 26,911 25,792 90,383 66,201
Net income before income tax 14,886 14,991 16,589 10,395 7,906 46,466 23,114
Income tax expense 5,104 5,331 6,116 4,134 3,099 16,551 8,675
Net income $9,782 $9,660 $10,473 $6,261 $4,807 $29,915 $14,439
Dividends on preferred stock (195) (193) (192) (197) (301) (580) (690)
Net income available to common stockholders $9,587 $9,467 $10,281 $6,064 $4,506 $29,335 $13,749

Earnings per share:

For the Three Months Ended For the Nine Months Ended
September 30, June 30, March 31, December 31, September 30, September 30, September 30,
(Dollars in thousands) 2017 2017 2017 2016 2016 2017 2016
Basic
Net income to common stockholders $9,587 $9,467 $10,281 $6,064 $4,506 $29,335 $13,749
Weighted average common shares outstanding 19,811,577 18,012,905 17,955,144 17,890,781 17,859,604 18,600,009 17,845,431
Basic earnings per common share $0.48 $0.53 $0.57 $0.34 $0.25 $1.58 $0.77
Diluted
Net income to common stockholders $9,587 $9,467 $10,281 $6,064 $4,506 $29,335 $13,749
Dilutive effect of preferred stock 195 193 192 197 580
Net income to common stockholders - diluted $9,782 $9,660 $10,473 $6,261 $4,506 $29,915 $13,749
Weighted average common shares outstanding 19,811,577 18,012,905 17,955,144 17,890,781 17,859,604 18,600,009 17,845,431
Dilutive effects of:
Restricted stock 63,384 47,521 87,094 66,613 148,977 65,999 125,215
Assumed exercises of stock warrants 54,476 129,896 145,896 118,285 93,095 110,089 71,251
Assumed exercises of stock options 45,788 32,592 47,873 12,511 42,084
Assumed conversion of Preferred A 315,773 315,773 315,773 315,773 315,773
Assumed conversion of Preferred B 354,471 354,471 360,578 360,578 354,471
Weighted average shares outstanding - diluted 20,645,469 18,893,158 18,912,358 18,764,541 18,101,676 19,488,425 18,041,897
Diluted earnings per common share $0.47 $0.51 $0.55 $0.33 $0.25 $1.53 $0.76
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 Nine Months Ended
September 30, June 30, March 31, December 31, September 30, September 30, September 30,
2017 2017 2017 2016 2016 2017 2016
Assumed conversion of Preferred A 315,773 315,773
Assumed conversion of Preferred B 360,578 360,578
Restricted stock awards 35,270
Stock options 58,442 58,442 164,175 58,442 164,175

Loans held for investment summarized as of:

September 30, June 30, March 31, December 31, September 30,
(Dollars in thousands) 2017 2017 2017 2016 2016
Commercial real estate $574,530 $541,217 $498,099 $442,237 $420,742
Construction, land development, land 141,368 120,253 109,849 109,812 101,169
1-4 family residential properties 96,032 101,833 105,230 104,974 108,721
Farmland 130,471 136,258 136,537 141,615 139,109
Commercial 890,372 842,715 792,764 778,643 777,806
Factored receivables 341,880 293,633 242,098 238,198 213,955
Consumer 30,093 29,497 28,415 29,764 25,602
Mortgage warehouse 220,717 229,694 122,244 182,381 172,751
Total loans $2,425,463 $2,295,100 $2,035,236 $2,027,624 $1,959,855

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:

September 30, June 30, March 31, December 31, September 30,
(Dollars in thousands) 2017 2017 2017 2016 2016
Equipment $226,120 $219,904 $203,251 $190,393 $181,987
Asset based lending (General) 193,884 188,257 166,917 161,454 129,501
Asset based lending (Healthcare) 67,889 68,606 78,208 79,668 84,900
Premium finance 57,083 31,274 23,162 23,971 27,573
Factored receivables 341,880 293,633 242,098 238,198 213,955
Commercial finance $886,856 $801,674 $713,636 $693,684 $637,916
Commercial finance % of total loans 37% 35% 35% 34% 33%
Yield on commercial finance loans 10.62% 11.42% 10.25% 10.54% 10.57%

Deposits summarized as of:

September 30, June 30, March 31, December 31, September 30,
(Dollars in thousands) 2017 2017 2017 2016 2016
Non-interest bearing demand $403,643 $381,042 $382,009 $363,351 $339,999
Interest bearing demand 284,282 350,966 329,201 340,362 311,351
Individual retirement accounts 97,186 99,694 100,436 103,022 103,007
Money market 189,177 205,243 203,686 213,253 209,572
Savings 158,464 173,137 173,258 171,354 171,665
Certificates of deposit 770,599 777,459 767,602 756,351 765,093
Brokered deposits 109,194 84,640 68,096 68,092 49,990
Total deposits $2,012,545 $2,072,181 $2,024,288 $2,015,785 $1,950,677

Net interest margin summarized for the three months ended:

September 30, 2017 June 30, 2017
Average Average Average Average
(Dollars in thousands) Balance Interest Rate Balance Interest Rate
Interest earning assets:
Interest earning cash balances $111,364 $370 1.32% $99,918 $289 1.16%
Taxable securities 211,354 1,570 2.95% 240,725 1,653 2.75%
Tax-exempt securities 25,174 85 1.34% 25,389 85 1.34%
FHLB stock 14,885 51 1.36% 10,395 36 1.39%
Loans 2,295,356 43,061 7.44% 2,135,346 41,475 7.79%
Total interest earning assets $2,658,133 $45,137 6.74% $2,511,773 $43,538 6.95%
Non-interest earning assets:
Other assets 191,037 211,530
Total assets $2,849,170 $2,723,303
Interest bearing liabilities:
Deposits:
Interest bearing demand $312,009 $137 0.17% $342,947 $136 0.16%
Individual retirement accounts 98,713 309 1.24% 100,505 303 1.21%
Money market 201,462 118 0.23% 206,163 120 0.23%
Savings 167,908 20 0.05% 171,602 27 0.06%
Certificates of deposit 773,075 2,381 1.22% 773,178 2,224 1.15%
Brokered deposits 72,094 307 1.69% 67,852 247 1.46%
Total deposits 1,625,261 3,272 0.80% 1,662,247 3,057 0.74%
Subordinated notes 48,791 837 6.81% 48,767 836 6.88%
Junior subordinated debentures 32,983 495 5.95% 32,878 475 5.79%
Other borrowings 365,464 1,021 1.11% 271,136 613 0.91%
Total interest bearing liabilities $2,072,499 $5,625 1.08% $2,015,028 $4,981 0.99%
Non-interest bearing liabilities and equity:
Non-interest bearing demand deposits 398,774 387,877
Other liabilities 15,698 12,808
Total equity 362,199 307,590
Total liabilities and equity $2,849,170 $2,723,303
Net interest income $39,512 $38,557
Interest spread 5.66% 5.96%
Net interest margin 5.90% 6.16%

Metrics and non-GAAP financial reconciliation:

As of and for the Three Months Ended As of and for the Nine Months
Ended
(Dollars in thousands, September 30, June 30, March 31, December 31, September 30, September 30, September 30,
except per share amounts) 2017 2017 2017 2016 2016 2017 2016
Net income available to common stockholders $9,587 $9,467 $10,281 $6,064 $4,506 $29,335 $13,749
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 1,618
Tax effect of adjustments 5,754 (251) 5,754 (251)
Adjusted net income available to common stockholders $9,587 $9,467 $314 $6,064 $5,873 $19,368 $15,116
Dilutive effect of convertible preferred stock 195 193 197 197 580
Adjusted net income available to common stockholders - diluted $9,782 $9,660 $314 $6,261 $6,070 $19,948 $15,116
Weighted average shares outstanding - diluted 20,645,469 18,893,158 18,912,358 18,764,541 18,101,676 19,488,425 18,041,897
Adjusted effects of assumed Preferred Stock conversion (676,351) 676,351
Adjusted weighted average shares outstanding - diluted 20,645,469 18,893,158 18,236,007 18,764,541 18,778,027 19,488,425 18,041,897
Adjusted diluted earnings per common share $0.47 $0.51 $0.02 $0.33 $0.32 $1.02 $0.84
Net income available to common stockholders $9,587 $9,467 $10,281 $6,064 $4,506 $29,335 $13,749
Average tangible common equity 309,624 254,088 238,405 233,733 235,938 267,633 237,647
Return on average tangible common equity 12.28% 14.94% 17.49% 10.32% 7.60% 14.65% 7.73%
Adjusted efficiency ratio:
Net interest income $39,512 $38,557 $31,819 $33,544 $30,418 $109,888 $78,814
Non-interest income 4,171 5,202 27,285 6,208 6,099 36,658 14,748
Operating revenue 43,683 43,759 59,104 39,752 36,517 146,546 93,562
Gain on sale of subsidiary (20,860) (20,860)
Adjusted operating revenue $43,683 $43,759 $38,244 $39,752 $36,517 $125,686 $93,562
Non-interest expenses $28,225 $27,321 $34,837 $26,911 $25,792 $90,383 $66,201
Incremental bonus related to transaction (4,814) (4,814)
Transaction related costs (325) (1,618) (325) (1,618)
Adjusted non-interest expenses $28,225 $27,321 $29,698 $26,911 $24,174 $85,244 $64,583
Adjusted efficiency ratio 64.61% 62.44% 77.65% 67.70% 66.20% 67.82% 69.03%
Adjusted net non-interest expense to average assets ratio:
Non-interest expenses $28,225 $27,321 $34,837 $26,911 $25,792 $90,383 $66,201
Incremental bonus related to transaction (4,814) (4,814)
Transaction related costs (325) (1,618) (325) (1,618)
Adjusted non-interest expenses $28,225 $27,321 $29,698 $26,911 $24,174 $85,244 $64,583
Total non-interest income $4,171 $5,202 $27,285 $6,208 $6,099 $36,658 $14,748
Gain on sale of subsidiary (20,860) (20,860)
Adjusted non-interest income $4,171 $5,202 $6,425 $6,208 $6,099 $15,798 $14,748
Adjusted net non-interest expenses $24,054 $22,119 $23,273 $20,703 $18,075 $69,446 $49,835
Average total assets $2,849,170 $2,723,303 $2,619,282 $2,603,226 $2,282,279 $2,731,426 $1,904,001
Adjusted net non-interest expense to average assets ratio 3.35% 3.26% 3.60% 3.16% 3.15% 3.40% 3.50%


As of and for the Three Months Ended As of and for the Nine Months
Ended
(Dollars in thousands, September 30, June 30, March 31, December 31, September 30, September 30, September 30,
except per share amounts) 2017 2017 2017 2016 2016 2017 2016
Reported yield on loans 7.44% 7.79% 7.15% 7.36% 7.42% 7.47% 7.87%
Effect of accretion income on acquired loans (0.24%) (0.54%) (0.22%) (0.54%) (0.32%) (0.33%) (0.45%)
Adjusted yield on loans 7.20% 7.25% 6.93% 6.82% 7.10% 7.14% 7.42%
Reported net interest margin 5.90% 6.16% 5.37% 5.60% 5.79% 5.82% 6.05%
Effect of accretion income on acquired loans (0.21%) (0.46%) (0.18%) (0.45%) (0.26%) (0.28%) (0.36%)
Adjusted net interest margin 5.69% 5.70% 5.19% 5.15% 5.53% 5.54% 5.69%
Total stockholders' equity $386,097 $310,467 $300,425 $289,345 $284,521 $386,097 $284,521
Preferred stock liquidation preference (9,658) (9,658) (9,746) (9,746) (9,746) (9,658) (9,746)
Total common stockholders' equity 376,439 300,809 290,679 279,599 274,775 376,439 274,775
Goodwill and other intangibles (42,452) (43,321) (44,233) (46,531) (47,449) (42,452) (47,449)
Tangible common stockholders' equity $333,987 $257,488 $246,446 $233,068 $227,326 $333,987 $227,326
Common shares outstanding 20,820,900 18,132,585 18,078,769 18,078,247 18,106,978 20,820,900 18,106,978
Tangible book value per share $16.04 $14.20 $13.63 $12.89 $12.55 $16.04 $12.55
Total assets at end of period $2,906,161 $2,836,684 $2,635,358 $2,641,067 $2,575,490 $2,906,161 $2,575,490
Goodwill and other intangibles (42,452) (43,321) (44,233) (46,531) (47,449) (42,452) (47,449)
Adjusted total assets at period end $2,863,709 $2,793,363 $2,591,125 $2,594,536 $2,528,041 $2,863,709 $2,528,041
Tangible common stockholders' equity ratio 11.66% 9.22% 9.51% 8.98% 8.99% 11.66% 8.99%

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.