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 WyseSenior Vice President, Finance & Investor Relationslwyse@tbkbank.com214-365-6936

Media Contact:Amanda TavackoliVice President, Marketing & Communicationatavackoli@tbkbank.com 214-365-6930

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