Triumph Bancorp Reports Second Quarter Net Income to Common Stockholders of $12.2 Million

DALLAS, July 18, 2018 (GLOBE NEWSWIRE) -- Triumph Bancorp, Inc. (Nasdaq:TBK) (“Triumph”) today announced earnings and operating results for the second quarter of 2018.

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.

2018 Second Quarter Highlights and Recent Developments

• For the second quarter of 2018, net income available to common stockholders was $12.2 million. Diluted earnings per share were $0.47. 
  
  
• Adjusted diluted earnings per share were $0.50 for the quarter ended June 30, 2018, which exclude $1.1 million of transaction costs, $0.8 million net of tax, related to our acquisition of Interstate Capital Corporation (“ICC”).
  
  
• On June 2, 2018 we acquired substantially all of the operating assets of, and assumed certain liabilities associated with, ICC’s accounts receivable factoring business for total consideration of $180.3 million, which was comprised of $160.3 million in cash and contingent consideration with an initial fair value of $20.0 million. As part of the ICC acquisition, we acquired $131.0 million of factored receivables and recorded $13.9 million of intangible assets and $43.0 million of goodwill.
  
  
• We completed a public offering of 5.4 million shares of our common stock on April 12, 2018. Our net proceeds from the offering were approximately $192.1 million after deducting the underwriting discount and offering expenses. We used the proceeds of this offering to fund the acquisition of ICC and we intend to use the remaining net proceeds of this offering to fund a portion of the consideration payable in the pending acquisitions of First Bancorp of Durango, Inc. and Southern Colorado Corp., and for general corporate purposes.
  
  
• Acquired ICC factored receivables were brought over in purchase accounting without an allowance. Given the short term nature of factored receivables, ICC contributed $1.8 million in provision for loan loss during the quarter to provide for turnover of the receivables subsequent to acquisition as well as portfolio growth. Turnover of the acquired receivables also resulted in the recognition of $1.6 million of discount accretion into interest income over the same period.
  
  
• Net interest margin (“NIM”) was 6.36% for the quarter ended June 30, 2018. Adjusted NIM, which excludes loan discount accretion, was 5.92%.
  
  
• Total loans held for investment increased $322.5 million, or 11.2%, to $3.196 billion at June 30, 2018. Average loans for the quarter increased $155.2 million, or 5.6%, to $2.922 billion.
  
  
• Triumph Business Capital grew period-end clients to 5,584 clients which is an increase of 2,146 clients, or 62.4%. Excluding the 1,714 clients added as a result of the ICC acquisition, Triumph Business Capital added 432 clients organically; an increase of 12.6%. The total dollar value of invoices purchased for the quarter ended June 30, 2018 was $1.163 billion with an average invoice price of $1,771. 
  
  
• At June 30, 2018, Triumph Business Capital had 76 clients utilizing the TriumphPay platform. For the quarter ended June 30, 2018, TriumphPay processed 45,373 invoices paying 12,561 distinct carriers a total of $62.7 million.
  
  
• On April 9, 2018 we entered into agreements to acquire First Bancorp of Durango, Inc. and Southern Colorado Corp. for aggregate cash consideration of approximately $147.5 million.  At December 31, 2017, First Bancorp of Durango, Inc. and Southern Colorado Corp. had a combined $734 million in assets, including $308 million in loans, and $653 million in deposits.

Balance Sheet

Total loans held for investment were $3.196 billion at June 30, 2018. Our commercial finance loans, which comprise 38% of the loan portfolio, were $1.207 billion at June 30, 2018, compared to $0.937 billion at March 31, 2018, an increase of $270.4 million, or 28.9% in the second quarter of 2018. The increase in commercial finance loans includes the impact of the ICC acquisition which has allowed us to increase the size and scope of our factored receivables operations.

Total deposits were $2.625 billion at June 30, 2018, an increase of $91.4 million or 3.6% in the second quarter of 2018.  Non-interest-bearing deposits accounted for 21% of total deposits and non-time deposits accounted for 54% of total deposits at June 30, 2018. 

Net Interest Income

We earned net interest income for the quarter ended June 30, 2018 of $53.3 million compared to $47.1 million for the quarter ended March 31, 2018. As a result of the ICC acquisition, we accreted $1.6 million into interest income during the quarter ended June 30, 2018.

Yields on loans for the quarter ended June 30, 2018 were up 44 bps from the prior quarter to 8.09% (up 23 bps from the prior quarter to 7.59% adjusted to exclude loan discount accretion). The average cost of our total deposits was 0.73% for the quarter ended June 30, 2018 compared to 0.68% for the quarter ended March 31, 2018, on an annualized basis. 

Asset Quality

Non-performing assets decreased 19 bps from March 31, 2018 to 1.28% of total assets at June 30, 2018.  The ratio of past due to total loans increased to 2.54% at June 30, 2018 from 2.41% at March 31, 2018. We recorded total net charge-offs of $0.4 million, or 0.01% of average loans, for the quarter ended June 30, 2018 compared to net charge-offs of $1.3 million, or 0.05% of average loans, for the quarter ended March 31, 2018. 

We recorded a provision for loan losses of $4.9 million for the quarter ended June 30, 2018 compared to a provision of $2.5 million for the quarter ended March 31, 2018. Acquired ICC factored receivables were brought over in purchase accounting without an allowance. Given the short term nature of factored receivables, ICC contributed $1.8 million in provision for loan loss during the quarter to provide for turnover of the receivables subsequent to acquisition as well as portfolio growth. From March 31, 2018 to June 30, 2018, our ALLL increased from $20.0 million or 0.70% of total loans to $24.5 million or 0.77% of total loans. 

Non-interest Income and Expense

We earned non-interest income for the quarter ended June 30, 2018 of $4.9 million compared to $5.2 million for the quarter ended March 31, 2018. Non-interest income for the quarter ended March 31, 2018 included a gain on sale of THF of $1.1 million.

For the quarter ended June 30, 2018, non-interest expense totaled $37.4 million, compared to $34.0 million for the quarter ended March 31, 2018. Non-interest expense for the quarter ended June 30, 2018 included transaction costs related to the ICC acquisition of $1.1 million.

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, July 19, 2018. Dan Karas, Chief Lending Officer, will also be available for questions.

To participate in the live conference call, please dial 1-855-940-9472 (Canada: 1-855-669-9657) and request to be joined into the Triumph Bancorp, Inc. (TBK) call.  A simultaneous audio-only webcast may be accessed via the Company's website at www.triumphbancorp.com through the Investor Relations, News & Events, Webcasts and Presentations links, or through a direct link here at: https://services.choruscall.com/links/tbk180719.html.  An archive of this conference call will subsequently be available at this same location on the Company’s website.  

About Triumph

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

Forward-Looking Statements

This press release contains forward-looking statements. Any statements about our expectations, beliefs, plans, predictions, forecasts, objectives, assumptions or future events or performance are not historical facts and may be forward-looking. You can identify forward-looking statements by the use of forward-looking terminology such as “believes,” “expects,” “could,” “may,” “will,” “should,” “seeks,” “likely,” “intends,” “plans,” “pro forma,” “projects,” “estimates” or “anticipates” or the negative of these words and phrases or similar words or phrases that are predictions of or indicate future events or trends and that do not relate solely to historical matters. You can also identify forward-looking statements by discussions of strategy, plans or intentions. Forward-looking statements involve numerous risks and uncertainties and you should not rely on them as predictions of future events. Forward-looking statements depend on assumptions, data or methods that may be incorrect or imprecise and we may not be able to realize them. We do not guarantee that the transactions and events described will happen as described (or that they will happen at all). The following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements: risks relating to our ability to consummate the pending acquisitions of First Bancorp of Durango, Inc. and Southern Colorado Corp., including the possibility that the expected benefits related to the pending acquisitions may not materialize as expected; of the pending acquisitions not being timely completed, if completed at all; that prior to the completion of the pending acquisitions, the targets’ businesses could experience disruptions due to transaction-related uncertainty or other factors making it more difficult to maintain relationships with employees, customers, other business partners or governmental entities, difficulty retaining key employees; and of the parties’ being unable to successfully implement integration strategies or to achieve expected synergies and operating efficiencies within our management’s expected timeframes or at all; business and economic conditions generally and in the bank and non-bank financial services industries, nationally and within our local market areas; 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 pending acquisitions of First Bancorp of Durango, Inc. and Southern Colorado Corp., and our prior acquisitions of the operating assets of Interstate Capital Corporation and certain of its affiliates, Valley Bancorp, Inc., and nine branches from Independent Bank in Colorado) 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 nonperforming 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 (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; 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 13, 2018.

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 Six Months Ended
		June 30,				March 31,				December 31,				September 30,				June 30,				June 30,				June 30,
(Dollars in thousands)		2018				2018				2017				2017				2017				2018				2017
Financial Highlights:
Total assets		$	3,794,631			$	3,405,010			$	3,499,033			$	2,906,161			$	2,836,684			$	3,794,631			$	2,836,684
Loans held for investment		$	3,196,462			$	2,873,985			$	2,810,856			$	2,425,463			$	2,295,100			$	3,196,462			$	2,295,100
Deposits		$	2,624,942			$	2,533,498			$	2,621,348			$	2,012,545			$	2,072,181			$	2,624,942			$	2,072,181
Net income available to common stockholders		$	12,192			$	11,878			$	6,111			$	9,587			$	9,467			$	24,070			$	19,748
Performance Ratios - Annualized:
Return on average assets			1.37	%			1.43	%			0.79	%			1.36	%			1.42	%			1.40	%			1.52	%
Return on average total equity			8.53	%			12.20	%			6.35	%			10.71	%			12.60	%			10.01	%			13.49	%
Return on average common equity			8.54	%			12.30	%			6.30	%			10.79	%			12.75	%			10.05	%			13.67	%
Return on average tangible common equity (1)			9.95	%			14.75	%			7.33	%			12.28	%			14.94	%			11.85	%			16.17	%
Yield on loans			8.09	%			7.65	%			7.73	%			7.44	%			7.79	%			7.88	%			7.49	%
Adjusted yield on loans (1)			7.59	%			7.36	%			7.47	%			7.20	%			7.25	%			7.48	%			7.10	%
Cost of interest bearing deposits			0.93	%			0.86	%			0.84	%			0.80	%			0.74	%			0.89	%			0.73	%
Cost of total deposits			0.73	%			0.68	%			0.67	%			0.64	%			0.60	%			0.70	%			0.59	%
Cost of total funds			1.06	%			0.95	%			0.92	%			0.90	%			0.83	%			1.00	%			0.81	%
Net interest margin			6.36	%			6.06	%			6.16	%			5.90	%			6.16	%			6.21	%			5.78	%
Adjusted net interest margin (1)			5.92	%			5.81	%			5.93	%			5.69	%			5.70	%			5.87	%			5.45	%
Net non-interest expense to average assets			3.59	%			3.43	%			3.65	%			3.35	%			3.26	%			3.51	%			2.24	%
Adjusted net non-interest expense to average assets (1)			3.47	%			3.56	%			3.43	%			3.35	%			3.26	%			3.51	%			3.43	%
Efficiency ratio			64.26	%			65.09	%			66.74	%			64.61	%			62.44	%			64.65	%			60.43	%
Adjusted efficiency ratio (1)			62.38	%			66.45	%			63.35	%			64.61	%			62.44	%			64.29	%			69.53	%
Asset Quality:(2)
Past due to total loans			2.54	%			2.41	%			2.33	%			2.22	%			2.51	%			2.54	%			2.51	%
Non-performing loans to total loans			1.43	%			1.41	%			1.38	%			1.25	%			1.36	%			1.43	%			1.36	%
Non-performing assets to total assets			1.28	%			1.47	%			1.39	%			1.42	%			1.50	%			1.28	%			1.50	%
ALLL to non-performing loans			53.57	%			49.52	%			48.41	%			67.33	%			63.56	%			53.57	%			63.56	%
ALLL to total loans			0.77	%			0.70	%			0.67	%			0.84	%			0.86	%			0.77	%			0.86	%
Net charge-offs to average loans			0.01	%			0.05	%			0.06	%			0.00	%			0.03	%			0.06	%			0.23	%
Capital:
Tier 1 capital to average assets(3)			15.00	%			11.23	%			11.80	%			13.50	%			11.28	%			15.00	%			11.28	%
Tier 1 capital to risk-weighted assets(3)			14.69	%			11.54	%			11.15	%			13.45	%			11.30	%			14.69	%			11.30	%
Common equity tier 1 capital to risk-weighted assets(3)			13.33	%			10.05	%			9.70	%			11.95	%			9.73	%			13.33	%			9.73	%
Total capital to risk-weighted assets(3)			16.75	%			13.66	%			13.21	%			15.91	%			13.87	%			16.75	%			13.87	%
Total equity to total assets			16.00	%			11.83	%			11.19	%			13.29	%			10.94	%			16.00	%			10.94	%
Tangible common stockholders' equity to tangible assets(1)			13.05	%			9.86	%			9.26	%			11.66	%			9.22	%			13.05	%			9.22	%
Per Share Amounts:
Book value per share		$	22.76			$	18.89			$	18.35			$	18.08			$	16.59			$	22.76			$	16.59
Tangible book value per share (1)		$	18.27			$	15.82			$	15.29			$	16.04			$	14.20			$	18.27			$	14.20
Basic earnings per common share		$	0.48			$	0.57			$	0.29			$	0.48			$	0.53			$	1.04			$	1.10
Diluted earnings per common share		$	0.47			$	0.56			$	0.29			$	0.47			$	0.51			$	1.02			$	1.07
Adjusted diluted earnings per common share(1)		$	0.50			$	0.52			$	0.34			$	0.47			$	0.51			$	1.02			$	0.54
Shares outstanding end of period			26,260,785				20,824,509				20,820,445				20,820,900				18,132,585				26,260,785				18,132,585

Unaudited consolidated balance sheet as of:

		June 30,				March 31,				December 31,				September 30,				June 30,
(Dollars in thousands)		2018				2018				2017				2017				2017
ASSETS
Total cash and cash equivalents		$	133,365			$	106,046			$	134,129			$	80,557			$	117,502
Securities - available for sale			183,184				192,916				250,603				207,301				225,183
Securities - held to maturity			8,673				8,614				8,557				17,999				26,036
Equity securities			5,025				4,925				5,006				2,025				2,023
Loans held for investment			3,196,462				2,873,985				2,810,856				2,425,463				2,295,100
Allowance for loan and lease losses			(24,547	)			(20,022	)			(18,748	)			(20,367	)			(19,797	)
Loans, net			3,171,915				2,853,963				2,792,108				2,405,096				2,275,303
Assets held for sale			—				—				71,362				—				—
FHLB stock			19,223				16,508				16,006				16,076				14,566
Premises and equipment, net			68,313				62,826				62,861				43,678				43,957
Other real estate owned ("OREO"), net			2,528				9,186				9,191				10,753				10,740
Goodwill and intangible assets, net			117,777				63,923				63,778				42,452				43,321
Bank-owned life insurance			40,168				44,534				44,364				37,025				36,852
Deferred tax asset, net			8,810				8,849				8,959				14,130				15,111
Other assets			35,650				32,720				32,109				29,069				26,090
Total assets		$	3,794,631			$	3,405,010			$	3,499,033			$	2,906,161			$	2,836,684
LIABILITIES
Non-interest bearing deposits		$	561,033			$	548,991			$	564,225			$	403,643			$	381,042
Interest bearing deposits			2,063,909				1,984,507				2,057,123				1,608,902				1,691,139
Total deposits			2,624,942				2,533,498				2,621,348				2,012,545				2,072,181
Customer repurchase agreements			10,509				6,751				11,488				19,869				14,959
Federal Home Loan Bank advances			420,000				355,000				365,000				385,000				340,000
Subordinated notes			48,878				48,853				48,828				48,804				48,780
Junior subordinated debentures			38,849				38,734				38,623				33,047				32,943
Other liabilities			44,228				19,230				22,048				20,799				17,354
Total liabilities			3,187,406				3,002,066				3,107,335				2,520,064				2,526,217
EQUITY
Preferred stock series A			4,550				4,550				4,550				4,550				4,550
Preferred stock series B			5,108				5,108				5,108				5,108				5,108
Common stock			264				209				209				209				182
Additional paid-in-capital			457,980				265,406				264,855				264,531				198,570
Treasury stock, at cost			(2,254	)			(1,853	)			(1,784	)			(1,760	)			(1,759	)
Retained earnings			143,426				131,234				119,356				113,245				103,658
Accumulated other comprehensive income			(1,849	)			(1,710	)			(596	)			214				158
Total equity			607,225				402,944				391,698				386,097				310,467
Total liabilities and equity		$	3,794,631			$	3,405,010			$	3,499,033			$	2,906,161			$	2,836,684

Unaudited consolidated statement of income:

		For the Three Months Ended																				For the Six Months Ended
		June 30,				March 31,				December 31,				September 30,				June 30,				June 30,				June 30,
(Dollars in thousands)		2018				2018				2017				2017				2017				2018				2017
Interest income:
Loans, including fees		$	39,710			$	36,883			$	34,856			$	30,863			$	30,663			$	76,593			$	55,848
Factored receivables, including fees			19,229				15,303				15,000				12,198				10,812				34,532				19,979
Securities			1,179				1,310				1,819				1,655				1,738				2,489				3,349
FHLB stock			101				105				78				51				36				206				78
Cash deposits			1,030				517				464				370				289				1,547				616
Total interest income			61,249				54,118				52,217				45,137				43,538				115,367				79,870
Interest expense:
Deposits			4,631				4,277				3,884				3,272				3,057				8,908				5,926
Subordinated notes			838				837				836				837				836				1,675				1,671
Junior subordinated debentures			713				597				520				495				475				1,310				940
Other borrowings			1,810				1,277				1,181				1,021				613				3,087				957
Total interest expense			7,992				6,988				6,421				5,625				4,981				14,980				9,494
Net interest income			53,257				47,130				45,796				39,512				38,557				100,387				70,376
Provision for loan losses			4,906				2,548				1,931				572				1,447				7,454				9,125
Net interest income after provision for loan losses			48,351				44,582				43,865				38,940				37,110				92,933				61,251
Non-interest income:
Service charges on deposits			1,210				1,145				1,178				1,046				977				2,355				1,957
Card income			1,394				1,244				1,122				956				917				2,638				1,744
Net OREO gains (losses) and valuation adjustments			(528	)			(88	)			(764	)			15				(112	)			(616	)			(101	)
Net gains (losses) on sale of securities			—				(272	)			—				35				—				(272	)			—
Fee income			1,121				800				658				625				637				1,921				1,220
Insurance commissions			819				714				857				826				708				1,533				1,299
Asset management fees			—				—				—				—				—				—				1,717
Gain on sale of subsidiary			—				1,071				—				—				—				1,071				20,860
Other			929				558				947				668				2,075				1,487				3,791
Total non-interest income			4,945				5,172				3,998				4,171				5,202				10,117				32,487
Non-interest expense:
Salaries and employee benefits			20,527				19,404				18,009				16,717				16,012				39,931				37,970
Occupancy, furniture and equipment			3,014				3,054				2,728				2,398				2,348				6,068				4,707
FDIC insurance and other regulatory assessments			383				199				411				294				270				582				496
Professional fees			2,078				1,640				2,521				1,465				1,238				3,718				3,206
Amortization of intangible assets			1,361				1,117				2,309				870				911				2,478				2,022
Advertising and promotion			1,300				1,029				573				804				911				2,329				1,849
Communications and technology			3,271				3,359				2,291				2,145				2,233				6,630				4,407
Other			5,469				4,240				4,389				3,532				3,398				9,709				7,501
Total non-interest expense			37,403				34,042				33,231				28,225				27,321				71,445				62,158
Net income before income tax			15,893				15,712				14,632				14,886				14,991				31,605				31,580
Income tax expense			3,508				3,644				8,327				5,104				5,331				7,152				11,447
Net income		$	12,385			$	12,068			$	6,305			$	9,782			$	9,660			$	24,453			$	20,133
Dividends on preferred stock			(193	)			(190	)			(194	)			(195	)			(193	)			(383	)			(385	)
Net income available to common stockholders		$	12,192			$	11,878			$	6,111			$	9,587			$	9,467			$	24,070			$	19,748

Earnings per share:

		For the Three Months Ended																				For the Six Months Ended
		June 30,				March 31,				December 31,				September 30,				June 30,				June 30,				June 30,
(Dollars in thousands)		2018				2018				2017				2017				2017				2018				2017
Basic
Net income to common stockholders		$	12,192			$	11,878			$	6,111			$	9,587			$	9,467			$	24,070			$	19,748
Weighted average common shares outstanding			25,519,108				20,721,363				20,717,548				19,811,577				18,012,905				23,133,489				17,984,184
Basic earnings per common share		$	0.48			$	0.57			$	0.29			$	0.48			$	0.53			$	1.04			$	1.10
Diluted
Net income to common stockholders		$	12,192			$	11,878			$	6,111			$	9,587			$	9,467			$	24,070			$	19,748
Dilutive effect of preferred stock			193				190				194				195				193				383				385
Net income to common stockholders - diluted		$	12,385			$	12,068			$	6,305			$	9,782			$	9,660			$	24,453			$	20,133
Weighted average common shares outstanding			25,519,108				20,721,363				20,717,548				19,811,577				18,012,905				23,133,489				17,984,184
Dilutive effects of:
Assumed conversion of Preferred A			315,773				315,773				315,773				315,773				315,773				315,773				315,773
Assumed conversion of Preferred B			354,471				354,471				354,471				354,471				354,471				354,471				354,471
Assumed exercises of stock warrants			—				—				—				54,476				129,896				—				137,896
Assumed exercises of stock options			86,821				83,872				56,359				45,788				32,592				85,123				40,233
Restricted stock awards			37,417				85,045				74,318				63,384				47,521				60,425				67,308
Restricted stock units			2,288				—				—				—				—				—				—
Performance stock units			—				—				—				—				—				—				—
Weighted average shares outstanding - diluted			26,315,878				21,560,524				21,518,469				20,645,469				18,893,158				23,949,281				18,899,865
Diluted earnings per common share		$	0.47			$	0.56			$	0.29			$	0.47			$	0.51			$	1.02			$	1.07
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 Six Months Ended
		June 30,				March 31,				December 31,				September 30,				June 30,				June 30,				June 30,
		2018				2018				2017				2017				2017				2018				2017
Assumed conversion of Preferred A			—				—				—				—				—				—				—
Assumed conversion of Preferred B			—				—				—				—				—				—				—
Stock options			51,952				—				57,926				58,442				58,442				51,952				58,442
Restricted stock awards			—				—				—				—				35,270				—				35,270
Restricted stock units			—				—				—				—				—				—				—
Performance stock units			59,658				—				—				—				—				59,658				—

Loans held for investment summarized as of:

		June 30,				March 31,				December 31,				September 30,				June 30,
(Dollars in thousands)		2018				2018				2017				2017				2017
Commercial real estate		$	766,839			$	781,006			$	745,893			$	574,530			$	541,217
Construction, land development, land			147,852				143,876				134,812				141,368				120,253
1-4 family residential properties			122,653				122,979				125,827				96,032				101,833
Farmland			177,060				184,064				180,141				130,471				136,258
Commercial			1,006,443				930,283				920,812				890,372				842,715
Factored receivables			603,812				397,145				374,410				341,880				293,633
Consumer			28,775				29,244				31,131				30,093				29,497
Mortgage warehouse			343,028				285,388				297,830				220,717				229,694
Total loans		$	3,196,462			$	2,873,985			$	2,810,856			$	2,425,463			$	2,295,100

A portion of our total loans held for investment portfolio consists of traditional community bank loans as well as commercial finance products offered under our commercial finance brands on a nationwide basis. Commercial finance loans are further summarized below:

		June 30,				March 31,				December 31,				September 30,				June 30,
(Dollars in thousands)		2018				2018				2017				2017				2017
Equipment		$	290,314			$	260,502			$	254,119			$	226,120			$	219,904
Asset based lending (General)			261,412				230,314				213,471				193,884				188,257
Asset based lending (Healthcare)			—				—				—				67,889				68,606
Premium finance			51,416				48,561				55,520				57,083				31,274
Factored receivables			603,812				397,145				374,410				341,880				293,633
Commercial finance		$	1,206,954			$	936,522			$	897,520			$	886,856			$	801,674
Commercial finance % of total loans			38	%			33	%			32	%			37	%			35	%

Additional information pertaining to our loan portfolio, summarized as of and for the quarters ended:

		June 30,				March 31,				December 31,				September 30,				June 30,
(Dollars in thousands)		2018				2018				2017				2017				2017
Average community banking		$	1,897,678			$	1,816,921			$	1,637,195			$	1,463,508			$	1,382,448
Average commercial finance(1)			1,024,369				949,938				921,579				831,955				752,586
Average total loans		$	2,922,047			$	2,766,859			$	2,558,774			$	2,295,463			$	2,135,034
Community banking yield			5.87	%			5.81	%			5.87	%			5.60	%			5.81	%
Commercial finance yield(1)			12.21	%			11.17	%			11.03	%			10.62	%			11.42	%
Total loan yield			8.09	%			7.65	%			7.73	%			7.44	%			7.79	%

⁽¹⁾ Includes assets held for sale for the periods ended March 31, 2018 and December 31, 2017

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,				March 31,				December 31,				September 30,				June 30,
		2018				2018				2017				2017				2017
Factored receivable period end balance		$	577,548,000			$	372,771,000			$	346,293,000			$	315,742,000			$	268,707,000
Yield on average receivable balance			18.70	%			17.40	%			16.91	%			16.64	%			17.35	%
Rolling twelve quarter annual charge-off rate			0.41	%			0.50	%			0.41	%			0.44	%			0.41	%
Factored receivables - transportation concentration			84	%			86	%			84	%			84	%			84	%
Interest income, including fees		$	20,314,000			$	14,780,000			$	14,518,000			$	11,736,000			$	10,387,000
Non-interest income			920,000				590,000				535,000				774,000				758,000
Factored receivable total revenue			21,234,000				15,370,000				15,053,000				12,510,000				11,145,000
Average net funds employed			398,096,000				316,488,000				309,614,000				260,384,000				219,694,000
Yield on average net funds employed			21.39	%			19.70	%			19.29	%			19.06	%			20.35	%
Accounts receivable purchased		$	1,162,810,000			$	912,336,000			$	872,373,000			$	732,406,000			$	639,131,000
Number of invoices purchased			656,429				521,906				511,879				476,370				446,153
Average invoice size		$	1,771			$	1,751			$	1,705			$	1,537			$	1,433
Average invoice size - transportation		$	1,695			$	1,662			$	1,647			$	1,486			$	1,386
Average invoice size - non-transportation		$	2,522			$	2,627			$	2,251			$	1,965			$	1,782
Net new clients			2,146				280				233				235				151
Period end clients			5,584				3,438				3,158				2,925				2,690

Deposits summarized as of:

		June 30,				March 31,				December 31,				September 30,				June 30,
(Dollars in thousands)		2018				2018				2017				2017				2017
Non-interest bearing demand		$	561,033			$	548,991			$	564,225			$	403,643			$	381,042
Interest bearing demand			358,246				392,947				403,244				284,282				350,966
Individual retirement accounts			101,380				105,558				108,505				97,186				99,694
Money market			268,699				283,354				283,969				189,177				205,243
Savings			239,127				244,103				235,296				158,464				173,137
Certificates of deposit			751,290				783,651				837,384				770,599				777,459
Brokered deposits			345,167				174,894				188,725				109,194				84,640
Total deposits		$	2,624,942			$	2,533,498			$	2,621,348			$	2,012,545			$	2,072,181

Net interest margin summarized for the three months ended:

		June 30, 2018												March 31, 2018
		Average								Average				Average								Average
(Dollars in thousands)		Balance				Interest				Rate				Balance				Interest				Rate
Interest earning assets:
Interest earning cash balances		$	217,605			$	1,030				1.90	%		$	131,723			$	517				1.59	%
Taxable securities			168,182				1,024				2.44	%			179,395				1,057				2.39	%
Tax-exempt securities			35,016				155				1.78	%			59,029				253				1.74	%
FHLB stock			18,297				101				2.21	%			16,311				105				2.61	%
Loans			2,922,047				58,939				8.09	%			2,766,859				52,186				7.65	%
Total interest earning assets		$	3,361,147			$	61,249				7.31	%		$	3,153,317			$	54,118				6.96	%
Non-interest earning assets:
Other assets			267,813												257,566
Total assets		$	3,628,960											$	3,410,883
Interest bearing liabilities:
Deposits:
Interest bearing demand		$	381,114			$	215				0.23	%		$	390,001			$	188				0.20	%
Individual retirement accounts			103,358				315				1.22	%			106,893				310				1.18	%
Money market			256,841				335				0.52	%			282,697				377				0.54	%
Savings			241,029				30				0.05	%			239,707				30				0.05	%
Certificates of deposit			767,484				2,593				1.36	%			813,244				2,584				1.29	%
Brokered deposits			246,089				1,143				1.86	%			186,390				788				1.71	%
Total deposits			1,995,915				4,631				0.93	%			2,018,932				4,277				0.86	%
Subordinated notes			48,864				838				6.88	%			48,839				837				6.95	%
Junior subordinated debentures			38,787				713				7.37	%			38,672				597				6.26	%
Other borrowings			385,646				1,810				1.88	%			342,426				1,277				1.51	%
Total interest bearing liabilities		$	2,469,212			$	7,992				1.30	%		$	2,448,869			$	6,988				1.16	%
Non-interest bearing liabilities and equity:
Non-interest bearing demand deposits			553,309												545,118
Other liabilities			23,823												15,709
Total equity			582,616												401,187
Total liabilities and equity		$	3,628,960											$	3,410,883
Net interest income						$	53,257											$	47,130
Interest spread											6.01	%											5.80	%
Net interest margin											6.36	%											6.06	%

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,		June 30,				March 31,				December 31,				September 30,				June 30,				June 30,				June 30,
except per share amounts)		2018				2018				2017				2017				2017				2018				2017
Net income available to common stockholders		$	12,192			$	11,878			$	6,111			$	9,587			$	9,467			$	24,070			$	19,748
Gain on sale of subsidiary			—				(1,071	)			—				—				—				(1,071	)			(20,860	)
Incremental bonus related to transaction			—				—				—				—				—				—				4,814
Transaction related costs			1,094				—				1,688				—				—				1,094				325
Tax effect of adjustments			(257	)			248				(601	)			—				—				(9	)			5,754
Adjusted net income available to common stockholders		$	13,029			$	11,055			$	7,198			$	9,587			$	9,467			$	24,084			$	9,781
Dilutive effect of convertible preferred stock			193				190				194				195				193				383				—
Adjusted net income available to common stockholders - diluted		$	13,222			$	11,245			$	7,392			$	9,782			$	9,660			$	24,467			$	9,781
Weighted average shares outstanding - diluted			26,315,878				21,560,524				21,518,469				20,645,469				18,893,158				23,950,143				18,899,865
Adjusted effects of assumed Preferred Stock conversion			—				—				—				—				—				—				(670,244	)
Adjusted weighted average shares outstanding - diluted			26,315,878				21,560,524				21,518,469				20,645,469				18,893,158				23,950,143				18,229,621
Adjusted diluted earnings per common share		$	0.50			$	0.52			$	0.34			$	0.47			$	0.51			$	1.02			$	0.54
Net income available to common stockholders		$	12,192			$	11,878			$	6,111			$	9,587			$	9,467			$	24,070			$	19,748
Average tangible common equity			491,492				326,614				330,819				309,624				254,088				409,509				246,290
Return on average tangible common equity			9.95	%			14.75	%			7.33	%			12.28	%			14.94	%			11.85	%			16.17	%
Adjusted efficiency ratio:
Net interest income		$	53,257			$	47,130			$	45,796			$	39,512			$	38,557			$	100,387			$	70,376
Non-interest income			4,945				5,172				3,998				4,171				5,202				10,117				32,487
Operating revenue			58,202				52,302				49,794				43,683				43,759				110,504				102,863
Gain on sale of subsidiary			—				(1,071	)			—				—				—				(1,071	)			(20,860	)
Adjusted operating revenue		$	58,202			$	51,231			$	49,794			$	43,683			$	43,759			$	109,433			$	82,003
Non-interest expenses		$	37,403			$	34,042			$	33,231			$	28,225			$	27,321			$	71,445			$	62,158
Incremental bonus related to transaction			—				—				—				—				—				—				(4,814	)
Transaction related costs			(1,094	)			—				(1,688	)			—				—				(1,094	)			(325	)
Adjusted non-interest expenses		$	36,309			$	34,042			$	31,543			$	28,225			$	27,321			$	70,351			$	57,019
Adjusted efficiency ratio			62.38	%			66.45	%			63.35	%			64.61	%			62.44	%			64.29	%			69.53	%
Adjusted net non-interest expense to average assets ratio:
Non-interest expenses		$	37,403			$	34,042			$	33,231			$	28,225			$	27,321			$	71,445			$	62,158
Incremental bonus related to transaction			—				—				—				—				—				—				(4,814	)
Transaction related costs			(1,094	)			—				(1,688	)			—				—				(1,094	)			(325	)
Adjusted non-interest expenses		$	36,309			$	34,042			$	31,543			$	28,225			$	27,321			$	70,351			$	57,019
Total non-interest income		$	4,945			$	5,172			$	3,998			$	4,171			$	5,202			$	10,117			$	32,487
Gain on sale of subsidiary			—				(1,071	)			—				—				—				(1,071	)			(20,860	)
Adjusted non-interest income		$	4,945			$	4,101			$	3,998			$	4,171			$	5,202			$	9,046			$	11,627
Adjusted net non-interest expenses		$	31,364			$	29,941			$	27,545			$	24,054			$	22,119			$	61,305			$	45,392
Average total assets		$	3,628,960			$	3,410,883			$	3,181,697			$	2,849,170			$	2,723,303			$	3,520,522			$	2,671,580
Adjusted net non-interest expense to average assets ratio			3.47	%			3.56	%			3.43	%			3.35	%			3.26	%			3.51	%			3.43	%

		As of and for the Three Months Ended																				As of and for the Six Months Ended
(Dollars in thousands,		June 30,				March 31,				December 31,				September 30,				June 30,				June 30,				June 30,
except per share amounts)		2018				2018				2017				2017				2017				2018				2017
Reported yield on loans			8.09	%			7.65	%			7.73	%			7.44	%			7.79	%			7.88	%			7.49	%
Effect of accretion income on acquired loans			(0.50	%)			(0.29	%)			(0.26	%)			(0.24	%)			(0.54	%)			(0.40	%)			(0.39	%)
Adjusted yield on loans			7.59	%			7.36	%			7.47	%			7.20	%			7.25	%			7.48	%			7.10	%
Reported net interest margin			6.36	%			6.06	%			6.16	%			5.90	%			6.16	%			6.21	%			5.78	%
Effect of accretion income on acquired loans			(0.44	%)			(0.25	%)			(0.23	%)			(0.21	%)			(0.46	%)			(0.34	%)			(0.33	%)
Adjusted net interest margin			5.92	%			5.81	%			5.93	%			5.69	%			5.70	%			5.87	%			5.45	%
Total stockholders' equity		$	607,225			$	402,944			$	391,698			$	386,097			$	310,467			$	607,225			$	310,467
Preferred stock liquidation preference			(9,658	)			(9,658	)			(9,658	)			(9,658	)			(9,658	)			(9,658	)			(9,658	)
Total common stockholders' equity			597,567				393,286				382,040				376,439				300,809				597,567				300,809
Goodwill and other intangibles			(117,777	)			(63,923	)			(63,778	)			(42,452	)			(43,321	)			(117,777	)			(43,321	)
Tangible common stockholders' equity		$	479,790			$	329,363			$	318,262			$	333,987			$	257,488			$	479,790			$	257,488
Common shares outstanding			26,260,785				20,824,509				20,820,445				20,820,900				18,132,585				26,260,785				18,132,585
Tangible book value per share		$	18.27			$	15.82			$	15.29			$	16.04			$	14.20			$	18.27			$	14.20
Total assets at end of period		$	3,794,631			$	3,405,010			$	3,499,033			$	2,906,161			$	2,836,684			$	3,794,631			$	2,836,684
Goodwill and other intangibles			(117,777	)			(63,923	)			(63,778	)			(42,452	)			(43,321	)			(117,777	)			(43,321	)
Adjusted total assets at period end		$	3,676,854			$	3,341,087			$	3,435,255			$	2,863,709			$	2,793,363			$	3,676,854			$	2,793,363
Tangible common stockholders' equity ratio			13.05	%			9.86	%			9.26	%			11.66	%			9.22	%			13.05	%			9.22	%

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

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

2)  Asset quality ratios exclude loans held for sale, except for non-performing assets to total assets.

3)  Current quarter ratios are preliminary.

Source: Triumph Bancorp, Inc.

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

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