Triumph Bancorp Reports Second Quarter Net Income to Common Stockholders of $27.2 million

Triumph Bancorp, Inc. (Nasdaq: TBK) (“Triumph” or the “Company”) today announced earnings and operating results for the second quarter of 2021.

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.

2021 Second Quarter Highlights

For the second quarter of 2021, net income to common shareholders was $27.2 million, and diluted earnings per share were $1.08.
Adjusted diluted earnings per share were $1.17 for the second quarter of 2021, which exclude transaction costs related to the acquisition of HubTran, Inc., net of taxes.
Net interest income was $90.3 million.
Non-interest income was $13.9 million.
Non-interest expense was $70.8 million, including $3.0 million of transaction costs related to the HubTran, Inc. acquisition.
Net interest margin was 6.47%. Yield on loans and the average cost of our total deposits were 7.77% and 0.20%, respectively.
Credit loss expense for the quarter ended June 30, 2021 was a benefit of $1.8 million primarily due to improvements in our macroeconomic forecasts and changes in the volume and mix of our underlying loan portfolio.
Net charge-offs were $0.4 million, or 0.01% of average loans, for the quarter.
The total dollar value of invoices purchased by Triumph Business Capital was $3.068 billion with an average invoice size of $2,189. The transportation average invoice size for the quarter was $2,090.
TriumphPay processed 3,165,119 invoices paying carriers a total of $3.427 billion.
On June 1, 2021, we, through TriumphPay, a division of our wholly-owned subsidiary TBK Bank, SSB, acquired HubTran, Inc., a cloud-based provider of automation software for the transportation industry's back-office, for $97 million in cash. As part of the acquisition, we acquired $27.3 million of intangible assets and $73.7 million of goodwill.

Balance Sheet

Total loans held for investment decreased $253.3 million, or 5.0%, during the second quarter to $4.831 billion at June 30, 2021. Average loans held for investment for the quarter decreased $35.5 million, or 0.7%, to $4.799 billion.

Total deposits were $4.725 billion at June 30, 2021, a decrease of $64.2 million, or 1.3%, in the second quarter of 2021. Non-interest-bearing deposits accounted for 38% of total deposits and non-time deposits accounted for 79% of total deposits at June 30, 2021.

Asset Quality and Allowance for Credit Loss

Our nonperforming assets ratio at June 30, 2021 was 0.97%. Approximately 2 basis points of this ratio at June 30, 2021 consisted of $1.5 million of the acquired Over-Formula Advance portfolio which represents the portion that is not covered by CVLG's indemnification. An additional 32 basis points of this ratio at June 30, 2021 consisted of $19.4 million of the Misdirected Payments. Over-Formula Advances and Misdirected Payments are discussed in greater detail below.

Our past-due loan ratio at June 30, 2021 was 2.28%. Approximately 21 basis points of this ratio at June 30, 2021 consisted of $10.1 million of past due factored receivables related to the Over-Formula Advance portfolio. An additional 40 basis points of this ratio at June 30, 2021 consisted of the $19.4 million of Misdirected Payments, as discussed below.

Our ACL as a percentage of loans held for investment increased 1 basis point during the quarter to 0.95% at June 30, 2021.

CARES Act and Paycheck Protection Program

As of June 30, 2021, our balance sheet reflected deferrals on outstanding loan balances of $53.7 million to assist customers impacted by COVID-19. Modifications related to the COVID-19 pandemic and qualifying under the provisions of Section 4013 of the CARES Act are not considered troubled debt restructurings. As of June 30, 2021, these deferred balances carried accrued interest of $0.2 million.

As of June 30, 2021, we carried 1,390 PPP loans representing a balance of $135.3 million classified as commercial loans. We recognized $1.8 million in fees from the SBA on PPP loans during the three months ended June 30, 2021 and carry $5.2 million of deferred fees on PPP loans at quarter end. The remaining fees will be amortized over the respective lives of the loans.

Items related to our July 2020 acquisition of TFS

As disclosed on our SEC Forms 8-K filed on July 8, 2020 and September 23, 2020, we acquired the transportation factoring assets of TFS, a wholly owned subsidiary of Covenant Logistics Group, Inc. ("CVLG"), and subsequently amended the terms of that transaction. There were no material developments related to that transaction that impacted our operating results for the three months ended June 30, 2021.

At June 30, 2021, the carrying value of the acquired over-formula advances was $10.1 million, the total reserve on acquired over-formula advances was $10.1 million and the balance of our indemnification asset, the value of the payment that would be due to us from CVLG in the event that these over-advances are charged off, was approximately $5 million.

As of June 30, 2021 we carried 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 also filed a declaratory judgment action in United States Federal District Court for the Southern District of Florida seeking a ruling that the USPS was obligated to make the payments represented by this receivable directly to us. Based on our legal analysis and discussions with our counsel advising us on this matter, we 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 June 30, 2021. The full amount of such receivable is reflected in non-performing and past due factored receivables as of June 30, 2021 in accordance with our policy. As of June 30, 2021, the entire $19.4 million Misdirected Payments amount was greater than 90 days past due.

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 7:00 a.m. Central Time on Thursday, July 22, 2021. Todd Ritterbusch, 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. call. A simultaneous audio-only webcast may be accessed via the Company's website at www.triumphbancorp.com through the Investor Relations, News & Events, Webcasts and Presentations links, or through a direct link here at: https://services.choruscall.com/links/tbk210722.html. An archive of this conference call will subsequently be available at this same location on the Company’s website.

About Triumph

Triumph Bancorp, Inc. (Nasdaq: TBK) is a financial holding company headquartered in Dallas, Texas. Triumph offers a diversified line of banking, payments, and factoring services 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: business and economic conditions generally and in the bank and non-bank financial services industries, nationally and within our local market areas; the impact of COVID-19 on our business, including the impact of the actions taken by governmental authorities to try and contain the virus or address the impact of the virus on the United States economy (including, without limitation, the CARES Act), and the resulting effect of all of such items on our operations, liquidity and capital position, and on the financial condition of our borrowers and other customers; our ability to mitigate our risk exposures; our ability to maintain our historical earnings trends; changes in management personnel; interest rate risk; concentration of our products and 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 nonperforming assets; inaccuracy of the assumptions and estimates we make in establishing reserves for probable loan losses and other estimates; risks related to the integration of acquired businesses, including our acquisition of HubTran Inc. and developments related to our acquisition of Transport Financial Solutions and the related over-formula advances, and any future acquisitions; our ability to successfully identify and address the risks associated with our possible future acquisitions, and the risks that our prior and possible future acquisitions make it more difficult for investors to evaluate our business, financial condition and results of operations, and impairs our ability to accurately forecast our future performance; 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 (the “Dodd-Frank Act”) and their application by our regulators; governmental monetary and fiscal policies; changes in the scope and cost of FDIC, 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 12, 2021.

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 our 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 Six Months Ended
(Dollars in thousands)	June 30,2021			March 31,2021			December 31,2020			September 30,2020			June 30,2020			June 30,2021			June 30,2020
Financial Highlights:
Total assets	$	6,015,877		$	6,099,628		$	5,935,791		$	5,836,787		$	5,617,493		$	6,015,877		$	5,617,493
Loans held for investment	$	4,831,215		$	5,084,512		$	4,996,776		$	4,852,911		$	4,393,311		$	4,831,215		$	4,393,311
Deposits	$	4,725,450		$	4,789,665		$	4,716,600		$	4,248,101		$	4,062,332		$	4,725,450		$	4,062,332
Net income available to common stockholders	$	27,180		$	33,122		$	31,328		$	22,005		$	13,440		$	60,302		$	8,990

Performance Ratios - Annualized:
Return on average assets	1.84		%	2.29		%	2.21		%	1.65		%	0.99		%	2.06		%	0.35		%
Return on average total equity	14.27		%	18.42		%	17.73		%	13.24		%	8.86		%	16.28		%	2.92		%
Return on average common equity	14.70		%	19.14		%	18.44		%	13.61		%	8.94		%	16.85		%	2.94		%
Return on average tangible common equity (1)	20.92		%	26.19		%	25.70		%	19.43		%	12.96		%	23.52		%	4.23		%
Yield on loans(2)	7.77		%	7.24		%	7.20		%	7.05		%	6.52		%	7.51		%	6.85		%
Cost of interest bearing deposits	0.31		%	0.41		%	0.54		%	0.79		%	1.08		%	0.36		%	1.21		%
Cost of total deposits	0.20		%	0.28		%	0.38		%	0.56		%	0.79		%	0.24		%	0.92		%
Cost of total funds	0.34		%	0.42		%	0.51		%	0.67		%	0.85		%	0.38		%	1.03		%
Net interest margin(2)	6.47		%	6.06		%	6.20		%	5.83		%	5.11		%	6.27		%	5.36		%
Net non-interest expense to average assets	3.75		%	3.14		%	2.54		%	3.23		%	2.40		%	3.45		%	3.09		%
Adjusted net non-interest expense to average assets (1)	3.55		%	3.14		%	2.54		%	3.17		%	3.11		%	3.35		%	3.47		%
Efficiency ratio	67.96		%	62.57		%	55.95		%	65.15		%	62.56		%	65.36		%	69.68		%
Adjusted efficiency ratio (1)	65.09		%	62.57		%	55.95		%	64.18		%	70.75		%	63.87		%	74.38		%

Asset Quality:(3)
Past due to total loans	2.28		%	1.96		%	3.22		%	2.40		%	1.50		%	2.28		%	1.50		%
Non-performing loans to total loans	1.06		%	1.17		%	1.16		%	1.17		%	1.27		%	1.06		%	1.27		%
Non-performing assets to total assets	0.97		%	1.15		%	1.15		%	1.52		%	1.20		%	0.97		%	1.20		%
ACL to non-performing loans	88.92		%	80.87		%	164.98		%	159.67		%	97.66		%	88.92		%	97.66		%
ACL to total loans	0.95		%	0.94		%	1.92		%	1.88		%	1.24		%	0.95		%	1.24		%
Net charge-offs to average loans	0.01		%	0.85		%	0.03		%	0.02		%	0.02		%	0.86		%	0.06		%

Capital:
Tier 1 capital to average assets(4)	9.73		%	10.89		%	10.80		%	10.75		%	9.98		%	9.73		%	9.98		%
Tier 1 capital to risk-weighted assets(4)	10.33		%	11.28		%	10.60		%	10.32		%	10.57		%	10.33		%	10.57		%
Common equity tier 1 capital to risk-weighted assets(4)	8.74		%	9.72		%	9.05		%	8.72		%	8.84		%	8.74		%	8.84		%
Total capital to risk-weighted assets	12.65		%	13.58		%	13.03		%	12.94		%	13.44		%	12.65		%	13.44		%
Total equity to total assets	13.17		%	12.53		%	12.24		%	11.89		%	11.69		%	13.17		%	11.69		%
Tangible common stockholders' equity to tangible assets(1)	8.04		%	8.98		%	8.56		%	8.09		%	7.84		%	8.04		%	7.84		%

Per Share Amounts:
Book value per share	$	29.76		$	28.90		$	27.42		$	26.11		$	25.28		$	29.76		$	25.28
Tangible book value per share (1)	$	18.35		$	21.34		$	19.78		$	18.38		$	17.59		$	18.35		$	17.59
Basic earnings (loss) per common share	$	1.10		$	1.34		$	1.27		$	0.89		$	0.56		$	2.44		$	0.37
Diluted earnings (loss) per common share	$	1.08		$	1.32		$	1.25		$	0.89		$	0.56		$	2.39		$	0.37
Adjusted diluted earnings per common share(1)	$	1.17		$	1.32		$	1.25		$	0.91		$	0.25		$	2.48		$	0.07
Shares outstanding end of period	25,109,703			24,882,929			24,868,218			24,851,601			24,202,686			25,109,703			24,202,686

Unaudited consolidated balance sheet as of:

(Dollars in thousands)	June 30,2021			March 31,2021			December 31,2020			September 30,2020			June 30,2020
ASSETS
Total cash and cash equivalents	$	444,439		$	380,811		$	314,393		$	288,278		$	437,064
Securities - available for sale	193,627			205,330			224,310			242,802			331,126
Securities - held to maturity, net	5,658			5,828			5,919			6,096			6,285
Equity securities	5,854			5,826			5,826			6,040			6,411
Loans held for sale	31,136			22,663			24,546			36,716			50,382
Loans held for investment	4,831,215			5,084,512			4,996,776			4,852,911			4,393,311
Allowance for credit losses	(45,694		)	(48,024		)	(95,739		)	(90,995		)	(54,613		)
Loans, net	4,785,521			5,036,488			4,901,037			4,761,916			4,338,698
FHLB and other restricted stock	8,096			9,807			6,751			18,464			26,345
Premises and equipment, net	106,720			105,390			103,404			105,455			107,736
Other real estate owned ("OREO"), net	1,013			1,421			1,432			1,704			1,962
Goodwill and intangible assets, net	286,567			188,006			189,922			192,041			186,162
Bank-owned life insurance	41,912			41,805			41,608			41,440			41,298
Deferred tax asset, net	—			1,260			6,427			7,716			8,544
Indemnification asset	5,246			5,246			36,225			31,218			—
Other assets	100,088			89,747			73,991			96,901			75,480
Total assets	$	6,015,877		$	6,099,628		$	5,935,791		$	5,836,787		$	5,617,493
LIABILITIES
Non-interest bearing deposits	$	1,803,552		$	1,637,653		$	1,352,785		$	1,315,900		$	1,120,949
Interest bearing deposits	2,921,898			3,152,012			3,363,815			2,932,201			2,941,383
Total deposits	4,725,450			4,789,665			4,716,600			4,248,101			4,062,332
Customer repurchase agreements	9,243			2,668			3,099			14,192			6,732
Federal Home Loan Bank advances	130,000			180,000			105,000			435,000			455,000
Payment Protection Program Liquidity Facility	139,673			158,796			191,860			223,713			223,809
Subordinated notes	87,620			87,564			87,509			87,455			87,402
Junior subordinated debentures	40,333			40,201			40,072			39,944			39,816
Deferred tax liability, net	3,333			—			—			—			—
Other liabilities	87,837			76,730			64,870			94,540			85,531
Total liabilities	5,223,489			5,335,624			5,209,010			5,142,945			4,960,622
EQUITY
Preferred Stock	45,000			45,000			45,000			45,000			45,000
Common stock	282			280			280			279			273
Additional paid-in-capital	494,224			490,699			489,151			488,094			472,795
Treasury stock, at cost	(104,486		)	(103,059		)	(103,052		)	(102,942		)	(102,888		)
Retained earnings	349,885			322,705			289,583			258,254			236,249
Accumulated other comprehensive income (loss)	7,483			8,379			5,819			5,157			5,442
Total stockholders' equity	792,388			764,004			726,781			693,842			656,871
Total liabilities and equity	$	6,015,877		$	6,099,628		$	5,935,791		$	5,836,787		$	5,617,493

Unaudited consolidated statement of income:

	For the Three Months Ended															For the Six Months Ended
(Dollars in thousands)	June 30,2021			March 31,2021			December 31,2020			September 30,2020			June 30,2020			June 30,2021			June 30,2020
Interest income:
Loans, including fees	$	45,988		$	48,706		$	50,723		$	48,774		$	50,394		$	94,694		$	98,717
Factored receivables, including fees	47,328			37,795			37,573			31,468			21,101			85,123			45,393
Securities	1,187			1,650			1,519			1,927			2,676			2,837			4,783
FHLB and other restricted stock	27			76			56			122			148			103			352
Cash deposits	158			126			68			73			79			284			567
Total interest income	94,688			88,353			89,939			82,364			74,398			183,041			149,812
Interest expense:
Deposits	2,470			3,372			4,308			5,834			7,584			5,842			17,261
Subordinated notes	1,350			1,349			1,347			1,348			1,321			2,699			2,668
Junior subordinated debentures	446			442			452			462			554			888			1,200
Other borrowings	140			170			234			341			688			310			1,932
Total interest expense	4,406			5,333			6,341			7,985			10,147			9,739			23,061
Net interest income	90,282			83,020			83,598			74,379			64,251			173,302			126,751
Credit loss expense (benefit)	(1,806		)	(7,845		)	4,680			(258		)	13,609			(9,651		)	33,907
Net interest income after credit loss expense (benefit)	92,088			90,865			78,918			74,637			50,642			182,953			92,844
Non-interest income:
Service charges on deposits	1,857			1,787			1,643			1,470			573			3,644			2,161
Card income	2,225			1,972			1,949			2,091			1,941			4,197			3,741
Net OREO gains (losses) and valuation adjustments	(287		)	(80		)	(217		)	(41		)	(101		)	(367		)	(358		)
Net gains (losses) on sale of securities	1			—			16			3,109			63			1			101
Fee income	4,470			2,249			1,615			1,402			1,304			6,719			2,990
Insurance commissions	1,272			1,486			1,327			990			864			2,758			1,915
Gain on sale of subsidiary	—			—			—			—			9,758			—			9,758
Other	4,358			6,877			16,053			1,472			5,627			11,235			7,198
Total non-interest income	13,896			14,291			22,386			10,493			20,029			28,187			27,506
Non-interest expense:
Salaries and employee benefits	41,658			35,980			33,798			31,651			30,804			77,638			61,526
Occupancy, furniture and equipment	6,112			5,779			7,046			5,574			4,964			11,891			10,146
FDIC insurance and other regulatory assessments	500			977			350			360			495			1,477			810
Professional fees	5,052			2,545			2,326			3,265			1,651			7,597			3,758
Amortization of intangible assets	2,428			1,975			2,065			2,141			2,046			4,403			4,124
Advertising and promotion	1,241			890			1,170			1,105			1,151			2,131			2,443
Communications and technology	6,028			5,900			5,639			5,569			5,444			11,928			10,945
Other	7,779			6,846			6,904			5,632			6,171			14,625			13,727
Total non-interest expense	70,798			60,892			59,298			55,297			52,726			131,690			107,479
Net income before income tax	35,186			44,264			42,006			29,833			17,945			79,450			12,871
Income tax expense	7,204			10,341			9,876			6,929			4,505			17,545			3,881
Net income	$	27,982		$	33,923		$	32,130		$	22,904		$	13,440		$	61,905		$	8,990
Dividends on preferred stock	(802		)	(801		)	(802		)	(899		)	—			(1,603		)	—
Net income available to common stockholders	$	27,180		$	33,122		$	31,328		$	22,005		$	13,440		$	60,302		$	8,990

Earnings per share:

	For the Three Months Ended										Six Months Ended June 30,
(Dollars in thousands)	June 30,2021		March 31,2021		December 31,2020		September 30,2020		June 30,2020		June 30,2021		June 30,2020
Basic
Net income to common stockholders	$	27,180	$	33,122	$	31,328	$	22,005	$	13,440	$	60,302	$	8,990
Weighted average common shares outstanding	24,724,128		24,675,109		24,653,099		24,592,092		23,987,049		24,699,754		24,150,689
Basic earnings per common share	$	1.10	$	1.34	$	1.27	$	0.89	$	0.56	$	2.44	$	0.37

Diluted
Net income to common stockholders - diluted	$	27,180	$	33,122	$	31,328	$	22,005	$	13,440	$	60,302	$	8,990
Weighted average common shares outstanding	24,724,128		24,675,109		24,653,099		24,592,092		23,987,049		24,699,754		24,150,689
Dilutive effects of:
Assumed exercises of stock options	134,358		130,016		101,664		48,102		38,627		133,219		55,753
Restricted stock awards	139,345		169,514		136,239		67,907		37,751		156,029		66,364
Restricted stock units	73,155		66,714		50,156		18,192		4,689		70,236		13,255
Performance stock units - market based	134,313		128,167		112,228		76,095		6,326		131,240		8,446
Performance stock units - performance based	—		—		—		—		—		—		—
Employee stock purchase plan	3,708		1,418		—		—		—		2,563		—
Weighted average shares outstanding - diluted	25,209,007		25,170,938		25,053,386		24,802,388		24,074,442		25,193,041		24,294,507
Diluted earnings per common share	$	1.08	$	1.32	$	1.25	$	0.89	$	0.56	$	2.39	$	0.37

Shares that were not considered in computing diluted earnings per common share because they were antidilutive are as follows:

	For the Three Months Ended					Six Months Ended June 30,
	June 30,2021	March 31,2021	December 31,2020	September 30,2020	June 30,2020	June 30,2021	June 30,2020
Stock options	16,939	—	—	98,513	148,528	16,939	98,956
Restricted stock awards	—	—	—	—	109,834	209,040	—
Restricted stock units	—	—	—	—	38,801	17,757	—
Performance stock units - market based	13,520	—	—	—	76,461	13,520	76,461
Performance stock units - performance based	265,625	256,625	256,625	261,125	262,625	265,625	262,625
Employee stock purchase plan	—	—	—	—	—	—	—

Loans held for investment summarized as of:

(Dollars in thousands)	June 30,2021		March 31,2021		December 31,2020		September 30,2020		June 30,2020
Commercial real estate	$	701,576	$	784,110	$	779,158	$	762,531	$	910,261
Construction, land development, land	185,444		223,841		219,647		244,512		213,617
1-4 family residential properties	135,288		142,859		157,147		164,785		168,707
Farmland	91,122		97,835		103,685		110,966		125,259
Commercial	1,453,583		1,581,125		1,562,957		1,536,903		1,518,656
Factored receivables	1,398,299		1,208,718		1,120,770		1,016,337		561,576
Consumer	12,389		14,332		15,838		17,106		18,450
Mortgage warehouse	853,514		1,031,692		1,037,574		999,771		876,785
Total loans	$	4,831,215	$	5,084,512	$	4,996,776	$	4,852,911	$	4,393,311

Our banking loan portfolio consists of traditional community bank loans as well as commercial finance product lines focused on businesses that require specialized financial solutions and national lending product lines that further diversify our lending operations.

Banking loans held for investment are further summarized below:

(Dollars in thousands)	June 30,2021		March 31,2021		December 31,2020		September 30,2020		June 30,2020
Commercial real estate	$	701,576	$	784,110	$	779,158	$	762,531	$	910,261
Construction, land development, land	185,444		223,841		219,647		244,512		213,617
1-4 family residential	135,288		142,859		157,147		164,785		168,707
Farmland	91,122		97,835		103,685		110,966		125,259
Commercial - General	290,562		288,458		340,850		342,858		333,793
Commercial - Paycheck Protection Program	135,307		237,299		189,857		223,230		219,122
Commercial - Agriculture	76,346		83,859		94,572		112,221		110,243
Commercial - Equipment	604,396		623,248		573,163		509,849		487,145
Commercial - Asset-based lending	181,394		188,825		180,488		160,711		176,235
Commercial - Liquid Credit	165,578		159,436		184,027		188,034		192,118
Consumer	12,389		14,332		15,838		17,106		18,450
Mortgage Warehouse	853,514		1,031,692		1,037,574		999,771		876,785
Total banking loans held for investment	$	3,432,916	$	3,875,794	$	3,876,006	$	3,836,574	$	3,831,735

The following table presents the Company’s operating segments:

(Dollars in thousands)
Three months ended June 30, 2021	Banking			Factoring			Payments			Corporate			Consolidated
Total interest income	$	47,356		$	44,653		$	2,675		$	4		$	94,688
Intersegment interest allocations	2,723			(2,584		)	(139		)	—			—
Total interest expense	2,610			—			—			1,796			4,406
Net interest income (expense)	47,469			42,069			2,536			(1,792		)	90,282
Credit loss expense (benefit)	(4,335		)	2,444			218			(133		)	(1,806		)
Net interest income after credit loss expense	51,804			39,625			2,318			(1,659		)	92,088
Noninterest income	10,018			2,742			1,083			53			13,896
Noninterest expense	41,860			17,174			10,842			922			70,798
Operating income (loss)	$	19,962		$	25,193		$	(7,441	)	$	(2,528	)	$	35,186

(Dollars in thousands)
Three months ended March 31, 2021	Banking			Factoring			Payments			Corporate			Consolidated
Total interest income	$	50,556		$	35,824		$	1,969		$	4		$	88,353
Intersegment interest allocations	2,942			(2,775		)	(167		)	—			—
Total interest expense	3,542			—			—			1,791			5,333
Net interest income (expense)	49,956			33,049			1,802			(1,787		)	83,020
Credit loss expense (benefit)	(12,453		)	4,483			292			(167		)	(7,845		)
Net interest income after credit loss expense	62,409			28,566			1,510			(1,620		)	90,865
Noninterest income	7,750			6,411			73			57			14,291
Noninterest expense	39,454			16,153			4,135			1,150			60,892
Operating income (loss)	$	30,705		$	18,824		$	(2,552	)	$	(2,713	)	$	44,264

Information pertaining to our factoring segment, which includes only factoring originated by our Triumph Business Capital subsidiary, summarized as of and for the quarters ended:

	June 30,2021			March 31,2021			December 31,2020			September 30,2020			June 30,2020
Factored receivable period end balance	$	1,284,314,000		$	1,118,988,000		$	1,036,548,000		$	953,434,000		$	531,933,000
Yield on average receivable balance	14.99		%	13.85		%	13.80		%	15.59		%	15.34		%
Current quarter charge-off rate(1)	0.04		%	3.95		%	0.02		%	0.09		%	0.16		%
Factored receivables - transportation concentration	91		%	90		%	89		%	88		%	85		%

Interest income, including fees	$	44,653,000		$	35,824,000		$	35,439,000		$	30,068,000		$	20,387,000
Non-interest income(2)	2,742,000			1,757,000			1,358,000			1,157,000			1,072,000
Factored receivable total revenue	47,395,000			37,581,000			36,797,000			31,225,000			21,459,000
Average net funds employed	1,072,405,000			936,528,000			924,899,000			694,170,000			477,112,000
Yield on average net funds employed	17.73		%	16.27		%	15.83		%	17.89		%	18.09		%

Accounts receivable purchased	$	3,068,262,000		$	2,492,468,000		$	2,461,249,000		$	1,984,490,000		$	1,238,465,000
Number of invoices purchased	1,401,695			1,188,678			1,189,271			1,027,839			812,902
Average invoice size	$	2,189		$	2,097		$	2,070		$	1,931		$	1,524
Average invoice size - transportation	$	2,090		$	1,974		$	1,943		$	1,787		$	1,378
Average invoice size - non-transportation	$	4,701		$	4,775		$	5,091		$	5,181		$	4,486

(1)	March 31, 2021 includes a $41.3 million charge-off related to the TFS acquisition, which contributed approximately 3.94% to the net charge-off rate for the quarter.

(2)	Total factoring segment non-interest income was $6.4 million, $15.5 million, and $3.2 million for the three months ended March 31, 2021, December 31, 2020 and September 30, 2020.March 31, 2021 non-interest income used to calculate yield on average net funds employed excludes a $4.7 million gain on our indemnification asset.December 31, 2020 non-interest income used to calculate yield on average net funds employed excludes a gain of $8.9 million related to CVLG’s delivery of proceeds resulting from the liquidation of its acquired stock and a $5.3 million gain on our indemnification asset. September 30, 2020 non-interest income used to calculate yield on average net funds employed excludes a $2.0 million gain recognized on the increased value of the receivable due from CVLG resulting from the amended TFS acquisition agreement.

Information pertaining to our payments segment, which includes only our TriumphPay division, summarized as of and for the quarters ended:

	June 30,2021			March 31,2021			December 31,2020			September 30,2020			June 30,2020
Factored receivable period end balance	$	113,985,000		$	89,730,000		$	84,222,000		$	62,903,000		$	29,643,000

Interest income	$	2,675,000		$	1,969,000		$	2,034,000		$	1,361,000		$	692,000
Noninterest income	1,083,000			73,000			51,000			47,000			12,000
Total revenue	$	3,758,000		$	2,042,000		$	2,085,000		$	1,408,000		$	704,000

Pre-tax operating income (loss)	$	(7,441,000	)	$	(2,552,000	)	$	(2,026,000	)	$	(1,936,000	)	$	(2,823,000	)
Interest expense	139,000			167,000			178,000			147,000			88,000
Depreciation and software amortization expense	68,000			65,000			63,000			63,000			63,000
Intangible amortization expense	497,000			—			—			—			—
Earnings (losses) before interest, taxes, depreciation, and amortization	$	(6,737,000	)	$	(2,320,000	)	$	(1,785,000	)	$	(1,726,000	)	$	(2,672,000	)
Transaction costs	2,992,000			—			—			—			—
Adjusted earnings (losses) before interest, taxes, depreciation, and amortization(1)	$	(3,745,000	)	$	(2,320,000	)	$	(1,785,000	)	$	(1,726,000	)	$	(2,672,000	)

Number of invoices processed	3,165,119			2,529,673			1,818,145			1,408,232			767,180
Amount of payments processed	$	3,426,808,000		$	2,301,632,000		$	1,920,037,000		$	1,221,305,000		$	667,354,000

(1)

Adjusted earnings (losses) before interest, taxes, depreciation, and amortization excludes material gains and expenses related to merger and acquisition-related activities and is a non-GAAP financial measure used to provide meaningful supplemental information regarding the segment's operational performance and to enhance investors' overall understanding of such financial performance by removing the volatility associated with certain acquisition-related items that are unrelated to our core business.

Deposits summarized as of:

(Dollars in thousands)	June 30,2021		March 31,2021		December 31,2020		September 30,2020		June 30,2020
Non-interest bearing demand	$	1,803,552	$	1,637,653	$	1,352,785	$	1,315,900	$	1,120,949
Interest bearing demand	760,874		729,364		688,680		634,272		648,309
Individual retirement accounts	87,052		89,748		92,584		94,933		97,388
Money market	395,035		402,070		393,325		384,476		397,914
Savings	474,163		464,035		421,488		405,954		391,624
Certificates of deposit	612,730		740,694		790,844		857,514		937,766
Brokered time deposits	306,975		516,006		516,786		344,986		258,378
Other brokered deposits	285,069		210,095		460,108		210,066		210,004
Total deposits	$	4,725,450	$	4,789,665	$	4,716,600	$	4,248,101	$	4,062,332

Net interest margin summarized for the three months ended:

	June 30, 2021						March 31, 2021
(Dollars in thousands)	AverageBalance		Interest		AverageRate		AverageBalance		Interest		AverageRate
Interest earning assets:
Interest earning cash balances	$	572,485	$	158	0.11	%	$	478,275	$	126	0.11	%
Taxable securities	165,786		967		2.34	%	189,407		1,428		3.06	%
Tax-exempt securities	33,451		220		2.64	%	34,717		222		2.59	%
FHLB and other restricted stock	9,518		27		1.14	%	8,511		76		3.62	%
Loans	4,814,050		93,316		7.77	%	4,848,275		86,501		7.24	%
Total interest earning assets	$	5,595,290	$	94,688	6.79	%	$	5,559,185	$	88,353	6.45	%
Non-interest earning assets:
Other assets	498,515						454,483
Total assets	$	6,093,805					$	6,013,668
Interest bearing liabilities:
Deposits:
Interest bearing demand	$	757,529	$	469	0.25	%	$	701,759	$	384	0.22	%
Individual retirement accounts	88,142		143		0.65	%	91,074		186		0.83	%
Money market	398,290		216		0.22	%	398,015		229		0.23	%
Savings	468,517		178		0.15	%	446,322		167		0.15	%
Certificates of deposit	664,478		1,157		0.70	%	765,244		1,955		1.04	%
Brokered time deposits	138,102		51		0.15	%	167,881		179		0.43	%
Other brokered deposits	685,397		256		0.15	%	803,009		272		0.14	%
Total interest bearing deposits	3,200,455		2,470		0.31	%	3,373,304		3,372		0.41	%
Federal Home Loan Bank advances	39,341		22		0.22	%	35,833		24		0.27	%
Subordinated notes	87,590		1,350		6.18	%	87,532		1,349		6.25	%
Junior subordinated debentures	40,251		446		4.44	%	40,125		442		4.47	%
Other borrowings	138,649		118		0.34	%	171,902		146		0.34	%
Total interest bearing liabilities	$	3,506,286	$	4,406	0.50	%	$	3,708,696	$	5,333	0.58	%
Non-interest bearing liabilities and equity:
Non-interest bearing demand deposits	1,749,858						1,494,001
Other liabilities	51,257						64,122
Total equity	786,404						746,849
Total liabilities and equity	$	6,093,805					$	6,013,668
Net interest income			$	90,282					$	83,020
Interest spread					6.29	%					5.87	%
Net interest margin					6.47	%					6.06	%

Loan balance totals include respective nonaccrual assets.Net interest spread is the yield on average interest earning assets less the rate on interest bearing liabilities.Net interest margin is the ratio of net interest income to average interest earning assets.Average rates have been annualized.

Additional information pertaining to our loan portfolio, including loans held for investment and loans held for sale, summarized for the quarters ended:

(Dollars in thousands)	June 30,2021			March 31,2021			December 31,2020			September 30,2020			June 30,2020
Average Banking loans	$	3,516,747		$	3,722,895		$	3,777,553		$	3,707,293		$	3,846,994
Average Factoring receivables	1,195,209			1,048,968			1,024,307			768,087			534,943
Average Payments receivables	102,094			76,412			74,947			50,683			27,738
Average total loans	$	4,814,050		$	4,848,275		$	4,876,807		$	4,526,063		$	4,409,675
Banking yield	5.25		%	5.31		%	5.34		%	5.23		%	5.27		%
Factoring yield	14.99		%	13.85		%	13.80		%	15.59		%	15.34		%
Payments Yield	10.51		%	10.45		%	10.80		%	10.68		%	10.03		%
Total loan yield	7.77		%	7.24		%	7.20		%	7.05		%	6.52		%

Metrics and non-GAAP financial reconciliation:

	As of and for the Three Months Ended																				As of and for the Six Months Ended
(Dollars in thousands,except per share amounts)	June 30,2021				March 31,2021				December 31,2020				September 30,2020				June 30,2020				June 30,2021				June 30,2020
Net income available to common stockholders	$	27,180			$	33,122			$	31,328			$	22,005			$	13,440			$	60,302			$	8,990
Transaction costs	2,992				—				—				827				—				2,992				—
Gain on sale of subsidiary or division	—				—				—				—				(9,758		)		—				(9,758		)
Tax effect of adjustments	(715		)		—				—				(197		)		2,451				(715		)		2,451
Adjusted net income available to common stockholders - diluted	$	29,457			$	33,122			$	31,328			$	22,635			$	6,133			$	62,579			$	1,683

Weighted average shares outstanding - diluted	25,209,007				25,170,938				25,053,386				24,802,388				24,074,442				25,193,041				24,294,507
Adjusted diluted earnings per common share	$	1.17			$	1.32			$	1.25			$	0.91			$	0.25			$	2.48			$	0.07

Average total stockholders' equity	$	786,404			$	746,849			$	720,892			$	688,327			$	610,258			$	766,736			$	618,808
Average preferred stock liquidation preference	(45,000		)		(45,000		)		(45,000		)		(45,000		)		(5,934		)		(45,000		)		(2,967		)
Average total common stockholders' equity	741,404				701,849				675,892				643,327				604,324				721,736				615,841
Average goodwill and other intangibles	(220,310		)		(188,980		)		(191,017		)		(192,682		)		(187,255		)		(204,732		)		(188,307		)
Average tangible common stockholders' equity	$	521,094			$	512,869			$	484,875			$	450,645			$	417,069			$	517,004			$	427,534

Net income available to common stockholders	$	27,180			$	33,122			$	31,328			$	22,005			$	13,440			$	60,302			$	8,990
Average tangible common equity	521,094				512,869				484,875				450,645				417,069				517,004				427,534
Return on average tangible common equity	20.92			%	26.19			%	25.70			%	19.43			%	12.96			%	23.52			%	4.23			%

Net interest income	$	90,282			$	83,020			$	83,598			$	74,379			$	64,251			$	173,302			$	126,751
Non-interest income	13,896				14,291				22,386				10,493				20,029				28,187				27,506
Operating revenue	104,178				97,311				105,984				84,872				84,280				201,489				154,257
Gain on sale of subsidiary or division	—				—				—				—				(9,758		)		—				(9,758		)
Adjusted operating revenue	$	104,178			$	97,311			$	105,984			$	84,872			$	74,522			$	201,489			$	144,499
Non-interest expenses	$	70,798			$	60,892			$	59,298			$	55,297			$	52,726			$	131,690			$	107,479
Transaction costs	(2,992		)		—				—				(827		)		—				(2,992		)		—
Adjusted non-interest expenses	$	67,806			$	60,892			$	59,298			$	54,470			$	52,726			$	128,698			$	107,479
Adjusted efficiency ratio	65.09			%	62.57			%	55.95			%	64.18			%	70.75			%	63.87			%	74.38			%

Adjusted net non-interest expense to average assets ratio:
Non-interest expenses	$	70,798			$	60,892			$	59,298			$	55,297			$	52,726			$	131,690			$	107,479
Transaction costs	(2,992		)		—				—				(827		)		—				(2,992		)		—
Adjusted non-interest expenses	$	67,806			$	60,892			$	59,298			$	54,470			$	52,726			$	128,698			$	107,479
Total non-interest income	$	13,896			$	14,291			$	22,386			$	10,493			$	20,029			$	28,187			$	27,506
Gain on sale of subsidiary or division	—				—				—				—				(9,758		)		—				(9,758		)
Adjusted non-interest income	$	13,896			$	14,291			$	22,386			$	10,493			$	10,271			$	28,187			$	17,748
Adjusted net non-interest expenses	$	53,910			$	46,601			$	36,912			$	43,977			$	42,455			$	100,511			$	89,731
Average total assets	$	6,093,805			$	6,013,668			$	5,788,549			$	5,518,708			$	5,487,072			$	6,053,826			$	5,196,815
Adjusted net non-interest expense to average assets ratio	3.55			%	3.14			%	2.54			%	3.17			%	3.11			%	3.35			%	3.47			%

Total stockholders' equity	$	792,388			$	764,004			$	726,781			$	693,842			$	656,871			$	792,388			$	656,871
Preferred stock liquidation preference	(45,000		)		(45,000		)		(45,000		)		(45,000		)		(45,000		)		(45,000		)		(45,000		)
Total common stockholders' equity	747,388				719,004				681,781				648,842				611,871				747,388				611,871
Goodwill and other intangibles	(286,567		)		(188,006		)		(189,922		)		(192,041		)		(186,162		)		(286,567		)		(186,162		)
Tangible common stockholders' equity	$	460,821			$	530,998			$	491,859			$	456,801			$	425,709			$	460,821			$	425,709
Common shares outstanding	25,109,703				24,882,929				24,868,218				24,851,601				24,202,686				25,109,703				24,202,686
Tangible book value per share	$	18.35			$	21.34			$	19.78			$	18.38			$	17.59			$	18.35			$	17.59

Total assets at end of period	$	6,015,877			$	6,099,628			$	5,935,791			$	5,836,787			$	5,617,493			$	6,015,877			$	5,617,493
Goodwill and other intangibles	(286,567		)		(188,006		)		(189,922		)		(192,041		)		(186,162		)		(286,567		)		(186,162		)
Tangible assets at period end	$	5,729,310			$	5,911,622			$	5,745,869			$	5,644,746			$	5,431,331			$	5,729,310			$	5,431,331
Tangible common stockholders' equity ratio	8.04			%	8.98			%	8.56			%	8.09			%	7.84			%	8.04			%	7.84			%

1) Triumph uses certain non-GAAP financial measures to provide meaningful supplemental information regarding Triumph's operational performance and to enhance investors' overall understanding of such financial performance. The non-GAAP measures used by Triumph include the following:

“Adjusted diluted earnings per common share” is defined as adjusted net income available to common stockholders divided by adjusted weighted average diluted common shares outstanding. Excluded from net income available to common stockholders are material gains and expenses related to merger and acquisition-related activities, including divestitures, net of tax. In our judgment, the adjustments made to net income available to common stockholders allow management and investors to better assess our performance in relation to our core net income by removing the volatility associated with certain acquisition-related items and other discrete items that are unrelated to our core business. Weighted average diluted common shares outstanding are adjusted as a result of changes in their dilutive properties given the gain and expense adjustments described herein.
"Tangible common stockholders' equity" is 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.
"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.

2) Performance ratios include discount accretion on purchased loans for the periods presented as follows:

	For the Three Months Ended										For the Six Months Ended
(Dollars in thousands)	June 30,2021		March 31,2021		December 31,2020		September 30,2020		June 30,2020		June 30,2021		June 30,2020
Loan discount accretion	$	2,161	$	3,501	$	2,334	$	4,104	$	2,139	$	5,662	$	4,273