Triumph Financial(TFIN) - 2024 Q2 - Quarterly Results

Financial Performance - Net income for the second quarter was $1.9 million, or $0.08 per diluted share[1] - Net income available to common stockholders decreased to $1,945,000, down 42.0% from $3,357,000 in the prior quarter[21] - Net income for the three months ended June 30, 2024, was $2,747 thousand, a decrease of 34.03% from $4,158 thousand in the previous quarter[66] - Basic earnings per common share for the quarter was $0.08, unchanged from the previous quarter[64] - Diluted earnings per common share for the three months ended June 30, 2024, was $0.08, down from $0.14 in the previous quarter[67] Revenue and Income Trends - Revenue stagnation is attributed to the longest freight recession in history, leading to increased expenses and missed consensus earnings estimates by approximately $3.3 million[2][5] - Non-interest income in the Payments segment grew by 5.6% quarter-over-quarter and 39.8% year-over-year, driven by fees from network transactions[23] - Total payment volume increased by 4.8% to $6,687,587,000, with broker clients contributing $6,379,680,000 of that total[24] - Network transactions increased by 13.0% compared to the previous quarter, reaching an all-time total of $5 billion in transactions[26] - Noninterest income for the three months ended June 30, 2024, was $17,167 thousand, up from $14,999 thousand in the previous quarter, marking a rise of 14.51%[79] Expenses and Cost Management - Total expenses for Q2 were $97.3 million, a 7.7% increase from Q1, with expectations to maintain expenses around $97 million for Q3[6][10] - Major drivers of expense increase included communications and technology ($2.4 million), salaries and benefits ($1.8 million), legal expenses ($1.1 million), and occupancy expenses ($0.9 million)[7] - TriumphPay's non-interest expenses rose to $17,800,000, an increase of 3.4% from the previous quarter[26] - Total noninterest expense for the three months ended June 30, 2024, was $97,343 thousand, compared to $90,371 thousand in the previous quarter, an increase of 7.09%[66] Asset and Capital Management - The company holds over $250 million in excess capital, providing confidence to continue investing despite market uncertainties[10] - Total assets increased to $5,783,334 thousand as of June 30, 2024, up from $5,575,493 thousand in the previous quarter, representing a growth of 3.73%[64] - Loans held for investment increased to $4,288,417 thousand as of June 30, 2024, compared to $4,195,120 thousand in the prior quarter, marking an increase of 2.21%[65] - Total stockholders' equity increased to $874,249 thousand as of June 30, 2024, from $872,339 thousand on March 31, 2024, a growth of 0.22%[65] Operational Efficiency - The efficiency ratio increased to 92.64% from 89.45% in the previous quarter, indicating a rise of 2.43%[64] - The return on average assets for the quarter was 0.19%, down from 0.31% in the previous quarter, reflecting a decrease of 38.71%[64] - The return on average total equity decreased to 1.26% from 1.90% in the prior quarter, a decline of 33.68%[64] Technology and Innovation - TriumphX, the technology organization, represents about 30% of the Corporate segment's spend and contributed to nearly 50% of the expense growth over the past several quarters[18] - Technology enhancements include upgrades to the proprietary factor management software, Delta, and the MyTriumph client portal[45][49] - The "instant purchase" AI-based decisioning model is currently in pilot phase with approximately 600 clients, expected to improve operational efficiency[50] Market Outlook - The company anticipates continued challenges in the freight market, with no significant changes in earnings outlook through year-end[54] - The company anticipates achieving 50% density in brokered freight by the end of this year, with current network engagement just under 47%[4][6] Client and Transaction Metrics - The average invoice paid by TriumphPay decreased by 1.2% in size, indicating a slight contraction in invoice amounts[24] - Number of invoices processed increased to 6,062,779 in Q2 2024, compared to 5,717,016 in Q1 2024, indicating a growth of 6.0%[74] - Average transportation invoice price decreased to $1,738, down 2% from Q2 2023 and 1.9% from Q1 2024[37]