Triumph Financial Inc (TFIN, Financial) released its Q3 earnings report on October 19, 2023, revealing a strong performance despite a challenging freight market. The company reported net income to common stockholders of $12.0 million, or $0.51 per diluted share.
Performance Highlights
TriumphPay, the company's payment platform, exceeded expectations with a 16.7% revenue growth this quarter. The EBITDA margins improved to (15)%, a significant achievement that the company cautions may not be replicated in future quarters due to the accumulation of several positives in this quarter.
Non-interest expenses for the quarter declined by about $4 million compared to the last quarter. This decline was attributed to lower contract labor costs related to offshoring efforts and some non-recurring items that elevated Q2 expenses. However, some of these declines, such as those related to the timing of initiatives and related professional services costs, are expected to be transitory.
Market Challenges
The freight market has not rebounded, and the company's leadership believes it could worsen before improving. Despite this, the company sees potential long-term value creation. Triumph Financial Inc (TFIN, Financial) believes that a deeper freight recession, if it occurs, could benefit the company due to its diversified balance sheet, excess capital, and a full suite of services.
Financial Highlights
As of the end of Q3, loans held for investment stood at $4,371,528,000, and deposits were at $4,487,051,000. The net income available to common stockholders was $11,993,000, and diluted earnings per common share were $0.51. The return on average assets was 0.93%, and the yield on loans was 9.16%. The cost of total deposits was 1.15%, and non-performing assets to total assets were 1.07%. The ACL to total loans was 0.80%, and total capital to risk-weighted assets was 15.77%.
Company Analysis
Despite the challenging freight market, Triumph Financial Inc (TFIN, Financial) has managed to deliver a strong performance in Q3. The company's diversified balance sheet, excess capital, and a full suite of services have positioned it well to navigate the current market conditions. The strong performance of TriumphPay and the decline in non-interest expenses have also contributed to the company's solid Q3 results.
However, the company has cautioned that the freight market could worsen before improving, which could impact future performance. Despite this, the company remains optimistic about its long-term prospects and believes that it is well-positioned to benefit from a potential freight recession.
