Myx Oops Forge

Main Menu

  • Home
  • Bank Earnings
  • Economic Contraction
  • Clearing Houses
  • Cash Advance Payments
  • Bankroll

Myx Oops Forge

Header Banner

Myx Oops Forge

  • Home
  • Bank Earnings
  • Economic Contraction
  • Clearing Houses
  • Cash Advance Payments
  • Bankroll
Cash Advance Payments
Home›Cash Advance Payments›Triumph Bancorp: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND OPERATING RESULTS

Triumph Bancorp: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND OPERATING RESULTS

By Amber C. Lafever
October 20, 2021
0
0


This section presents management's perspective on our financial condition and
results of operations. The following discussion and analysis of our financial
condition and results of operations should be read in conjunction with the
Company's interim consolidated financial statements and the accompanying notes
included elsewhere in this Quarterly Report on Form 10-Q and with the
consolidated financial statements and accompanying notes and other detailed
information appearing in the Company's Annual Report on Form 10-K for the year
ended December 31, 2020. To the extent that this discussion describes prior
performance, the descriptions relate only to the periods listed, which may not
be indicative of our future financial outcomes. In addition to historical
information, this discussion contains forward-looking statements that involve
risks, uncertainties and assumptions that could cause results to differ
materially from management's expectations. See the "Forward-Looking Statements"
section of this discussion for further information on forward-looking
statements.
Overview
We are a financial holding company headquartered in Dallas, Texas and registered
under the Bank Holding Company Act. As of September 30, 2021, we had
consolidated total assets of $6.025 billion, total loans held for investment of
$4.783 billion, total deposits of $4.823 billion and total stockholders' equity
of $820.7 million.
Through our wholly owned bank subsidiary, TBK Bank, we offer traditional banking
services, commercial finance product lines focused on businesses that require
specialized financial solutions and national lending product lines that further
diversify our lending operations. Traditional banking offerings include a full
suite of lending and deposit products and services. These activities are focused
on our local market areas and some products are offered on a nationwide basis.
They generate a stable source of core deposits and a diverse asset base to
support our overall operations. Our commercial finance product lines generate
attractive returns and include asset-based lending and equipment lending
products offered on a nationwide basis. Additionally, we offer mortgage
warehouse and liquid credit lending products on a nationwide basis to provide
further asset base diversification and stable deposits.
Year to date, our aggregate outstanding balances for these banking products has
decreased $700.3 million, or 18.1%, to $3.176 billion as of September 30, 2021.
The following table sets forth our banking loans:
                                            September 30,       December 31,
(Dollars in thousands)                           2021               2020
Banking
Commercial real estate                     $      630,106      $    779,158
Construction, land development, land              171,814           219,647
1-4 family residential                            127,073           157,147
Farmland                                           82,990           103,685
Commercial - General                              289,242           340,850
Commercial - Paycheck Protection Program           87,413           189,857
Commercial - Agriculture                           77,263            94,572
Commercial - Equipment                            588,105           573,163
Commercial - Asset-based lending                  213,927           180,488
Commercial - Liquid Credit                        142,547           184,027
Consumer                                           12,677            15,838
Mortgage Warehouse                                752,545         1,037,574
Total banking loans                        $    3,175,702      $  3,876,006


Our Banking products and services share basic processes and have similar
economic characteristics. Our factoring subsidiary, Triumph Business Capital,
operates in a highly specialized niche and earns substantially higher yields on
its factored accounts receivable portfolio than our other lending products. This
business also has a legacy and structure as a standalone company. Our payments
business, TriumphPay, is a division of TBK Bank and also operates in a highly
specialized niche with unique processes and key performance indicators.
                                       48
--------------------------------------------------------------------------------
  Table of     Contents
We have determined our reportable segments are Banking, Factoring, Payments and
Corporate. For the nine months ended September 30, 2021, our Banking segment
generated 53% of our total revenue (comprised of interest and noninterest
income), our Factoring segment generated 43% of our total revenue, our Payments
segment generated 4% of our total revenue, and our Corporate segment generated
less than 1% of our total revenue.
Third Quarter 2021 Overview
Net income available to common stockholders for the three months ended
September 30, 2021 was $23.6 million, or $0.94 per diluted share, compared to
net income to common stockholders for the three months ended September 30, 2020
of $22.0 million, or $0.89 per diluted share. Excluding material gains and
expenses related to merger and acquisition related activities, including
divestitures, adjusted net income to common stockholders was $22.6 million, or
$0.91 per diluted share, for the three months ended September 30, 2020. For the
three months ended September 30, 2021, our return on average common equity was
12.13% and our return on average assets was 1.61%.
Net income available to common stockholders for the nine months ended
September 30, 2021 was $83.9 million, or $3.33 per diluted share, compared to
net income available to common stockholders for the nine months ended
September 30, 2020 of $31.0 million, or $1.27 per diluted share. Excluding
material gains and expenses related to merger and acquisition related
activities, including divestitures, adjusted net income to common stockholders
was $86.2 million, or $3.42 per diluted share, for the nine months ended
September 30, 2021 and $24.3 million, or $0.99 per diluted share, for the nine
months ended September 30, 2020. For the nine months ended September 30, 2021,
our return on average common equity was 15.18% and our return on average assets
was 1.91%.
At September 30, 2021, we had total assets of $6.025 billion, including gross
loans of $4.783 billion, compared to $5.936 billion of total assets and
$4.997 billion of gross loans at December 31, 2020. Total loans decreased
$214.0 million during the nine months ended September 30, 2021. Our Banking
loans, which constitute 66% of our total loan portfolio at September 30, 2021,
decreased from $3.876 billion in aggregate as of December 31, 2020 to $3.176
billion as of September 30, 2021, a decrease of 18.1%. Our Factoring factored
receivables, which constitute 31% of our total loan portfolio at September 30,
2021, increased from $1.037 billion in aggregate as of December 31, 2020 to
$1.480 billion as of September 30, 2021, an increase of 42.8%. Our Payments
factored receivables, which constitute 3.0% of our total loan portfolio at
September 30, 2021, increased from $84.2 million in aggregate as of December 31,
2020 to $127.0 million as of September 30, 2021, an increase of 50.8%.
At September 30, 2021, we had total liabilities of $5.204 billion, including
total deposits of $4.823 billion, compared to $5.209 billion of total
liabilities and $4.717 billion of total deposits at December 31, 2020. Deposits
increased $106.0 million during the nine months ended September 30, 2021.
At September 30, 2021, we had total stockholders' equity of $820.7 million.
During the nine months ended September 30, 2021, total stockholders' equity
increased $93.9 million, primarily due to our net income during the period.
Capital ratios remained strong with Tier 1 capital and total capital to risk
weighted assets ratios of 11.06% and 13.69%, respectively, at September 30,
2021.
2021 Items of Note
HubTran, Inc.
On June 1, 2021, we, through TriumphPay, a division of our wholly-owned
subsidiary TBK Bank, SSB, entered into a definitive agreement to acquire
HubTran, Inc., a cloud-based provider of automation software for the trucking
industry's back-office, for $97 million in cash subject to customary purchase
price adjustments.
The acquisition of HubTran enables us to create a payments network that will
allow freight brokers and factors to lower costs, remove inefficiencies, reduce
fraud and add value for their stakeholders. TriumphPay already offered tools and
services to increase automation, mitigate fraud, create back-office efficiency
and improve the payment experience. Through the acquisition of HubTran,
TriumphPay created additional value through the enhancement of its presentment,
audit, and payment capabilities for shippers, third party logistics companies
(i.e., freight brokers) and their carriers, and factors. The acquisition of
HubTran was a meaningful inflection point in the operations of TriumphPay as the
TriumphPay strategy has shifted from a capital-intensive on-balance sheet
product with a focus on interest income to a payments network for the trucking
industry with a focus on fee revenue. At the time of acquisition, HubTran
brought integrations and in-process integrations with over 220 freight brokers
and more than 50 factors.
For further information on the above transaction, see Note 2 - Business
Combinations and Divestitures in the accompanying condensed notes to the
consolidated financial statements included elsewhere in this report.
                                       49
--------------------------------------------------------------------------------
  Table of     Contents
Misdirected Payments
As of September 30, 2021 we carry a separate $19.4 million receivable (the
"Misdirected Payments") payable by the United States Postal Service ("USPS")
arising from accounts factored to the largest over-formula advance carrier. This
amount is separate from the acquired Over-Formula Advances. The amounts
represented by this receivable were paid by the USPS directly to such customer
in contravention of notices of assignment delivered to, and previously honored
by, the USPS, which amount was then not remitted back to us by such customer as
required. The USPS disputes their obligation to make such payment, citing
purported deficiencies in the notices delivered to them. In addition to
commencing litigation against such customer, we have commenced litigation
against the USPS seeking a ruling that the USPS was obligated to make the
payments represented by this receivable directly to us. During the third quarter
of 2021 we, together with the USPS, entered into a stipulation of dismissal
without prejudice for our initial action with respect to this matter in United
States Federal District Court and filed a new action seeking recourse from the
USPS in the United States Court of Federal Claims. Based on our legal analysis
and discussions with our counsel advising us on this matter, we continue to
believe it is probable that we will prevail in such action and that the USPS
will have the capacity to make payment on such receivable. Consequently, we have
not reserved for such balance as of September 30, 2021. The full amount of such
receivable is reflected in non-performing and past due factored receivables as
of September 30, 2021 in accordance with our policy. As of September 30, 2021,
the entire $19.4 million Misdirected Payments amount was greater than 90 days
past due.
2020 Items of Note
Transport Financial Solutions
On July 8, 2020, we, through our wholly-owned subsidiary Advance Business
Capital LLC ("ABC"), acquired the transportation factoring assets (the "TFS
Acquisition") of Transport Financial Solutions ("TFS"), a wholly owned
subsidiary of Covenant Logistics Group, Inc. ("CVLG"), in exchange for cash
consideration of $108.4 million, 630,268 shares of the Company's common stock
valued at approximately $13.9 million, and contingent consideration of up to
approximately $9.9 million to be paid in cash following the twelve-month period
ending July 31, 2021.
Subsequent to the closing of the TFS Acquisition, the Company identified that
approximately $62.2 million of the assets acquired at closing were advances
against future payments to be made to three large clients (and their affiliated
entities) of TFS pursuant to long-term contractual arrangements between the
obligor on such contracts and such clients (and their affiliated entities) for
services that had not yet been performed.
On September 23, 2020, the Company and ABC entered into an Account Management
Agreement, Amendment to Purchase Agreement and Mutual Release (the "Agreement")
with CVLG and Covenant Transport Solutions, LLC a wholly owned subsidiary of
CVLG ("CTS" and, together with CVLG, "Covenant"). Pursuant to the Agreement, the
parties agreed to certain amendments to that certain Accounts Receivable
Purchase Agreement (the "ARPA"), dated as of July 8, 2020, by and among ABC, as
buyer, CTS, as seller, and the Company, as buyer indirect parent. Such
amendments include:
•Return of the portion of the purchase price paid under the ARPA consisting of
630,268 shares of Company common stock, which will be accomplished through the
sale of such shares by CVLG pursuant to the terms of the Agreement and the
surrender of the cash proceeds of such sale (net of brokerage or underwriting
fees and commissions) to the Company;
•Elimination of the earn-out consideration potentially payable to CTS under the
ARPA; and
•Modification of the indemnity provisions under the ARPA to eliminate the
existing indemnifications for breaches of representations and warranties and to
replace such with a newly established indemnification by Covenant in the event
ABC incurs losses related to the $62.2 million in over-formula advances made to
specified clients identified in the Agreement (the "Over-Formula Advance
Portfolio"). Under the terms of the new indemnification arrangement, Covenant
will be responsible for and will indemnify ABC for 100% of the first $30 million
of any losses incurred by ABC related to the Over-Formula Advance Portfolio, and
for 50% of the next $30 million of any losses incurred by ABC, for total
indemnification by Covenant of $45 million.

Covenant's indemnification obligations under the Agreement were secured by a
pledge of equipment collateral by Covenant with an estimated net orderly
liquidation value of $60 million (the "Equipment Collateral"). The Company's
wholly-owned bank subsidiary, TBK Bank, SSB, provided Covenant with a $45
million line of credit, also secured by the Equipment Collateral, the proceeds
of which may be drawn to satisfy Covenant's indemnification obligations under
the Agreement. During the first quarter of 2021, Covenant drew on the line of
credit to fund its only $35.6 million indemnification payment thus far, but has
since paid down that amount in its entirety. At September 30, 2021, Covenant had
remaining availability of $9.4 million left on its TBK line of credit available
to cover our indemnification balance up to of $5.0 million.
                                       50
--------------------------------------------------------------------------------
  Table of     Contents
Pursuant to the Agreement, Triumph and Covenant have agreed to certain terms
related to the management of the Over-Formula Advance Portfolio, and the terms
by which Covenant may provide assistance to maximize recovery on the
Over-Formula Advance Portfolio.
Pursuant to the Agreement, the Company and Covenant have provided mutual
releases to each other related to any and all claims related to the transactions
contemplated by the ARPA or the Over-Formula Advance Portfolio. Also in
connection the Agreement, Covenant agreed to dismiss, with prejudice, the
declaratory judgment action filed in the 95th Judicial District Court of Dallas
County, Texas (removed to the United States District Court, Northern District of
Texas), related to the ARPA and the transactions contemplated.
Further discussion regarding activity related to the TFS Acquisition can be
found below.
Triumph Premium Finance
On April 20, 2020, we entered into an agreement to sell the assets (the
"Disposal Group") of Triumph Premium Finance ("TPF") and exit our premium
finance line of business. The decision to sell TPF was made during the three
months ended March 31, 2020, and at March 31, 2020, the carrying amount of the
Disposal Group was transferred to assets held for sale. The transaction closed
on June 30, 2020, and the assets of the Disposal Group, consisting primarily of
$84.5 million of premium finance loans, was sold for a gain on sale of $9.8
million.
For further information on the above transactions, see Note 2 - Business
Combinations and Divestitures in the accompanying condensed notes to the
consolidated financial statements included elsewhere in this report.
Preferred Stock Offering
On June 19, 2020, we issued 45,000 shares of 7.125% Series C
Fixed-Rate Non-Cumulative Perpetual Preferred Stock, par value $0.01 per share,
with a liquidation preference of $1,000 per share through an underwritten public
offering of 1,800,000 depositary shares, each representing a 1/40th ownership
interest in a share of the Series C Preferred Stock. Total gross proceeds from
the preferred stock offering were $45.0 million. Net proceeds after underwriting
discounts and offering expenses were $42.4 million. The net proceeds will be
used for general corporate purposes.
Stock Repurchase Program
During the three months ended March 31, 2020, we repurchased 871,319 shares into
treasury stock under our stock repurchase program at an average price of $40.81,
for a total of $35.6 million, effectively completing the $50.0 million stock
repurchase program authorized by our board of directors on October 16, 2019.
There were no shares repurchased during the remainder of fiscal year 2020.
Recent Developments: COVID-19 and the Legislative Action
Significant progress has been made to combat the outbreak of COVID-19; however,
the global pandemic has adversely impacted a broad range of industries in which
the Company's customers operate and could still impair their ability to fulfill
their financial obligations to the Company. While employee availability has had
no material impact on operations to date, a resurgence of COVID-19 has the
potential to create widespread business continuity issues for the Company.
Congress, the President, and the Federal Reserve have taken several actions
designed to cushion the economic fallout. The Coronavirus Aid, Relief and
Economic Security ("CARES") Act was signed into law at the end of March 2020 as
a $2 trillion legislative package. The goal of the CARES Act was to curb the
economic downturn through various measures, including direct financial aid to
American families and economic stimulus to significantly impacted industry
sectors through programs like the Paycheck Protection Program ("PPP") and Main
Street Lending Program ("MSLP"). During December 2020, many provisions of the
CARES Act were extended through the end of 2021. In addition to the general
impact of COVID-19, certain provisions of the CARES Act as well as other recent
legislative and regulatory relief efforts have had a material impact on the
Company's 2020 and 2021 operations and could continue to impact operations going
forward.
The Company's business is dependent upon the willingness and ability of its
employees and customers to conduct banking and other financial transactions.
While it appears that epidemiological and macroeconomic conditions are trending
in a positive direction as of September 30, 2021, if there is a resurgence in
the virus, the Company could experience further adverse effects on its business,
financial condition, results of operations and cash flows. While it is not
possible to know the full universe or extent that the impact of COVID-19, and
any potential resulting measures to curtail its spread, will have on the
Company's future operations, the Company is disclosing potentially material
items of which it is aware.
                                       51
--------------------------------------------------------------------------------
  Table of     Contents
Financial position and results of operations
Pertaining to our September 30, 2021 financial condition and year to date
results of operations, improving conditions around COVID-19 had a material
impact on our allowance for credit losses ("ACL"). We have not yet experienced
material charge-offs related to COVID-19. Our ACL calculation, and resulting
provision for credit losses, are significantly impacted by changes in forecasted
economic conditions. Given that forecasted economic scenarios have brightened
significantly since December 31, 2020, our required ACL decreased during the
nine months ended September 30, 2021. Refer to our discussion of the ACL in Note
1 and Note 4 of our unaudited financial statements as well as further discussion
later on in MD&A. Should economic conditions worsen as a result of a resurgence
in the virus and resulting measures to curtail its spread, we could experience
increases in our required ACL and record additional credit loss expense. The
execution of the payment deferral program discussed in the following commentary
assisted our ratio of past due loans to total loans as well other asset quality
ratios at September 30, 2021. It is possible that our asset quality measures
could worsen at future measurement periods if the effects of COVID-19 are
prolonged.
The Company's interest income could be reduced due to COVID-19. In keeping with
guidance from regulators, the Company continues to work with COVID-19 affected
borrowers to defer their payments, interest, and fees. While interest and fees
continue to accrue to income, through normal GAAP accounting, should eventual
credit losses on these deferred payments emerge, the related loans would be
placed on nonaccrual status and interest income and fees accrued would be
reversed. In such a scenario, interest income in future periods could be
negatively impacted. As of September 30, 2021, the Company carried $0.1 million
of accrued interest income and fees on outstanding deferrals made to COVID-19
affected borrowers. This is down from $0.7 million of accrued interest income
and fees on outstanding deferrals at December 31, 2020. At this time, the
Company is unable to project the materiality of such an impact on future
deferrals to COVID-19 affected borrowers, but recognizes the breadth of the
economic impact may affect its borrowers' ability to repay in future periods.
Capital and liquidity
As of September 30, 2021, all of our capital ratios, and our subsidiary bank's
capital ratios, were in excess of all regulatory requirements. While we believe
that we have sufficient capital to withstand a double-dip economic recession
brought about by a resurgence in COVID-19, our reported and regulatory capital
ratios could be adversely impacted by further credit loss expense. We rely on
cash on hand as well as dividends from our subsidiary bank to service our debt.
If our capital deteriorates such that our subsidiary bank is unable to pay
dividends to us for an extended period of time, we may not be able to service
our debt.
We maintain access to multiple sources of liquidity. Wholesale funding markets
have remained open to us, but rates for short term funding can be volatile. If
an extended recession caused large numbers of our deposit customers to withdraw
their funds, we might become more reliant on volatile or more expensive sources
of funding.
Asset valuation
COVID-19 has not affected our ability to account timely for the assets on our
balance sheet; however, this could change in future periods. While certain
valuation assumptions and judgments have changed to account for pandemic-related
circumstances such as widening credit spreads, we do not anticipate significant
changes in methodology used to determine the fair value of assets measured in
accordance with GAAP. As of September 30, 2021, our goodwill was not impaired
and we did not have any impairment with respect to our intangible assets,
premises and equipment or other long-lived assets.
Our processes, controls and business continuity plan
The Company's preparedness efforts, coupled with quick and decisive plan
implementation, has resulted in minimal impacts to operations as a result of
COVID-19. At September 30, 2021, many of our employees continue to work remotely
with no disruption to our operations. We have not incurred additional material
cost related to our remote working strategy to date, nor do we anticipate
incurring material cost in future periods.
As of September 30, 2021, we don't anticipate significant challenges to our
ability to maintain our systems and controls in light of the measures we have
taken to prevent the spread of COVID-19. The Company does not currently face any
material resource constraint through the implementation of our business
continuity plans.
                                       52
--------------------------------------------------------------------------------
  Table of     Contents
Lending operations and accommodations to borrowers
In keeping with regulatory guidance to work with borrowers during this
unprecedented situation and as outlined in the CARES Act, the Company is
executing a payment deferral program for its clients that are adversely affected
by the pandemic. Depending on the demonstrated need of the client, the Company
is deferring either the full loan payment or the principal component of the loan
payment for a stated period of time. The loans carried under this payment
deferral program have decreased substantially since December 31, 2020, and as of
September 30, 2021, the Company's balance sheet reflected 3 of these deferrals
on outstanding loan balances of $32.2 million. In accordance with the CARES Act
and March 2020 interagency guidance, these short term deferrals are not
considered troubled debt restructurings. It is possible that these deferrals
could be extended further under the CARES Act; however, the volume of these
future potential extensions is unknown. It is also possible that in spite of our
best efforts to assist our borrowers and achieve full collection of our
investment, these deferred loans could result in future charge-offs with
additional credit loss expense charged to earnings; however, the amount of any
future charge-offs on deferred loans is unknown. At September 30, 2021, 94% of
the $32.2 million COVID deferral balance was made up of one relationship.
With the passage of the PPP, administered by the Small Business Administration
("SBA"), the Company has actively participated in assisting its customers with
applications for resources through the program. PPP loans generally have a
two-year or five-year term and earn interest at 1%. The Company believes that
these loans will ultimately be forgiven by the SBA in accordance with the terms
of the program. As of September 30, 2021, the Company carried 815 PPP loans
representing a book value of $87.4 million. The Company recognized $1.6 million
and $4.5 million in fees from the SBA on PPP loans during the three and nine
months ended September 30, 2021, respectively, and carries $3.6 million of
deferred fees on PPP loans at quarter end. The remaining fees will be amortized
and recognized over the life of the associated loans or as the associated loans
are forgiven. It is the Company's understanding that loans funded through the
PPP program are fully guaranteed by the U.S. government. Should those
circumstances change, the Company could be required to establish an allowance
for credit loss through additional credit loss expense charged to earnings.
Credit
While all industries have and will continue to experience adverse impacts as a
result of COVID-19 virus, we had exposures (on balance sheet loans and
commitments to lend) in the following loan categories considered to be "at-risk"
of significant impact as of September 30, 2021. The exposures reported below
exclude fully guaranteed PPP loans.
Retail Lending:
The Company's exposure to retail at September 30, 2021 equated to approximately
$188.6 million, or 3.9% of total loans, summarized as follows:

•36% retail real estate
•28% new and used vehicle lending; mostly dealer floorplan
•17% grocery stores, pet stores, pharmacies, gas stations and convenience stores
•7% factoring
•12% other types of retail lending
At September 30, 2021 there were no retail loans in deferral through our CARES
Act deferral program.
Office Lending:
The Company's exposure to office lending at September 30, 2021 equated to
approximately $180.4 million, or 3.8% of total loans, summarized as follows:
•85% non-owner occupied facilities.
•15% owner occupied facilities
•less than 1% construction development lending
At September 30, 2021 there were no office lending loans in deferral through our
CARES Act deferral program.
Hospitality Lending:
The Company's exposure to hospitality at September 30, 2021 equated to
approximately $121.9 million, or 2.5% of total loans. These were mostly smaller
loans purchased through our bank acquisitions and secured by hotels. At
September 30, 2021 there were no hospitality loans in deferral through our CARES
Act deferral program.
                                       53
--------------------------------------------------------------------------------
  Table of     Contents
Restaurants:
The Company's exposure to restaurants at September 30, 2021 equated to
approximately $31.3 million, or less than 1% of total loans. At September 30,
2021 there were no restaurant loans in deferral through our CARES Act deferral
program.
Health Care and Senior Care Lending:
The Company's exposure to health care and senior care at September 30, 2021
equated to $42.7 million, or less than 1% of total loans. At September 30, 2021
there were no health care and senior care loans in deferral through our CARES
Act deferral program.
We continue to work with customers directly affected by COVID-19. We are
prepared to offer assistance in accordance with regulator guidelines. As a
result of the current economic environment caused by the COVID-19 virus, we
continue to engage in communication with borrowers to better understand their
situation and the challenges faced, allowing us to respond proactively as needs
and issues arise.
Trucking transportation
The third quarter of 2021 featured a continuation of high spot market rates in
all transportation modes; dry van, reefer and flat bed. The well-publicized
difficulties in supply chain movements from port to warehouse have kept trucks
utilized and demand at record levels. Ocean carriers and air freight also
experienced record demand and at record price levels. Through August 2021, a
record number of new motor carriers had received carrier authority. These are
generally not new drivers to the market but previously employed company drivers
who have begun operating on their own to take advantage of high rates. In
addition there are owner operators that had been working under a lease
arrangement with larger carriers, but became fully independent either
voluntarily or after being terminated in part due to labor law regulation.


                                       54
--------------------------------------------------------------------------------
  Table of     Contents
Financial Highlights
                                                  Three Months Ended September 30,                 Nine Months Ended September 30,
(Dollars in thousands, except per share
amounts)                                             2021                    2020                    2021                    2020
Income Statement Data:
Interest income                               $        96,735           $     82,364          $       279,776           $    232,176
Interest expense                                        4,964                  7,985                   14,703                 31,046
Net interest income                                    91,771                 74,379                  265,073                201,130
Credit loss expense (benefit)                          (1,187)                  (258)                 (10,838)                33,649
Net interest income after credit loss expense          92,958                 74,637                  275,911                167,481

(benefit to)

Gain on sale of subsidiary or division                      -                      -                        -                  9,758
Other noninterest income                               12,055                 10,493                   40,242                 28,241
Noninterest income                                     12,055                 10,493                   40,242                 37,999
Noninterest expense                                    72,813                 55,297                  204,503                162,776
Net income (loss) before income taxes                  32,200                 29,833                  111,650                 42,704
Income tax expense (benefit)                            7,771                  6,929                   25,316                 10,810
Net income (loss)                             $        24,429           $     22,904          $        86,334           $     31,894
Dividends on preferred stock                             (802)                  (899)                  (2,405)                  (899)
Net income available (loss) to common
stockholders                                  $        23,627           $     22,005          $        83,929           $     30,995

Per Share Data:
Basic earnings (loss) per common share        $          0.95           $       0.89          $          3.40           $       1.28
Diluted earnings (loss) per common share      $          0.94           $       0.89          $          3.33           $       1.27
Weighted average shares outstanding - basic        24,759,419             24,592,092               24,719,861             24,298,897
Weighted average shares outstanding - diluted      25,227,963             24,802,388               25,199,991             24,464,215

Adjusted Per Share Data(1):
Adjusted diluted earnings per common share    $          0.94           $       0.91          $          3.42           $       0.99
Adjusted weighted average shares outstanding       25,227,963             24,802,388               25,199,991             24,464,215

– diluted

Performance ratios - Annualized:
Return on average assets                                 1.61   %               1.65  %                  1.91   %               0.80  %
Return on average total equity                          11.85   %              13.24  %                 14.72   %               6.63  %
Return on average common equity                         12.13   %              13.61  %                 15.18   %               6.62  %
Return on average tangible common equity (1)            19.21   %              19.43  %                 22.12   %               9.51  %
Yield on loans(2)                                        7.92   %               7.05  %                  7.65   %               6.92  %
Cost of interest bearing deposits                        0.27   %               0.79  %                  0.33   %               1.07  %
Cost of total deposits                                   0.16   %               0.56  %                  0.21   %               0.79  %
Cost of total funds                                      0.38   %               0.67  %                  0.38   %               0.90  %
Net interest margin(2)                                   6.69   %               5.83  %                  6.41   %               5.52  %
Efficiency ratio                                        70.13   %              65.15  %                 66.98   %              68.07  %
Adjusted efficiency ratio (1)                           70.13   %              64.18  %                 66.00   %              70.61  %
Net noninterest expense to average assets                4.00   %               3.23  %                  3.63   %               3.14  %
Adjusted net noninterest expense to average
assets (1)                                               4.00   %               3.17  %                  3.57   %               3.37  %


                                       55

————————————————– ——————————

Contents

                                                        September 30,      December 31,
(Dollars in thousands, except per share amounts)            2021               2020
Balance Sheet Data:
Total assets                                           $  6,024,535       $ 5,935,791
Cash and cash equivalents                                   532,764           314,393
Investment securities                                       175,927           236,055
Loans held for investment, net                            4,741,713         4,901,037
Total liabilities                                         5,203,861         5,209,010
Noninterest bearing deposits                              2,020,984         1,352,785
Interest bearing deposits                                 2,801,591         3,363,815
FHLB advances                                                30,000           105,000
Paycheck Protection Program Liquidity Facility               97,554         

191 860

Subordinated notes                                          106,755         

87,509

Junior subordinated debentures                               40,467         

40,072

Total stockholders' equity                                  820,674         

726,781

Preferred stockholders' equity                               45,000            45,000
Common stockholders' equity                                 775,674           681,781

Per Share Data:
Book value per share                                   $      30.87       $     27.42
Tangible book value per share (1)                      $      19.73       $ 

19.78

Shares outstanding end of period                         25,123,342        24,868,218

Asset Quality ratios(3):
Past due to total loans                                        2.31  %           3.22  %
Nonperforming loans to total loans                             0.90  %           1.16  %
Nonperforming assets to total assets                           0.86  %           1.15  %
ACL to nonperforming loans                                    95.75  %         164.98  %
ACL to total loans                                             0.86  %           1.92  %
Net charge-offs to average loans(4)                            0.94  %      

0.10%

Capital ratios:
Tier 1 capital to average assets                              10.43  %          10.80  %
Tier 1 capital to risk-weighted assets                        11.06  %          10.60  %
Common equity Tier 1 capital to risk-weighted assets           9.45  %           9.05  %
Total capital to risk-weighted assets                         13.69  %          13.03  %
Total stockholders' equity to total assets                    13.62  %          12.24  %
Tangible common stockholders' equity ratio (1)                 8.63  %      

8.56%


(1)The Company uses certain non-GAAP financial measures to provide meaningful
supplemental information regarding the Company's operational performance and to
enhance investors' overall understanding of such financial performance. The
non-GAAP measures used by the Company include the following:
•"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.
                                       56
--------------------------------------------------------------------------------
  Table of     Contents
•"Adjusted efficiency ratio" is defined as noninterest expenses divided by our
operating revenue, which is equal to net interest income plus noninterest
income. Also excluded are material gains and expenses related to merger and
acquisition-related activities, including divestitures. In our judgment, the
adjustments made to operating revenue allow management and investors to better
assess our performance in relation to our core operating revenue by removing the
volatility associated with certain acquisition-related items and other discrete
items that are unrelated to our core business.
•"Adjusted net noninterest expense to average total assets" is defined as
noninterest expenses net of noninterest 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.
•"Tangible common stockholders' equity" is defined as common stockholders'
equity less goodwill and other intangible assets.
•"Total tangible assets" is defined as total assets less goodwill and other
intangible assets.
•"Tangible book value per share" is defined as tangible common stockholders'
equity divided by total common shares outstanding. This measure is important to
investors interested in changes from period-to-period in book value per share
exclusive of changes in intangible assets.
•"Tangible common stockholders' equity ratio" is defined as the ratio of
tangible common stockholders' equity divided by total tangible assets. We
believe that this measure is important to many investors in the marketplace who
are interested in relative changes from period-to period in common equity and
total assets, each exclusive of changes in intangible assets.
•"Return on average tangible common equity" is defined as net income available
to common stockholders divided by average tangible common stockholders' equity.
(2)Performance ratios include discount accretion on purchased loans for the
periods presented as follows:
                                          Three Months Ended September 30,         Nine Months Ended September 30,
(Dollars in thousands, except per share
amounts)                                       2021                2020                2021                2020
Loan discount accretion                   $     1,953          $   4,104          $     7,615          $   8,377


(3)Asset quality ratios exclude loans held for sale, except for non-performing
assets to total assets.
(4)Net charge-offs to average loans ratios are for the nine months ended
September 30, 2021 and the year ended December 31, 2020.
                                       57

————————————————– ——————————

  Table of     Contents
GAAP Reconciliation of Non-GAAP Financial Measures
We believe the non-GAAP financial measures included above provide useful
information to management and investors that is supplementary to our financial
condition, results of operations and cash flows computed in accordance with
GAAP; however, we acknowledge that our non-GAAP financial measures have a number
of limitations. The following reconciliation table provides a more detailed
analysis of the non-GAAP financial measures:

© Edgar online, source Previews


Related posts:

  1. JSC Georgia Capital — Moody’s assigns B2 ranking to JSC Georgia Capital’s $50 million notes, outlook secure
  2. US Might Ship COVID Invoice Funds of $ 1,400 in Days; the kid tax credit score, an even bigger problem
  3. Do I’ve to get a bank card? 6 methods to know for certain
  4. US Might Ship COVID Invoice Funds of $ 1,400 in Days; the kid tax credit score, a much bigger problem
Tagsfiscal yearlong termreal estateshort termunited states
  • Privacy Policy
  • Terms and Conditions