TBK - Earnings call transcript Q3 2019 | Triumph Financial, Inc.

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Operator

Good morning, and welcome to the Triumph Bancorp’s Third Quarter Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Luke Wyse, Senior Vice President of Finance and Investor Relations. Mr. ahead. go please Wyse,

Luke Wyse

to quarter Bancorp XXXX Welcome discuss call our third financial the morning. conference Triumph to Good results.

are forward-looking Before to we actual forward-looking undertakes Those and include The to could revise any no remind like risks statements statements. company you that anticipated statement. uncertainties get this presentation cause started, that subject to I’d obligation differ. publicly and results may to

refer on to our If X. the presentation you’re webcast, logged including statement into available Safe please Harbor Slide our online, slide

For our those please statement. to phone, during note that and presentation subject the statement Harbor joining by www.triumphbancorp.com. made Safe are website comments are Safe Harbor available All call on today’s that at

Bryce Triumph’s Chairman our Graft; morning Ritterbusch, CEO, you the this Chief Lending by joined Officer. have. I’m questions we’ll address Vice any and to Fowler; be After may happy Todd Financial and Officer, presentation, Aaron our Chief

the to I’d this over Aaron. to call turn Aaron? At like time,

Aaron Graft

more one for Good Thank in morning. Luke. our the outlook results, Triumph reviewing at ever addition appreciate well you, calls we joining this to because you changes as our our as I is we strategic outline We to done quarterly financial have of important XXXX. will us. believe approach earnings

quarter. First, let’s review the

with our earned financial of income per for generally stockholders an performance the $X.XX third For and quarter, we million overall line $XX.X was in quarter net expectations. average or to common diluted QX was share.

was full million with side, $XXX exiting positive loans a On the growth XX% and strong due to robust quarter-over-quarter. or pipeline market very QX, loan housing a up

commercial national balances million up platforms. with XX% warehouse our Mortgage warehouse about was $XXX growth the finance in lending XX% Approximately mortgage our approximately QX. from business XX% another from and over average were sourcing of

mortgage we this later discipline strategic quarter predict call. and we in to growth housing will beyond moderate cannot discuss our in and we balances, the balance the thus sheet fourth the expect warehouse we as loan market While implement

release. finance deposits You can Total quarter. Slide product third in non-interest-bearing million X% encouraged grew by commercial The $XX and loan investor grew see $XX increased deposits the million or or X%. tables million deck in the the I’m portfolio quarter. composition by the in that $XX on earnings XX% by X in or the

at to Our increased loan-to-deposit ratio quarter-end XXX%.

As our reminder, inflated warehouse is approximately of the we with advances, FHLB fund by of mortgage a and points of line our majority percentage activity warehouse business. ratio to our fund use XX advances FHLB this mortgage

XX The interest X net to quarter was declined cost million to points $X.X yields total income Third deposits of X.XX%. QX. X.XX%. basis up increased Loan from points basis

XX Net discount We to accreted interest loan in margin of $X.X declined QX. million X.XX%. basis points

but points. quality to loans-to-total quarter Our X.X% fluctuation metrics due X% solid. X.XX%. at NPA-to-total below Past experienced asset remained during from assets XX remained some basis increased loans third the

believe trend, net we loans of point However, charge-offs-to-average don’t quarter. is this were and indicative any during larger basis adverse the X

will for increase slightly quarter the quarter were XXXX. earnings which call. expense million that fourth estimate second Third the $XX.X was We lower quarter provided of to estimate our expenses in million of $XX.X than non-interest QX $XX.X for million,

repurchase During our was of completed for $XX.XX that the XXX,XXX quarter, stock X% shares quarter, we of we program into total have of outstanding at $XX $XX treasury July. stock common outstanding million. repurchase repurchased repurchased in an million average a approximately completed the the with XX/XX/XXXX. on in prior the $XX Board stock approximately Together second million our price authorized This by program

later future these our discuss will capital on remarks. I in plans

success. vital weaknesses These banking businesses, to our I the airtime they not future like Ritterbusch, line but as Todd? in community Now transportation-centric our highlight to business. Chief of much and get and would ask to do are Officer, Todd businesses Lending as our strengths current our

Todd Ritterbusch

Thank you, Aaron.

bank Our our is of the about like lot largest it. and there’s a community business, to part

of of bank cost deposits basis very a only with community our quality total high are First, points. XX funds

Our only X credit points the quality been three basis the over exceptional annualized past years. of in rates community also with loss low bank has

most demand growth and has for Loan credit strong remains been high markets. in

Our which to credit highly acquisition, was high deliver clients. quality stable Midwest profits, Division, bank and our first satisfied continues

and Our recently Western and TBK’s are have integration have but are completed systems. which of and in Mountain the and Colorado to divisions, concentrated hard Kansas bank more branches newer Mexico, also the work in New conversions with

approaching of deliver Back changes, rapidly these unlike learning, job our small business experience branch, remarkable teams adapting our commercial Dallas, grand client branch offering of most done and and along earlier in products special and new consumer follow products the have opening customer any our launched product Through our a relationships. and, the we’re shortly. retaining with will importantly, new new checking other month, We a deposit will this – services. which

of set been Our we’ve is the services ever fully new to offer. capabilities treasury with operational robust able platform that most now

forward, the area our expect Looking bank services the generate income. core and be fee in to we primarily in in that community XXXX deposits growth of

past. the bank the be expect And moderate serve. bank on asset Our community we for dependent we growth total more is community for to growth communities asset within than in economic the conditions years

Aaron Graft

you, Thank Todd.

brokerage We factoring I in community one-third business, our our area the business, business. banking our our profitable, our approximately defensible of TriumphPay. finance, industry, is we industry. from generate This transportation includes the of touch most our and and insurance and any It more specifically the ways equipment Beyond revenues lines know other of. of differentiated institution transportation financial trucking, than over-the-road national

years over businesses. growth three transportation-related in our primarily next expect I to our the be

believe transportation up quarter. margins level the could of to XXX the to our to XXX have this exposure transportation. a done portion sell off clients maintain of We profitably We assets a we also now given TriumphPay be We from option prudent clients, last generate. maintain high

increase QX We a the a quarter During Transplace, third on top XX% from broker, million, distinct paying September XX. XX,XXX freight and processed TriumphPay prior approximately XX XX% the over quarter, totaled added processed XXXX. a Payments $XXX invoices XXX,XXX carriers. increase

Xpress. After the of onboarded we date prior quarter-end but earnings to call, this also U.S.

$X rate of another XXX% payment in is to volume billion, our run slightly XXXX we approximately below gross As run QX totals. add our of integrations billion several of rate volume is TriumphPay’s dollars pipeline, today, schedule increase over XXXX. expect which the Considering annualized in

Given this strong down hiring our investment adoption, and and members. on additional team we are development doubling technical

for As a next believe easily all this result at earnings TriumphPay’s of year. remainder be justify and to operating of on of will investments. these At and a scale, on this returns least margins investment, will continue capital TriumphPay drag year the we

$X.X relatively or million. prices $XX of result X% the Total of was The during invoices We This increased factoring volume X% at invoices of the XXX,XXX dollar revenue invoice flat at transportation Triumph X%. Business primarily purchased purchased during less QX. was than rising quarter-over-quarter quarter, XX,XXX $X,XXX. billion to an invoices Capital to increase

but that shrunk. of a total funded XXXX, in not as this year, which TBC our of XXX a clients, the was X,XXX year-to-date three client Net given is new year first X.XX%, X,XXX clients quarters growth growth growth for base Through past than the quarter means of quarter X,XXX or remained transportation. Growth of lower pipeline have last quarter-end. client This net which, clients clients slower the number record for X.X% has for a exited. was because than

linked small than believe were in declines in spot causally XXXX. of versus trucking segment, exited greater those that suggests analysis XX% we which is attrition the rate to XXXX Our that

chasing excesses view rates flood competitors. healthy, Our and the in the the that year. the overall but is tonnage out high weaker market working currently still capacity The of is transportation through is of market’s resetting XXXX now last is weeding

the and buybacks normal not businesses, as through earnings low of of buyback barrier-to-entry not full engaged to TriumphPay. we a $XX and our we the like growth yet million are trucking. Thus, expect we capital $XX to return this believe new announced From yesterday, value business we our restricting have to efficient point not lower-margin continued power does market did expect a we completion is in we in announced more This the structure acquisitions. Because maintain a capital of a surprising shareholders and in realized past million actively we than the we when forward, series in were recognize plan. plan our

forward, going businesses, primarily be Business TriumphPay. by Triumph Capital transportation and will loan growth our of said, driven majority I As our the

side, proportion of prioritizing higher be the our funding. On our we deposits lower-cost are resources a deposit to to growing high-quality,

Our expected to moderate low net be more will digits mid-single percentage growth basis. going asset annual past, the forward than likely an on in

activities on net This yields our and assets. lower-cost higher a to relatively path on margin return net in lending and funding, resulting interest wider time, will, over lead higher

a ratio We approximately not common concluded intend and tangible We beyond we equity have repurchase common materially grow not to shareholder to and the need to X%. earnings maintain [indiscernible] maximize do value. certainly $XX billion threshold of of that

capital to excess on of connection these achieve equity. the in is on tangible levels, slide in asset and our return long-term investor XX%. our X% a changes, of return excess a balance walk-forward include As the on equity we in have and In we transition sheet goal return with assets modified return tangible common allocation on to target our common deck

assumptions We expectations are for of regarding our key providing financial and XXXX. some color additional

additional the these in the in approach impact this to of in company color their for order incorporating in this providing financial and are investors with strategic models our conjunction We assist resetting expected change changes.

businesses, and is less the warehouse to but following through is of Total assumptions. loans. from all of growth be forecast is XXXX total projected or end X% our volume $X.X to from Capital be about lending the Our at XXXX Business of TriumphPay. increase market Triumph XX% Mortgage of baseline the financial subject loans XXXX or a billion conditions loan to of includes expected Substantially mainly XXXX. end approximately transportation

are exit XXXX for not low-cost, keep Loan and increase production, advances. the assets Home mortgage pace profile high-quality XXX% around adjusted their deposits Bank we warehouse with expect position. to ratio lower-returning should and return loan-to-deposit either the strategy in scrutinizing relationships are to We loan or funded with our when opportunities that Growth balances Federal for core in

believe X.X% September will our interest subsequent of greater years sustained. increase expect XXXX proportion in balance as of yield in margin interest assuming the consume lines margin We a XX is of highest-margin curve net approximately business We sheet. net our

We including technology, on branch expense to new between $XXX of expect increased spending million XXXX million, TriumphPay. and non-interest our $XXX Dallas in

increase the total in quarter. quarter to our mainly due consistent business. will to decline with the expense and the XXXX, Dallas annual new revenue reset increase costs In of benefits for payroll in full our branch the X% an XXXX, in patterns quarter of prior to operating nature from transportation prior first cost quarter we a the anticipate years, cyclical of in XXXX, due non-interest of over the Also annual taxes, of the QX X% of first

forward, going this. TBK I as the we repurchase sub-debt and to intent, Our said, of to continue is additional support of are to considering shares issuance

We repurchase providing $XX on made are of or share the volume the million repurchases not color authorization future today. share the other timing, than announcement of price

our go-forward can We deposit several take are a time strategy the will growth quarters reminder, confident execute our through But and the of on increase we will that balance plans. on remixed these for work that impact sheet loan and equity return it as and to over earnings.

share share. of loan Consequently, to EPS issuance, we the per $X.XX potential $X.XX or repurchases, excluding in sub-debt XXXX estimate range the of sales impact

want in outside prices materially due items also of as range our vary that estimated trends to We our changes and macro other such control. could remind EPS investors invoice transportation to

historical invoice change XXXX. invoice of in transportation for year. setting range, average resulting full for give the year for sense example, prices guidance. to has $X.XX flat change for a assumed remain practice our every correlating EPS volatility, not For It in estimated we of give in to $X.XX average $XXX prices our a the estimate To our this EPS EPS investors year, been we approximately

we do in it future. think again I is it will the unlikely

investors at we it giving understand a that where are so as are We company. can this time

than We If transportation compared into XXXX make banking win-win, we predict, unfolds as future top-quartile about investments performance we ever be to like peers. that and view we TBK. fintech excited deliver significant able more of the our financial to a are platform our will still and

turn questions. Having for the over all will call we that, said

Operator

Thank question question-and-answer comes today from ahead. you. the We’ll go The now session. [Operator Brady begin Gailey Instructions] with first Please KBW.

Brady Gailey

guys. morning, good Hey,

Aaron Graft

Brady. morning, Good

Brady Gailey

Maybe costs you Those do climbed coming deposit it I costs. peak some we But your could bit. here down. from kind for with that little peers with a XQ is seen you should of that relief know of guys? start deposit little still for the think costs deposit a decline have and

Aaron Graft

deposits and be bringing do, on first the balance was in the we sitting have – to lagging – those those think deposits of Yes, of higher support a were prior May we full would We and of would us. indicator on first shift talked a Brady. and Those amount that’s growth for time to come we significant so this deposits this when call, June will strategic – costs. at about year quarter this in only our sheet. as the

we And forward. here, in the deposits. expect from also, deposit So to we on $XX million non-interest-bearing later about came quarter. Those going talked costs fall in the

generate We to due of continue about. the type we those deposits to initiatives talked

you’re think I assume is funds foreseeable So we of safe this show future. for highest cost that would the to the

Brady Gailey

was X% But, All been quarter, raise X%, quarters that sounds big over the fairly a should we a like have right. going forward? of continue this level running you expect of couple sub-debt where between And mean, X% all the company buyback, may I mean, number of is repurchased. which number you I then the buyback last to similar that. some to of kind It

Aaron Graft

give we’re of can say so the said, we’re Stock investors want I market’s a pay stock And creating that our thinking part potential is believe, our bank guidance lot of but something our not companies we like bearing think think we and As attention That’s what nor numbers peers. We we very unique are defend to understand would any going community price. the our do mean, buybacks we our a peers. buybacks, doing. not thinking, community primary But valued specific price. the that motivation. we this. behind to what than the here’s the I has different to out, that bank are of return to that to timing of always here

unless is eight it’s net six gives using the just shares to our the market make using on so and building, good to internal or of very our or repurchase continue quarters until our going whether we’re over shareholders. valuation next time for investment rate platform view appropriate to it sub-debt purchases And income of this is the a to period fintech over return those long a four,

as So for buy we as the where much long-term long company of to intend, we shareholders. our they as as prices the are are, can back

we of expect so we’re portion if used trade income should And the our buy material you to a net shares. in, range going to be continue in to forward, back

Brady Gailey

want other off over for selling hit finally me, to you what right. level I banks selling point you you maybe At would about transportation those with concentration All assets where mean, And you then the transportation mentioned some or time. assets think investors? assets do that some of other

Aaron Graft

a The Yes. analysis analysis. concentration is twofold

concentration XX% would materially get the our On the of of gets do transportation into a to I the large don’t business to to which we it time. prepared would doing in overall, road, say extent we’re hand, a and base. exceeding a foresee we’re where – shipper assets when concerns. I asset name, one or – that, one that real down would about point freight lot if total borrower large To a loan it specific we think be in brokerage, a with

And better command our road continue piece we’re sort doing, further, the especially scale, higher valuation businesses they’ll us fee business. the those we are than we the and of in sheet, extent we the get for what income think TriumphPay To factoring valuations. the to for they as of more balance down think

those run along to now right groundwork the laying we’re So those lines.

not come I’m really from of about transportation. particularly that concerned percentages so And revenue

on grow loans grows. that the as sheet, we’ll As as over-concentrated from transportation our delivering long market allow the opportunity we’re far quality is the as community name funding, revenue as we’re comes to any at one balance – safe, bank and not high-quality what’s

Brady Gailey

Okay, great. guys. Thanks,

Operator

Sandler Brad ahead. from with Milsaps go The next question O’Neill. Please comes

Brad Milsaps

guys. Hey, good morning,

Aaron Graft

Good morning, Brad.

Brad Milsaps

for color all around of on kind thoughts XXXX. thanks your the Aaron,

of I billion kind the be to book? commercial take you’re Just you mix, of your you’d Yes, that overall know $X.X bit relative have finance, was warehouse a you company. kind loan curious, kind that kind of the pieces target of mentioned, to quickly, but you’ve the of where said you less willing book, or total. the change see rest XX-XX, of – to of XX% higher the the kind given and writing but historically that the little Can loan of recently expected would how higher-yielding the talk about be targeted you I managing

Aaron Graft

Yes.

TriumphPay said have. we as the we what we than think XXXX other think I relatively growth have loan So or that growth – service Everything flat or we on very in material I TBC. is moderate call any see don’t true. going the segment else to in customers would be in you’re any growth, is,

obviously our business. receivables of transportation So it’s have finance much our even than commercial to lines in business, remember finance with important higher factored commercial associated yields of line those other

And in we’re so we static growth and unless other that’s where taking. mean change. come some appropriately I we’re paid else that lines from. our until getting we’re relatively for economic conditions holding Everything think the business of the risk will don’t of

so going we those as of going when And of on just to end grow of XXXX, customers. those businesses a us warehouse, as of the balance shift. serve mortgage regardless hold you does NIM as employing to also, curve discipline what think And result a to flat, mix result that we’re the sheet yield look you is – for that forward

Brad Milsaps

EPS Got guidance. it. And then the just on

think $X.XX you I mentioned $X.XX. to

the range? in of that mix, of Obviously, What but mind high range? talked think terms a else factor being big jumps of a you kind of big other your as the growth little of the is going are do end to at out invoice anything be the low You factors kind a component or a swing bit side sort the of big in factor. that in just swing

Aaron Graft

will make that of deposit difference. we’re pipeline growth that material mean a the quality building. Continuing I

had we’re funding we’ve have pressures Of of overall the course, the won’t past we restraining in the sheet. growth balance because

the I correlated they for How think factors our in grow businesses can’t much my on the highly that the will predict. mind there’s transportation-related grow doubt to year. that no course, of we will whole be, macroeconomic

doing, else plus maintaining So deposits quality everything growing driving we’re those and factors. quality and that, the credit are

Brad Milsaps

the environment But the based transportation guidance on now we’re in. current is

Aaron Graft

Correct. success people having full we want forward. clear, want we expected. we’ve I I was given our than to first-mover even as know, you And platform transportation be never we mean All more we just that a did is There’s advantage. What year understand guidance. with Yes. to Brad. project are fintech

investing maintain lead proposition. widen to value heavily the are that We of and because long-term

And – were so for we XXXX optimize doing for EPS in something our definitely higher trying if XXXX. we the and longer to can But we’re be unique. just term optimizing

So is giving earnings analogy. a have. away say we’re some of giving would the otherwise it away we wouldn’t I bad

investing what the for earnings significant create our into think opportunity We’re we those has to value investors.

of that. value to So try going or XXXX was we to illustrate opportunity. we’re the XXXX to longer-term we relative All didn’t economy is to any were psychology of our about where investors predict in how the trying thinking

Brad Milsaps

Sure.

And expect The I of forward. little yes, get one that to going was low, rate just but it. then up a housekeeping. quarter I tax Now low into the this kind final go XXs back

Bryce Fowler

taxes XX.X%-ish – but some I area. sir. this quarter, from Yes, the pay to state did do. adjustments amended and We returns to return we’ll have such returns

Brad Milsaps

Okay, guys. great. Thank you,

Operator

line The Tenner, comes go is with ahead. Gary open. next from your Davidson. Tenner Mr. question Please D.A.

Gary Tenner

morning. Good

XXXX, incorrectly. your of down questions guidance, – Aaron, may I with guide but answered the margin lot for a You got

just you hoping that was repeat could start. to I So

Aaron Graft

quarter, a to else. in mean, that compressed don’t guidance anticipate reason XXXX as quarter I for shift. just margin something than faster use I anything is that the about in grew our repeating. just Mortgage question mix and margin net The was full Our this to this – interest year talk warehouse X.X%.

to going for XXXX, to keep roughly XX% warehouse we of As smaller. said mortgage loans or we’re

upon based we the mix it it’s So stays XXXX where year. if full shift, X.X% think yield curve is, for

Gary Tenner

what trade – in And to saying about you you maybe that health in of out industry, you just XXXX. you volumes, et would the trends trade kind trying cetera. or predict the on trucking the economy of thanks. Okay, on in past, you you’re the in negatively, are during was impact that weren’t transportation your positively read, comments, the curious, you that war having had pointed talked – But based of industry What any the trade seeing on economy? I’m overall the some terms give necessarily

Aaron Graft

the the really see a at more and Yes. correlation to Gary, then been time freight in as how that spot was in orders, people drifting can ordered you I and new equipment I chased many in now you truck much earnings see XXXX, refer new mixed XXXX. that freights It’s it market would up. you And Page has as And our where release it’s capacity than market remember. spot obviously can bag, XXXX show was ordered, XX rates between any driven in this we but aren’t much trucks. softer ordering higher

– feel capacity. confident tonnage capacity So market not confident saying I feel of deteriorating. a that very in materially overall don’t that it’s I don’t I is pretty huge amount – system. is in that And tonnage know the leaving I

trying clients, flat, trucking extent sign project recession. their the decent. no Not we’re exciting this It of, they overhead because economy feels what itself doing. kind what numbers we of of with out just we come what any from the can’t seeing market We enough our so in to but system out, to We we’re to the of all ends attrition our cover – see – the just material – why from kind an our to operating numbers of earn much capacity a in see, having see work there. is that’s there. which came in So excess that recession think is teeter-totter signs smaller is feels But I don’t imminent that super overall the both capacity.

Gary Tenner

could more helpful. one Okay. That’s ask And if question. I

maybe we a How more event contribution eventually? income gave XXXX side think probably as guidepost you kind year onboard of good The carriers? interest on in outlook. Is us more a larger next fee building a side. terms about should net growing you about And of the for of pretty that guidance Your fee talked

Aaron Graft

Yes.

year need not is transportation building a XXXX innovations the integration think of I the technology amount for do And throughout overall which platform It’s also, support rolled be it’s drive to of we some that integrations. – with the a will out a the be a in and an fintech year. completing provider. maintain member our rollout, to will that easy we large to significant outsourced become year technical member and payment where team team company their support we’re

our prudently allows maximize balance showing is manage income all years think for out multiples. in we also I risk XXXXand those the that that any about So again, of model that But way rather start do platform would argue start that business point. sheet. us that of years not when that in business that those XXXX, sheet think platform to to the do piece out up And would by is be to mature as a a through fee to coming we and we how just than create dollars balance

continuing that’s to the the So think of about future. further into currently XXXX pull just ours a XXXX. That’s away yes, out the answer in is your that is from focus pack leading. I to we’re question not

Gary Tenner

additional creation And question a of terms things, maximizing of reclassifying fee in is you’re income? sense a is where that in piece of it revenue? of incremental generating Okay. Or that income fee kind on

Aaron Graft

all extent receivables I be you generate where create question holistically, the them receivables to you be generating income think a sale income to you’re versus answer. from fee to sheet, hard mean, you balance the balance held I don’t have you going – your of the all that’s hold say would you on on generated had the would spread your plumbing the it I would sheet. those But

balance significant But a we days. have and sheet quality that a portion they to component that production. then of balance that nothing generate by XX for laying I’m there’s income us and the do off And that prudent turns aware it’s sheet component always generates because credit our probably has think hold fee in do, some both of yield the eventually, that they a we’ll on that

Gary Tenner

thanks. all the Great, Thanks color. for

Operator

Stephens. The next ahead. Matt Please with question from comes Olney go

Matt Olney

morning, guys. Good thanks. Hey,

Aaron Graft

Good morning.

Matt Olney

I programs opportunity guess next does technology? deemphasizing which it expenses, you’re few Is that And Is – reinvestments? more does the about in guidance quarters next this you the reinvest as adding operating the But from continue could be clients? to that going new assume sounds talk see. sense any it the TriumphPay, or like you on these you can year, given to it well? onboarding businesses over benefits for makes

Aaron Graft

Just let me clarify When question include it there? question, from that what deemphasizing, specifically say benefits does your Matt. any is we be you will businesses last

Matt Olney

know loan just I be consider going you’re to growth side. slowing expense down holistically, be benefits does I that guess and And there’d guidance didn’t if benefits? some the on those

Aaron Graft

it. Got

ancillary argue, to businesses you say from things things would is some learning in doing TriumphPay, us machine roll data, I would in and other out is I So yet market. space, the that we’re that ready expenses just stuff transportation TBC – not have and holding overall, what away both in let’s separate we’re the to fintech which, that platform,

of rest the So let’s talk about sheet. the balance

other a clear, tried growth don’t amount I growth. expect incremental loan we’ve be large But of any of these of loan think in lines you’ll as see we to business.

have. serve customers We’re going to the we

of flat you evaluate I result, material expect do a there’s business. would those will lines we – would As business, think those of in year for whether expenses we businesses lower will are expense – segments reductions don’t be part core sheet at to what looking but certainly We not if of there’s still those doing. segments lines of the any are to of the in lower of our open we’re as that overall ROE belong balance ROE continually enterprise.

does expense not of and spend year engineers, the then what business. developers hires, a guidance full in of to guidance So just expense numbers lot – technical the and help those in expense reductions doing. that – our project pieces parts consultants Further, software in around with advanced don’t that even of – is we’re other large then really more us

of TriumphPay integrations the one, broker Ultimately, shipper is, clients that get our freight with do into we to where you we number more get and platform. ability and think clients faster

The a the at we of that and TBC never before. is expect the do the second to way long-term start overhead that done you TBC we’re to scale net historically. here ratio get we creating in fall to parts feeds the would some manually do to for we’ve of And have that ability to other use thing and as it verification we able data from the business back-office that been technology

efficiency years, able ever start the I And deliver in operating in past. to you’ll business we’ve see more to been so the think in out that than

Matt Olney

Okay. in X% then from the TBC, have year growth not It’s ICC we year. good I run XQ was share on purchased think And that the That’s a XQ much this invoices skewed X% of a about this quarter rate? last year-over-year, do a the helpful, year level you to feel second you the the we Aaron. comparison How finally previously, market point. comparisons. last saw about of the growth number but kind guess, of since, I as And closed go-forward at larger deal and year-over-year saw year-over-year

thoughts you that? on have any So

Aaron Graft

That’s predict. to hard

a difference generates is the going larger I of a several client think generally speaking, month. versus a in generates one to tremendous more of of carrier between invoices in growth client segment. who an And the amount who course, hundred future, there invoices see you’re our owner-operator XX month

have. within of between the of of part line itself we that that clients mix the will business be shift types So

in in say I Triumph three-year where forward. would CEO Brenner, going he us, call him pretty Geoff of see growth is overall, some his – plan, I taking believes who Capital Business the would significant plan our still Now

the more I expectations mean, going any guidance, So amount I’m have we three that we not – still just next prepared business a growth to of years. significant say full business year with of I in get but generate us did for granular for that the would than line over the to revenue to it’s high

Matt Olney

of sounds it two X%? lastly long-term you the it and of growth in a think a took more really X.X% long-term you X.X%. then us of like sheet the And feel benefits from disciplined be this think good of driver items Okay. the X.X% kind opportunity to from I help smaller be about and ROA see for ROA goal like also is increase or those about sounds balance It going But out you the must of I assume bigger you And there. that strategy. TriumphPay. what’s me, part Can part to

Aaron Graft

Sure.

You on already it. hit

think to are bank bank, to have that. we becoming to because anything we returns understand doing community allows the else us important is reason specialized do. a relative generate should that outsized position we more The some us. we’re I and market it everyone is And

it. I in it materially will to us think you’ll We opportunity. don’t the economy grow invest see gives unless that continue

a XX% if into of we said, above are just about drag capital our I in going go majority you start And it’s start efficient growth to to that, are to talking blended is So expand. – out operating as because the be the you’re businesses choosing a move we’re margins our you a scale something comes we that beyond assets – fast. the and NIM and part more efficiency TriumphPay yield XX% doing go in on earnings maintain basis, minimum approaching But on ratio. at of structure and at a business – to that that future much both see of look, we mean, – a

continue that is primary quickly. efficiency we need is transmitted, out. our and ratio that scale – to upon that realize to network get then investments to goal drag pulling a more the swing are in earnings from which to out, years years us that start you broker and continue drive Now market. can to and a our adoption, start But our on forward. if And few up But business to to just go payments margins freight go to catch stop perspective, from be several fast the after that fast is notwithstanding always

and sheet, it’s more those to it’s why technology – I are that’s a disciplined saying X% out. so years I a And we don’t even balance ROE going into specialized investments five years us mix out. these from the asset XX% But and think generate pull a with XX do and not think margins a long-term we’re ROA goals.

Matt Olney

guys. you, Thank Great.

Operator

Next with Please question ahead. Moss from Riley comes go FBR. B. Steve

Steve Moss

guys. morning, Good

Aaron Graft

morning. Good

Steve Moss

TriumphPay $X TriumphPay. up I in rate over little here more with dive wanted on a to billion run ramp into the

And up as a Just over wondering includes there about you say, that the if ramp next, the U.S. about ramp just we is more addition October. going which in growth the more forward, from that thinking from that new is or of the announced months Xpress, think relationship up clients? you’re XX of

Aaron Graft

said, year would will within The be next and for that jump. both billion the that annualized include as will call, Xpress. come. a U.S. as bigger. significant denominator of of as of those we create is And the full and onboarding course, $X go forward, freight which ramp Transplace brokers, addition we’ll be top will this under clients. projection XX announce gets as that – date time happens, from here new happens, number the Each they of year, just The we of it it’s the we more And course,

think but So going growth XXX% four we’re I quarters. promise over I quarter the significant can’t growth perpetuity, every do have into next to

Steve Moss

wondering, the process how these That’s less. doing or just you’re And larger long Okay. helpful. more carriers, is integration as

If you could give…

Aaron Graft

the ago in around, And integration the last moves long job is five for continued cycle invest great but team time, a large project Graft invasive building who a of leads the it team team – Jordan to right, that investment. have sales cycle and an broker We over seeds years. Well, dreamed he’s sowing years have and this this is and – it. technological done two the a and our freight because sales

custom custom The a you got the upon first several-month has own talking transportation to mean the – So sales a is their about done. with long understand, you’re around integration moves of actual it’s a depending largest the software, – I – a sales programming freight cycle. to be it’s broker for cycle all, endeavor. that management

who days. a an quicker which process, off-the-shelf management built software XX XX, integrations, we’ve probably much As transportation brokers far that’s already well, with as use freight

Steve Moss

it. thing then more just one thinking I And about Okay. guess

or XXXX. up about receivables ramp both in existing factored growth Just in thinking just business Is it TriumphPay? the TriumphPay really and driven by

Aaron Graft

and and a It from won’t of be I think a TBC it’s growth. come it mean from going next business plan that just TBC year, to comes TriumphPay. material I this for exciting part very has both TriumphPay.

Steve Moss

you very that. much. Appreciate thank Okay,

Aaron Graft

Sure.

Operator

Fargo. question go Please next The from comes with ahead. Jared Wells Shaw

Timur Braziler

filling good This in Hi, Braziler actually for Jared. Timur morning. is

Aaron Graft

Good morning.

Timur Braziler

expect, having Good improved going morning. ramped margin for just wondering through funding drive benefit assumptions big fund one the on Maybe on next of lower, more and on not mix assumptions be year. to side the I’m to funding asset Understand quick the is a much side. that the sheet. as to that you costs are how what the well, just balance achieved

Bryce Fowler

that Sure. of This is Bryce. one. I’ll kind take

other deposit we our I to side, opportunities funding – as we’re that non-interest-bearing grow to the on we as talked and plans current well customer management existing our other deposits from continue mean, So is there. about, mix out are, the the base in marketplaces serve treasury as

need begin was projecting continue cost, million So drop begin – deposits, the and in with we significant to to growth of here. from costing combine bring kind of we expect funding almost to of to deposits million us pretty growth our a of in immediately – growth are over that cost a as incremental And what to grow to of to would $XXX $XXX you quality XXXX. lack

Timur Braziler

confidence the opportunities to items deposits the for organic organic the Dallas there guess are like growth, for I deposit that on be branch? be what side? gives through going additional Okay. taking Or the And the to going that is you increased

Todd Ritterbusch

one. Todd is I’ll in This Ritterbusch. that jump on Yes.

majority clients. of that growth. deposit levers deposit those we’re drive it’s So the existing can the branch Dallas we of a growth different be planning. from comes we Yes, will but levers, pull more, the organic have one Much not the to growth number of

finance clients community both our a businesses our credit-only have We large that today. banking within share and are commercial of clients

like And relationships, if well. to we’ll in treasury we we’d are going us relationships. continue to continue as form going broader to to the But deposits bring those their them are a compel – those we to so relationship of

cases, So and win the opportunity the real future. there on there, confident we is won’t for pipeline those all we’re probably but plans in that we our see, based

Aaron Graft

And Timur, Aaron. is this

amount that to thing as volume of payments– in Another float grows, payment to a generate the start volume. greater is we remember from payment TriumphPay

And to so starts non-interest-bearing payments going while it to correlate that of generate totally – it it that self-fund platform. doesn’t itself, through the growth deposits

Timur Braziler

industry? had you additional an there? be Any one in color. on think then That’s color Any me, great. you. past And that you – good increase Okay. saw mentioned one would last there Thank specific can Aaron, due I that for just you loans. granularity provide Any

Aaron Graft

we’re loans, in as I lot were which a mean some that, there The theme already no – legacy have of position ag up. have just Most loans Timur, a couple some that – in them. got loans. of have is certain of to cleaned a been just had quarter-end already working of through estate are some We’ve real duration of them there, and –

an and deterioration charge-offs. a in those, specific through this of don’t – see I any of and It’s segment not we any we’ll was it’s more work to that So significant expect we’re portfolio anomaly seeing. think

Todd Ritterbusch

there, payment not in events, jump driven Aaron, defaults. too? maturity can those I by So past dues largely were

up choosing maturity. a way. the of number change wanted a against So terms where we some We in came we had situations to

are resolution. but are to on in We still the those things several negotiations working coming through they cases,

due it’s doesn’t so past because as but And a mean that a the payment it we’ve you there. that got maturity, see default past

Timur Braziler

Understood. Thank you.

Operator

a Tenner follow-up Instructions] Davidson. [Operator go ahead. with Please D.A. The from next is Gary question

Gary Tenner

Thanks for the follow-up question.

receivables proportion how January? thinking With CECL would that kind shift factored inform larger about asset, pretty with coming changes how and a total the you the of in does short-duration loans that would of be obviously be

Bryce Fowler

Bryce. is This Sure.

Let me one. that take

very net-net, around that conclusion I earnings we’ll Q overall put our our balance. work Like it’ll this, smaller conditions. cycle other But will September based impact immaterial pretty disclosure the have, announcing, get allocation, retained the but overall mean, ALLL our is – impact we’ll shorter-duration and a balances CECL longer around in in XX to like some are probably within We’re portfolio is get will banks on as zero assets bigger. see duration to factoring ends, the close

Gary Tenner

completely $XX Okay, clarify, great. period some to that guidance EPS, execution And of assume XXXX buyback does on million time? of the just over the

Aaron Graft

No.

weren’t – we assuming that making around didn’t said, buybacks predictions that. is because we guidance no As

was given in heard, us to forecast not Of guidance. course, buying I the I but you’ve market expect shares, would in back mean, that be what that

Gary Tenner

Perfect, makes sense. That you. thank Okay.

Operator

to Graft any concludes Aaron turn to This like closing for I conference over back would our session. now question-and-answer remarks. the

Aaron Graft

all joining for the to with you speaking and you Thank this us call, look future. in for forward we

Operator

has conference Thank now for presentation. attending This concluded. you today’s

may disconnect. You now

Triumph Financial (TFIN) 17 Oct 192019 Q3 Earnings call transcript