October 18, 2017 - EX-99.1 - 8-K: Current report | Triumph Financial, Inc. (TFIN)

Exhibit 99.1

Triumph Bancorp Reports Third Quarter Net Income to Common Stockholders of $9.6 Million and Diluted Earnings per Share of $0.47.

DALLAS – October 18, 2017 (GLOBE NEWSWIRE) – Triumph Bancorp, Inc. (Nasdaq: TBK) (“Triumph”) today announced earnings and operating results for the third quarter 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 Third Quarter Highlights

•

For the third quarter of 2017, net income was $9.8 million and net income available to common stockholders was $9.6 million, compared to net income of $9.7 million and net income available to common stockholders of $9.5 million for the quarter ended June 30, 2017.

•

Diluted earnings per share were $0.47 for the quarter ended September 30, 2017, compared to $0.51 for the quarter ended June 30, 2017. Earnings per share were impacted by our public offering of 2.53 million shares of our common stock on August 1, 2017. Our net proceeds from the offering, after deducting the underwriting discount and offering expenses, were $65.5 million.

•

Total loans held for investment increased $130.4 million, or 5.7%, to $2.425 billion at September 30, 2017, compared to $2.295 billion at June 30, 2017.

•

Non-performing assets to total assets decreased to 1.42% at September 30, 2017 from 1.50% at June 30, 2017. Net charge-offs to average loans decreased to 0.00% for the quarter ended September 30, 2017, compared to 0.03% for the quarter ended June 30, 2017.

•

Net interest margin (“NIM”) was 5.90% for the quarter ended September 30, 2017, compared to 6.16% for the quarter ended June 30, 2017. Adjusted NIM, which excludes loan discount accretion, was 5.69% for the quarter ended September 30, 2017, compared to 5.70% for the quarter ended June 30, 2017.

Balance Sheet

Total loans held for investment were $2.425 billion at September 30, 2017. Our commercial finance loans, which comprise 37% of the loan portfolio, were $886.9 million at September 30, 2017, compared to $801.7 million at June 30, 2017. This is an increase of $85.2 million, or 10.6%, in the third quarter of 2017, and includes a $48.2 million, or 16.4%, increase in factored receivables.

Total deposits were $2.013 billion at September 30, 2017, a decrease of $59.6 million or 2.9% for the third quarter of 2017. The decrease in deposits was due in part to our intentional plan to reduce our reliance on the use of public funds. Non-interest-bearing deposits accounted for 20% of total deposits and non-time deposits accounted for 51% of total deposits at September 30, 2017.

Net Interest Income

We earned net interest income for the quarter ended September 30, 2017 of $39.5 million compared to $38.6 million for the quarter ended June 30, 2017.

Yields on loans for the quarter ended September 30, 2017 were down 35 bps from the prior quarter to 7.44% (down 5 bps from the prior quarter to 7.20% adjusted to exclude loan discount accretion). The average cost of our total deposits was 0.64% for the quarter ended September 30, 2017 compared to 0.60% for the quarter ended June 30, 2017, on an annualized basis.

Asset Quality

Non-performing assets decreased 8 bps from June 30, 2017 to 1.42% of total assets at September 30, 2017. The ratio of past due to total loans decreased to 2.22% at September 30, 2017 from 2.51% at June 30, 2017. We recorded total net charge-offs of $0.0 million for the quarter ended September 30, 2017 compared to net charge-offs of $0.7 million for the quarter ended June 30, 2017. We recorded a provision for loan losses of $0.6 million for the quarter ended September 30, 2017 compared to a provision of $1.4 million for the quarter ended June 30, 2017. From June 30, 2017 to September 30, 2017, our ALLL increased from $19.8 million or 0.86% of total loans to $20.4 million or 0.84% of total loans.

Non-interest Income and Expense

We earned non-interest income for the quarter ended September 30, 2017 of $4.2 million compared to $5.2 million for the quarter ended June 30, 2017. Non-interest income for the quarter ended June 30, 2017 included $1.0 million of income from our CLO warehouse investment. The CLO associated with our CLO warehouse investment was closed and our invested funds were returned in June 2017.

For the quarter ended September 30, 2017, non-interest expense totaled $28.2 million compared to $27.3 million for the quarter ended June 30, 2017.

Branch Acquisition

As previously announced, we closed our acquisition of 9 branches in Colorado from Independent Bank Group, Inc.’s banking subsidiary Independent Bank on October 6, 2017. TBK Bank purchased approximately $99 million in loans and assumed approximately $162 million in deposits associated with the branches.

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 19, 2017. 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 our website at www.triumphbancorp.com through the Investor Relations, News & Events, Webcasts and Presentations links, or through a direct link here at http://services.choruscall.com/links/tbk171019.html. An archive of this conference call will subsequently be available at this same location on our 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 our pending acquisition of 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 June 30, 2017, filed with the Securities and Exchange Commission on July 21, 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 Nine Months Ended
	September 30,			June 30,			March 31,			December 31,			September 30,			September 30,			September 30,
(Dollars in thousands)	2017			2017			2017			2016			2016			2017			2016
Financial Highlights:
Total assets	$	2,906,161		$	2,836,684		$	2,635,358		$	2,641,067		$	2,575,490		$	2,906,161		$	2,575,490
Loans held for investment	$	2,425,463		$	2,295,100		$	2,035,236		$	2,027,624		$	1,959,855		$	2,425,463		$	1,959,855
Deposits	$	2,012,545		$	2,072,181		$	2,024,288		$	2,015,785		$	1,950,677		$	2,012,545		$	1,950,677
Net income available to common stockholders	$	9,587		$	9,467		$	10,281		$	6,064		$	4,506		$	29,335		$	13,749

Performance Ratios - Annualized:
Return on average assets		1.36	%		1.42	%		1.62	%		0.96	%		0.84	%		1.46	%		1.01	%
Return on average total equity		10.71	%		12.60	%		14.44	%		8.58	%		6.63	%		12.44	%		6.89	%
Return on average common equity		10.79	%		12.75	%		14.66	%		8.60	%		6.51	%		12.58	%		6.83	%
Return on average tangible common equity ⁽¹⁾		12.28	%		14.94	%		17.49	%		10.32	%		7.60	%		14.65	%		7.73	%
Yield on loans		7.44	%		7.79	%		7.15	%		7.36	%		7.42	%		7.47	%		7.87	%
Adjusted yield on loans⁽¹⁾		7.20	%		7.25	%		6.93	%		6.82	%		7.10	%		7.14	%		7.42	%
Cost of interest bearing deposits		0.80	%		0.74	%		0.71	%		0.66	%		0.68	%		0.75	%		0.71	%
Cost of total deposits		0.64	%		0.60	%		0.58	%		0.54	%		0.57	%		0.61	%		0.61	%
Cost of total funds		0.90	%		0.83	%		0.79	%		0.73	%		0.61	%		0.84	%		0.65	%
Net interest margin		5.90	%		6.16	%		5.37	%		5.60	%		5.79	%		5.82	%		6.05	%
Adjusted net interest margin⁽¹⁾		5.69	%		5.70	%		5.19	%		5.15	%		5.53	%		5.54	%		5.69	%
Net non-interest expense to average assets		3.35	%		3.26	%		1.17	%		3.16	%		3.43	%		2.63	%		3.61	%
Adjusted net non-interest expense to average assets ⁽¹⁾		3.35	%		3.26	%		3.60	%		3.16	%		3.15	%		3.40	%		3.50	%
Efficiency ratio		64.61	%		62.44	%		58.94	%		67.70	%		70.63	%		61.68	%		70.76	%
Adjusted efficiency ratio⁽¹⁾		64.61	%		62.44	%		77.65	%		67.70	%		66.20	%		67.82	%		69.03	%

Asset Quality:⁽²⁾
Past due to total loans		2.22	%		2.51	%		3.16	%		3.61	%		3.86	%		2.22	%		3.86	%
Non-performing loans to total loans		1.25	%		1.36	%		1.80	%		2.23	%		2.25	%		1.25	%		2.25	%
Non-performing assets to total assets		1.42	%		1.50	%		1.92	%		1.98	%		2.05	%		1.42	%		2.05	%
ALLL to non-performing loans		67.33	%		63.56	%		52.18	%		34.00	%		33.78	%		67.33	%		33.78	%
ALLL to total loans		0.84	%		0.86	%		0.94	%		0.76	%		0.76	%		0.84	%		0.76	%
Net charge-offs to average loans		0.00	%		0.03	%		0.20	%		0.10	%		0.10	%		0.22	%		0.13	%

Capital:
Tier 1 capital to average assets⁽³⁾		13.50	%		11.28	%		11.32	%		10.85	%		12.04	%		13.50	%		12.04	%
Tier 1 capital to risk-weighted assets⁽³⁾		13.45	%		11.30	%		12.05	%		11.85	%		11.94	%		13.45	%		11.94	%
Common equity tier 1 capital to risk-weighted assets⁽³⁾		11.95	%		9.73	%		10.32	%		10.18	%		10.24	%		11.95	%		10.24	%
Total capital to risk-weighted assets⁽³⁾		15.91	%		13.87	%		14.87	%		14.60	%		14.77	%		15.91	%		14.77	%
Total equity to total assets		13.29	%		10.94	%		11.40	%		10.96	%		11.05	%		13.29	%		11.05	%
Tangible common stockholders' equity to tangible assets		11.66	%		9.22	%		9.51	%		8.98	%		8.99	%		11.66	%		8.99	%

Per Share Amounts:
Book value per share	$	18.08		$	16.59		$	16.08		$	15.47		$	15.18		$	18.08		$	15.18
Tangible book value per share⁽¹⁾	$	16.04		$	14.20		$	13.63		$	12.89		$	12.55		$	16.04		$	12.55
Basic earnings per common share	$	0.48		$	0.53		$	0.57		$	0.34		$	0.25		$	1.58		$	0.77
Diluted earnings per common share	$	0.47		$	0.51		$	0.55		$	0.33		$	0.25		$	1.53		$	0.76
Adjusted diluted earnings per common share⁽¹⁾	$	0.47		$	0.51		$	0.02		$	0.33		$	0.32		$	1.02		$	0.84
Shares outstanding end of period		20,820,900			18,132,585			18,078,769			18,078,247			18,106,978			20,820,900			18,106,978

Unaudited consolidated balance sheet as of:

	September 30,			June 30,			March 31,			December 31,			September 30,
(Dollars in thousands)	2017			2017			2017			2016			2016
ASSETS
Total cash and cash equivalents	$	80,557		$	117,502		$	126,084		$	114,514		$	104,725
Securities - available for sale		209,326			227,206			254,452			275,029			286,574
Securities - held to maturity		17,999			26,036			28,882			29,352			29,316
Loans held for sale		—			—			—			—			9,623
Loans held for investment		2,425,463			2,295,100			2,035,236			2,027,624			1,959,855
Allowance for loan and lease losses		(20,367	)		(19,797	)		(19,093	)		(15,405	)		(14,912	)
Loans, net		2,405,096			2,275,303			2,016,143			2,012,219			1,944,943
FHLB stock		16,076			14,566			7,167			8,430			8,397
Premises and equipment, net		43,678			43,957			44,630			45,460			45,050
Other real estate owned ("OREO"), net		10,753			10,740			11,638			6,077			8,061
Goodwill and intangible assets, net		42,452			43,321			44,233			46,531			47,449
Bank-owned life insurance		37,025			36,852			36,679			36,509			36,347
Deferred tax asset, net		14,130			15,111			15,678			18,825			20,042
Other assets		29,069			26,090			49,772			48,121			34,963
Total assets	$	2,906,161		$	2,836,684		$	2,635,358		$	2,641,067		$	2,575,490
LIABILITIES
Non-interest bearing deposits	$	403,643		$	381,042		$	382,009		$	363,351		$	339,999
Interest bearing deposits		1,608,902			1,691,139			1,642,279			1,652,434			1,610,678
Total deposits		2,012,545			2,072,181			2,024,288			2,015,785			1,950,677
Customer repurchase agreements		19,869			14,959			10,468			10,490			15,329
Federal Home Loan Bank advances		385,000			340,000			200,000			230,000			230,000
Subordinated notes		48,804			48,780			48,757			48,734			48,676
Junior subordinated debentures		33,047			32,943			32,840			32,740			32,640
Other liabilities		20,799			17,354			18,580			13,973			13,647
Total liabilities		2,520,064			2,526,217			2,334,933			2,351,722			2,290,969
EQUITY
Preferred stock series A		4,550			4,550			4,550			4,550			4,550
Preferred stock series B		5,108			5,108			5,196			5,196			5,196
Common stock		209			182			182			182			182
Additional paid-in-capital		264,531			198,570			197,866			197,157			196,306
Treasury stock, at cost		(1,760	)		(1,759	)		(1,494	)		(1,374	)		(751	)
Retained earnings		113,245			103,658			94,191			83,910			77,846
Accumulated other comprehensive income		214			158			(66	)		(276	)		1,192
Total equity		386,097			310,467			300,425			289,345			284,521
Total liabilities and equity	$	2,906,161		$	2,836,684		$	2,635,358		$	2,641,067		$	2,575,490

Unaudited consolidated statement of income:

	For the Three Months Ended															For the Nine Months Ended
	September 30,			June 30,			March 31,			December 31,			September 30,			September 30,			September 30,
(Dollars in thousands)	2017			2017			2017			2016			2016			2017			2016
Interest income:
Loans, including fees	$	30,863		$	30,663		$	25,185		$	26,486		$	23,123		$	86,711		$	57,758
Factored receivables, including fees		12,198			10,812			9,167			9,731			9,021			32,177			25,482
Securities		1,655			1,738			1,611			1,368			1,218			5,004			2,941
FHLB stock		51			36			42			34			16			129			39
Cash deposits		370			289			327			155			93			986			498
Total interest income		45,137			43,538			36,332			37,774			33,471			125,007			86,718
Interest expense:
Deposits		3,272			3,057			2,869			2,735			2,408			9,198			6,421
Subordinated notes		837			836			835			835			—			2,508			—
Junior subordinated debentures		495			475			465			431			382			1,435			996
Other borrowings		1,021			613			344			229			263			1,978			487
Total interest expense		5,625			4,981			4,513			4,230			3,053			15,119			7,904
Net interest income		39,512			38,557			31,819			33,544			30,418			109,888			78,814
Provision for loan losses		572			1,447			7,678			2,446			2,819			9,697			4,247
Net interest income after provision for loan losses		38,940			37,110			24,141			31,098			27,599			100,191			74,567
Non-interest income:
Service charges on deposits		1,046			977			980			1,109			984			3,003			2,338
Card income		956			917			827			842			767			2,700			1,890
Net OREO gains (losses) and valuation adjustments		15			(112	)		11			(275	)		63			(86	)		(1,152	)
Net gains (losses) on sale of securities		35			—			—			7			(68	)		35			(63	)
Net gains on sale of loans		—			—			—			—			—			—			16
Fee income		625			637			583			547			655			1,845			1,693
Asset management fees		—			—			1,717			1,787			1,553			1,717			4,787
Gain on sale of subsidiary		—			—			20,860			—			—			20,860			—
Other		1,494			2,783			2,307			2,191			2,145			6,584			5,239
Total non-interest income		4,171			5,202			27,285			6,208			6,099			36,658			14,748
Non-interest expense:
Salaries and employee benefits		16,717			16,012			21,958			15,351			14,699			54,687			39,180
Occupancy, furniture and equipment		2,398			2,348			2,359			2,353			1,921			7,105			4,948
FDIC insurance and other regulatory assessments		294			270			226			265			143			790			648
Professional fees		1,465			1,238			1,968			1,481			1,874			4,671			4,048
Amortization of intangible assets		870			911			1,111			1,130			958			2,892			2,652
Advertising and promotion		804			911			938			790			779			2,653			1,926
Communications and technology		2,145			2,233			2,174			1,830			1,966			6,552			4,661
Other		3,532			3,398			4,103			3,711			3,452			11,033			8,138
Total non-interest expense		28,225			27,321			34,837			26,911			25,792			90,383			66,201
Net income before income tax		14,886			14,991			16,589			10,395			7,906			46,466			23,114
Income tax expense		5,104			5,331			6,116			4,134			3,099			16,551			8,675
Net income	$	9,782		$	9,660		$	10,473		$	6,261		$	4,807		$	29,915		$	14,439
Dividends on preferred stock		(195	)		(193	)		(192	)		(197	)		(301	)		(580	)		(690	)
Net income available to common stockholders	$	9,587		$	9,467		$	10,281		$	6,064		$	4,506		$	29,335		$	13,749

Earnings per share:

	For the Three Months Ended										For the Nine Months Ended
	September 30,		June 30,		March 31,		December 31,		September 30,		September 30,		September 30,
(Dollars in thousands)	2017		2017		2017		2016		2016		2017		2016
Basic
Net income to common stockholders	$	9,587	$	9,467	$	10,281	$	6,064	$	4,506	$	29,335	$	13,749
Weighted average common shares outstanding		19,811,577		18,012,905		17,955,144		17,890,781		17,859,604		18,600,009		17,845,431
Basic earnings per common share	$	0.48	$	0.53	$	0.57	$	0.34	$	0.25	$	1.58	$	0.77

Diluted
Net income to common stockholders	$	9,587	$	9,467	$	10,281	$	6,064	$	4,506	$	29,335	$	13,749
Dilutive effect of preferred stock		195		193		192		197		—		580		—
Net income to common stockholders - diluted	$	9,782	$	9,660	$	10,473	$	6,261	$	4,506	$	29,915	$	13,749
Weighted average common shares outstanding		19,811,577		18,012,905		17,955,144		17,890,781		17,859,604		18,600,009		17,845,431
Dilutive effects of:
Restricted stock		63,384		47,521		87,094		66,613		148,977		65,999		125,215
Assumed exercises of stock warrants		54,476		129,896		145,896		118,285		93,095		110,089		71,251
Assumed exercises of stock options		45,788		32,592		47,873		12,511		—		42,084		—
Assumed conversion of Preferred A		315,773		315,773		315,773		315,773		—		315,773		—
Assumed conversion of Preferred B		354,471		354,471		360,578		360,578		—		354,471		—
Weighted average shares outstanding - diluted		20,645,469		18,893,158		18,912,358		18,764,541		18,101,676		19,488,425		18,041,897
Diluted earnings per common share	$	0.47	$	0.51	$	0.55	$	0.33	$	0.25	$	1.53	$	0.76


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 Nine Months Ended
	September 30,		June 30,		March 31,		December 31,		September 30,		September 30,		September 30,
	2017		2017		2017		2016		2016		2017		2016
Assumed conversion of Preferred A		—		—		—		—		315,773		—		315,773
Assumed conversion of Preferred B		—		—		—		—		360,578		—		360,578
Restricted stock awards		—		35,270		—		—		—		—		—
Stock options		58,442		58,442		—		—		164,175		58,442		164,175

Loans held for investment summarized as of:

	September 30,		June 30,		March 31,		December 31,		September 30,
(Dollars in thousands)	2017		2017		2017		2016		2016
Commercial real estate	$	574,530	$	541,217	$	498,099	$	442,237	$	420,742
Construction, land development, land		141,368		120,253		109,849		109,812		101,169
1-4 family residential properties		96,032		101,833		105,230		104,974		108,721
Farmland		130,471		136,258		136,537		141,615		139,109
Commercial		890,372		842,715		792,764		778,643		777,806
Factored receivables		341,880		293,633		242,098		238,198		213,955
Consumer		30,093		29,497		28,415		29,764		25,602
Mortgage warehouse		220,717		229,694		122,244		182,381		172,751
Total loans	$	2,425,463	$	2,295,100	$	2,035,236	$	2,027,624	$	1,959,855

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)	2017			2017			2017			2016			2016
Equipment	$	226,120		$	219,904		$	203,251		$	190,393		$	181,987
Asset based lending (General)		193,884			188,257			166,917			161,454			129,501
Asset based lending (Healthcare)		67,889			68,606			78,208			79,668			84,900
Premium finance		57,083			31,274			23,162			23,971			27,573
Factored receivables		341,880			293,633			242,098			238,198			213,955
Commercial finance	$	886,856		$	801,674		$	713,636		$	693,684		$	637,916

Commercial finance % of total loans		37	%		35	%		35	%		34	%		33	%
Yield on commercial finance loans		10.62	%		11.42	%		10.25	%		10.54	%		10.57	%

Deposits summarized as of:

	September 30,		June 30,		March 31,		December 31,		September 30,
(Dollars in thousands)	2017		2017		2017		2016		2016
Non-interest bearing demand	$	403,643	$	381,042	$	382,009	$	363,351	$	339,999
Interest bearing demand		284,282		350,966		329,201		340,362		311,351
Individual retirement accounts		97,186		99,694		100,436		103,022		103,007
Money market		189,177		205,243		203,686		213,253		209,572
Savings		158,464		173,137		173,258		171,354		171,665
Certificates of deposit		770,599		777,459		767,602		756,351		765,093
Brokered deposits		109,194		84,640		68,096		68,092		49,990
Total deposits	$	2,012,545	$	2,072,181	$	2,024,288	$	2,015,785	$	1,950,677

Net interest margin summarized for the three months ended:

	September 30, 2017							June 30, 2017
	Average				Average			Average				Average
(Dollars in thousands)	Balance		Interest		Rate			Balance		Interest		Rate
Interest earning assets:
Interest earning cash balances	$	111,364	$	370		1.32	%	$	99,918	$	289		1.16	%
Taxable securities		211,354		1,570		2.95	%		240,725		1,653		2.75	%
Tax-exempt securities		25,174		85		1.34	%		25,389		85		1.34	%
FHLB stock		14,885		51		1.36	%		10,395		36		1.39	%
Loans		2,295,356		43,061		7.44	%		2,135,346		41,475		7.79	%
Total interest earning assets	$	2,658,133	$	45,137		6.74	%	$	2,511,773	$	43,538		6.95	%
Non-interest earning assets:
Other assets		191,037							211,530
Total assets	$	2,849,170						$	2,723,303
Interest bearing liabilities:
Deposits:
Interest bearing demand	$	312,009	$	137		0.17	%	$	342,947	$	136		0.16	%
Individual retirement accounts		98,713		309		1.24	%		100,505		303		1.21	%
Money market		201,462		118		0.23	%		206,163		120		0.23	%
Savings		167,908		20		0.05	%		171,602		27		0.06	%
Certificates of deposit		773,075		2,381		1.22	%		773,178		2,224		1.15	%
Brokered deposits		72,094		307		1.69	%		67,852		247		1.46	%
Total deposits		1,625,261		3,272		0.80	%		1,662,247		3,057		0.74	%
Subordinated notes		48,791		837		6.81	%		48,767		836		6.88	%
Junior subordinated debentures		32,983		495		5.95	%		32,878		475		5.79	%
Other borrowings		365,464		1,021		1.11	%		271,136		613		0.91	%
Total interest bearing liabilities	$	2,072,499	$	5,625		1.08	%	$	2,015,028	$	4,981		0.99	%
Non-interest bearing liabilities and equity:
Non-interest bearing demand deposits		398,774							387,877
Other liabilities		15,698							12,808
Total equity		362,199							307,590
Total liabilities and equity	$	2,849,170						$	2,723,303
Net interest income			$	39,512						$	38,557
Interest spread						5.66	%						5.96	%
Net interest margin						5.90	%						6.16	%

Metrics and non-GAAP financial reconciliation:

	As of and for the Three Months Ended															As of and for the Nine Months Ended
(Dollars in thousands,	September 30,			June 30,			March 31,			December 31,			September 30,			September 30,			September 30,
except per share amounts)	2017			2017			2017			2016			2016			2017			2016
Net income available to common stockholders	$	9,587		$	9,467		$	10,281		$	6,064		$	4,506		$	29,335		$	13,749
Gain on sale of subsidiary		—			—			(20,860	)		—			—			(20,860	)		—
Incremental bonus related to transaction		—			—			4,814			—			—			4,814			—
Transaction related costs		—			—			325			—			1,618			325			1,618
Tax effect of adjustments		—			—			5,754			—			(251	)		5,754			(251	)
Adjusted net income available to common stockholders	$	9,587		$	9,467		$	314		$	6,064		$	5,873		$	19,368		$	15,116
Dilutive effect of convertible preferred stock		195			193			—			197			197			580			—
Adjusted net income available to common stockholders - diluted	$	9,782		$	9,660		$	314		$	6,261		$	6,070		$	19,948		$	15,116

Weighted average shares outstanding - diluted		20,645,469			18,893,158			18,912,358			18,764,541			18,101,676			19,488,425			18,041,897
Adjusted effects of assumed Preferred Stock conversion		—			—			(676,351	)		—			676,351			—			—
Adjusted weighted average shares outstanding - diluted		20,645,469			18,893,158			18,236,007			18,764,541			18,778,027			19,488,425			18,041,897
Adjusted diluted earnings per common share	$	0.47		$	0.51		$	0.02		$	0.33		$	0.32		$	1.02		$	0.84

Net income available to common stockholders	$	9,587		$	9,467		$	10,281		$	6,064		$	4,506		$	29,335		$	13,749
Average tangible common equity		309,624			254,088			238,405			233,733			235,938			267,633			237,647
Return on average tangible common equity		12.28	%		14.94	%		17.49	%		10.32	%		7.60	%		14.65	%		7.73	%

Adjusted efficiency ratio:
Net interest income	$	39,512		$	38,557		$	31,819		$	33,544		$	30,418		$	109,888		$	78,814
Non-interest income		4,171			5,202			27,285			6,208			6,099			36,658			14,748
Operating revenue		43,683			43,759			59,104			39,752			36,517			146,546			93,562
Gain on sale of subsidiary		—			—			(20,860	)		—			—			(20,860	)		—
Adjusted operating revenue	$	43,683		$	43,759		$	38,244		$	39,752		$	36,517		$	125,686		$	93,562
Non-interest expenses	$	28,225		$	27,321		$	34,837		$	26,911		$	25,792		$	90,383		$	66,201
Incremental bonus related to transaction		—			—			(4,814	)		—			—			(4,814	)		—
Transaction related costs		—			—			(325	)		—			(1,618	)		(325	)		(1,618	)
Adjusted non-interest expenses	$	28,225		$	27,321		$	29,698		$	26,911		$	24,174		$	85,244		$	64,583
Adjusted efficiency ratio		64.61	%		62.44	%		77.65	%		67.70	%		66.20	%		67.82	%		69.03	%

Adjusted net non-interest expense to average assets ratio:
Non-interest expenses	$	28,225		$	27,321		$	34,837		$	26,911		$	25,792		$	90,383		$	66,201
Incremental bonus related to transaction		—			—			(4,814	)		—			—			(4,814	)		—
Transaction related costs		—			—			(325	)		—			(1,618	)		(325	)		(1,618	)
Adjusted non-interest expenses	$	28,225		$	27,321		$	29,698		$	26,911		$	24,174		$	85,244		$	64,583

Total non-interest income	$	4,171		$	5,202		$	27,285		$	6,208		$	6,099		$	36,658		$	14,748
Gain on sale of subsidiary		—			—			(20,860	)		—			—			(20,860	)		—
Adjusted non-interest income	$	4,171		$	5,202		$	6,425		$	6,208		$	6,099		$	15,798		$	14,748
Adjusted net non-interest expenses	$	24,054		$	22,119		$	23,273		$	20,703		$	18,075		$	69,446		$	49,835
Average total assets	$	2,849,170		$	2,723,303		$	2,619,282		$	2,603,226		$	2,282,279		$	2,731,426		$	1,904,001
Adjusted net non-interest expense to average assets ratio		3.35	%		3.26	%		3.60	%		3.16	%		3.15	%		3.40	%		3.50	%

	As of and for the Three Months Ended															As of and for the Nine Months Ended
(Dollars in thousands,	September 30,			June 30,			March 31,			December 31,			September 30,			September 30,			September 30,
except per share amounts)	2017			2017			2017			2016			2016			2017			2016
Reported yield on loans		7.44	%		7.79	%		7.15	%		7.36	%		7.42	%		7.47	%		7.87	%
Effect of accretion income on acquired loans		(0.24	%)		(0.54	%)		(0.22	%)		(0.54	%)		(0.32	%)		(0.33	%)		(0.45	%)
Adjusted yield on loans		7.20	%		7.25	%		6.93	%		6.82	%		7.10	%		7.14	%		7.42	%

Reported net interest margin		5.90	%		6.16	%		5.37	%		5.60	%		5.79	%		5.82	%		6.05	%
Effect of accretion income on acquired loans		(0.21	%)		(0.46	%)		(0.18	%)		(0.45	%)		(0.26	%)		(0.28	%)		(0.36	%)
Adjusted net interest margin		5.69	%		5.70	%		5.19	%		5.15	%		5.53	%		5.54	%		5.69	%

Total stockholders' equity	$	386,097		$	310,467		$	300,425		$	289,345		$	284,521		$	386,097		$	284,521
Preferred stock liquidation preference		(9,658	)		(9,658	)		(9,746	)		(9,746	)		(9,746	)		(9,658	)		(9,746	)
Total common stockholders' equity		376,439			300,809			290,679			279,599			274,775			376,439			274,775
Goodwill and other intangibles		(42,452	)		(43,321	)		(44,233	)		(46,531	)		(47,449	)		(42,452	)		(47,449	)
Tangible common stockholders' equity	$	333,987		$	257,488		$	246,446		$	233,068		$	227,326		$	333,987		$	227,326
Common shares outstanding		20,820,900			18,132,585			18,078,769			18,078,247			18,106,978			20,820,900			18,106,978
Tangible book value per share	$	16.04		$	14.20		$	13.63		$	12.89		$	12.55		$	16.04		$	12.55

Total assets at end of period	$	2,906,161		$	2,836,684		$	2,635,358		$	2,641,067		$	2,575,490		$	2,906,161		$	2,575,490
Goodwill and other intangibles		(42,452	)		(43,321	)		(44,233	)		(46,531	)		(47,449	)		(42,452	)		(47,449	)
Adjusted total assets at period end	$	2,863,709		$	2,793,363		$	2,591,125		$	2,594,536		$	2,528,041		$	2,863,709		$	2,528,041
Tangible common stockholders' equity ratio		11.66	%		9.22	%		9.51	%		8.98	%		8.99	%		11.66	%		8.99	%

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.

Asset quality ratios exclude loans held for sale.

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

Form: 8-K

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