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

DALLAS, Jan. 22, 2018 (GLOBE NEWSWIRE) -- Triumph Bancorp, Inc. (Nasdaq:TBK) (“Triumph”) today announced earnings and operating results for the fourth quarter and full year of 2017.

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

2017 Fourth Quarter Highlights 

• For the fourth quarter of 2017, net income was $6.3 million and net income available to common stockholders was $6.1 million, compared to net income of $9.8 million and net income available to common stockholders of $9.6 million for the quarter ended September 30, 2017. Diluted earnings per share were $0.29 for the quarter ended December 31, 2017, compared to $0.47 for the quarter ended September 30, 2017. 
  
  
• Net income for the quarter ended December 31, 2017 was impacted by (i) an income tax charge of $3.0 million related to the re‑measurement of our deferred tax assets and deferred tax liabilities at our new expected effective tax rate due to the enactment of the Tax Cuts and Jobs Act (the “Tax Act”), (ii) acquisition-related transaction costs of $1.7 million, and (iii) a $1.3 million impairment charge on core deposit intangible assets associated with acquired public deposits that management decided to no longer hold.
  
  
• We report adjusted diluted earnings per share to remove the volatility of material gains and expenses related to merger and acquisition-related activities. Adjusted diluted earnings per share for the quarter ended December 31, 2017 were $0.34, compared to $0.47 for the quarter ended September 30, 2017. 
  
  
• Non-performing assets to total assets decreased to 1.21% at December 31, 2017 from 1.42% at September 30, 2017. Net charge-offs to average loans increased to 0.06% for the quarter ended December 31, 2017, compared to 0.00% for the quarter ended September 30, 2017.
  
  
• Net interest margin (“NIM”) was 6.16% for the quarter ended December 31, 2017, compared to 5.90% for the quarter ended September 30, 2017. Adjusted NIM, which excludes loan discount accretion, was 5.93% for the quarter ended December 31, 2017, compared to 5.69% for the quarter ended September 30, 2017.
  
  
• We closed our previously announced acquisition of nine branch locations in Colorado (the “Acquired Branches”) from Independent Bank Group, Inc.’s banking subsidiary Independent Bank on October 6, 2017 at which time we completed the core system conversion. We acquired $95.8 million of loans, assumed $160.7 million of deposits associated with the branches and recorded $3.3 million of core deposit intangible assets and $5.8 million of goodwill.
  
  
• We closed our previously announced acquisition of Valley Bancorp, Inc. (“Valley”) and its community banking subsidiary, Valley Bank & Trust, on December 9, 2017 at which time we completed the core system conversion. We acquired $171.2 million of loans, assumed $293.4 million of deposits from Valley and recorded $6.1 million of core deposit intangible assets and $10.5 million of goodwill.
  
  
• On January 19, 2018, we entered into an agreement to sell the assets (the “Disposal Group”) of Triumph Healthcare Finance (“THF”) and exit our healthcare asset based lending line of business. The decision to sell THF was made prior to the end of the fourth quarter, and at December 31, 2017, the fair value of the Disposal Group exceeded its carrying amount. As a result of this decision, the carrying amount of the Disposal Group, including loans with a recorded balance of $68.7 million, net of an allowance for loan and lease losses of $2.1 million, was transferred to assets held for sale.
  
  
• Total loans held for investment increased $385.4 million, or 15.9%, to $2.811 billion at December 31, 2017, compared to $2.425 billion at September 30, 2017. Organic growth, which excludes the impact of the THF loan reclassification and acquired loans, was $186.3 million, or 7.9%, in the fourth quarter.

2017 Annual Highlights

• For the year ended December 31, 2017, net income was $36.2 million and net income available to common stockholders was $35.4 million, compared to net income of $20.7 million and net income available to common stockholders of $19.8 million for the year ended December 31, 2016. Diluted earnings per share were $1.81 for the year ended December 31, 2017, compared to $1.10 for the year ended December 31, 2016. 
  
  
• Adjusted diluted earnings per share, which excluded from net income available to common stockholders, material gains and expenses related to merger and acquisition-related activities, including divestitures, net of tax, were $1.37 for the year ended December 31, 2017, compared to $1.17 for the year ended December 31, 2016. 
  
  
• Net interest margin (“NIM”) was 5.92% for the year ended December 31, 2017, compared to 5.91% for the year ended December 31, 2016. Adjusted NIM, which excludes loan discount accretion, was 5.65% for the year ended December 31, 2017, compared to 5.52% for the year ended December 31, 2016.

Balance Sheet

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

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

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

Net Interest Income

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

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

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

Asset Quality

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

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

Non-interest Income and Expense

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

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

Conference Call Information

Aaron P. Graft, Vice Chairman and CEO and Bryce Fowler, CFO will review the quarterly results in a conference call for investors and analysts beginning at 9:00 a.m. Central Time on Monday, January 22, 2018. Dan Karas, Chief Lending Officer, will also be available for questions.

To participate in the live conference call, please dial 1-855-940-9472 (Canada: 1-855-669-9657) and request to be joined into the Triumph Bancorp, Inc. (TBK) call.  A simultaneous audio-only webcast may be accessed via the Company's website at www.triumphbancorp.com through the Investor Relations, News & Events, Webcasts and Presentations links, or through a direct link here at: https://services.choruscall.com/links/tbk180122.html.  An archive of this conference call will subsequently be available at this same location on the Company’s website.  

About Triumph

Triumph Bancorp, Inc. (Nasdaq:TBK) is a financial holding company headquartered in Dallas, Texas.  Triumph offers a diversified line of community banking and commercial finance products through its bank subsidiary, TBK Bank, SSB. www.triumphbancorp.com

Forward-Looking Statements

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

While forward-looking statements reflect our good-faith beliefs, they are not guarantees of future performance. All forward-looking statements are necessarily only estimates of future results. Accordingly, actual results may differ materially from those expressed in or contemplated by the particular forward-looking statement, and, therefore, you are cautioned not to place undue reliance on such statements. Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events or circumstances, except as required by applicable law. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see "Risk Factors" and the forward-looking statement disclosure contained in Triumph’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission on February 17, 2017 and Triumph’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2017, filed with the Securities and Exchange Commission on October 20, 2017.

Non-GAAP Financial Measures

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

 

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

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

 Unaudited consolidated balance sheet as of:

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

Unaudited consolidated statement of income:

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

Earnings per share:

		For the Three Months Ended																				For the Years Ended
		December 31,				September 30,				June 30,				March 31,				December 31,				December 31,				December 31,
(Dollars in thousands)		2017				2017				2017				2017				2016				2017				2016
Basic
Net income to common stockholders		$	6,111			$	9,587			$	9,467			$	10,281			$	6,064			$	35,446			$	19,813
Weighted average common shares outstanding			20,717,548				19,811,577				18,012,905				17,955,144				17,890,781				19,133,745				17,856,828
Basic earnings per common share		$	0.29			$	0.48			$	0.53			$	0.57			$	0.34			$	1.85			$	1.11
Diluted
Net income to common stockholders		$	6,111			$	9,587			$	9,467			$	10,281			$	6,064			$	35,446			$	19,813
Dilutive effect of preferred stock			194				195				193				192				197				774				—
Net income to common stockholders - diluted		$	6,305			$	9,782			$	9,660			$	10,473			$	6,261			$	36,220			$	19,813
Weighted average common shares outstanding			20,717,548				19,811,577				18,012,905				17,955,144				17,890,781				19,133,745				17,856,828
Dilutive effects of:
Restricted stock			74,318				63,384				47,521				87,094				66,613				68,079				110,565
Assumed exercises of stock warrants			—				54,476				129,896				145,896				118,285				82,567				83,010
Assumed exercises of stock options			56,359				45,788				32,592				47,873				12,511				45,653				3,128
Assumed conversion of Preferred A			315,773				315,773				315,773				315,773				315,773				315,773				—
Assumed conversion of Preferred B			354,471				354,471				354,471				360,578				360,578				354,471				—
Weighted average shares outstanding - diluted			21,518,469				20,645,469				18,893,158				18,912,358				18,764,541				20,000,288				18,053,531
Diluted earnings per common share		$	0.29			$	0.47			$	0.51			$	0.55			$	0.33			$	1.81			$	1.10
Shares that were not considered in computing diluted earnings per common share because they were antidilutive are as follows:
		For the Three Months Ended																				For the Years Ended
		December 31,				September 30,				June 30,				March 31,				December 31,				December 31,				December 31,
		2017				2017				2017				2017				2016				2017				2016
Assumed conversion of Preferred A			—				—				—				—				—				—				315,773
Assumed conversion of Preferred B			—				—				—				—				—				—				360,578
Restricted stock awards			—				—				35,270				—				—				—				—
Stock options			57,926				58,442				58,442				—				—				57,926				—

Loans held for investment summarized as of:

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

A portion of our total loans held for investment portfolio consists of commercial finance products offered under our commercial finance brands on a nationwide basis, as further summarized below:

		December 31,				September 30,				June 30,				March 31,				December 31,
(Dollars in thousands)		2017				2017				2017				2017				2016
Equipment		$	254,119			$	226,120			$	219,904			$	203,251			$	190,393
Asset based lending (General)			213,471				193,884				188,257				166,917				161,454
Asset based lending (Healthcare)			—				67,889				68,606				78,208				79,668
Premium finance			55,520				57,083				31,274				23,162				23,971
Factored receivables			374,410				341,880				293,633				242,098				238,198
Commercial finance		$	897,520			$	886,856			$	801,674			$	713,636			$	693,684
Commercial finance % of total loans			32	%			37	%			35	%			35	%			34	%
Yield on commercial finance loans			11.03	%			10.62	%			11.42	%			10.25	%			10.54	%

Deposits summarized as of:

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

Net interest margin summarized for the three months ended:

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

Metrics and non-GAAP financial reconciliation:

		As of and for the Three Months Ended																				As of and for the Years Ended
(Dollars in thousands,		December 31,				September 30,				June 30,				March 31,				December 31,				December 31,				December 31,
except per share amounts)		2017				2017				2017				2017				2016				2017				2016
Net income available to common stockholders		$	6,111			$	9,587			$	9,467			$	10,281			$	6,064			$	35,446			$	19,813
Gain on sale of subsidiary			—				—				—				(20,860	)			—				(20,860	)			—
Incremental bonus related to transaction			—				—				—				4,814				—				4,814				—
Transaction related costs			1,688				—				—				325				—				2,013				1,618
Tax effect of adjustments			(601	)			—				—				5,754				—				5,153				(251	)
Adjusted net income available to common stockholders		$	7,198			$	9,587			$	9,467			$	314			$	6,064			$	26,566			$	21,180
Dilutive effect of convertible preferred stock			194				195				193				—				197				774				783
Adjusted net income available to common stockholders - diluted		$	7,392			$	9,782			$	9,660			$	314			$	6,261			$	27,340			$	21,963
Weighted average shares outstanding - diluted			21,518,469				20,645,469				18,893,158				18,912,358				18,764,541				20,000,288				18,053,531
Adjusted effects of assumed Preferred Stock conversion			—				—				—				(676,351	)			—				—				676,351
Adjusted weighted average shares outstanding - diluted			21,518,469				20,645,469				18,893,158				18,236,007				18,764,541				20,000,288				18,729,882
Adjusted diluted earnings per common share		$	0.34			$	0.47			$	0.51			$	0.02			$	0.33			$	1.37			$	1.17
Net income available to common stockholders		$	6,111			$	9,587			$	9,467			$	10,281			$	6,064			$	35,446			$	19,813
Average tangible common equity			330,819				309,624				254,088				238,405				233,733				283,561				236,660
Return on average tangible common equity			7.33	%			12.28	%			14.94	%			17.49	%			10.32	%			12.50	%			8.37	%
Adjusted efficiency ratio:
Net interest income		$	45,796			$	39,512			$	38,557			$	31,819			$	33,544			$	155,684			$	112,358
Non-interest income			3,998				4,171				5,202				27,285				6,208				40,656				20,956
Operating revenue			49,794				43,683				43,759				59,104				39,752				196,340				133,314
Gain on sale of subsidiary			—				—				—				(20,860	)			—				(20,860	)			—
Adjusted operating revenue		$	49,794			$	43,683			$	43,759			$	38,244			$	39,752			$	175,480			$	133,314
Non-interest expenses		$	33,231			$	28,225			$	27,321			$	34,837			$	26,911			$	123,614			$	93,112
Incremental bonus related to transaction			—				—				—				(4,814	)			—				(4,814	)			—
Transaction related costs			(1,688	)			—				—				(325	)			—				(2,013	)			(1,618	)
Adjusted non-interest expenses		$	31,543			$	28,225			$	27,321			$	29,698			$	26,911			$	116,787			$	91,494
Adjusted efficiency ratio			63.35	%			64.61	%			62.44	%			77.65	%			67.70	%			66.55	%			68.63	%
Adjusted net non-interest expense to average assets ratio:
Non-interest expenses		$	33,231			$	28,225			$	27,321			$	34,837			$	26,911			$	123,614			$	93,112
Incremental bonus related to transaction			—				—				—				(4,814	)			—				(4,814	)			—
Transaction related costs			(1,688	)			—				—				(325	)			—				(2,013	)			(1,618	)
Adjusted non-interest expenses		$	31,543			$	28,225			$	27,321			$	29,698			$	26,911			$	116,787			$	91,494
Total non-interest income		$	3,998			$	4,171			$	5,202			$	27,285			$	6,208			$	40,656			$	20,956
Gain on sale of subsidiary			—				—				—				(20,860	)			—				(20,860	)			—
Adjusted non-interest income		$	3,998			$	4,171			$	5,202			$	6,425			$	6,208			$	19,796			$	20,956
Adjusted net non-interest expenses		$	27,545			$	24,054			$	22,119			$	23,273			$	20,703			$	96,991			$	70,538
Average total assets		$	3,181,697			$	2,849,170			$	2,723,303			$	2,619,282			$	2,603,226			$	2,844,916			$	2,079,756
Adjusted net non-interest expense to average assets ratio			3.43	%			3.35	%			3.26	%			3.60	%			3.16	%			3.41	%			3.39	%

 

		As of and for the Three Months Ended																				As of and for the Years Ended
(Dollars in thousands,		December 31,				September 30,				June 30,				March 31,				December 31,				December 31,				December 31,
except per share amounts)		2017				2017				2017				2017				2016				2017				2016
Reported yield on loans			7.73	%			7.44	%			7.79	%			7.15	%			7.36	%			7.55	%			7.71	%
Effect of accretion income on acquired loans			(0.26	%)			(0.24	%)			(0.54	%)			(0.22	%)			(0.54	%)			(0.32	%)			(0.48	%)
Adjusted yield on loans			7.47	%			7.20	%			7.25	%			6.93	%			6.82	%			7.23	%			7.23	%
Reported net interest margin			6.16	%			5.90	%			6.16	%			5.37	%			5.60	%			5.92	%			5.91	%
Effect of accretion income on acquired loans			(0.23	%)			(0.21	%)			(0.46	%)			(0.18	%)			(0.45	%)			(0.27	%)			(0.39	%)
Adjusted net interest margin			5.93	%			5.69	%			5.70	%			5.19	%			5.15	%			5.65	%			5.52	%
Total stockholders' equity		$	391,698			$	386,097			$	310,467			$	300,425			$	289,345			$	391,698			$	289,345
Preferred stock liquidation preference			(9,658	)			(9,658	)			(9,658	)			(9,746	)			(9,746	)			(9,658	)			(9,746	)
Total common stockholders' equity			382,040				376,439				300,809				290,679				279,599				382,040				279,599
Goodwill and other intangibles			(63,778	)			(42,452	)			(43,321	)			(44,233	)			(46,531	)			(63,778	)			(46,531	)
Tangible common stockholders' equity		$	318,262			$	333,987			$	257,488			$	246,446			$	233,068			$	318,262			$	233,068
Common shares outstanding			20,820,445				20,820,900				18,132,585				18,078,769				18,078,247				20,820,445				18,078,247
Tangible book value per share		$	15.29			$	16.04			$	14.20			$	13.63			$	12.89			$	15.29			$	12.89
Total assets at end of period		$	3,499,033			$	2,906,161			$	2,836,684			$	2,635,358			$	2,641,067			$	3,499,033			$	2,641,067
Goodwill and other intangibles			(63,778	)			(42,452	)			(43,321	)			(44,233	)			(46,531	)			(63,778	)			(46,531	)
Adjusted total assets at period end		$	3,435,255			$	2,863,709			$	2,793,363			$	2,591,125			$	2,594,536			$	3,435,255			$	2,594,536
Tangible common stockholders' equity ratio			9.26	%			11.66	%			9.22	%			9.51	%			8.98	%			9.26	%			8.98	%

1. Triumph uses certain non-GAAP financial measures to provide meaningful supplemental information regarding Triumph's operational performance and to enhance investors' overall understanding of such financial performance.  The non-GAAP measures used by Triumph include the following:
   
   
   • “Adjusted diluted earnings per common share” is defined as adjusted net income available to common stockholders divided by adjusted weighted average diluted common shares outstanding.  Excluded from net income available to common stockholders are material gains and expenses related to merger and acquisition-related activities, including divestitures, net of tax. In our judgment, the adjustments made to net income available to common stockholders allow management and investors to better assess our performance in relation to our core net income by removing the volatility associated with certain acquisition-related items and other discrete items that are unrelated to our core business.  Weighted average diluted common shares outstanding are adjusted as a result of changes in their dilutive properties given the gain and expense adjustments described herein.
     
     
   • "Tangible common stockholders' equity" is common stockholders' equity less goodwill and other intangible assets.
     
     
   • "Total tangible assets" is defined as total assets less goodwill and other intangible assets.
     
     
   • "Tangible book value per share" is defined as tangible common stockholders' equity divided by total common shares outstanding. This measure is important to investors interested in changes from period-to-period in book value per share exclusive of changes in intangible assets.
     
     
   • "Tangible common stockholders' equity ratio" is defined as the ratio of tangible common stockholders' equity divided by total tangible assets. We believe that this measure is important to many investors in the marketplace who are interested in relative changes from period-to period in common equity and total assets, each exclusive of changes in intangible assets.
     
     
   • "Return on Average Tangible Common Equity" is defined as net income available to common stockholders divided by average tangible common stockholders' equity.
     
     
   • "Adjusted efficiency ratio" is defined as non-interest expenses divided by our operating revenue, which is equal to net interest income plus non-interest income. Also excluded are material gains and expenses related to merger and acquisition-related activities, including divestitures. In our judgment, the adjustments made to operating revenue and non-interest expense allow management and investors to better assess our performance in relation to our core operating revenue by removing the volatility associated with certain acquisition-related items and other discrete items that are unrelated to our core business.
     
     
   • "Adjusted net non-interest expense to average total assets" is defined as non-interest expenses net of non-interest income divided by total average assets. Excluded are material gains and expenses related to merger and acquisition-related activities, including divestitures.  This metric is used by our management to better assess our operating efficiency. 
     
     
   • "Adjusted yield on loans" is our yield on loans after excluding loan discount accretion from our acquired loan portfolio.  Our management uses this metric to better assess the impact of purchase accounting on our yield on loans, as the effect of loan discount accretion is expected to decrease as the acquired loans pay down or mature and are removed from our balance sheet.
     
     
   • “Adjusted net interest margin” is net interest margin after excluding loan accretion from the acquired loan portfolio.  Our management uses this metric to better assess the impact of purchase accounting on net interest margin, as the effect of loan discount accretion is expected to decrease as the acquired loans pay down or mature and are removed from our balance sheet. 
     
     
2. Asset quality ratios exclude loans held for sale, except for non-performing assets to total assets.
   
   
3. Current quarter ratios are preliminary.

Source: Triumph Bancorp, Inc.

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

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