Triumph Bancorp Reports Third Quarter Net Income to Common Stockholders of $23.6 million

DALLAS, Oct. 20, 2021 (GLOBE NEWSWIRE) -- Triumph Bancorp, Inc. (Nasdaq: TBK) (“Triumph” or the “Company”) today announced earnings and operating results for the third quarter of 2021.

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.

2021 Third Quarter Highlights

• For the third quarter of 2021, net income to common shareholders was $23.6 million, and diluted earnings per share were $0.94.
• Net interest income was $91.8 million.
• Non-interest income was $12.1 million.
• Non-interest expense was $72.8 million.
• Net interest margin was 6.69%. Yield on loans and the average cost of our total deposits were 7.92% and 0.16%, respectively.
• Credit loss expense for the quarter ended September 30, 2021 was a benefit of $1.2 million.
• Net charge-offs were $3.7 million, or 0.08% of average loans, for the quarter.
• We recognized a downward adjustment to third quarter interest income of $3.5 million related to certain factored receivables. The majority of this adjustment represents a timing difference for revenue that will be recognized in future periods. This adjustment will have minimal impact on subsequent quarters.
• The total dollar value of invoices purchased by Triumph Business Capital was $3.532 billion with an average invoice size of $2,300. The transportation average invoice size for the quarter was $2,195.
• TriumphPay processed 3,760,948 invoices paying carriers a total of $4.191 billion.

Balance Sheet

Total loans held for investment decreased $48.5 million, or 1.0%, during the third quarter to $4.783 billion at September 30, 2021. Average loans held for investment for the quarter decreased $27.9 million, or 0.6%, to $4.771 billion.

Total deposits were $4.823 billion at September 30, 2021, an increase of $97.1 million, or 2.1%, in the third quarter of 2021. Non-interest-bearing deposits accounted for 42% of total deposits and non-time deposits accounted for 84% of total deposits at September 30, 2021.

Asset Quality and Allowance for Credit Loss

Our nonperforming assets ratio at September 30, 2021 was 0.86%. Approximately 2 basis points of this ratio at September 30, 2021 consisted of $1.4 million of the acquired Over-Formula Advance portfolio which represents the portion that is not covered by CVLG's indemnification. An additional 32 basis points of this ratio at September 30, 2021 consisted of $19.4 million of the Misdirected Payments. Over-Formula Advances and Misdirected Payments are discussed in greater detail below.

Our past-due loan ratio at September 30, 2021 was 2.31%. Approximately 21 basis points of this ratio at September 30, 2021 consisted of $10.1 million of past due factored receivables related to the Over-Formula Advance portfolio. An additional 40 basis points of this ratio at September 30, 2021 consisted of the $19.4 million of Misdirected Payments, as discussed below.

Our ACL as a percentage of loans held for investment decreased 9 basis point during the quarter to 0.86% at September 30, 2021.

CARES Act and Paycheck Protection Program

As of September 30, 2021, our balance sheet reflected deferrals on outstanding loan balances of $32.2 million to assist customers impacted by COVID-19. Modifications related to the COVID-19 pandemic and qualifying under the provisions of Section 4013 of the CARES Act are not considered troubled debt restructurings. As of September 30, 2021, these deferred balances carried accrued interest of $0.1 million.

As of September 30, 2021, we carried 815 PPP loans representing a balance of $87.4 million classified as commercial loans. We recognized $1.6 million in fees from the SBA on PPP loans during the three months ended September 30, 2021 and carry $3.6 million of deferred fees on PPP loans at quarter end. The remaining fees will be amortized over the respective lives of the loans or recognized upon forgiveness of the loans.

Items related to our July 2020 acquisition of TFS

As disclosed on our SEC Forms 8-K filed on July 8, 2020 and September 23, 2020, we acquired the transportation factoring assets of TFS, a wholly owned subsidiary of Covenant Logistics Group, Inc. ("CVLG"), and subsequently amended the terms of that transaction. There were no material developments related to that transaction that impacted our operating results for the three months ended September 30, 2021.

At September 30, 2021, the carrying value of the acquired over-formula advances was $10.1 million, the total reserve on acquired over-formula advances was $10.1 million and the balance of our indemnification asset, the value of the payment that would be due to us from CVLG in the event that these over-advances are charged off, was $4.8 million.

As of September 30, 2021 we carried a separate $19.4 million receivable (the “Misdirected Payments”) payable by the United States Postal Service (“USPS”) arising from accounts factored to the largest over-formula advance carrier. This amount is separate from the acquired Over-Formula Advances. The amounts represented by this receivable were paid by the USPS directly to such customer in contravention of notices of assignment delivered to, and previously honored by, the USPS, which amount was then not remitted back to us by such customer as required. The USPS disputes their obligation to make such payment, citing purported deficiencies in the notices delivered to them. In addition to commencing litigation against such customer, we have commenced litigation against the USPS seeking a ruling that the USPS was obligated to make the payments represented by this receivable directly to us. During the third quarter of 2021 we, together with the USPS, entered into a stipulation of dismissal without prejudice for our initial action with respect to this matter in United States Federal District Court and filed a new action seeking recourse from the USPS in the United States Court of Federal Claims. Based on our legal analysis and discussions with our counsel advising us on this matter, we continue to believe it is probable that we will prevail in such action and that the USPS will have the capacity to make payment on such receivable. Consequently, we have not reserved for such balance as of September 30, 2021. The full amount of such receivable is reflected in non-performing and past due factored receivables as of September 30, 2021 in accordance with our policy. As of September 30, 2021, the entire $19.4 million Misdirected Payments amount was greater than 90 days past due.

Conference Call Information

Aaron P. Graft, Vice Chairman and CEO and Brad Voss, CFO will review the quarterly results in a conference call for investors and analysts beginning at 7:00 a.m. Central Time on Thursday, October 21, 2021.

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. 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/tbk211021.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 banking, payments, and factoring services 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: business and economic conditions generally and in the bank and non-bank financial services industries, nationally and within our local market areas; the impact of COVID-19 on our business, including the impact of the actions taken by governmental authorities to try and contain the virus or address the impact of the virus on the United States economy (including, without limitation, the CARES Act), and the resulting effect of all of such items on our operations, liquidity and capital position, and on the financial condition of our borrowers and other customers; our ability to mitigate our risk exposures; our ability to maintain our historical earnings trends; changes in management personnel; interest rate risk; concentration of our products and 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 nonperforming assets; inaccuracy of the assumptions and estimates we make in establishing reserves for probable loan losses and other estimates; risks related to the integration of acquired businesses, including our acquisition of HubTran Inc. and developments related to our acquisition of Transport Financial Solutions and the related over-formula advances, and any future acquisitions; our ability to successfully identify and address the risks associated with our possible future acquisitions, and the risks that our prior and possible future acquisitions make it more difficult for investors to evaluate our business, financial condition and results of operations, and impairs our ability to accurately forecast our future performance; lack of liquidity; fluctuations in the fair value and liquidity of the securities we hold for sale; impairment of investment securities, goodwill, other intangible assets or deferred tax assets; our risk management strategies; environmental liability associated with our lending activities; increased competition in the bank and non-bank financial services industries, nationally, regionally or locally, which may adversely affect pricing and terms; the accuracy of our financial statements and related disclosures; material weaknesses in our internal control over financial reporting; system failures or failures to prevent breaches of our network security; the institution and outcome of litigation and other legal proceedings against us or to which we become subject; changes in carry-forwards of net operating losses; changes in federal tax law or policy; the impact of recent and future legislative and regulatory changes, including changes in banking, securities and tax laws and regulations, such as the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) and their application by our regulators; governmental monetary and fiscal policies; changes in the scope and cost of FDIC, 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 12, 2021.

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 our 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
(Dollars in thousands)	September 30, 2021				June 30, 2021				March 31, 2021				December 31, 2020				September 30, 2020				September 30, 2021				September 30, 2020
Financial Highlights:
Total assets	$	6,024,535			$	6,015,877			$	6,099,628			$	5,935,791			$	5,836,787			$	6,024,535			$	5,836,787
Loans held for investment	$	4,782,730			$	4,831,215			$	5,084,512			$	4,996,776			$	4,852,911			$	4,782,730			$	4,852,911
Deposits	$	4,822,575			$	4,725,450			$	4,789,665			$	4,716,600			$	4,248,101			$	4,822,575			$	4,248,101
Net income available to common stockholders	$	23,627			$	27,180			$	33,122			$	31,328			$	22,005			$	83,929			$	30,995
Performance Ratios - Annualized:
Return on average assets	1.61		%		1.84		%		2.29		%		2.21		%		1.65		%		1.91		%		0.80		%
Return on average total equity	11.85		%		14.27		%		18.42		%		17.73		%		13.24		%		14.72		%		6.63		%
Return on average common equity	12.13		%		14.70		%		19.14		%		18.44		%		13.61		%		15.18		%		6.62		%
Return on average tangible common equity (1)	19.21		%		20.92		%		26.19		%		25.70		%		19.43		%		22.12		%		9.51		%
Yield on loans(2)	7.92		%		7.77		%		7.24		%		7.20		%		7.05		%		7.65		%		6.92		%
Cost of interest bearing deposits	0.27		%		0.31		%		0.41		%		0.54		%		0.79		%		0.33		%		1.07		%
Cost of total deposits	0.16		%		0.20		%		0.28		%		0.38		%		0.56		%		0.21		%		0.79		%
Cost of total funds	0.38		%		0.34		%		0.42		%		0.51		%		0.67		%		0.38		%		0.90		%
Net interest margin(2)	6.69		%		6.47		%		6.06		%		6.20		%		5.83		%		6.41		%		5.52		%
Net non-interest expense to average assets	4.00		%		3.75		%		3.14		%		2.54		%		3.23		%		3.63		%		3.14		%
Adjusted net non-interest expense to average assets (1)	4.00		%		3.55		%		3.14		%		2.54		%		3.17		%		3.57		%		3.37		%
Efficiency ratio	70.13		%		67.96		%		62.57		%		55.95		%		65.15		%		66.98		%		68.07		%
Adjusted efficiency ratio (1)	70.13		%		65.09		%		62.57		%		55.95		%		64.18		%		66.00		%		70.61		%
Asset Quality:(3)
Past due to total loans	2.31		%		2.28		%		1.96		%		3.22		%		2.40		%		2.31		%		2.40		%
Non-performing loans to total loans	0.90		%		1.06		%		1.17		%		1.16		%		1.17		%		0.90		%		1.17		%
Non-performing assets to total assets	0.86		%		0.97		%		1.15		%		1.15		%		1.52		%		0.86		%		1.52		%
ACL to non-performing loans	95.75		%		88.92		%		80.87		%		164.98		%		159.67		%		95.75		%		159.67		%
ACL to total loans	0.86		%		0.95		%		0.94		%		1.92		%		1.88		%		0.86		%		1.88		%
Net charge-offs to average loans	0.08		%		0.01		%		0.85		%		0.03		%		0.02		%		0.94		%		0.08		%
Capital:
Tier 1 capital to average assets(4)	10.43		%		9.73		%		10.89		%		10.80		%		10.75		%		10.43		%		10.75		%
Tier 1 capital to risk-weighted assets(4)	11.06		%		10.33		%		11.28		%		10.60		%		10.32		%		11.06		%		10.32		%
Common equity tier 1 capital to risk-weighted assets(4)	9.45		%		8.74		%		9.72		%		9.05		%		8.72		%		9.45		%		8.72		%
Total capital to risk-weighted assets	13.69		%		12.65		%		13.58		%		13.03		%		12.94		%		13.69		%		12.94		%
Total equity to total assets	13.62		%		13.17		%		12.53		%		12.24		%		11.89		%		13.62		%		11.89		%
Tangible common stockholders' equity to tangible assets(1)	8.63		%		8.04		%		8.98		%		8.56		%		8.09		%		8.63		%		8.09		%
Per Share Amounts:
Book value per share	$	30.87			$	29.76			$	28.90			$	27.42			$	26.11			$	30.87			$	26.11
Tangible book value per share (1)	$	19.73			$	18.35			$	21.34			$	19.78			$	18.38			$	19.73			$	18.38
Basic earnings (loss) per common share	$	0.95			$	1.10			$	1.34			$	1.27			$	0.89			$	3.40			$	1.28
Diluted earnings (loss) per common share	$	0.94			$	1.08			$	1.32			$	1.25			$	0.89			$	3.33			$	1.27
Adjusted diluted earnings per common share(1)	$	0.94			$	1.17			$	1.32			$	1.25			$	0.91			$	3.42			$	0.99
Shares outstanding end of period	25,123,342				25,109,703				24,882,929				24,868,218				24,851,601				25,123,342				24,851,601

Unaudited consolidated balance sheet as of:

(Dollars in thousands)	September 30, 2021				June 30, 2021				March 31, 2021				December 31, 2020				September 30, 2020
ASSETS
Total cash and cash equivalents	$	532,764			$	444,439			$	380,811			$	314,393			$	288,278
Securities - available for sale	164,816				193,627				205,330				224,310				242,802
Securities - held to maturity, net	5,488				5,658				5,828				5,919				6,096
Equity securities	5,623				5,854				5,826				5,826				6,040
Loans held for sale	26,437				31,136				22,663				24,546				36,716
Loans held for investment	4,782,730				4,831,215				5,084,512				4,996,776				4,852,911
Allowance for credit losses	(41,017		)		(45,694		)		(48,024		)		(95,739		)		(90,995		)
Loans, net	4,741,713				4,785,521				5,036,488				4,901,037				4,761,916
FHLB and other restricted stock	4,901				8,096				9,807				6,751				18,464
Premises and equipment, net	104,311				106,720				105,390				103,404				105,455
Other real estate owned ("OREO"), net	893				1,013				1,421				1,432				1,704
Goodwill and intangible assets, net	280,055				286,567				188,006				189,922				192,041
Bank-owned life insurance	41,540				41,912				41,805				41,608				41,440
Deferred tax asset, net	—				—				1,260				6,427				7,716
Indemnification asset	4,786				5,246				5,246				36,225				31,218
Other assets	111,208				100,088				89,747				73,991				96,901
Total assets	$	6,024,535			$	6,015,877			$	6,099,628			$	5,935,791			$	5,836,787
LIABILITIES
Non-interest bearing deposits	$	2,020,984			$	1,803,552			$	1,637,653			$	1,352,785			$	1,315,900
Interest bearing deposits	2,801,591				2,921,898				3,152,012				3,363,815				2,932,201
Total deposits	4,822,575				4,725,450				4,789,665				4,716,600				4,248,101
Customer repurchase agreements	11,990				9,243				2,668				3,099				14,192
Federal Home Loan Bank advances	30,000				130,000				180,000				105,000				435,000
Payment Protection Program Liquidity Facility	97,554				139,673				158,796				191,860				223,713
Subordinated notes	106,755				87,620				87,564				87,509				87,455
Junior subordinated debentures	40,467				40,333				40,201				40,072				39,944
Deferred tax liability, net	982				3,333				—				—				—
Other liabilities	93,538				87,837				76,730				64,870				94,540
Total liabilities	5,203,861				5,223,489				5,335,624				5,209,010				5,142,945
EQUITY
Preferred Stock	45,000				45,000				45,000				45,000				45,000
Common stock	282				282				280				280				279
Additional paid-in-capital	499,282				494,224				490,699				489,151				488,094
Treasury stock, at cost	(104,600		)		(104,486		)		(103,059		)		(103,052		)		(102,942		)
Retained earnings	373,512				349,885				322,705				289,583				258,254
Accumulated other comprehensive income (loss)	7,198				7,483				8,379				5,819				5,157
Total stockholders' equity	820,674				792,388				764,004				726,781				693,842
Total liabilities and equity	$	6,024,535			$	6,015,877			$	6,099,628			$	5,935,791			$	5,836,787

Unaudited consolidated statement of income:

	For the Three Months Ended																				For the Nine Months Ended
(Dollars in thousands)	September 30, 2021				June 30, 2021				March 31, 2021				December 31, 2020				September 30, 2020				September 30, 2021				September 30, 2020
Interest income:
Loans, including fees	$	44,882			$	45,988			$	48,706			$	50,723			$	48,774			$	139,576			$	147,491
Factored receivables, including fees	50,516				47,328				37,795				37,573				31,468				135,639				76,861
Securities	1,126				1,187				1,650				1,519				1,927				3,963				6,710
FHLB and other restricted stock	28				27				76				56				122				131				474
Cash deposits	183				158				126				68				73				467				640
Total interest income	96,735				94,688				88,353				89,939				82,364				279,776				232,176
Interest expense:
Deposits	1,948				2,470				3,372				4,308				5,834				7,790				23,095
Subordinated notes	2,449				1,350				1,349				1,347				1,348				5,148				4,016
Junior subordinated debentures	443				446				442				452				462				1,331				1,662
Other borrowings	124				140				170				234				341				434				2,273
Total interest expense	4,964				4,406				5,333				6,341				7,985				14,703				31,046
Net interest income	91,771				90,282				83,020				83,598				74,379				265,073				201,130
Credit loss expense (benefit)	(1,187		)		(1,806		)		(7,845		)		4,680				(258		)		(10,838		)		33,649
Net interest income after credit loss expense (benefit)	92,958				92,088				90,865				78,918				74,637				275,911				167,481
Non-interest income:
Service charges on deposits	2,030				1,857				1,787				1,643				1,470				5,674				3,631
Card income	2,144				2,225				1,972				1,949				2,091				6,341				5,832
Net OREO gains (losses) and valuation adjustments	(9		)		(287		)		(80		)		(217		)		(41		)		(376		)		(399		)
Net gains (losses) on sale of securities	4				1				—				16				3,109				5				3,210
Fee income	5,198				4,470				2,249				1,615				1,402				11,917				4,392
Insurance commissions	1,231				1,272				1,486				1,327				990				3,989				2,905
Gain on sale of subsidiary	—				—				—				—				—				—				9,758
Other	1,457				4,358				6,877				16,053				1,472				12,692				8,670
Total non-interest income	12,055				13,896				14,291				22,386				10,493				40,242				37,999
Non-interest expense:
Salaries and employee benefits	43,769				41,658				35,980				33,798				31,651				121,407				93,177
Occupancy, furniture and equipment	6,388				6,112				5,779				7,046				5,574				18,279				15,720
FDIC insurance and other regulatory assessments	353				500				977				350				360				1,830				1,170
Professional fees	2,362				5,052				2,545				2,326				3,265				9,959				7,023
Amortization of intangible assets	3,274				2,428				1,975				2,065				2,141				7,677				6,265
Advertising and promotion	1,403				1,241				890				1,170				1,105				3,534				3,548
Communications and technology	7,090				6,028				5,900				5,639				5,569				19,018				16,514
Other	8,174				7,779				6,846				6,904				5,632				22,799				19,359
Total non-interest expense	72,813				70,798				60,892				59,298				55,297				204,503				162,776
Net income before income tax	32,200				35,186				44,264				42,006				29,833				111,650				42,704
Income tax expense	7,771				7,204				10,341				9,876				6,929				25,316				10,810
Net income	$	24,429			$	27,982			$	33,923			$	32,130			$	22,904			$	86,334			$	31,894
Dividends on preferred stock	(802		)		(802		)		(801		)		(802		)		(899		)		(2,405		)		(899		)
Net income available to common stockholders	$	23,627			$	27,180			$	33,122			$	31,328			$	22,005			$	83,929			$	30,995

Earnings per share:

	For the Three Months Ended																				Nine Months Ended
(Dollars in thousands)	September 30, 2021				June 30, 2021				March 31, 2021				December 31, 2020				September 30, 2020				September 30, 2021				September 30, 2020
Basic
Net income to common stockholders	$	23,627			$	27,180			$	33,122			$	31,328			$	22,005			$	83,929			$	30,995
Weighted average common shares outstanding	24,759,419				24,724,128				24,675,109				24,653,099				24,592,092				24,719,861				24,298,897
Basic earnings per common share	$	0.95			$	1.10			$	1.34			$	1.27			$	0.89			$	3.40			$	1.28
Diluted
Net income to common stockholders - diluted	$	23,627			$	27,180			$	33,122			$	31,328			$	22,005			$	83,929			$	30,995
Weighted average common shares outstanding	24,759,419				24,724,128				24,675,109				24,653,099				24,592,092				24,719,861				24,298,897
Dilutive effects of:
Assumed exercises of stock options	121,110				134,358				130,016				101,664				48,102				129,149				53,232
Restricted stock awards	141,204				139,345				169,514				136,239				67,907				146,172				65,893
Restricted stock units	74,268				73,155				66,714				50,156				18,192				71,620				15,198
Performance stock units - market based	131,346				134,313				128,167				112,228				76,095				131,275				30,995
Performance stock units - performance based	—				—				—				—				—				—				—
Employee stock purchase plan	616				3,708				1,418				—				—				1,914				—
Weighted average shares outstanding - diluted	25,227,963				25,209,007				25,170,938				25,053,386				24,802,388				25,199,991				24,464,215
Diluted earnings per common share	$	0.94			$	1.08			$	1.32			$	1.25			$	0.89			$	3.33			$	1.27

Shares that were not considered in computing diluted earnings per common share because they were antidilutive are as follows:

	For the Three Months Ended															Nine Months Ended
	September 30, 2021			June 30, 2021			March 31, 2021			December 31, 2020			September 30, 2020			September 30, 2021			September 30, 2020
Stock options	16,939			16,939			—			—			98,513			16,939			98,513
Restricted stock awards	—			—			—			—			—			195,640			—
Restricted stock units	—			—			—			—			—			17,757			—
Performance stock units - market based	12,020			13,520			—			—			—			12,020			—
Performance stock units - performance based	259,383			265,625			256,625			256,625			261,125			259,383			261,125
Employee stock purchase plan	—			—			—			—			—			—			—

Loans held for investment summarized as of:

(Dollars in thousands)	September 30, 2021				June 30, 2021				March 31, 2021				December 31, 2020				September 30, 2020
Commercial real estate	$	630,106			$	701,576			$	784,110			$	779,158			$	762,531
Construction, land development, land	171,814				185,444				223,841				219,647				244,512
1-4 family residential properties	127,073				135,288				142,859				157,147				164,785
Farmland	82,990				91,122				97,835				103,685				110,966
Commercial	1,398,497				1,453,583				1,581,125				1,562,957				1,536,903
Factored receivables	1,607,028				1,398,299				1,208,718				1,120,770				1,016,337
Consumer	12,677				12,389				14,332				15,838				17,106
Mortgage warehouse	752,545				853,514				1,031,692				1,037,574				999,771
Total loans	$	4,782,730			$	4,831,215			$	5,084,512			$	4,996,776			$	4,852,911

Our banking loan portfolio consists of traditional community bank loans as well as commercial finance product lines focused on businesses that require specialized financial solutions and national lending product lines that further diversify our lending operations.

Banking loans held for investment are further summarized below:

(Dollars in thousands)	September 30, 2021				June 30, 2021				March 31, 2021				December 31, 2020				September 30, 2020
Commercial real estate	$	630,106			$	701,576			$	784,110			$	779,158			$	762,531
Construction, land development, land	171,814				185,444				223,841				219,647				244,512
1-4 family residential	127,073				135,288				142,859				157,147				164,785
Farmland	82,990				91,122				97,835				103,685				110,966
Commercial - General	289,242				290,562				288,458				340,850				342,858
Commercial - Paycheck Protection Program	87,413				135,307				237,299				189,857				223,230
Commercial - Agriculture	77,263				76,346				83,859				94,572				112,221
Commercial - Equipment	588,105				604,396				623,248				573,163				509,849
Commercial - Asset-based lending	213,927				181,394				188,825				180,488				160,711
Commercial - Liquid Credit	142,547				165,578				159,436				184,027				188,034
Consumer	12,677				12,389				14,332				15,838				17,106
Mortgage Warehouse	752,545				853,514				1,031,692				1,037,574				999,771
Total banking loans held for investment	$	3,175,702			$	3,432,916			$	3,875,794			$	3,876,006			$	3,836,574

The following table presents the Company’s operating segments:

(Dollars in thousands)
Three months ended September 30, 2021		Banking				Factoring				Payments				Corporate				Consolidated
Total interest income		$	46,175			$	47,222			$	3,295			$	43			$	96,735
Intersegment interest allocations		2,452				(2,341		)		(111		)		—				—
Total interest expense		2,073				—				—				2,891				4,964
Net interest income (expense)		46,554				44,881				3,184				(2,848		)		91,771
Credit loss expense (benefit)		(2,399		)		1,164				38				10				(1,187		)
Net interest income after credit loss expense		48,953				43,717				3,146				(2,858		)		92,958
Noninterest income		7,371				1,557				3,086				41				12,055
Noninterest expense		41,183				19,106				11,416				1,108				72,813
Operating income (loss)		$	15,141			$	26,168			$	(5,184	)		$	(3,925	)		$	32,200

(Dollars in thousands)
Three months ended June 30, 2021		Banking				Factoring				Payments				Corporate				Consolidated
Total interest income		$	47,356			$	44,653			$	2,675			$	4			$	94,688
Intersegment interest allocations		2,723				(2,584		)		(139		)		—				—
Total interest expense		2,610				—				—				1,796				4,406
Net interest income (expense)		47,469				42,069				2,536				(1,792		)		90,282
Credit loss expense (benefit)		(4,335		)		2,444				218				(133		)		(1,806		)
Net interest income after credit loss expense		51,804				39,625				2,318				(1,659		)		92,088
Noninterest income		10,018				2,742				1,083				53				13,896
Noninterest expense		41,860				17,174				10,842				922				70,798
Operating income (loss)		$	19,962			$	25,193			$	(7,441	)		$	(2,528	)		$	35,186

Information pertaining to our factoring segment, which includes only factoring originated by our Triumph Business Capital subsidiary, summarized as of and for the quarters ended:

	September 30, 2021				June 30, 2021				March 31, 2021				December 31, 2020				September 30, 2020
Factored receivable period end balance	$	1,479,989,000			$	1,284,314,000			$	1,118,988,000			$	1,036,548,000			$	953,434,000
Yield on average receivable balance	13.75		%		14.99		%		13.85		%		13.80		%		15.59		%
Current quarter charge-off rate(1)	0.24		%		0.04		%		3.95		%		0.02		%		0.09		%
Factored receivables - transportation concentration	90		%		91		%		90		%		89		%		88		%
Interest income, including fees	$	47,222,000			$	44,653,000			$	35,824,000			$	35,439,000			$	30,068,000
Non-interest income(2)	1,557,000				2,742,000				1,757,000				1,358,000				1,157,000
Factored receivable total revenue	48,779,000				47,395,000				37,581,000				36,797,000				31,225,000
Average net funds employed	1,235,610,000				1,072,405,000				936,528,000				924,899,000				694,170,000
Yield on average net funds employed	15.66		%		17.73		%		16.27		%		15.83		%		17.89		%
Accounts receivable purchased	$	3,531,811,000			$	3,068,262,000			$	2,492,468,000			$	2,461,249,000			$	1,984,490,000
Number of invoices purchased	1,535,321				1,401,695				1,188,678				1,189,271				1,027,839
Average invoice size	$	2,300			$	2,189			$	2,097			$	2,070			$	1,931
Average invoice size - transportation	$	2,195			$	2,090			$	1,974			$	1,943			$	1,787
Average invoice size - non-transportation	$	4,944			$	4,701			$	4,775			$	5,091			$	5,181

(1)	March 31, 2021 includes a $41.3 million charge-off related to the TFS acquisition, which contributed approximately 3.94% to the net charge-off rate for the quarter.
(2)	Total factoring segment non-interest income was $6.4 million, $15.5 million, and $3.2 million for the three months ended March 31, 2021, December 31, 2020 and September 30, 2020.
	March 31, 2021 non-interest income used to calculate yield on average net funds employed excludes a $4.7 million gain on our indemnification asset.
	December 31, 2020 non-interest income used to calculate yield on average net funds employed excludes a gain of $8.9 million related to CVLG’s delivery of proceeds resulting from the liquidation of its acquired stock and a $5.3 million gain on our indemnification asset.
	September 30, 2020 non-interest income used to calculate yield on average net funds employed excludes a $2.0 million gain recognized on the increased value of the receivable due from CVLG resulting from the amended TFS acquisition agreement.

Information pertaining to our payments segment, which includes only our TriumphPay division, summarized as of and for the quarters ended:

	September 30, 2021				June 30, 2021				March 31, 2021				December 31, 2020				September 30, 2020
Factored receivable period end balance	$	127,039,000			$	113,985,000			$	89,730,000			$	84,222,000			$	62,903,000
Interest income	$	3,295,000			$	2,675,000			$	1,969,000			$	2,034,000			$	1,361,000
Noninterest income	3,086,000				1,083,000				73,000				51,000				47,000
Total revenue	$	6,381,000			$	3,758,000			$	2,042,000			$	2,085,000			$	1,408,000
Pre-tax operating income (loss)	$	(5,184,000	)		$	(7,441,000	)		$	(2,552,000	)		$	(2,026,000	)		$	(1,936,000	)
Interest expense	111,000				139,000				167,000				178,000				147,000
Depreciation and software amortization expense	77,000				68,000				65,000				63,000				63,000
Intangible amortization expense	1,490,000				497,000				—				—				—
Earnings (losses) before interest, taxes, depreciation, and amortization	$	(3,506,000	)		$	(6,737,000	)		$	(2,320,000	)		$	(1,785,000	)		$	(1,726,000	)
Transaction costs	—				2,992,000				—				—				—
Adjusted earnings (losses) before interest, taxes, depreciation, and amortization(1)	$	(3,506,000	)		$	(3,745,000	)		$	(2,320,000	)		$	(1,785,000	)		$	(1,726,000	)
Number of invoices processed	3,760,948				3,165,119				2,529,673				1,818,145				1,408,232
Amount of payments processed	$	4,191,424,000			$	3,426,808,000			$	2,301,632,000			$	1,920,037,000			$	1,221,305,000

(1) Adjusted earnings (losses) before interest, taxes, depreciation, and amortization excludes material gains and expenses related to merger and acquisition-related activities and is a non-GAAP financial measure used to provide meaningful supplemental information regarding the segment's operational performance and to enhance investors' overall understanding of such financial performance by removing the volatility associated with certain acquisition-related items that are unrelated to our core business.

   

Deposits summarized as of:

(Dollars in thousands)	September 30, 2021				June 30, 2021				March 31, 2021				December 31, 2020				September 30, 2020
Non-interest bearing demand	$	2,020,984			$	1,803,552			$	1,637,653			$	1,352,785			$	1,315,900
Interest bearing demand	795,234				760,874				729,364				688,680				634,272
Individual retirement accounts	86,012				87,052				89,748				92,584				94,933
Money market	472,242				395,035				402,070				393,325				384,476
Savings	483,946				474,163				464,035				421,488				405,954
Certificates of deposit	574,539				612,730				740,694				790,844				857,514
Brokered time deposits	117,064				306,975				516,006				516,786				344,986
Other brokered deposits	272,554				285,069				210,095				460,108				210,066
Total deposits	$	4,822,575			$	4,725,450			$	4,789,665			$	4,716,600			$	4,248,101

Net interest margin summarized for the three months ended:

	September 30, 2021											June 30, 2021
(Dollars in thousands)	Average Balance				Interest				Average Rate			Average Balance				Interest				Average Rate
Interest earning assets:
Interest earning cash balances	$	474,122			$	183			0.15	%		$	572,485			$	158			0.11	%
Taxable securities	154,017				948				2.44	%		165,786				967				2.34	%
Tax-exempt securities	27,839				178				2.54	%		33,451				220				2.64	%
FHLB and other restricted stock	7,956				28				1.40	%		9,518				27				1.14	%
Loans	4,777,409				95,398				7.92	%		4,814,050				93,316				7.77	%
Total interest earning assets	$	5,441,343			$	96,735			7.05	%		$	5,595,290			$	94,688			6.79	%
Non-interest earning assets:
Other assets	579,288											498,515
Total assets	$	6,020,631										$	6,093,805
Interest bearing liabilities:
Deposits:
Interest bearing demand	$	779,625			$	435			0.22	%		$	757,529			$	469			0.25	%
Individual retirement accounts	86,571				126				0.58	%		88,142				143				0.65	%
Money market	417,435				225				0.21	%		398,290				216				0.22	%
Savings	479,915				185				0.15	%		468,517				178				0.15	%
Certificates of deposit	595,001				725				0.48	%		664,478				1,157				0.70	%
Brokered time deposits	99,116				29				0.12	%		138,102				51				0.15	%
Other brokered deposits	441,446				223				0.20	%		685,397				256				0.15	%
Total interest bearing deposits	2,899,109				1,948				0.27	%		3,200,455				2,470				0.31	%
Federal Home Loan Bank advances	36,522				22				0.24	%		39,341				22				0.22	%
Subordinated notes	114,071				2,449				8.52	%		87,590				1,350				6.18	%
Junior subordinated debentures	40,390				443				4.35	%		40,251				446				4.44	%
Other borrowings	127,946				102				0.32	%		138,649				118				0.34	%
Total interest bearing liabilities	$	3,218,038			$	4,964			0.61	%		$	3,506,286			$	4,406			0.50	%
Non-interest bearing liabilities and equity:
Non-interest bearing demand deposits	1,912,398											1,749,858
Other liabilities	72,173											51,257
Total equity	818,022											786,404
Total liabilities and equity	$	6,020,631										$	6,093,805
Net interest income					$	91,771										$	90,282
Interest spread									6.44	%										6.29	%
Net interest margin									6.69	%										6.47	%

Loan balance totals include respective nonaccrual assets.
Net interest spread is the yield on average interest earning assets less the rate on interest bearing liabilities.
Net interest margin is the ratio of net interest income to average interest earning assets.
Average rates have been annualized.

Additional information pertaining to our loan portfolio, including loans held for investment and loans held for sale, summarized for the quarters ended:

(Dollars in thousands)	September 30, 2021				June 30, 2021				March 31, 2021				December 31, 2020				September 30, 2020
Average Banking loans	$	3,299,152			$	3,516,747			$	3,722,895			$	3,777,553			$	3,707,293
Average Factoring receivables	1,362,856				1,195,209				1,048,968				1,024,307				768,087
Average Payments receivables	115,401				102,094				76,412				74,947				50,683
Average total loans	$	4,777,409			$	4,814,050			$	4,848,275			$	4,876,807			$	4,526,063
Banking yield	5.40		%		5.25		%		5.31		%		5.34		%		5.23		%
Factoring yield	13.75		%		14.99		%		13.85		%		13.80		%		15.59		%
Payments Yield	11.33		%		10.51		%		10.45		%		10.80		%		10.68		%
Total loan yield	7.92		%		7.77		%		7.24		%		7.20		%		7.05		%

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, except per share amounts)		September 30, 2021					June 30, 2021					March 31, 2021					December 31, 2020					September 30, 2020					September 30, 2021					September 30, 2020
Net income available to common stockholders		$	23,627				$	27,180				$	33,122				$	31,328				$	22,005				$	83,929				$	30,995
Transaction costs		—					2,992					—					—					827					2,992					827
Gain on sale of subsidiary or division		—					—					—					—					—					—					(9,758		)
Tax effect of adjustments		—					(715		)			—					—					(197		)			(715		)			2,254
Adjusted net income available to common stockholders - diluted		$	23,627				$	29,457				$	33,122				$	31,328				$	22,635				$	86,206				$	24,318
Weighted average shares outstanding - diluted		25,227,963					25,209,007					25,170,938					25,053,386					24,802,388					25,199,991					24,464,215
Adjusted diluted earnings per common share		$	0.94				$	1.17				$	1.32				$	1.25				$	0.91				$	3.42				$	0.99
Average total stockholders' equity		$	818,022				$	786,404				$	746,849				$	720,892				$	688,327				$	784,019				$	642,151
Average preferred stock liquidation preference		(45,000		)			(45,000		)			(45,000		)			(45,000		)			(45,000		)			(45,000		)			(17,080		)
Average total common stockholders' equity		773,022					741,404					701,849					675,892					643,327					739,019					625,071
Average goodwill and other intangibles		(284,970		)			(220,310		)			(188,980		)			(191,017		)			(192,682		)			(231,751		)			(189,776		)
Average tangible common stockholders' equity		$	488,052				$	521,094				$	512,869				$	484,875				$	450,645				$	507,268				$	435,295
Net income available to common stockholders		$	23,627				$	27,180				$	33,122				$	31,328				$	22,005				$	83,929				$	30,995
Average tangible common equity		488,052					521,094					512,869					484,875					450,645					507,268					435,295
Return on average tangible common equity		19.21			%		20.92			%		26.19			%		25.70			%		19.43			%		22.12			%		9.51			%
Net interest income		$	91,771				$	90,282				$	83,020				$	83,598				$	74,379				$	265,073				$	201,130
Non-interest income		12,055					13,896					14,291					22,386					10,493					40,242					37,999
Operating revenue		103,826					104,178					97,311					105,984					84,872					305,315					239,129
Gain on sale of subsidiary or division		—					—					—					—					—					—					(9,758		)
Adjusted operating revenue		$	103,826				$	104,178				$	97,311				$	105,984				$	84,872				$	305,315				$	229,371
Non-interest expenses		$	72,813				$	70,798				$	60,892				$	59,298				$	55,297				$	204,503				$	162,776
Transaction costs		—					(2,992		)			—					—					(827		)			(2,992		)			(827		)
Adjusted non-interest expenses		$	72,813				$	67,806				$	60,892				$	59,298				$	54,470				$	201,511				$	161,949
Adjusted efficiency ratio		70.13			%		65.09			%		62.57			%		55.95			%		64.18			%		66.00			%		70.61			%
Adjusted net non-interest expense to average assets ratio:
Non-interest expenses		$	72,813				$	70,798				$	60,892				$	59,298				$	55,297				$	204,503				$	162,776
Transaction costs		—					(2,992		)			—					—					(827		)			(2,992		)			(827		)
Adjusted non-interest expenses		$	72,813				$	67,806				$	60,892				$	59,298				$	54,470				$	201,511				$	161,949
Total non-interest income		$	12,055				$	13,896				$	14,291				$	22,386				$	10,493				$	40,242				$	37,999
Gain on sale of subsidiary or division		—					—					—					—					—					—					(9,758		)
Adjusted non-interest income		$	12,055				$	13,896				$	14,291				$	22,386				$	10,493				$	40,242				$	28,241
Adjusted net non-interest expenses		$	60,758				$	53,910				$	46,601				$	36,912				$	43,977				$	161,269				$	133,708
Average total assets		$	6,020,631				$	6,093,805				$	6,013,668				$	5,788,549				$	5,518,708				$	6,042,677				$	5,304,903
Adjusted net non-interest expense to average assets ratio		4.00			%		3.55			%		3.14			%		2.54			%		3.17			%		3.57			%		3.37			%
Total stockholders' equity		$	820,674				$	792,388				$	764,004				$	726,781				$	693,842				$	820,674				$	693,842
Preferred stock liquidation preference		(45,000		)			(45,000		)			(45,000		)			(45,000		)			(45,000		)			(45,000		)			(45,000		)
Total common stockholders' equity		775,674					747,388					719,004					681,781					648,842					775,674					648,842
Goodwill and other intangibles		(280,055		)			(286,567		)			(188,006		)			(189,922		)			(192,041		)			(280,055		)			(192,041		)
Tangible common stockholders' equity		$	495,619				$	460,821				$	530,998				$	491,859				$	456,801				$	495,619				$	456,801
Common shares outstanding		25,123,342					25,109,703					24,882,929					24,868,218					24,851,601					25,123,342					24,851,601
Tangible book value per share		$	19.73				$	18.35				$	21.34				$	19.78				$	18.38				$	19.73				$	18.38
Total assets at end of period		$	6,024,535				$	6,015,877				$	6,099,628				$	5,935,791				$	5,836,787				$	6,024,535				$	5,836,787
Goodwill and other intangibles		(280,055		)			(286,567		)			(188,006		)			(189,922		)			(192,041		)			(280,055		)			(192,041		)
Tangible assets at period end		$	5,744,480				$	5,729,310				$	5,911,622				$	5,745,869				$	5,644,746				$	5,744,480				$	5,644,746
Tangible common stockholders' equity ratio		8.63			%		8.04			%		8.98			%		8.56			%		8.09			%		8.63			%		8.09			%

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 defined as 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.

2)  Performance ratios include discount accretion on purchased loans for the periods presented as follows:

	For the Three Months Ended																				For the Nine Months Ended
(Dollars in thousands)	September 30, 2021				June 30, 2021				March 31, 2021				December 31, 2020				September 30, 2020				September 30, 2021				September 30, 2020
Loan discount accretion	$	1,953			$	2,161			$	3,501			$	2,334			$	4,104			$	7,615			$	8,377

3)  Asset quality ratios exclude loans held for sale, except for non-performing assets to total assets.

4)  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
Senior Vice President, Director of Corporate Communication
atavackoli@tbkbank.com
214-365-6930