Triumph Financial(US:TFIN)2021-01-22 18:31Financial Data and Key Metrics Changes - For Q4 2020, the company reported net income of $31.1 million or $1.25 per diluted share, indicating a solid quarter with strong profitability [6] - The loan-to-deposit ratio decreased slightly to 106% from 114% at the end of Q3 2020, adjusted for mortgage warehouse loan balances [18] - The net interest margin (NIM) improved to 6.2%, positioning the company at the top of its peer group, driven by growth in transportation lines of business [19] Business Line Data and Key Metrics Changes - Triumph Business Capital's factoring revenue for Q4 2020 was $36.8 million, with a 24% increase compared to Q3 and a 65% increase year-over-year [34] - TriumphPay processed 1.8 million invoices in Q4, totaling approximately $1.8 billion, representing a 56% increase from the prior quarter and a 282% increase from Q4 2019 [35] - The company purchased approximately $19.6 million of accounts receivable from a major trucking client, which led to a legal dispute over payment collection [12][14] Market Data and Key Metrics Changes - The transportation payments business paid approximately 2.9 million invoices totaling around $4.03 billion in Q4, reflecting a 38% growth over the prior quarter [33] - Deferred loan balances at year-end were $104.6 million, an 82% decline from $572 million on June 30, 2020, indicating improved credit risk management [23] Company Strategy and Development Direction - The company aims to enhance its relationship banking across all lending units and expects deposits and fee income to grow faster than loan balances [31] - There is a focus on building a comprehensive banking solution for transportation factoring and equipment finance clients, shifting the loan mix towards long-term relationships [31] - The company plans to continue investing in technology and data analytics to improve operational efficiency and client service [64] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the transportation sector's strength, citing ongoing challenges in finding qualified drivers and supply chain disruptions [60] - The company anticipates that the legal issues surrounding the TFS acquisition will not lead to further surprises, and it plans to focus on brokered freight and commercial shipper freight moving forward [96] - Management expects core expenses to be approximately $58 million in Q1 2021, with no significant growth anticipated throughout the year [21][108] Other Important Information - The company established an additional $11.5 million in reserves related to the TFS acquisition, impacting reported asset quality metrics [15] - The company is targeting to onboard two more Tier 1 brokers in Q1 2021, with a goal of reaching a $14 billion run rate by the end of 2021 for TriumphPay [56] Q&A Session Summary Question: What is the current QuickPay usage and its impact on average balances? - Management indicated that QuickPay usage varies with new broker onboarding, but for established users, penetration is approaching mid-teens percentages [46] Question: How is the average invoice size trending into 2021? - The average invoice size for January is $1,934, indicating strong demand in the transportation sector [50] Question: What is the outlook for provision expense? - Management believes provision expense could be zero or negative in the coming quarters due to strong credit performance in core businesses [74] Question: What are the expectations for net interest income in Q1? - Management expects Q1 net interest income to be lower than Q4 but not to the extent seen historically [70] Question: What is the company's stance on M&A? - The company is unlikely to pursue M&A outside of the transportation space, focusing instead on organic growth [97]