Triumph Bancorp Reports Fourth Quarter Net Income to Common Stockholders of $6.1 Million and 2017 Annual Net Income to Common Stockholders of $35.4 Million

DALLAS, Jan. 22, 2018 (GLOBE NEWSWIRE) -- Triumph Bancorp, Inc. (Nasdaq:TBK) (“Triumph”) today announced earnings and operating results for the fourth quarter and full year 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 Fourth Quarter Highlights

  • For the fourth quarter of 2017, net income was $6.3 million and net income available to common stockholders was $6.1 million, compared to net income of $9.8 million and net income available to common stockholders of $9.6 million for the quarter ended September 30, 2017. Diluted earnings per share were $0.29 for the quarter ended December 31, 2017, compared to $0.47 for the quarter ended September 30, 2017.

  • Net income for the quarter ended December 31, 2017 was impacted by (i) an income tax charge of $3.0 million related to the re‑measurement of our deferred tax assets and deferred tax liabilities at our new expected effective tax rate due to the enactment of the Tax Cuts and Jobs Act (the “Tax Act”), (ii) acquisition-related transaction costs of $1.7 million, and (iii) a $1.3 million impairment charge on core deposit intangible assets associated with acquired public deposits that management decided to no longer hold.

  • We report adjusted diluted earnings per share to remove the volatility of material gains and expenses related to merger and acquisition-related activities. Adjusted diluted earnings per share for the quarter ended December 31, 2017 were $0.34, compared to $0.47 for the quarter ended September 30, 2017.

  • Non-performing assets to total assets decreased to 1.21% at December 31, 2017 from 1.42% at September 30, 2017. Net charge-offs to average loans increased to 0.06% for the quarter ended December 31, 2017, compared to 0.00% for the quarter ended September 30, 2017.

  • Net interest margin (“NIM”) was 6.16% for the quarter ended December 31, 2017, compared to 5.90% for the quarter ended September 30, 2017. Adjusted NIM, which excludes loan discount accretion, was 5.93% for the quarter ended December 31, 2017, compared to 5.69% for the quarter ended September 30, 2017.

  • We closed our previously announced acquisition of nine branch locations in Colorado (the “Acquired Branches”) from Independent Bank Group, Inc.’s banking subsidiary Independent Bank on October 6, 2017 at which time we completed the core system conversion. We acquired $95.8 million of loans, assumed $160.7 million of deposits associated with the branches and recorded $3.3 million of core deposit intangible assets and $5.8 million of goodwill.

  • We closed our previously announced acquisition of Valley Bancorp, Inc. (“Valley”) and its community banking subsidiary, Valley Bank & Trust, on December 9, 2017 at which time we completed the core system conversion. We acquired $171.2 million of loans, assumed $293.4 million of deposits from Valley and recorded $6.1 million of core deposit intangible assets and $10.5 million of goodwill.

  • On January 19, 2018, we entered into an agreement to sell the assets (the “Disposal Group”) of Triumph Healthcare Finance (“THF”) and exit our healthcare asset based lending line of business. The decision to sell THF was made prior to the end of the fourth quarter, and at December 31, 2017, the fair value of the Disposal Group exceeded its carrying amount. As a result of this decision, the carrying amount of the Disposal Group, including loans with a recorded balance of $68.7 million, net of an allowance for loan and lease losses of $2.1 million, was transferred to assets held for sale.

  • Total loans held for investment increased $385.4 million, or 15.9%, to $2.811 billion at December 31, 2017, compared to $2.425 billion at September 30, 2017. Organic growth, which excludes the impact of the THF loan reclassification and acquired loans, was $186.3 million, or 7.9%, in the fourth quarter.

2017 Annual Highlights

  • For the year ended December 31, 2017, net income was $36.2 million and net income available to common stockholders was $35.4 million, compared to net income of $20.7 million and net income available to common stockholders of $19.8 million for the year ended December 31, 2016. Diluted earnings per share were $1.81 for the year ended December 31, 2017, compared to $1.10 for the year ended December 31, 2016.

  • Adjusted diluted earnings per share, which excluded from net income available to common stockholders, material gains and expenses related to merger and acquisition-related activities, including divestitures, net of tax, were $1.37 for the year ended December 31, 2017, compared to $1.17 for the year ended December 31, 2016.

  • Net interest margin (“NIM”) was 5.92% for the year ended December 31, 2017, compared to 5.91% for the year ended December 31, 2016. Adjusted NIM, which excludes loan discount accretion, was 5.65% for the year ended December 31, 2017, compared to 5.52% for the year ended December 31, 2016.

Balance Sheet

Total loans held for investment were $2.811 billion at December 31, 2017, an increase of $385.4 million, or 15.9%, in the fourth quarter and $783.2 million, or 38.6%, for the year ended December 31, 2017. Excluding the impact of the THF loan reclassification, total loans held for investment increased $453.3 million, or 19.2% in the fourth quarter. We acquired loans with an acquisition date fair value of $267.0 million in the Valley and Acquired Branches transactions.

Our commercial finance loans, which comprise 32% of the loan portfolio, were $897.5 million at December 31, 2017, compared to $886.9 million at September 30, 2017. This is an increase of $10.6 million, or 1.2%, in the fourth quarter of 2017. Excluding the impact of the THF loan reclassification, commercial finance loans increased $78.6 million, or 9.6% in the fourth quarter.

Total deposits were $2.621 billion at December 31, 2017, an increase of $608.8 million or 30.3% in the fourth quarter of 2017 and an increase of $605.6 million, or 30.0%, for the year ended December 31, 2017. Non-interest-bearing deposits accounted for 21.5% of total deposits and non-time deposits accounted for 56.7% of total deposits at December 31, 2017. We assumed deposits with an acquisition date fair value of $454.1 million in the Valley and Acquired Branches transactions.

Net Interest Income

We earned net interest income for the quarter ended December 31, 2017 of $45.8 million compared to $39.5 million for the quarter ended September 30, 2017.

Yields on loans for the quarter ended December 31, 2017 were up 29 bps from the prior quarter to 7.73% (up 27 bps from the prior quarter to 7.47% adjusted to exclude loan discount accretion). The average cost of our total deposits was 0.67% for the quarter ended December 31, 2017 compared to 0.64% for the quarter ended September 30, 2017, on an annualized basis.

We earned net interest income of $155.7 million for the year ended December 31, 2017, compared to $112.4 million for the year ended December 31, 2016.

Asset Quality

Non-performing assets decreased 21 bps from September 30, 2017 to 1.21% of total assets at December 31, 2017. The ratio of past due to total loans decreased to 2.11% at December 31, 2017 from 2.22% at September 30, 2017. We recorded total net charge-offs of $1.4 million, or 0.06% of average loans, for the quarter ended December 31, 2017 compared to net charge-offs of $0.0 million, or 0.00% of average loans, for the quarter ended September 30, 2017. We recorded a provision for loan losses of $1.9 million for the quarter ended December 31, 2017 compared to a provision of $0.6 million for the quarter ended September 30, 2017. From September 30, 2017 to December 31, 2017, our ALLL decreased from $20.4 million or 0.84% of total loans to $18.7 million or 0.67% of total loans.

We recorded net charge-offs of $6.2 million, or 0.28% of average loans, for the year ended December 31, 2017, compared to net charge-offs of $3.9 million, or 0.25% of average loans, for the year ended December 31, 2016. We recorded a provision for loan losses of $11.6 million for the year ended December 31, 2017, compared to a provision of $6.7 for the year ended December 31, 2016.

Non-interest Income and Expense

We earned non-interest income for the quarter ended December 31, 2017 of $4.0 million compared to $4.2 million for the quarter ended September 30, 2017. We earned non-interest income of $40.7 million for the year ended December 31, 2017, compared to $21.0 million for the year ended December 31, 2016. Non-interest income for the year ended December 31, 2017 included a $20.9 million pre-tax gain on the sale of TCA during the first quarter of the year.

For the quarter ended December 31, 2017, non-interest expense totaled $33.2 million, compared to $28.2 million for the quarter ended September 30, 2017. Non-interest expense for the quarter ended December 31, 2017 included $1.7 million of transaction costs associated with the acquisitions of Valley and the Acquired Branches and $1.3 million of impairment on core deposit intangible assets associated with public funds which management decided to no longer hold. We incurred non-interest expense of $123.6 million for the year ended December 31, 2017, compared to $93.1 million for the year ended December 31, 2016. In addition to the fourth quarter acquisition-related transaction costs and impairment on core deposit intangible assets, non-interest income for the year ended December 31, 2017 included a $4.8 million incremental bonus related to the sale of TCA during the first quarter of the year.

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 9:00 a.m. Central Time on Monday, January 22, 2018. 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 the Company's website at www.triumphbancorp.com through the Investor Relations, News & Events, Webcasts and Presentations links, or through a direct link here at: https://services.choruscall.com/links/tbk180122.html. An archive of this conference call will subsequently be available at this same location on the Company’s website.

About Triumph

Triumph Bancorp, Inc. (Nasdaq:TBK) is a financial holding company headquartered in Dallas, Texas. Triumph offers a diversified line of community banking 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 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 September 30, 2017, filed with the Securities and Exchange Commission on October 20, 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 Years Ended
December 31, September 30, June 30, March 31, December 31, December 31, December 31,
(Dollars in thousands) 2017 2017 2017 2017 2016 2017 2016
Financial Highlights:
Total assets $3,499,033 $2,906,161 $2,836,684 $2,635,358 $2,641,067 $3,499,033 $2,641,067
Loans held for investment $2,810,856 $2,425,463 $2,295,100 $2,035,236 $2,027,624 $2,810,856 $2,027,624
Deposits $2,621,348 $2,012,545 $2,072,181 $2,024,288 $2,015,785 $2,621,348 $2,015,785
Net income available to common stockholders $6,111 $9,587 $9,467 $10,281 $6,064 $35,446 $19,813
Performance Ratios - Annualized:
Return on average assets 0.79% 1.36% 1.42% 1.62% 0.96% 1.27% 1.00%
Return on average total equity 6.35% 10.71% 12.60% 14.44% 8.58% 10.66% 7.33%
Return on average common equity 6.30% 10.79% 12.75% 14.66% 8.60% 10.73% 7.29%
Return on average tangible common equity (1) 7.33% 12.28% 14.94% 17.49% 10.32% 12.50% 8.37%
Yield on loans 7.73% 7.44% 7.79% 7.15% 7.36% 7.55% 7.71%
Adjusted yield on loans (1) 7.47% 7.20% 7.25% 6.93% 6.82% 7.23% 7.23%
Cost of interest bearing deposits 0.84% 0.80% 0.74% 0.71% 0.66% 0.78% 0.70%
Cost of total deposits 0.67% 0.64% 0.60% 0.58% 0.54% 0.62% 0.59%
Cost of total funds 0.92% 0.90% 0.83% 0.79% 0.73% 0.86% 0.68%
Net interest margin 6.16% 5.90% 6.16% 5.37% 5.60% 5.92% 5.91%
Adjusted net interest margin (1) 5.93% 5.69% 5.70% 5.19% 5.15% 5.65% 5.52%
Net non-interest expense to average assets 3.65% 3.35% 3.26% 1.17% 3.16% 2.92% 3.47%
Adjusted net non-interest expense to average assets (1) 3.43% 3.35% 3.26% 3.60% 3.16% 3.41% 3.39%
Efficiency ratio 66.74% 64.61% 62.44% 58.94% 67.70% 62.96% 69.84%
Adjusted efficiency ratio (1) 63.35% 64.61% 62.44% 77.65% 67.70% 66.55% 68.63%
Asset Quality:(2)
Past due to total loans 2.11% 2.22% 2.51% 3.16% 3.61% 2.11% 3.61%
Non-performing loans to total loans 1.15% 1.25% 1.36% 1.80% 2.23% 1.15% 2.23%
Non-performing assets to total assets 1.21% 1.42% 1.50% 1.92% 1.98% 1.21% 1.98%
ALLL to non-performing loans 57.83% 67.33% 63.56% 52.18% 34.00% 57.83% 34.00%
ALLL to total loans 0.67% 0.84% 0.86% 0.94% 0.76% 0.67% 0.76%
Net charge-offs to average loans 0.06% 0.00% 0.03% 0.20% 0.10% 0.28% 0.25%
Capital:
Tier 1 capital to average assets(3) 11.80% 13.50% 11.28% 11.32% 10.85% 11.80% 10.85%
Tier 1 capital to risk-weighted assets(3) 11.39% 13.45% 11.30% 12.05% 11.85% 11.39% 11.85%
Common equity tier 1 capital to risk-weighted assets(3) 9.92% 11.95% 9.73% 10.32% 10.18% 9.92% 10.18%
Total capital to risk-weighted assets(3) 13.50% 15.91% 13.87% 14.87% 14.60% 13.50% 14.60%
Total equity to total assets 11.19% 13.29% 10.94% 11.40% 10.96% 11.19% 10.96%
Tangible common stockholders' equity to tangible assets 9.26% 11.66% 9.22% 9.51% 8.98% 9.26% 8.98%
Per Share Amounts:
Book value per share $18.35 $18.08 $16.59 $16.08 $15.47 $18.35 $15.47
Tangible book value per share (1) $15.29 $16.04 $14.20 $13.63 $12.89 $15.29 $12.89
Basic earnings per common share $0.29 $0.48 $0.53 $0.57 $0.34 $1.85 $1.11
Diluted earnings per common share $0.29 $0.47 $0.51 $0.55 $0.33 $1.81 $1.10
Adjusted diluted earnings per common share(1) $0.34 $0.47 $0.51 $0.02 $0.33 $1.37 $1.17
Shares outstanding end of period 20,820,445 20,820,900 18,132,585 18,078,769 18,078,247 20,820,445 18,078,247

Unaudited consolidated balance sheet as of:

December 31, September 30, June 30, March 31, December 31,
(Dollars in thousands) 2017 2017 2017 2017 2016
ASSETS
Total cash and cash equivalents $134,129 $80,557 $117,502 $126,084 $114,514
Securities - available for sale 255,609 209,326 227,206 254,452 275,029
Securities - held to maturity 8,557 17,999 26,036 28,882 29,352
Loans held for investment 2,810,856 2,425,463 2,295,100 2,035,236 2,027,624
Allowance for loan and lease losses (18,748) (20,367) (19,797) (19,093) (15,405)
Loans, net 2,792,108 2,405,096 2,275,303 2,016,143 2,012,219
Assets held for sale 71,362
FHLB stock 16,006 16,076 14,566 7,167 8,430
Premises and equipment, net 62,861 43,678 43,957 44,630 45,460
Other real estate owned ("OREO"), net 9,191 10,753 10,740 11,638 6,077
Goodwill and intangible assets, net 63,778 42,452 43,321 44,233 46,531
Bank-owned life insurance 44,364 37,025 36,852 36,679 36,509
Deferred tax asset, net 8,959 14,130 15,111 15,678 18,825
Other assets 32,109 29,069 26,090 49,772 48,121
Total assets $3,499,033 $2,906,161 $2,836,684 $2,635,358 $2,641,067
LIABILITIES
Non-interest bearing deposits $564,225 $403,643 $381,042 $382,009 $363,351
Interest bearing deposits 2,057,123 1,608,902 1,691,139 1,642,279 1,652,434
Total deposits 2,621,348 2,012,545 2,072,181 2,024,288 2,015,785
Customer repurchase agreements 11,488 19,869 14,959 10,468 10,490
Federal Home Loan Bank advances 365,000 385,000 340,000 200,000 230,000
Subordinated notes 48,828 48,804 48,780 48,757 48,734
Junior subordinated debentures 38,623 33,047 32,943 32,840 32,740
Other liabilities 22,048 20,799 17,354 18,580 13,973
Total liabilities 3,107,335 2,520,064 2,526,217 2,334,933 2,351,722
EQUITY
Preferred stock series A 4,550 4,550 4,550 4,550 4,550
Preferred stock series B 5,108 5,108 5,108 5,196 5,196
Common stock 209 209 182 182 182
Additional paid-in-capital 264,855 264,531 198,570 197,866 197,157
Treasury stock, at cost (1,784) (1,760) (1,759) (1,494) (1,374)
Retained earnings 119,356 113,245 103,658 94,191 83,910
Accumulated other comprehensive income (596) 214 158 (66) (276)
Total equity 391,698 386,097 310,467 300,425 289,345
Total liabilities and equity $3,499,033 $2,906,161 $2,836,684 $2,635,358 $2,641,067

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) 2017 2017 2017 2017 2016 2017 2016
Interest income:
Loans, including fees $34,856 $30,863 $30,663 $25,185 $26,486 $121,567 $84,244
Factored receivables, including fees 15,000 12,198 10,812 9,167 9,731 47,177 35,213
Securities 1,819 1,655 1,738 1,611 1,368 6,823 4,309
FHLB stock 78 51 36 42 34 207 73
Cash deposits 464 370 289 327 155 1,450 653
Total interest income 52,217 45,137 43,538 36,332 37,774 177,224 124,492
Interest expense:
Deposits 3,884 3,272 3,057 2,869 2,735 13,082 9,156
Subordinated notes 836 837 836 835 835 3,344 835
Junior subordinated debentures 520 495 475 465 431 1,955 1,427
Other borrowings 1,181 1,021 613 344 229 3,159 716
Total interest expense 6,421 5,625 4,981 4,513 4,230 21,540 12,134
Net interest income 45,796 39,512 38,557 31,819 33,544 155,684 112,358
Provision for loan losses 1,931 572 1,447 7,678 2,446 11,628 6,693
Net interest income after provision for loan losses 43,865 38,940 37,110 24,141 31,098 144,056 105,665
Non-interest income:
Service charges on deposits 1,178 1,046 977 980 1,109 4,181 3,447
Card income 1,122 956 917 827 842 3,822 2,732
Net OREO gains (losses) and valuation adjustments (764) 15 (112) 11 (275) (850) (1,427)
Net gains (losses) on sale of securities 35 7 35 (56)
Net gains on sale of loans 16
Fee income 658 625 637 583 547 2,503 2,240
Insurance commissions 857 826 708 590 721 2,981 1,295
Asset management fees 1,717 1,787 1,717 6,574
Gain on sale of subsidiary 20,860 20,860
Other 947 668 2,075 1,717 1,470 5,407 6,135
Total non-interest income 3,998 4,171 5,202 27,285 6,208 40,656 20,956
Non-interest expense:
Salaries and employee benefits 18,009 16,717 16,012 21,958 15,351 72,696 54,531
Occupancy, furniture and equipment 2,728 2,398 2,348 2,359 2,353 9,833 7,301
FDIC insurance and other regulatory assessments 411 294 270 226 265 1,201 913
Professional fees 2,521 1,465 1,238 1,968 1,481 7,192 5,529
Amortization of intangible assets 2,309 870 911 1,111 1,130 5,201 3,782
Advertising and promotion 573 804 911 938 790 3,226 2,716
Communications and technology 2,291 2,145 2,233 2,174 1,830 8,843 6,491
Other 4,389 3,532 3,398 4,103 3,711 15,422 11,849
Total non-interest expense 33,231 28,225 27,321 34,837 26,911 123,614 93,112
Net income before income tax 14,632 14,886 14,991 16,589 10,395 61,098 33,509
Income tax expense 8,327 5,104 5,331 6,116 4,134 24,878 12,809
Net income $6,305 $9,782 $9,660 $10,473 $6,261 $36,220 $20,700
Dividends on preferred stock (194) (195) (193) (192) (197) (774) (887)
Net income available to common stockholders $6,111 $9,587 $9,467 $10,281 $6,064 $35,446 $19,813

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) 2017 2017 2017 2017 2016 2017 2016
Basic
Net income to common stockholders $6,111 $9,587 $9,467 $10,281 $6,064 $35,446 $19,813
Weighted average common shares outstanding 20,717,548 19,811,577 18,012,905 17,955,144 17,890,781 19,133,745 17,856,828
Basic earnings per common share $0.29 $0.48 $0.53 $0.57 $0.34 $1.85 $1.11
Diluted
Net income to common stockholders $6,111 $9,587 $9,467 $10,281 $6,064 $35,446 $19,813
Dilutive effect of preferred stock 194 195 193 192 197 774
Net income to common stockholders - diluted $6,305 $9,782 $9,660 $10,473 $6,261 $36,220 $19,813
Weighted average common shares outstanding 20,717,548 19,811,577 18,012,905 17,955,144 17,890,781 19,133,745 17,856,828
Dilutive effects of:
Restricted stock 74,318 63,384 47,521 87,094 66,613 68,079 110,565
Assumed exercises of stock warrants 54,476 129,896 145,896 118,285 82,567 83,010
Assumed exercises of stock options 56,359 45,788 32,592 47,873 12,511 45,653 3,128
Assumed conversion of Preferred A 315,773 315,773 315,773 315,773 315,773 315,773
Assumed conversion of Preferred B 354,471 354,471 354,471 360,578 360,578 354,471
Weighted average shares outstanding - diluted 21,518,469 20,645,469 18,893,158 18,912,358 18,764,541 20,000,288 18,053,531
Diluted earnings per common share $0.29 $0.47 $0.51 $0.55 $0.33 $1.81 $1.10
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,
2017 2017 2017 2017 2016 2017 2016
Assumed conversion of Preferred A 315,773
Assumed conversion of Preferred B 360,578
Restricted stock awards 35,270
Stock options 57,926 58,442 58,442 57,926

Loans held for investment summarized as of:

December 31, September 30, June 30, March 31, December 31,
(Dollars in thousands) 2017 2017 2017 2017 2016
Commercial real estate $745,893 $574,530 $541,217 $498,099 $442,237
Construction, land development, land 134,812 141,368 120,253 109,849 109,812
1-4 family residential properties 125,827 96,032 101,833 105,230 104,974
Farmland 180,141 130,471 136,258 136,537 141,615
Commercial 920,812 890,372 842,715 792,764 778,643
Factored receivables 374,410 341,880 293,633 242,098 238,198
Consumer 31,131 30,093 29,497 28,415 29,764
Mortgage warehouse 297,830 220,717 229,694 122,244 182,381
Total loans $2,810,856 $2,425,463 $2,295,100 $2,035,236 $2,027,624

A portion of our total loans held for investment 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) 2017 2017 2017 2017 2016
Equipment $254,119 $226,120 $219,904 $203,251 $190,393
Asset based lending (General) 213,471 193,884 188,257 166,917 161,454
Asset based lending (Healthcare) 67,889 68,606 78,208 79,668
Premium finance 55,520 57,083 31,274 23,162 23,971
Factored receivables 374,410 341,880 293,633 242,098 238,198
Commercial finance $897,520 $886,856 $801,674 $713,636 $693,684
Commercial finance % of total loans 32% 37% 35% 35% 34%
Yield on commercial finance loans 11.03% 10.62% 11.42% 10.25% 10.54%

Deposits summarized as of:

December 31, September 30, June 30, March 31, December 31,
(Dollars in thousands) 2017 2017 2017 2017 2016
Non-interest bearing demand $564,225 $403,643 $381,042 $382,009 $363,351
Interest bearing demand 403,244 284,282 350,966 329,201 340,362
Individual retirement accounts 108,505 97,186 99,694 100,436 103,022
Money market 283,969 189,177 205,243 203,686 213,253
Savings 235,296 158,464 173,137 173,258 171,354
Certificates of deposit 837,384 770,599 777,459 767,602 756,351
Brokered deposits 188,725 109,194 84,640 68,096 68,092
Total deposits $2,621,348 $2,012,545 $2,072,181 $2,024,288 $2,015,785

Net interest margin summarized for the three months ended:

December 31, 2017 September 30, 2017
Average Average Average Average
(Dollars in thousands) Balance Interest Rate Balance Interest Rate
Interest earning assets:
Interest earning cash balances $134,661 $464 1.37% $111,364 $370 1.32%
Taxable securities 198,997 1,658 3.31% 211,354 1,570 2.95%
Tax-exempt securities 39,082 161 1.63% 25,174 85 1.34%
FHLB stock 16,764 78 1.85% 14,885 51 1.36%
Loans 2,558,774 49,856 7.73% 2,295,356 43,061 7.44%
Total interest earning assets $2,948,278 $52,217 7.03% $2,658,133 $45,137 6.74%
Non-interest earning assets:
Other assets 233,419 191,037
Total assets $3,181,697 $2,849,170
Interest bearing liabilities:
Deposits:
Interest bearing demand $343,560 $141 0.16% $312,009 $137 0.17%
Individual retirement accounts 102,234 319 1.24% 98,713 309 1.24%
Money market 220,040 153 0.28% 201,462 118 0.23%
Savings 191,814 24 0.05% 167,908 20 0.05%
Certificates of deposit 826,018 2,644 1.27% 773,075 2,381 1.22%
Brokered deposits 140,914 603 1.70% 72,094 307 1.69%
Total deposits 1,824,580 3,884 0.84% 1,625,261 3,272 0.80%
Subordinated notes 48,814 836 6.79% 48,791 837 6.81%
Junior subordinated debentures 34,515 520 5.98% 32,983 495 5.95%
Other borrowings 391,840 1,181 1.20% 365,464 1,021 1.11%
Total interest bearing liabilities $2,299,749 $6,421 1.11% $2,072,499 $5,625 1.08%
Non-interest bearing liabilities and equity:
Non-interest bearing demand deposits 469,596 398,774
Other liabilities 18,081 15,698
Total equity 394,271 362,199
Total liabilities and equity $3,181,697 $2,849,170
Net interest income $45,796 $39,512
Interest spread 5.92% 5.66%
Net interest margin 6.16% 5.90%

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) 2017 2017 2017 2017 2016 2017 2016
Net income available to common stockholders $6,111 $9,587 $9,467 $10,281 $6,064 $35,446 $19,813
Gain on sale of subsidiary (20,860) (20,860)
Incremental bonus related to transaction 4,814 4,814
Transaction related costs 1,688 325 2,013 1,618
Tax effect of adjustments (601) 5,754 5,153 (251)
Adjusted net income available to common stockholders $7,198 $9,587 $9,467 $314 $6,064 $26,566 $21,180
Dilutive effect of convertible preferred stock 194 195 193 197 774 783
Adjusted net income available to common stockholders - diluted $7,392 $9,782 $9,660 $314 $6,261 $27,340 $21,963
Weighted average shares outstanding - diluted 21,518,469 20,645,469 18,893,158 18,912,358 18,764,541 20,000,288 18,053,531
Adjusted effects of assumed Preferred Stock conversion (676,351) 676,351
Adjusted weighted average shares outstanding - diluted 21,518,469 20,645,469 18,893,158 18,236,007 18,764,541 20,000,288 18,729,882
Adjusted diluted earnings per common share $0.34 $0.47 $0.51 $0.02 $0.33 $1.37 $1.17
Net income available to common stockholders $6,111 $9,587 $9,467 $10,281 $6,064 $35,446 $19,813
Average tangible common equity 330,819 309,624 254,088 238,405 233,733 283,561 236,660
Return on average tangible common equity 7.33% 12.28% 14.94% 17.49% 10.32% 12.50% 8.37%
Adjusted efficiency ratio:
Net interest income $45,796 $39,512 $38,557 $31,819 $33,544 $155,684 $112,358
Non-interest income 3,998 4,171 5,202 27,285 6,208 40,656 20,956
Operating revenue 49,794 43,683 43,759 59,104 39,752 196,340 133,314
Gain on sale of subsidiary (20,860) (20,860)
Adjusted operating revenue $49,794 $43,683 $43,759 $38,244 $39,752 $175,480 $133,314
Non-interest expenses $33,231 $28,225 $27,321 $34,837 $26,911 $123,614 $93,112
Incremental bonus related to transaction (4,814) (4,814)
Transaction related costs (1,688) (325) (2,013) (1,618)
Adjusted non-interest expenses $31,543 $28,225 $27,321 $29,698 $26,911 $116,787 $91,494
Adjusted efficiency ratio 63.35% 64.61% 62.44% 77.65% 67.70% 66.55% 68.63%
Adjusted net non-interest expense to average assets ratio:
Non-interest expenses $33,231 $28,225 $27,321 $34,837 $26,911 $123,614 $93,112
Incremental bonus related to transaction (4,814) (4,814)
Transaction related costs (1,688) (325) (2,013) (1,618)
Adjusted non-interest expenses $31,543 $28,225 $27,321 $29,698 $26,911 $116,787 $91,494
Total non-interest income $3,998 $4,171 $5,202 $27,285 $6,208 $40,656 $20,956
Gain on sale of subsidiary (20,860) (20,860)
Adjusted non-interest income $3,998 $4,171 $5,202 $6,425 $6,208 $19,796 $20,956
Adjusted net non-interest expenses $27,545 $24,054 $22,119 $23,273 $20,703 $96,991 $70,538
Average total assets $3,181,697 $2,849,170 $2,723,303 $2,619,282 $2,603,226 $2,844,916 $2,079,756
Adjusted net non-interest expense to average assets ratio 3.43% 3.35% 3.26% 3.60% 3.16% 3.41% 3.39%

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) 2017 2017 2017 2017 2016 2017 2016
Reported yield on loans 7.73% 7.44% 7.79% 7.15% 7.36% 7.55% 7.71%
Effect of accretion income on acquired loans (0.26%) (0.24%) (0.54%) (0.22%) (0.54%) (0.32%) (0.48%)
Adjusted yield on loans 7.47% 7.20% 7.25% 6.93% 6.82% 7.23% 7.23%
Reported net interest margin 6.16% 5.90% 6.16% 5.37% 5.60% 5.92% 5.91%
Effect of accretion income on acquired loans (0.23%) (0.21%) (0.46%) (0.18%) (0.45%) (0.27%) (0.39%)
Adjusted net interest margin 5.93% 5.69% 5.70% 5.19% 5.15% 5.65% 5.52%
Total stockholders' equity $391,698 $386,097 $310,467 $300,425 $289,345 $391,698 $289,345
Preferred stock liquidation preference (9,658) (9,658) (9,658) (9,746) (9,746) (9,658) (9,746)
Total common stockholders' equity 382,040 376,439 300,809 290,679 279,599 382,040 279,599
Goodwill and other intangibles (63,778) (42,452) (43,321) (44,233) (46,531) (63,778) (46,531)
Tangible common stockholders' equity $318,262 $333,987 $257,488 $246,446 $233,068 $318,262 $233,068
Common shares outstanding 20,820,445 20,820,900 18,132,585 18,078,769 18,078,247 20,820,445 18,078,247
Tangible book value per share $15.29 $16.04 $14.20 $13.63 $12.89 $15.29 $12.89
Total assets at end of period $3,499,033 $2,906,161 $2,836,684 $2,635,358 $2,641,067 $3,499,033 $2,641,067
Goodwill and other intangibles (63,778) (42,452) (43,321) (44,233) (46,531) (63,778) (46,531)
Adjusted total assets at period end $3,435,255 $2,863,709 $2,793,363 $2,591,125 $2,594,536 $3,435,255 $2,594,536
Tangible common stockholders' equity ratio 9.26% 11.66% 9.22% 9.51% 8.98% 9.26% 8.98%

  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, except for non-performing assets to total assets.

  3. Current quarter ratios are preliminary.

Source: Triumph Bancorp, Inc.

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.