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Triumph Bancorp Reports Third Quarter Net Income to Common Stockholders of $4.5 Million

DALLAS, Oct. 26, 2016 (GLOBE NEWSWIRE) -- Triumph Bancorp, Inc. (NASDAQ:TBK) today announced earnings and operating results for the third quarter of 2016.

As part of how we measure our results, we use certain non-GAAP financial measures to ascertain performance.  These non-GAAP financial measures are reconciled in the section labeled “Metrics and Non-GAAP Financial Reconciliation” at the end of this document.

2016 Third Quarter Highlights

  • For the third quarter of 2016, net income was $4.8 million and net income available to common stockholders was $4.5 million, compared to net income of $4.6 million and net income available to common stockholders of $4.4 million for the quarter ended June 30, 2016.
  • Diluted earnings per share were $0.25 for the quarter ended September 30, 2016, compared to $0.25 for the quarter ended June 30, 2016.  Adjusted diluted earnings per share, which exclude acquisition-related costs, were $0.32 for the quarter ended September 30, 2016.
  • For the quarter ended September 30, 2016, our annualized return on average common equity and return on average assets were 6.51% and 0.84%, respectively, compared to an annualized return on average common equity and return on average assets of 6.64% and 1.07%, respectively, for the quarter ended June 30, 2016.  Our ratio of tangible common stockholders’ equity to tangible assets was 8.99% as of September 30, 2016.
  • Net interest margin (“NIM”) was 5.79% for the quarter ended September 30, 2016, compared to 6.53% for the quarter ended June 30, 2016.
  • Total loans held for investment increased $549.3 million or 38.9% to $1.960 billion at September 30, 2016.
  • Closed our previously announced acquisition of ColoEast Bankshares, Inc. (“ColoEast”) and its wholly owned bank subsidiary, Colorado East Bank & Trust, on August 1, 2016.
  • Completed a $50 million subordinated debt offering enhancing our regulatory capital position.

Balance Sheet

Average loans outstanding for the third quarter of 2016 were $1.724 billion, an increase of $437.7 million, or 34.0%, from the average balance for the quarter ended June 30, 2016.  Total loans held for investment were $1.960 billion at September 30, 2016, an increase of $549.3 million or 38.9% from $1.411 billion at June 30, 2016.  We acquired loans with an acquisition date fair value of $460.8 million in the ColoEast transaction.  Our commercial finance loan portfolio totaled $637.9 million as of September 30, 2016, an increase of $31.0 million or 5.1% in the third quarter.

The third quarter increase in our commercial finance loan portfolio was partially offset by a $23.6 million reduction in factored receivables outstanding during the period.  This reduction was due to a one-time acceleration of factored invoice collections upon our implementation of a new payment processing initiative.

Total deposits were $1.951 billion at September 30, 2016, an increase of $675.5 million or 53.0% for the third quarter of 2016.  Non-interest-bearing deposits accounted for 17% of total deposits and non-time deposits accounted for 53% of total deposits. The average cost of our total funds was 0.61% for the quarter ended September 30, 2016 compared to 0.68% for the quarter ended June 30, 2016, on an annualized basis.  We assumed $653.0 million of deposits in the ColoEast transaction.

Net Interest Income

We earned net interest income for the quarter ended September 30, 2016 of $30.4 million compared to $25.9 million for the quarter ended June 30, 2016.  Yields on loans for the quarter ended September 30, 2016 were down 108 bps from the prior quarter to 7.42% (down 71 bps from the prior quarter to 7.10% adjusted to exclude loan discount accretion). NIM adjusted to exclude loan discount accretion was 5.53% for the quarter ended September 30, 2016 compared to 5.98% for the quarter ended June 30, 2016.  Yields on loans and NIM for the quarter ended September 30, 2016 were impacted by the acquisition of ColoEast, which created a shift in our loan mix.  At September 30, 2016, 33% of our loans were comprised of our higher-yielding commercial finance products, compared to 43% at June 30, 2016.  

Asset Quality

Non-performing assets increased 45 bps from June 30, 2016 to September 30, 2016 to 2.05% of total assets.  This increase included $7.4 million of nonaccrual loans and $3.1 million of OREO acquired in the ColoEast acquisition, which were recorded at their respective fair values on the acquisition date.  The remaining increase was primarily due to three loan relationships, including troubled debt restructurings during the quarter ended September 30, 2016.  These same loan relationships also contributed to the ratio of past due to total loans, which increased to 3.86% at September 30, 2016 from 2.80% at June 30, 2016.  In addition, our past due loans at September 30, 2016 included $19.2 million of delinquent loans acquired in the ColoEast acquisition.  We recorded net charge-offs of $1.68 million for the quarter ended September 30, 2016 compared to net charge-offs of $0.26 million for the quarter ended June 30, 2016.  The increase in net charge-offs was primarily due to a $1.4 million loan relationship charged-off during the third quarter of 2016.  We recorded a provision for loan losses of $2.8 million for the quarter ended September 30, 2016 compared to a provision of $1.9 million for the quarter ended June 30, 2016. From June 30, 2016 to September 30, 2016, our allowance for loan and lease losses (“ALLL”) increased from $13.8 million or 0.98% of total loans to $14.9 million or 0.76% of total loans. The ALLL ratio was impacted by the acquired ColoEast loan portfolio during the period which was recorded at fair value on the acquisition date and did not require an ALLL. 

Non-interest Income and Expense

We earned non-interest income for the quarter ended September 30, 2016 of $6.1 million compared to $3.7 million for the quarter ended June 30, 2016.  Non-interest income for the prior quarter ended June 30, 2016 was reduced by a $1.2 million OREO write-down related to a bank facility previously transferred to OREO that is no longer being actively operated. Non-interest income for the quarter ended September 30, 2016 includes the operations of ColoEast subsequent to the August 1, 2016 acquisition date.

For the quarter ended September 30, 2016, non-interest expense totaled $25.8 million, compared to $20.3 million for the quarter ended June 30, 2016.  Non-interest expense for the quarter ended September 30, 2016 was increased by $1.6 million of acquisition costs associated with the ColoEast transaction.  Non-interest expense for the quarter ended September 30, 2016 includes the operations of ColoEast subsequent to the August 1, 2016 acquisition date.

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 27, 2016. Dan Karas, Chief Lending Officer, will also be available for questions.

To participate in the live conference call, please dial 1 (855) 779-1042 (U.S. and Canada) and enter Conference ID # 94147204.  A simultaneous audio-only webcast may be accessed via our website at www.triumphbancorp.com through the Investor Relations, Webcasts and Presentations links, or through a direct link here at http://edge.media-server.com/m/p/t6qdamxr. An archive of this conference call will subsequently be available at this same location on our website.

About Triumph

Headquartered in Dallas, Texas, Triumph Bancorp, Inc. (NASDAQ:TBK) is a financial holding company with a diversified line of community banking, commercial finance and asset management activities. www.triumphbancorp.com

Forward-Looking Statements

This press release contains forward-looking statements. Any statements about our expectations, beliefs, plans, predictions, forecasts, objectives, assumptions or future events or performance are not historical facts and may be forward-looking. You can identify forward-looking statements by the use of forward-looking terminology such as “believes,” “expects,” “could,” “may,” “will,” “should,” “seeks,” “likely,” “intends,” “plans,” “pro forma,” “projects,” “estimates” or “anticipates” or the negative of these words and phrases or similar words or phrases that are predictions of or indicate future events or trends and that do not relate solely to historical matters. You can also identify forward-looking statements by discussions of strategy, plans or intentions. Forward-looking statements involve numerous risks and uncertainties and you should not rely on them as predictions of future events. Forward-looking statements depend on assumptions, data or methods that may be incorrect or imprecise and we may not be able to realize them. We do not guarantee that the transactions and events described will happen as described (or that they will happen at all). The following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements: our limited operating history as an integrated company; business and economic conditions generally and in the bank and non-bank financial services industries, nationally and within our local market area; our ability to mitigate our risk exposures; our ability to maintain our historical earnings trends; risks related to the integration of acquired businesses (including our recently completed acquisition of ColoEast Bankshares, 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; risks related to our asset management business; our risk management strategies; environmental liability associated with our lending activities; increased competition in the bank and non-bank financial services industries, nationally, regionally or locally, which may adversely affect pricing and terms; the obligations associated with being a public company; the accuracy of our financial statements and related disclosures; material weaknesses in our internal control over financial reporting; system failures or failures to prevent breaches of our network security; the institution and outcome of litigation and other legal proceedings against us or to which we become subject; changes in carry-forwards of net operating losses; changes in federal tax law or policy; the impact of recent and future legislative and regulatory changes, including changes in banking, securities and tax laws and regulations, such as the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) and their application by our regulators; governmental monetary and fiscal policies; changes in the scope and cost of the Federal Deposit Insurance Corporation insurance and other coverages; failure to receive regulatory approval for future acquisitions; increases in our capital requirements; and risk retention requirements under the Dodd-Frank Act.

While forward-looking statements reflect our good-faith beliefs, they are not guarantees of future performance. All forward-looking statements are necessarily only estimates of future results. Accordingly, actual results may differ materially from those expressed in or contemplated by the particular forward-looking statement, and, therefore, you are cautioned not to place undue reliance on such statements. Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events or circumstances, except as required by applicable law. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see "Risk Factors" and the forward-looking statement disclosure contained in Triumph’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission on February 26, 2016.

Non-GAAP Financial Measures

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

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

    As of and for the Three Months Ended  
    September 30,     June 30,     March 31,     December 31,     September 30,  
    2016     2016     2016     2015     2015  
Financial Highlights (Dollars in thousands):                                        
Total assets   $ 2,575,490     $ 1,783,395     $ 1,687,795     $ 1,691,313     $ 1,581,463  
Loans held for investment   $ 1,959,855     $ 1,410,518     $ 1,245,840     $ 1,291,885     $ 1,185,301  
Deposits   $ 1,950,677     $ 1,275,154     $ 1,260,393     $ 1,248,950     $ 1,200,036  
Net income available to common stockholders   $ 4,506     $ 4,431     $ 4,812     $ 4,312     $ 5,732  
                                         
Performance Ratios - Annualized:                                        
Return on average assets     0.84 %     1.07 %     1.20 %     1.10 %     1.50 %
Return on average total equity     6.63 %     6.69 %     7.39 %     6.68 %     8.96 %
Return on average common equity (1)     6.51 %     6.64 %     7.37 %     6.63 %     9.00 %
Return on average tangible common equity (1)     7.60 %     7.37 %     8.23 %     7.45 %     10.20 %
Yield on loans     7.42 %     8.50 %     7.84 %     8.17 %     8.34 %
Adjusted yield on loans (1)     7.10 %     7.81 %     7.47 %     7.84 %     7.96 %
Cost of interest bearing deposits     0.68 %     0.72 %     0.74 %     0.71 %     0.69 %
Cost of total deposits     0.57 %     0.63 %     0.64 %     0.61 %     0.59 %
Cost of total funds     0.61 %     0.68 %     0.69 %     0.66 %     0.64 %
Net interest margin     5.79 %     6.53 %     5.90 %     6.20 %     6.45 %
Adjusted net interest margin (1)     5.53 %     5.98 %     5.61 %     5.94 %     6.14 %
Net non-interest expense to average assets (1)(2)     3.15 %     3.85 %     3.61 %     3.96 %     4.04 %
Efficiency ratio (1)(2)     66.20 %     68.74 %     73.09 %     75.40 %     73.85 %
                                         
Asset Quality:(3)                                        
Past due to total loans     3.86 %     2.80 %     3.61 %     2.41 %     2.14 %
Non-performing loans  to total loans     2.25 %     1.56 %     1.70 %     1.03 %     0.97 %
Non-performing assets to total assets     2.05 %     1.60 %     1.72 %     1.10 %     1.12 %
ALLL to non-performing loans     33.78 %     62.60 %     56.96 %     94.10 %     100.00 %
ALLL to total loans     0.76 %     0.98 %     0.97 %     0.97 %     0.97 %
Net charge-offs to average loans     0.10 %     0.02 %     0.00 %     0.01 %     0.01 %
                                         
Capital:                                        
Tier 1 capital to average assets(4)     12.04 %     16.02 %     16.24 %     16.56 %     16.87 %
Tier 1 capital to risk-weighted assets(4)     11.96 %     17.14 %     18.79 %     18.23 %     19.34 %
Common equity tier 1 capital to risk-weighted assets(4)     10.26 %     15.19 %     16.62 %     16.23 %     17.18 %
Total capital to risk-weighted assets(4)     14.80 %     18.01 %     19.65 %     19.11 %     20.21 %
Total equity to total assets     11.05 %     15.69 %     16.24 %     15.85 %     16.69 %
Tangible common stockholders' equity to tangible assets     8.99 %     13.88 %     14.30 %     13.85 %     14.50 %
                                         
Per Share Amounts:                                        
Book value per share   $ 15.18     $ 14.91     $ 14.67     $ 14.34     $ 14.09  
Tangible book value per share (1)   $ 12.55     $ 13.47     $ 13.18     $ 12.79     $ 12.48  
Basic earnings per common share   $ 0.25     $ 0.25     $ 0.27     $ 0.24     $ 0.32  
Diluted earnings per common share   $ 0.25     $ 0.25     $ 0.27     $ 0.24     $ 0.32  
Adjusted diluted earnings per common share(1)(2)   $ 0.32     $ 0.25     $ 0.27     $ 0.19     $ 0.22  
Shares outstanding end of period     18,106,978       18,107,493       18,015,423       18,018,200       18,040,072  
                                         


Unaudited consolidated balance sheet as of:

    September 30,     June 30,     March 31,     December 31,     September 30,  
 (Dollars in thousands)   2016     2016     2016     2015     2015  
ASSETS                                        
Total cash and cash equivalents   $ 104,725     $ 61,750     $ 123,715     $ 105,277     $ 115,783  
Securities - available for sale     286,574       159,790       161,517       163,169       156,820  
Securities - held to maturity     29,316       27,502       25,796             747  
Loans held for sale     9,623             3,043       1,341       2,174  
Loans held for investment     1,959,855       1,410,518       1,245,840       1,291,885       1,185,301  
Allowance for loan and lease losses     (14,912 )     (13,772 )     (12,093 )     (12,567 )     (11,544 )
Loans, net     1,944,943       1,396,746       1,233,747       1,279,318       1,173,757  
FHLB and FRB stock     8,397       6,368       4,234       3,818       7,992  
Premises and equipment, net     45,050       19,629       19,934       22,227       21,807  
Other real estate owned ("OREO"), net     8,061       6,074       7,478       5,177       6,201  
Goodwill and intangible assets, net     47,449       26,160       26,877       27,854       28,995  
Bank-owned life insurance     36,347       29,786       29,658       29,535       29,406  
Deferred tax asset, net     20,042       15,042       15,240       15,945       15,838  
Other assets     34,963       34,548       36,556       37,652       21,943  
Total assets   $ 2,575,490     $ 1,783,395     $ 1,687,795     $ 1,691,313     $ 1,581,463  
LIABILITIES                                        
Non-interest bearing deposits   $ 339,999     $ 170,834     $ 160,818     $ 168,264     $ 167,931  
Interest bearing deposits     1,610,678       1,104,320       1,099,575       1,080,686       1,032,105  
Total deposits     1,950,677       1,275,154       1,260,393       1,248,950       1,200,036  
Customer repurchase agreements     15,329       13,635       9,641       9,317       15,584  
Federal Home Loan Bank advances     230,000       180,500       110,000       130,000       61,000  
Junior subordinated debentures     32,640       24,823       24,754       24,687       24,620  
Subordinated notes     48,676                          
Other liabilities     13,647       9,520       8,893       10,321       16,304  
Total liabilities     2,290,969       1,503,632       1,413,681       1,423,275       1,317,544  
EQUITY                                        
Preferred stock series A     4,550       4,550       4,550       4,550       4,550  
Preferred stock series B     5,196       5,196       5,196       5,196       5,196  
Common stock     182       182       181       181       181  
Additional paid-in-capital     196,306       195,711       194,687       194,297       193,465  
Treasury stock, at cost     (751 )     (741 )     (597 )     (560 )     (184 )
Retained earnings     77,846       73,340       68,909       64,097       59,785  
Accumulated other comprehensive income     1,192       1,525       1,188       277       926  
Total equity     284,521       279,763       274,114       268,038       263,919  
Total liabilities and equity   $ 2,575,490     $ 1,783,395     $ 1,687,795     $ 1,691,313     $ 1,581,463  
   


Unaudited consolidated statement of income for the three months ended:

    September 30,     June 30,     March 31,     December 31,     September 30,  
 (Dollars in thousands)   2016     2016     2016     2015     2015  
Interest income:                                        
Loans, including fees   $ 23,123     $ 18,547     $ 16,088     $ 15,524     $ 15,716  
Factored receivables, including fees     9,021       8,639       7,822       8,952       8,829  
Taxable securities     1,154       965       768       669       649  
Tax exempt securities     80       6       7       14       17  
Cash deposits     93       197       208       122       92  
Total interest income     33,471       28,354       24,893       25,281       25,303  
Interest expense:                                        
Deposits     2,408       2,020       1,993       1,905       1,764  
Junior subordinated debentures     382       312       302       288       283  
Other borrowings     263       115       109       38       25  
Total interest expense     3,053       2,447       2,404       2,231       2,072  
Net interest income     30,418       25,907       22,489       23,050       23,231  
Provision for loan losses     2,819       1,939       (511 )     1,178       165  
Net interest income after provision for loan losses     27,599       23,968       23,000       21,872       23,066  
Non-interest income:                                        
Service charges on deposits     984       695       659       744       710  
Card income     767       577       546       559       574  
Net OREO gains (losses) and valuation adjustments     63       (1,204 )     (11 )     (128 )     (58 )
Net gains (losses) on sale of securities     (68 )           5       2       15  
Net gains on sale of loans           4       12       234       363  
Fee income     655       504       534       465       542  
Bargain purchase gain                       900       1,708  
Asset management fees     1,553       1,605       1,629       1,670       1,744  
Other     2,145       1,487       1,607       1,125       700  
Total non-interest income     6,099       3,668       4,981       5,571       6,298  
Non-interest expense:                                        
Salaries and employee benefits     14,699       12,229       12,252       12,448       12,416  
Occupancy, furniture and equipment     1,921       1,534       1,493       1,546       1,575  
FDIC insurance and other regulatory assessments     143       281       224       300       252  
Professional fees     1,874       1,101       1,073       906       1,344  
Amortization of intangible assets     958       717       977       1,141       1,179  
Advertising and promotion     779       628       519       374       618  
Communications and technology     1,966       1,263       1,432       1,596       951  
Other     3,452       2,578       2,108       2,591       2,210  
Total non-interest expense     25,792       20,331       20,078       20,902       20,545  
Net income before income tax     7,906       7,305       7,903       6,541       8,819  
Income tax expense     3,099       2,679       2,897       2,032       2,891  
Net income   $ 4,807     $ 4,626     $ 5,006     $ 4,509     $ 5,928  
Dividends on preferred stock     (301 )     (195 )     (194 )     (197 )     (196 )
Net income available to common stockholders   $ 4,506     $ 4,431     $ 4,812     $ 4,312     $ 5,732  
   


Loans held for investment summarized as of:

    September 30,     June 30,     March 31,     December 31,     September 30,  
 (Dollars in thousands)   2016     2016     2016     2015     2015  
Commercial real estate   $ 420,742     $ 298,991     $ 293,485     $ 291,819     $ 247,175  
Construction, land development, land     101,169       36,498       41,622       43,876       52,446  
1-4 family residential properties     108,721       74,121       76,973       78,244       77,043  
Farmland     139,109       35,795       33,250       33,573       25,784  
Commercial     777,806       574,508       509,433       495,356       468,055  
Factored receivables     213,955       237,520       199,532       215,088       201,803  
Consumer     25,602       17,339       13,530       13,050       10,632  
Mortgage warehouse     172,751       135,746       78,015       120,879       102,363  
  Total loans   $ 1,959,855     $ 1,410,518     $ 1,245,840     $ 1,291,885     $ 1,185,301  
   

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)   2016     2016     2016     2015     2015  
Equipment   $ 181,987     $ 167,000     $ 159,755     $ 148,951     $ 143,483  
Asset based lending (General)     129,501       114,632       85,739       75,134       85,641  
Asset based lending (Healthcare)     84,900       81,664       79,580       80,200       66,832  
Premium finance     27,573       6,117       3,506       1,612        
Factored receivables     213,955       237,520       199,532       215,088       201,803  
  Commercial finance   $ 637,916     $ 606,933     $ 528,112     $ 520,985     $ 497,759  
                                         
Total loans held for investment   $ 1,959,855     $ 1,410,518     $ 1,245,840     $ 1,291,885     $ 1,185,301  
Commercial finance as a % of total     33 %     43 %     42 %     40 %     42 %
Community banking as a % of total     67 %     57 %     58 %     60 %     58 %
                                         

Deposits summarized as of:

    September 30,     June 30,     March 31,     December 31,     September 30,    
(Dollars in thousands)   2016     2016     2016     2015     2015    
Non-interest bearing demand   $ 339,999     $ 170,834     $ 160,818     $ 168,264     $ 167,931    
Interest bearing demand     311,351       235,877       227,002       238,833       206,603    
Individual retirement accounts     103,007       64,204       63,265       60,971       58,619    
Money market     209,572       120,929       111,578       112,214       117,888    
Savings     171,665       77,625       77,969       74,759       72,244    
Certificates of deposit     765,093       555,710       569,820       543,909       526,732    
Brokered deposits     49,990       49,975       49,941       50,000       50,019    
  Total deposits   $ 1,950,677     $ 1,275,154     $ 1,260,393     $ 1,248,950     $ 1,200,036    
     


Net interest margin summarized for the three months ended:

     September 30, 2016     June 30, 2016  
    Average             Average     Average             Average  
(Dollars in thousands)   Balance     Interest     Rate     Balance     Interest     Rate  
Interest earning assets:                                                
Interest earning cash balances   $ 73,022     $ 93       0.51 %   $ 120,088     $ 197       0.66 %
Taxable securities     253,690       1,138       1.78 %     184,010       952       2.08 %
Tax exempt securities     28,239       80       1.13 %     1,063       6       2.27 %
FHLB stock     9,627       16       0.66 %     4,748       13       1.10 %
Loans     1,723,896       32,144       7.42 %     1,286,159       27,186       8.50 %
Total interest earning assets   $ 2,088,474     $ 33,471       6.38 %   $ 1,596,068     $ 28,354       7.15 %
Non-interest earning assets:                                                
Other assets     193,805                       146,874                  
Total assets   $ 2,282,279                     $ 1,742,942                  
Interest bearing liabilities:                                                
Deposits:                                                
Interest bearing demand   $ 280,689     $ 71       0.10 %   $ 242,862     $ 59       0.10 %
Individual retirement accounts     87,723       253       1.15 %     64,075       197       1.24 %
Money market     182,124       96       0.21 %     122,670       69       0.23 %
Savings     140,338       23       0.07 %     78,795       10       0.05 %
Certificates of deposit     670,372       1,839       1.09 %     565,600       1,560       1.11 %
Brokered deposits     49,964       126       1.00 %     49,950       125       1.01 %
Total deposits     1,411,210       2,408       0.68 %     1,123,952       2,020       0.72 %
Junior subordinated debentures     29,977       382       5.07 %     24,788       312       5.06 %
Other borrowings     257,358       263       0.41 %     139,601       115       0.33 %
Total interest bearing liabilities   $ 1,698,545     $ 3,053       0.72 %   $ 1,288,341     $ 2,447       0.76 %
Non-interest bearing liabilities and equity:                                                
Non-interest bearing demand deposits     283,128                       166,863                  
Other liabilities     11,986                       9,770                  
Total equity     288,620                       277,968                  
Total liabilities and equity   $ 2,282,279                     $ 1,742,942                  
Net interest income           $ 30,418                     $ 25,907          
Interest spread                     5.66 %                     6.39 %
Net interest margin                     5.79 %                     6.53 %
   


Metrics and non-GAAP financial reconciliation:

    As of and for the Three Months Ended  
    September 30,     June 30,     March 31,     December 31,     September 30,  
 (Dollars in thousands, except per share amounts)   2016     2016     2016     2015     2015  
Net income available to common stockholders   $ 4,506     $ 4,431     $ 4,812     $ 4,312     $ 5,732  
Bargain purchase gain, non-taxable                       (900 )     (1,708 )
Acquisition related costs     1,618                          
Tax effect of acquisition related costs     (251 )                        
Adjusted net income available to common stockholders   $ 5,873     $ 4,431     $ 4,812     $ 3,412     $ 4,024  
Dilutive effect of convertible preferred stock     197                          
Adjusted net income available to common stockholders - diluted   $ 6,070     $ 4,431     $ 4,812     $ 3,412     $ 4,024  
                                         
Weighted average shares outstanding - diluted     18,101,676       18,042,585       17,981,276       17,916,251       18,587,821  
Adjusted effects of assumed Preferred Stock conversion     676,351                         (676,351 )
Adjusted weighted average shares outstanding - diluted     18,778,027       18,042,585       17,981,276       17,916,251       17,911,470  
Adjusted diluted earnings per common share   $ 0.32     $ 0.25     $ 0.27     $ 0.19     $ 0.22  
                                         
Net income available to common stockholders   $ 4,506     $ 4,431     $ 4,812     $ 4,312     $ 5,732  
Average tangible common equity     235,938       241,666       235,192       229,636       222,884  
Return on average tangible common equity     7.60 %     7.37 %     8.23 %     7.45 %     10.20 %
                                         
Efficiency ratio:                                        
Net interest income   $ 30,418     $ 25,907     $ 22,489     $ 23,050     $ 23,231  
Non-interest income     6,099       3,668       4,981       5,571       6,298  
Operating revenue     36,517       29,575       27,470       28,621       29,529  
Bargain purchase gain                       (900 )     (1,708 )
Adjusted operating revenue   $ 36,517     $ 29,575     $ 27,470     $ 27,721     $ 27,821  
Non-interest expenses   $ 25,792     $ 20,331     $ 20,078     $ 20,902     $ 20,545  
Acquisition related costs     (1,618 )                        
Adjusted non-interest expenses   $ 24,174     $ 20,331     $ 20,078     $ 20,902     $ 20,545  
Efficiency ratio     66.20 %     68.74 %     73.09 %     75.40 %     73.85 %
                                         
Net non-interest expense to average assets ratio:                                        
Non-interest expenses   $ 25,792     $ 20,331     $ 20,078     $ 20,902     $ 20,545  
Acquisition related costs     (1,618 )                        
Adjusted non-interest expenses   $ 24,174     $ 20,331     $ 20,078     $ 20,902     $ 20,545  
Total non-interest income   $ 6,099     $ 3,668     $ 4,981     $ 5,571     $ 6,298  
Bargain purchase gain                       (900 )     (1,708 )
Adjusted non-interest income   $ 6,099     $ 3,668     $ 4,981     $ 4,671     $ 4,590  
Adjusted net non-interest expenses   $ 18,075     $ 16,663     $ 15,097     $ 16,231     $ 15,955  
Average total assets   $ 2,282,279     $ 1,742,942     $ 1,682,640     $ 1,624,891     $ 1,565,698  
Net non-interest expense to average assets ratio     3.15 %     3.85 %     3.61 %     3.96 %     4.04 %
   



    As of and for the Three Months Ended  
    September 30,     June 30,     March 31,     December 31,     September 30,  
 (Dollars in thousands, except per share amounts)   2016     2016     2016     2015     2015  
Reported yield on loans     7.42 %     8.50 %     7.84 %     8.17 %     8.34 %
Effect of accretion income on acquired loans     (0.32 %)     (0.69 %)     (0.37 %)     (0.33 %)     (0.38 %)
Adjusted yield on loans     7.10 %     7.81 %     7.47 %     7.84 %     7.96 %
                                         
Reported net interest margin     5.79 %     6.53 %     5.90 %     6.20 %     6.45 %
Effect of accretion income on acquired loans     (0.26 %)     (0.55 %)     (0.29 %)     (0.26 %)     (0.31 %)
Adjusted net interest margin     5.53 %     5.98 %     5.61 %     5.94 %     6.14 %
                                         
Total stockholders' equity   $ 284,521     $ 279,763     $ 274,114     $ 268,038     $ 263,919  
Preferred stock liquidation preference     (9,746 )     (9,746 )     (9,746 )     (9,746 )     (9,746 )
Total common stockholders' equity     274,775       270,017       264,368       258,292       254,173  
Goodwill and other intangibles     (47,449 )     (26,160 )     (26,877 )     (27,854 )     (28,995 )
Tangible common stockholders' equity   $ 227,326     $ 243,857     $ 237,491     $ 230,438     $ 225,178  
Common shares outstanding     18,106,978       18,107,493       18,015,423       18,018,200       18,040,072  
Tangible book value per share   $ 12.55     $ 13.47     $ 13.18     $ 12.79     $ 12.48  
                                         
Total assets at end of period   $ 2,575,490     $ 1,783,395     $ 1,687,795     $ 1,691,313     $ 1,581,463  
Goodwill and other intangibles     (47,449 )     (26,160 )     (26,877 )     (27,854 )     (28,995 )
Adjusted total assets at period end   $ 2,528,041     $ 1,757,235     $ 1,660,918     $ 1,663,459     $ 1,552,468  
Tangible common stockholders' equity ratio     8.99 %     13.88 %     14.30 %     13.85 %     14.50 %
   

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

  • "Common stockholders' equity" is defined as total stockholders' equity at end of period less the liquidation preference value of the preferred stock.
  • “Adjusted diluted earnings per common share” is defined as adjusted net income available to common stockholders divided by adjusted weighted average diluted common shares outstanding.  Excluded from net income available to common stockholders are material gains and expenses related to merger and acquisition-related activities, net of tax. In our judgment, the adjustments made to net income available to common stockholders allow management and investors to better assess our performance in relation to our core net income by removing the volatility associated with certain acquisition-related items and other discrete items that are unrelated to our core business.  Weighted average diluted common shares outstanding are adjusted as a result of changes in their dilutive properties given the gain and expense adjustments described herein.  
  • "Tangible common stockholders' equity" is common stockholders' equity less goodwill and other intangible assets.
  • "Total tangible assets" is defined as total assets less goodwill and other intangible assets.
  • "Tangible book value per share" is defined as tangible common stockholders' equity divided by total common shares outstanding. This measure is important to investors interested in changes from period-to-period in book value per share exclusive of changes in intangible assets.
  • "Tangible common stockholders' equity ratio" is defined as the ratio of tangible common stockholders' equity divided by total tangible assets. We believe that this measure is important to many investors in the marketplace who are interested in relative changes from period-to period in common equity and total assets, each exclusive of changes in intangible assets.
  • "Return on Average Tangible Common Equity" is defined as net income available to common stockholders divided by average tangible common stockholders' equity.
  • "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 allow management and investors to better assess our performance in relation to our core operating revenue by removing the volatility associated with certain acquisition-related items and other discrete items that are unrelated to our core business.
  • "Net 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 accretion from our acquired loan portfolio.  Our management uses this metric to better assess the impact of purchase accounting on our yield on loans, as the effect of loan discount accretion is expected to decrease as the acquired loans roll off of our balance sheet.
  • “Adjusted net interest margin” is net interest margin after excluding loan accretion from the acquired loan portfolio.  Our management uses this metric to better assess the impact of purchase accounting on net interest margin, as the effect of loan discount accretion is expected to decrease as the acquired loans mature or roll off of our balance sheet. 

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

3) Asset quality ratios exclude loans held for sale.

4) Current quarter ratios are preliminary.

Investor Relations:
Luke Wyse
Vice President, Finance & Investor Relations
lwyse@triumphllc.com
214-365-6936

Media Contact:
Amanda Tavackoli
Vice President, Marketing & Communication
atavackoli@triumphllc.com 
214-365-6930

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