DALLAS, Oct. 26, 2016 (GLOBE NEWSWIRE) -- Triumph Bancorp, Inc. (NASDAQ:TBK) today announced earnings and operating results for the third quarter of 2016.
As part of how we measure our results, we use certain non-GAAP financial measures to ascertain performance. These non-GAAP financial measures are reconciled in the section labeled “Metrics and Non-GAAP Financial Reconciliation” at the end of this document.
2016 Third Quarter Highlights
- For the third quarter of 2016, net income was $4.8 million and net income available to common stockholders was $4.5 million, compared to net income of $4.6 million and net income available to common stockholders of $4.4 million for the quarter ended June 30, 2016.
- Diluted earnings per share were $0.25 for the quarter ended September 30, 2016, compared to $0.25 for the quarter ended June 30, 2016. Adjusted diluted earnings per share, which exclude acquisition-related costs, were $0.32 for the quarter ended September 30, 2016.
- For the quarter ended September 30, 2016, our annualized return on average common equity and return on average assets were 6.51% and 0.84%, respectively, compared to an annualized return on average common equity and return on average assets of 6.64% and 1.07%, respectively, for the quarter ended June 30, 2016. Our ratio of tangible common stockholders’ equity to tangible assets was 8.99% as of September 30, 2016.
- Net interest margin (“NIM”) was 5.79% for the quarter ended September 30, 2016, compared to 6.53% for the quarter ended June 30, 2016.
- Total loans held for investment increased $549.3 million or 38.9% to $1.960 billion at September 30, 2016.
- Closed our previously announced acquisition of ColoEast Bankshares, Inc. (“ColoEast”) and its wholly owned bank subsidiary, Colorado East Bank & Trust, on August 1, 2016.
- Completed a $50 million subordinated debt offering enhancing our regulatory capital position.
Balance Sheet
Average loans outstanding for the third quarter of 2016 were $1.724 billion, an increase of $437.7 million, or 34.0%, from the average balance for the quarter ended June 30, 2016. Total loans held for investment were $1.960 billion at September 30, 2016, an increase of $549.3 million or 38.9% from $1.411 billion at June 30, 2016. We acquired loans with an acquisition date fair value of $460.8 million in the ColoEast transaction. Our commercial finance loan portfolio totaled $637.9 million as of September 30, 2016, an increase of $31.0 million or 5.1% in the third quarter.
The third quarter increase in our commercial finance loan portfolio was partially offset by a $23.6 million reduction in factored receivables outstanding during the period. This reduction was due to a one-time acceleration of factored invoice collections upon our implementation of a new payment processing initiative.
Total deposits were $1.951 billion at September 30, 2016, an increase of $675.5 million or 53.0% for the third quarter of 2016. Non-interest-bearing deposits accounted for 17% of total deposits and non-time deposits accounted for 53% of total deposits. The average cost of our total funds was 0.61% for the quarter ended September 30, 2016 compared to 0.68% for the quarter ended June 30, 2016, on an annualized basis. We assumed $653.0 million of deposits in the ColoEast transaction.
Net Interest Income
We earned net interest income for the quarter ended September 30, 2016 of $30.4 million compared to $25.9 million for the quarter ended June 30, 2016. Yields on loans for the quarter ended September 30, 2016 were down 108 bps from the prior quarter to 7.42% (down 71 bps from the prior quarter to 7.10% adjusted to exclude loan discount accretion). NIM adjusted to exclude loan discount accretion was 5.53% for the quarter ended September 30, 2016 compared to 5.98% for the quarter ended June 30, 2016. Yields on loans and NIM for the quarter ended September 30, 2016 were impacted by the acquisition of ColoEast, which created a shift in our loan mix. At September 30, 2016, 33% of our loans were comprised of our higher-yielding commercial finance products, compared to 43% at June 30, 2016.
Asset Quality
Non-performing assets increased 45 bps from June 30, 2016 to September 30, 2016 to 2.05% of total assets. This increase included $7.4 million of nonaccrual loans and $3.1 million of OREO acquired in the ColoEast acquisition, which were recorded at their respective fair values on the acquisition date. The remaining increase was primarily due to three loan relationships, including troubled debt restructurings during the quarter ended September 30, 2016. These same loan relationships also contributed to the ratio of past due to total loans, which increased to 3.86% at September 30, 2016 from 2.80% at June 30, 2016. In addition, our past due loans at September 30, 2016 included $19.2 million of delinquent loans acquired in the ColoEast acquisition. We recorded net charge-offs of $1.68 million for the quarter ended September 30, 2016 compared to net charge-offs of $0.26 million for the quarter ended June 30, 2016. The increase in net charge-offs was primarily due to a $1.4 million loan relationship charged-off during the third quarter of 2016. We recorded a provision for loan losses of $2.8 million for the quarter ended September 30, 2016 compared to a provision of $1.9 million for the quarter ended June 30, 2016. From June 30, 2016 to September 30, 2016, our allowance for loan and lease losses (“ALLL”) increased from $13.8 million or 0.98% of total loans to $14.9 million or 0.76% of total loans. The ALLL ratio was impacted by the acquired ColoEast loan portfolio during the period which was recorded at fair value on the acquisition date and did not require an ALLL.
Non-interest Income and Expense
We earned non-interest income for the quarter ended September 30, 2016 of $6.1 million compared to $3.7 million for the quarter ended June 30, 2016. Non-interest income for the prior quarter ended June 30, 2016 was reduced by a $1.2 million OREO write-down related to a bank facility previously transferred to OREO that is no longer being actively operated. Non-interest income for the quarter ended September 30, 2016 includes the operations of ColoEast subsequent to the August 1, 2016 acquisition date.
For the quarter ended September 30, 2016, non-interest expense totaled $25.8 million, compared to $20.3 million for the quarter ended June 30, 2016. Non-interest expense for the quarter ended September 30, 2016 was increased by $1.6 million of acquisition costs associated with the ColoEast transaction. Non-interest expense for the quarter ended September 30, 2016 includes the operations of ColoEast subsequent to the August 1, 2016 acquisition date.
Conference Call Information
Aaron P. Graft, Vice Chairman and CEO and Bryce Fowler, CFO will review the quarterly results in a conference call for investors and analysts beginning at 8:30 a.m. Central Time on Thursday, October 27, 2016. Dan Karas, Chief Lending Officer, will also be available for questions.
To participate in the live conference call, please dial 1 (855) 779-1042 (U.S. and Canada) and enter Conference ID # 94147204. A simultaneous audio-only webcast may be accessed via our website at www.triumphbancorp.com through the Investor Relations, Webcasts and Presentations links, or through a direct link here at http://edge.media-server.com/m/p/t6qdamxr. An archive of this conference call will subsequently be available at this same location on our website.
About Triumph
Headquartered in Dallas, Texas, Triumph Bancorp, Inc. (NASDAQ:TBK) is a financial holding company with a diversified line of community banking, commercial finance and asset management activities. www.triumphbancorp.com
Forward-Looking Statements
This press release contains forward-looking statements. Any statements about our expectations, beliefs, plans, predictions, forecasts, objectives, assumptions or future events or performance are not historical facts and may be forward-looking. You can identify forward-looking statements by the use of forward-looking terminology such as “believes,” “expects,” “could,” “may,” “will,” “should,” “seeks,” “likely,” “intends,” “plans,” “pro forma,” “projects,” “estimates” or “anticipates” or the negative of these words and phrases or similar words or phrases that are predictions of or indicate future events or trends and that do not relate solely to historical matters. You can also identify forward-looking statements by discussions of strategy, plans or intentions. Forward-looking statements involve numerous risks and uncertainties and you should not rely on them as predictions of future events. Forward-looking statements depend on assumptions, data or methods that may be incorrect or imprecise and we may not be able to realize them. We do not guarantee that the transactions and events described will happen as described (or that they will happen at all). The following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements: our limited operating history as an integrated company; business and economic conditions generally and in the bank and non-bank financial services industries, nationally and within our local market area; our ability to mitigate our risk exposures; our ability to maintain our historical earnings trends; risks related to the integration of acquired businesses (including our recently completed acquisition of ColoEast Bankshares, Inc.) and any future acquisitions; changes in management personnel; interest rate risk; concentration of our factoring services in the transportation industry; credit risk associated with our loan portfolio; lack of seasoning in our loan portfolio; deteriorating asset quality and higher loan charge-offs; time and effort necessary to resolve non-performing assets; inaccuracy of the assumptions and estimates we make in establishing reserves for probable loan losses and other estimates; lack of liquidity; fluctuations in the fair value and liquidity of the securities we hold for sale; impairment of investment securities, goodwill, other intangible assets or deferred tax assets; risks related to our asset management business; our risk management strategies; environmental liability associated with our lending activities; increased competition in the bank and non-bank financial services industries, nationally, regionally or locally, which may adversely affect pricing and terms; the obligations associated with being a public company; the accuracy of our financial statements and related disclosures; material weaknesses in our internal control over financial reporting; system failures or failures to prevent breaches of our network security; the institution and outcome of litigation and other legal proceedings against us or to which we become subject; changes in carry-forwards of net operating losses; changes in federal tax law or policy; the impact of recent and future legislative and regulatory changes, including changes in banking, securities and tax laws and regulations, such as the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) and their application by our regulators; governmental monetary and fiscal policies; changes in the scope and cost of the Federal Deposit Insurance Corporation insurance and other coverages; failure to receive regulatory approval for future acquisitions; increases in our capital requirements; and risk retention requirements under the Dodd-Frank Act.
While forward-looking statements reflect our good-faith beliefs, they are not guarantees of future performance. All forward-looking statements are necessarily only estimates of future results. Accordingly, actual results may differ materially from those expressed in or contemplated by the particular forward-looking statement, and, therefore, you are cautioned not to place undue reliance on such statements. Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events or circumstances, except as required by applicable law. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see "Risk Factors" and the forward-looking statement disclosure contained in Triumph’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission on February 26, 2016.
Non-GAAP Financial Measures
This press release includes certain non‐GAAP financial measures intended to supplement, not substitute for, comparable GAAP measures. Reconciliations of non‐GAAP financial measures to GAAP financial measures are provided at the end of this press release.
The following table sets forth key metrics used by Triumph to monitor its operations. Footnotes in this table can be found in our definitions of non-GAAP financial measures at the end of this document.
| As of and for the Three Months Ended | ||||||||||||||||||||
| September 30, | June 30, | March 31, | December 31, | September 30, | ||||||||||||||||
| 2016 | 2016 | 2016 | 2015 | 2015 | ||||||||||||||||
| Financial Highlights (Dollars in thousands): | ||||||||||||||||||||
| Total assets | $ | 2,575,490 | $ | 1,783,395 | $ | 1,687,795 | $ | 1,691,313 | $ | 1,581,463 | ||||||||||
| Loans held for investment | $ | 1,959,855 | $ | 1,410,518 | $ | 1,245,840 | $ | 1,291,885 | $ | 1,185,301 | ||||||||||
| Deposits | $ | 1,950,677 | $ | 1,275,154 | $ | 1,260,393 | $ | 1,248,950 | $ | 1,200,036 | ||||||||||
| Net income available to common stockholders | $ | 4,506 | $ | 4,431 | $ | 4,812 | $ | 4,312 | $ | 5,732 | ||||||||||
| Performance Ratios - Annualized: | ||||||||||||||||||||
| Return on average assets | 0.84 | % | 1.07 | % | 1.20 | % | 1.10 | % | 1.50 | % | ||||||||||
| Return on average total equity | 6.63 | % | 6.69 | % | 7.39 | % | 6.68 | % | 8.96 | % | ||||||||||
| Return on average common equity (1) | 6.51 | % | 6.64 | % | 7.37 | % | 6.63 | % | 9.00 | % | ||||||||||
| Return on average tangible common equity (1) | 7.60 | % | 7.37 | % | 8.23 | % | 7.45 | % | 10.20 | % | ||||||||||
| Yield on loans | 7.42 | % | 8.50 | % | 7.84 | % | 8.17 | % | 8.34 | % | ||||||||||
| Adjusted yield on loans (1) | 7.10 | % | 7.81 | % | 7.47 | % | 7.84 | % | 7.96 | % | ||||||||||
| Cost of interest bearing deposits | 0.68 | % | 0.72 | % | 0.74 | % | 0.71 | % | 0.69 | % | ||||||||||
| Cost of total deposits | 0.57 | % | 0.63 | % | 0.64 | % | 0.61 | % | 0.59 | % | ||||||||||
| Cost of total funds | 0.61 | % | 0.68 | % | 0.69 | % | 0.66 | % | 0.64 | % | ||||||||||
| Net interest margin | 5.79 | % | 6.53 | % | 5.90 | % | 6.20 | % | 6.45 | % | ||||||||||
| Adjusted net interest margin (1) | 5.53 | % | 5.98 | % | 5.61 | % | 5.94 | % | 6.14 | % | ||||||||||
| Net non-interest expense to average assets (1)(2) | 3.15 | % | 3.85 | % | 3.61 | % | 3.96 | % | 4.04 | % | ||||||||||
| Efficiency ratio (1)(2) | 66.20 | % | 68.74 | % | 73.09 | % | 75.40 | % | 73.85 | % | ||||||||||
| Asset Quality:(3) | ||||||||||||||||||||
| Past due to total loans | 3.86 | % | 2.80 | % | 3.61 | % | 2.41 | % | 2.14 | % | ||||||||||
| Non-performing loans to total loans | 2.25 | % | 1.56 | % | 1.70 | % | 1.03 | % | 0.97 | % | ||||||||||
| Non-performing assets to total assets | 2.05 | % | 1.60 | % | 1.72 | % | 1.10 | % | 1.12 | % | ||||||||||
| ALLL to non-performing loans | 33.78 | % | 62.60 | % | 56.96 | % | 94.10 | % | 100.00 | % | ||||||||||
| ALLL to total loans | 0.76 | % | 0.98 | % | 0.97 | % | 0.97 | % | 0.97 | % | ||||||||||
| Net charge-offs to average loans | 0.10 | % | 0.02 | % | 0.00 | % | 0.01 | % | 0.01 | % | ||||||||||
| Capital: | ||||||||||||||||||||
| Tier 1 capital to average assets(4) | 12.04 | % | 16.02 | % | 16.24 | % | 16.56 | % | 16.87 | % | ||||||||||
| Tier 1 capital to risk-weighted assets(4) | 11.96 | % | 17.14 | % | 18.79 | % | 18.23 | % | 19.34 | % | ||||||||||
| Common equity tier 1 capital to risk-weighted assets(4) | 10.26 | % | 15.19 | % | 16.62 | % | 16.23 | % | 17.18 | % | ||||||||||
| Total capital to risk-weighted assets(4) | 14.80 | % | 18.01 | % | 19.65 | % | 19.11 | % | 20.21 | % | ||||||||||
| Total equity to total assets | 11.05 | % | 15.69 | % | 16.24 | % | 15.85 | % | 16.69 | % | ||||||||||
| Tangible common stockholders' equity to tangible assets | 8.99 | % | 13.88 | % | 14.30 | % | 13.85 | % | 14.50 | % | ||||||||||
| Per Share Amounts: | ||||||||||||||||||||
| Book value per share | $ | 15.18 | $ | 14.91 | $ | 14.67 | $ | 14.34 | $ | 14.09 | ||||||||||
| Tangible book value per share (1) | $ | 12.55 | $ | 13.47 | $ | 13.18 | $ | 12.79 | $ | 12.48 | ||||||||||
| Basic earnings per common share | $ | 0.25 | $ | 0.25 | $ | 0.27 | $ | 0.24 | $ | 0.32 | ||||||||||
| Diluted earnings per common share | $ | 0.25 | $ | 0.25 | $ | 0.27 | $ | 0.24 | $ | 0.32 | ||||||||||
| Adjusted diluted earnings per common share(1)(2) | $ | 0.32 | $ | 0.25 | $ | 0.27 | $ | 0.19 | $ | 0.22 | ||||||||||
| Shares outstanding end of period | 18,106,978 | 18,107,493 | 18,015,423 | 18,018,200 | 18,040,072 | |||||||||||||||
Unaudited consolidated balance sheet as of:
| September 30, | June 30, | March 31, | December 31, | September 30, | ||||||||||||||||
| (Dollars in thousands) | 2016 | 2016 | 2016 | 2015 | 2015 | |||||||||||||||
| ASSETS | ||||||||||||||||||||
| Total cash and cash equivalents | $ | 104,725 | $ | 61,750 | $ | 123,715 | $ | 105,277 | $ | 115,783 | ||||||||||
| Securities - available for sale | 286,574 | 159,790 | 161,517 | 163,169 | 156,820 | |||||||||||||||
| Securities - held to maturity | 29,316 | 27,502 | 25,796 | — | 747 | |||||||||||||||
| Loans held for sale | 9,623 | — | 3,043 | 1,341 | 2,174 | |||||||||||||||
| Loans held for investment | 1,959,855 | 1,410,518 | 1,245,840 | 1,291,885 | 1,185,301 | |||||||||||||||
| Allowance for loan and lease losses | (14,912 | ) | (13,772 | ) | (12,093 | ) | (12,567 | ) | (11,544 | ) | ||||||||||
| Loans, net | 1,944,943 | 1,396,746 | 1,233,747 | 1,279,318 | 1,173,757 | |||||||||||||||
| FHLB and FRB stock | 8,397 | 6,368 | 4,234 | 3,818 | 7,992 | |||||||||||||||
| Premises and equipment, net | 45,050 | 19,629 | 19,934 | 22,227 | 21,807 | |||||||||||||||
| Other real estate owned ("OREO"), net | 8,061 | 6,074 | 7,478 | 5,177 | 6,201 | |||||||||||||||
| Goodwill and intangible assets, net | 47,449 | 26,160 | 26,877 | 27,854 | 28,995 | |||||||||||||||
| Bank-owned life insurance | 36,347 | 29,786 | 29,658 | 29,535 | 29,406 | |||||||||||||||
| Deferred tax asset, net | 20,042 | 15,042 | 15,240 | 15,945 | 15,838 | |||||||||||||||
| Other assets | 34,963 | 34,548 | 36,556 | 37,652 | 21,943 | |||||||||||||||
| Total assets | $ | 2,575,490 | $ | 1,783,395 | $ | 1,687,795 | $ | 1,691,313 | $ | 1,581,463 | ||||||||||
| LIABILITIES | ||||||||||||||||||||
| Non-interest bearing deposits | $ | 339,999 | $ | 170,834 | $ | 160,818 | $ | 168,264 | $ | 167,931 | ||||||||||
| Interest bearing deposits | 1,610,678 | 1,104,320 | 1,099,575 | 1,080,686 | 1,032,105 | |||||||||||||||
| Total deposits | 1,950,677 | 1,275,154 | 1,260,393 | 1,248,950 | 1,200,036 | |||||||||||||||
| Customer repurchase agreements | 15,329 | 13,635 | 9,641 | 9,317 | 15,584 | |||||||||||||||
| Federal Home Loan Bank advances | 230,000 | 180,500 | 110,000 | 130,000 | 61,000 | |||||||||||||||
| Junior subordinated debentures | 32,640 | 24,823 | 24,754 | 24,687 | 24,620 | |||||||||||||||
| Subordinated notes | 48,676 | — | — | — | — | |||||||||||||||
| Other liabilities | 13,647 | 9,520 | 8,893 | 10,321 | 16,304 | |||||||||||||||
| Total liabilities | 2,290,969 | 1,503,632 | 1,413,681 | 1,423,275 | 1,317,544 | |||||||||||||||
| EQUITY | ||||||||||||||||||||
| Preferred stock series A | 4,550 | 4,550 | 4,550 | 4,550 | 4,550 | |||||||||||||||
| Preferred stock series B | 5,196 | 5,196 | 5,196 | 5,196 | 5,196 | |||||||||||||||
| Common stock | 182 | 182 | 181 | 181 | 181 | |||||||||||||||
| Additional paid-in-capital | 196,306 | 195,711 | 194,687 | 194,297 | 193,465 | |||||||||||||||
| Treasury stock, at cost | (751 | ) | (741 | ) | (597 | ) | (560 | ) | (184 | ) | ||||||||||
| Retained earnings | 77,846 | 73,340 | 68,909 | 64,097 | 59,785 | |||||||||||||||
| Accumulated other comprehensive income | 1,192 | 1,525 | 1,188 | 277 | 926 | |||||||||||||||
| Total equity | 284,521 | 279,763 | 274,114 | 268,038 | 263,919 | |||||||||||||||
| Total liabilities and equity | $ | 2,575,490 | $ | 1,783,395 | $ | 1,687,795 | $ | 1,691,313 | $ | 1,581,463 | ||||||||||
Unaudited consolidated statement of income for the three months ended:
| September 30, | June 30, | March 31, | December 31, | September 30, | ||||||||||||||||
| (Dollars in thousands) | 2016 | 2016 | 2016 | 2015 | 2015 | |||||||||||||||
| Interest income: | ||||||||||||||||||||
| Loans, including fees | $ | 23,123 | $ | 18,547 | $ | 16,088 | $ | 15,524 | $ | 15,716 | ||||||||||
| Factored receivables, including fees | 9,021 | 8,639 | 7,822 | 8,952 | 8,829 | |||||||||||||||
| Taxable securities | 1,154 | 965 | 768 | 669 | 649 | |||||||||||||||
| Tax exempt securities | 80 | 6 | 7 | 14 | 17 | |||||||||||||||
| Cash deposits | 93 | 197 | 208 | 122 | 92 | |||||||||||||||
| Total interest income | 33,471 | 28,354 | 24,893 | 25,281 | 25,303 | |||||||||||||||
| Interest expense: | ||||||||||||||||||||
| Deposits | 2,408 | 2,020 | 1,993 | 1,905 | 1,764 | |||||||||||||||
| Junior subordinated debentures | 382 | 312 | 302 | 288 | 283 | |||||||||||||||
| Other borrowings | 263 | 115 | 109 | 38 | 25 | |||||||||||||||
| Total interest expense | 3,053 | 2,447 | 2,404 | 2,231 | 2,072 | |||||||||||||||
| Net interest income | 30,418 | 25,907 | 22,489 | 23,050 | 23,231 | |||||||||||||||
| Provision for loan losses | 2,819 | 1,939 | (511 | ) | 1,178 | 165 | ||||||||||||||
| Net interest income after provision for loan losses | 27,599 | 23,968 | 23,000 | 21,872 | 23,066 | |||||||||||||||
| Non-interest income: | ||||||||||||||||||||
| Service charges on deposits | 984 | 695 | 659 | 744 | 710 | |||||||||||||||
| Card income | 767 | 577 | 546 | 559 | 574 | |||||||||||||||
| Net OREO gains (losses) and valuation adjustments | 63 | (1,204 | ) | (11 | ) | (128 | ) | (58 | ) | |||||||||||
| Net gains (losses) on sale of securities | (68 | ) | — | 5 | 2 | 15 | ||||||||||||||
| Net gains on sale of loans | — | 4 | 12 | 234 | 363 | |||||||||||||||
| Fee income | 655 | 504 | 534 | 465 | 542 | |||||||||||||||
| Bargain purchase gain | — | — | — | 900 | 1,708 | |||||||||||||||
| Asset management fees | 1,553 | 1,605 | 1,629 | 1,670 | 1,744 | |||||||||||||||
| Other | 2,145 | 1,487 | 1,607 | 1,125 | 700 | |||||||||||||||
| Total non-interest income | 6,099 | 3,668 | 4,981 | 5,571 | 6,298 | |||||||||||||||
| Non-interest expense: | ||||||||||||||||||||
| Salaries and employee benefits | 14,699 | 12,229 | 12,252 | 12,448 | 12,416 | |||||||||||||||
| Occupancy, furniture and equipment | 1,921 | 1,534 | 1,493 | 1,546 | 1,575 | |||||||||||||||
| FDIC insurance and other regulatory assessments | 143 | 281 | 224 | 300 | 252 | |||||||||||||||
| Professional fees | 1,874 | 1,101 | 1,073 | 906 | 1,344 | |||||||||||||||
| Amortization of intangible assets | 958 | 717 | 977 | 1,141 | 1,179 | |||||||||||||||
| Advertising and promotion | 779 | 628 | 519 | 374 | 618 | |||||||||||||||
| Communications and technology | 1,966 | 1,263 | 1,432 | 1,596 | 951 | |||||||||||||||
| Other | 3,452 | 2,578 | 2,108 | 2,591 | 2,210 | |||||||||||||||
| Total non-interest expense | 25,792 | 20,331 | 20,078 | 20,902 | 20,545 | |||||||||||||||
| Net income before income tax | 7,906 | 7,305 | 7,903 | 6,541 | 8,819 | |||||||||||||||
| Income tax expense | 3,099 | 2,679 | 2,897 | 2,032 | 2,891 | |||||||||||||||
| Net income | $ | 4,807 | $ | 4,626 | $ | 5,006 | $ | 4,509 | $ | 5,928 | ||||||||||
| Dividends on preferred stock | (301 | ) | (195 | ) | (194 | ) | (197 | ) | (196 | ) | ||||||||||
| Net income available to common stockholders | $ | 4,506 | $ | 4,431 | $ | 4,812 | $ | 4,312 | $ | 5,732 | ||||||||||
Loans held for investment summarized as of:
| September 30, | June 30, | March 31, | December 31, | September 30, | ||||||||||||||||
| (Dollars in thousands) | 2016 | 2016 | 2016 | 2015 | 2015 | |||||||||||||||
| Commercial real estate | $ | 420,742 | $ | 298,991 | $ | 293,485 | $ | 291,819 | $ | 247,175 | ||||||||||
| Construction, land development, land | 101,169 | 36,498 | 41,622 | 43,876 | 52,446 | |||||||||||||||
| 1-4 family residential properties | 108,721 | 74,121 | 76,973 | 78,244 | 77,043 | |||||||||||||||
| Farmland | 139,109 | 35,795 | 33,250 | 33,573 | 25,784 | |||||||||||||||
| Commercial | 777,806 | 574,508 | 509,433 | 495,356 | 468,055 | |||||||||||||||
| Factored receivables | 213,955 | 237,520 | 199,532 | 215,088 | 201,803 | |||||||||||||||
| Consumer | 25,602 | 17,339 | 13,530 | 13,050 | 10,632 | |||||||||||||||
| Mortgage warehouse | 172,751 | 135,746 | 78,015 | 120,879 | 102,363 | |||||||||||||||
| Total loans | $ | 1,959,855 | $ | 1,410,518 | $ | 1,245,840 | $ | 1,291,885 | $ | 1,185,301 | ||||||||||
A portion of our total loan portfolio consists of commercial finance products offered under our commercial finance brands on a nationwide basis, as further summarized below:
| September 30, | June 30, | March 31, | December 31, | September 30, | ||||||||||||||||
| (Dollars in thousands) | 2016 | 2016 | 2016 | 2015 | 2015 | |||||||||||||||
| Equipment | $ | 181,987 | $ | 167,000 | $ | 159,755 | $ | 148,951 | $ | 143,483 | ||||||||||
| Asset based lending (General) | 129,501 | 114,632 | 85,739 | 75,134 | 85,641 | |||||||||||||||
| Asset based lending (Healthcare) | 84,900 | 81,664 | 79,580 | 80,200 | 66,832 | |||||||||||||||
| Premium finance | 27,573 | 6,117 | 3,506 | 1,612 | — | |||||||||||||||
| Factored receivables | 213,955 | 237,520 | 199,532 | 215,088 | 201,803 | |||||||||||||||
| Commercial finance | $ | 637,916 | $ | 606,933 | $ | 528,112 | $ | 520,985 | $ | 497,759 | ||||||||||
| Total loans held for investment | $ | 1,959,855 | $ | 1,410,518 | $ | 1,245,840 | $ | 1,291,885 | $ | 1,185,301 | ||||||||||
| Commercial finance as a % of total | 33 | % | 43 | % | 42 | % | 40 | % | 42 | % | ||||||||||
| Community banking as a % of total | 67 | % | 57 | % | 58 | % | 60 | % | 58 | % | ||||||||||
Deposits summarized as of:
| September 30, | June 30, | March 31, | December 31, | September 30, | |||||||||||||||||
| (Dollars in thousands) | 2016 | 2016 | 2016 | 2015 | 2015 | ||||||||||||||||
| Non-interest bearing demand | $ | 339,999 | $ | 170,834 | $ | 160,818 | $ | 168,264 | $ | 167,931 | |||||||||||
| Interest bearing demand | 311,351 | 235,877 | 227,002 | 238,833 | 206,603 | ||||||||||||||||
| Individual retirement accounts | 103,007 | 64,204 | 63,265 | 60,971 | 58,619 | ||||||||||||||||
| Money market | 209,572 | 120,929 | 111,578 | 112,214 | 117,888 | ||||||||||||||||
| Savings | 171,665 | 77,625 | 77,969 | 74,759 | 72,244 | ||||||||||||||||
| Certificates of deposit | 765,093 | 555,710 | 569,820 | 543,909 | 526,732 | ||||||||||||||||
| Brokered deposits | 49,990 | 49,975 | 49,941 | 50,000 | 50,019 | ||||||||||||||||
| Total deposits | $ | 1,950,677 | $ | 1,275,154 | $ | 1,260,393 | $ | 1,248,950 | $ | 1,200,036 | |||||||||||
Net interest margin summarized for the three months ended:
| September 30, 2016 | June 30, 2016 | |||||||||||||||||||||||
| Average | Average | Average | Average | |||||||||||||||||||||
| (Dollars in thousands) | Balance | Interest | Rate | Balance | Interest | Rate | ||||||||||||||||||
| Interest earning assets: | ||||||||||||||||||||||||
| Interest earning cash balances | $ | 73,022 | $ | 93 | 0.51 | % | $ | 120,088 | $ | 197 | 0.66 | % | ||||||||||||
| Taxable securities | 253,690 | 1,138 | 1.78 | % | 184,010 | 952 | 2.08 | % | ||||||||||||||||
| Tax exempt securities | 28,239 | 80 | 1.13 | % | 1,063 | 6 | 2.27 | % | ||||||||||||||||
| FHLB stock | 9,627 | 16 | 0.66 | % | 4,748 | 13 | 1.10 | % | ||||||||||||||||
| Loans | 1,723,896 | 32,144 | 7.42 | % | 1,286,159 | 27,186 | 8.50 | % | ||||||||||||||||
| Total interest earning assets | $ | 2,088,474 | $ | 33,471 | 6.38 | % | $ | 1,596,068 | $ | 28,354 | 7.15 | % | ||||||||||||
| Non-interest earning assets: | ||||||||||||||||||||||||
| Other assets | 193,805 | 146,874 | ||||||||||||||||||||||
| Total assets | $ | 2,282,279 | $ | 1,742,942 | ||||||||||||||||||||
| Interest bearing liabilities: | ||||||||||||||||||||||||
| Deposits: | ||||||||||||||||||||||||
| Interest bearing demand | $ | 280,689 | $ | 71 | 0.10 | % | $ | 242,862 | $ | 59 | 0.10 | % | ||||||||||||
| Individual retirement accounts | 87,723 | 253 | 1.15 | % | 64,075 | 197 | 1.24 | % | ||||||||||||||||
| Money market | 182,124 | 96 | 0.21 | % | 122,670 | 69 | 0.23 | % | ||||||||||||||||
| Savings | 140,338 | 23 | 0.07 | % | 78,795 | 10 | 0.05 | % | ||||||||||||||||
| Certificates of deposit | 670,372 | 1,839 | 1.09 | % | 565,600 | 1,560 | 1.11 | % | ||||||||||||||||
| Brokered deposits | 49,964 | 126 | 1.00 | % | 49,950 | 125 | 1.01 | % | ||||||||||||||||
| Total deposits | 1,411,210 | 2,408 | 0.68 | % | 1,123,952 | 2,020 | 0.72 | % | ||||||||||||||||
| Junior subordinated debentures | 29,977 | 382 | 5.07 | % | 24,788 | 312 | 5.06 | % | ||||||||||||||||
| Other borrowings | 257,358 | 263 | 0.41 | % | 139,601 | 115 | 0.33 | % | ||||||||||||||||
| Total interest bearing liabilities | $ | 1,698,545 | $ | 3,053 | 0.72 | % | $ | 1,288,341 | $ | 2,447 | 0.76 | % | ||||||||||||
| Non-interest bearing liabilities and equity: | ||||||||||||||||||||||||
| Non-interest bearing demand deposits | 283,128 | 166,863 | ||||||||||||||||||||||
| Other liabilities | 11,986 | 9,770 | ||||||||||||||||||||||
| Total equity | 288,620 | 277,968 | ||||||||||||||||||||||
| Total liabilities and equity | $ | 2,282,279 | $ | 1,742,942 | ||||||||||||||||||||
| Net interest income | $ | 30,418 | $ | 25,907 | ||||||||||||||||||||
| Interest spread | 5.66 | % | 6.39 | % | ||||||||||||||||||||
| Net interest margin | 5.79 | % | 6.53 | % | ||||||||||||||||||||
Metrics and non-GAAP financial reconciliation:
| As of and for the Three Months Ended | ||||||||||||||||||||
| September 30, | June 30, | March 31, | December 31, | September 30, | ||||||||||||||||
| (Dollars in thousands, except per share amounts) | 2016 | 2016 | 2016 | 2015 | 2015 | |||||||||||||||
| Net income available to common stockholders | $ | 4,506 | $ | 4,431 | $ | 4,812 | $ | 4,312 | $ | 5,732 | ||||||||||
| Bargain purchase gain, non-taxable | — | — | — | (900 | ) | (1,708 | ) | |||||||||||||
| Acquisition related costs | 1,618 | — | — | — | — | |||||||||||||||
| Tax effect of acquisition related costs | (251 | ) | — | — | — | — | ||||||||||||||
| Adjusted net income available to common stockholders | $ | 5,873 | $ | 4,431 | $ | 4,812 | $ | 3,412 | $ | 4,024 | ||||||||||
| Dilutive effect of convertible preferred stock | 197 | — | — | — | — | |||||||||||||||
| Adjusted net income available to common stockholders - diluted | $ | 6,070 | $ | 4,431 | $ | 4,812 | $ | 3,412 | $ | 4,024 | ||||||||||
| Weighted average shares outstanding - diluted | 18,101,676 | 18,042,585 | 17,981,276 | 17,916,251 | 18,587,821 | |||||||||||||||
| Adjusted effects of assumed Preferred Stock conversion | 676,351 | — | — | — | (676,351 | ) | ||||||||||||||
| Adjusted weighted average shares outstanding - diluted | 18,778,027 | 18,042,585 | 17,981,276 | 17,916,251 | 17,911,470 | |||||||||||||||
| Adjusted diluted earnings per common share | $ | 0.32 | $ | 0.25 | $ | 0.27 | $ | 0.19 | $ | 0.22 | ||||||||||
| Net income available to common stockholders | $ | 4,506 | $ | 4,431 | $ | 4,812 | $ | 4,312 | $ | 5,732 | ||||||||||
| Average tangible common equity | 235,938 | 241,666 | 235,192 | 229,636 | 222,884 | |||||||||||||||
| Return on average tangible common equity | 7.60 | % | 7.37 | % | 8.23 | % | 7.45 | % | 10.20 | % | ||||||||||
| Efficiency ratio: | ||||||||||||||||||||
| Net interest income | $ | 30,418 | $ | 25,907 | $ | 22,489 | $ | 23,050 | $ | 23,231 | ||||||||||
| Non-interest income | 6,099 | 3,668 | 4,981 | 5,571 | 6,298 | |||||||||||||||
| Operating revenue | 36,517 | 29,575 | 27,470 | 28,621 | 29,529 | |||||||||||||||
| Bargain purchase gain | — | — | — | (900 | ) | (1,708 | ) | |||||||||||||
| Adjusted operating revenue | $ | 36,517 | $ | 29,575 | $ | 27,470 | $ | 27,721 | $ | 27,821 | ||||||||||
| Non-interest expenses | $ | 25,792 | $ | 20,331 | $ | 20,078 | $ | 20,902 | $ | 20,545 | ||||||||||
| Acquisition related costs | (1,618 | ) | — | — | — | — | ||||||||||||||
| Adjusted non-interest expenses | $ | 24,174 | $ | 20,331 | $ | 20,078 | $ | 20,902 | $ | 20,545 | ||||||||||
| Efficiency ratio | 66.20 | % | 68.74 | % | 73.09 | % | 75.40 | % | 73.85 | % | ||||||||||
| Net non-interest expense to average assets ratio: | ||||||||||||||||||||
| Non-interest expenses | $ | 25,792 | $ | 20,331 | $ | 20,078 | $ | 20,902 | $ | 20,545 | ||||||||||
| Acquisition related costs | (1,618 | ) | — | — | — | — | ||||||||||||||
| Adjusted non-interest expenses | $ | 24,174 | $ | 20,331 | $ | 20,078 | $ | 20,902 | $ | 20,545 | ||||||||||
| Total non-interest income | $ | 6,099 | $ | 3,668 | $ | 4,981 | $ | 5,571 | $ | 6,298 | ||||||||||
| Bargain purchase gain | — | — | — | (900 | ) | (1,708 | ) | |||||||||||||
| Adjusted non-interest income | $ | 6,099 | $ | 3,668 | $ | 4,981 | $ | 4,671 | $ | 4,590 | ||||||||||
| Adjusted net non-interest expenses | $ | 18,075 | $ | 16,663 | $ | 15,097 | $ | 16,231 | $ | 15,955 | ||||||||||
| Average total assets | $ | 2,282,279 | $ | 1,742,942 | $ | 1,682,640 | $ | 1,624,891 | $ | 1,565,698 | ||||||||||
| Net non-interest expense to average assets ratio | 3.15 | % | 3.85 | % | 3.61 | % | 3.96 | % | 4.04 | % | ||||||||||
| As of and for the Three Months Ended | ||||||||||||||||||||
| September 30, | June 30, | March 31, | December 31, | September 30, | ||||||||||||||||
| (Dollars in thousands, except per share amounts) | 2016 | 2016 | 2016 | 2015 | 2015 | |||||||||||||||
| Reported yield on loans | 7.42 | % | 8.50 | % | 7.84 | % | 8.17 | % | 8.34 | % | ||||||||||
| Effect of accretion income on acquired loans | (0.32 | %) | (0.69 | %) | (0.37 | %) | (0.33 | %) | (0.38 | %) | ||||||||||
| Adjusted yield on loans | 7.10 | % | 7.81 | % | 7.47 | % | 7.84 | % | 7.96 | % | ||||||||||
| Reported net interest margin | 5.79 | % | 6.53 | % | 5.90 | % | 6.20 | % | 6.45 | % | ||||||||||
| Effect of accretion income on acquired loans | (0.26 | %) | (0.55 | %) | (0.29 | %) | (0.26 | %) | (0.31 | %) | ||||||||||
| Adjusted net interest margin | 5.53 | % | 5.98 | % | 5.61 | % | 5.94 | % | 6.14 | % | ||||||||||
| Total stockholders' equity | $ | 284,521 | $ | 279,763 | $ | 274,114 | $ | 268,038 | $ | 263,919 | ||||||||||
| Preferred stock liquidation preference | (9,746 | ) | (9,746 | ) | (9,746 | ) | (9,746 | ) | (9,746 | ) | ||||||||||
| Total common stockholders' equity | 274,775 | 270,017 | 264,368 | 258,292 | 254,173 | |||||||||||||||
| Goodwill and other intangibles | (47,449 | ) | (26,160 | ) | (26,877 | ) | (27,854 | ) | (28,995 | ) | ||||||||||
| Tangible common stockholders' equity | $ | 227,326 | $ | 243,857 | $ | 237,491 | $ | 230,438 | $ | 225,178 | ||||||||||
| Common shares outstanding | 18,106,978 | 18,107,493 | 18,015,423 | 18,018,200 | 18,040,072 | |||||||||||||||
| Tangible book value per share | $ | 12.55 | $ | 13.47 | $ | 13.18 | $ | 12.79 | $ | 12.48 | ||||||||||
| Total assets at end of period | $ | 2,575,490 | $ | 1,783,395 | $ | 1,687,795 | $ | 1,691,313 | $ | 1,581,463 | ||||||||||
| Goodwill and other intangibles | (47,449 | ) | (26,160 | ) | (26,877 | ) | (27,854 | ) | (28,995 | ) | ||||||||||
| Adjusted total assets at period end | $ | 2,528,041 | $ | 1,757,235 | $ | 1,660,918 | $ | 1,663,459 | $ | 1,552,468 | ||||||||||
| Tangible common stockholders' equity ratio | 8.99 | % | 13.88 | % | 14.30 | % | 13.85 | % | 14.50 | % | ||||||||||
1) The Company uses certain non-GAAP financial measures to provide meaningful supplemental information regarding the Company's operational performance and to enhance investors' overall understanding of such financial performance. The non-GAAP measures used by the Company include the following:
- "Common stockholders' equity" is defined as total stockholders' equity at end of period less the liquidation preference value of the preferred stock.
- “Adjusted diluted earnings per common share” is defined as adjusted net income available to common stockholders divided by adjusted weighted average diluted common shares outstanding. Excluded from net income available to common stockholders are material gains and expenses related to merger and acquisition-related activities, net of tax. In our judgment, the adjustments made to net income available to common stockholders allow management and investors to better assess our performance in relation to our core net income by removing the volatility associated with certain acquisition-related items and other discrete items that are unrelated to our core business. Weighted average diluted common shares outstanding are adjusted as a result of changes in their dilutive properties given the gain and expense adjustments described herein.
- "Tangible common stockholders' equity" is common stockholders' equity less goodwill and other intangible assets.
- "Total tangible assets" is defined as total assets less goodwill and other intangible assets.
- "Tangible book value per share" is defined as tangible common stockholders' equity divided by total common shares outstanding. This measure is important to investors interested in changes from period-to-period in book value per share exclusive of changes in intangible assets.
- "Tangible common stockholders' equity ratio" is defined as the ratio of tangible common stockholders' equity divided by total tangible assets. We believe that this measure is important to many investors in the marketplace who are interested in relative changes from period-to period in common equity and total assets, each exclusive of changes in intangible assets.
- "Return on Average Tangible Common Equity" is defined as net income available to common stockholders divided by average tangible common stockholders' equity.
- "Efficiency ratio" is defined as non-interest expenses divided by our operating revenue, which is equal to net interest income plus non-interest income. Also excluded are material gains and expenses related to merger and acquisition-related activities, including divestitures. In our judgment, the adjustments made to operating revenue allow management and investors to better assess our performance in relation to our core operating revenue by removing the volatility associated with certain acquisition-related items and other discrete items that are unrelated to our core business.
- "Net non-interest expense to average total assets" is defined as non-interest expenses net of non-interest income divided by total average assets. Excluded are material gains and expenses related to merger and acquisition-related activities, including divestitures. This metric is used by our management to better assess our operating efficiency.
- "Adjusted yield on loans" is our yield on loans after excluding loan accretion from our acquired loan portfolio. Our management uses this metric to better assess the impact of purchase accounting on our yield on loans, as the effect of loan discount accretion is expected to decrease as the acquired loans roll off of our balance sheet.
- “Adjusted net interest margin” is net interest margin after excluding loan accretion from the acquired loan portfolio. Our management uses this metric to better assess the impact of purchase accounting on net interest margin, as the effect of loan discount accretion is expected to decrease as the acquired loans mature or roll off of our balance sheet.
2) Adjusted to exclude material gains and expenses related to merger and acquisition-related activities, net of tax where applicable.
3) Asset quality ratios exclude loans held for sale.
4) Current quarter ratios are preliminary.