A bigger Triumph reports a minuscule level of charge-offs for Q2

Triumph Bancorp’s second-quarter earnings report reflected that the bank — a leading supplier of funds to the trucking industry through factoring — is having no trouble collecting on its loans.
It is having strong performance on its loans even as it makes more of them and at higher average amounts. .

Triumph, in releasing its second-quarter earnings Wednesday afternoon, said its charge-off rate for the quarter was a mere 0.04%. A year ago, during a quarter that included the heart of the pandemic and with plunging trucking rates for most of the period, Triumph reported a charge-off rate of 3.95%.

Even more striking was the change in the company’s recording of credit loss expenses. In the second quarter of 2020, Triumph booked loss expenses of $13.6 million. In the corresponding quarter of 2021, the credit loss expense was actually a gain of $1.8 million, with the company citing improvements in the bank’s economic forecasts and changes in the “volume and mix” of its portfolio.

The factoring book at Triumph also grew considerably during the quarter. The value of the invoices purchased by Triumph in the latest quarter was $3.068 billion, with an average invoice size of $2,189. About 90% of the company’s factoring business is in transportation, and the transportation loans averaged $2,090.

A year earlier, the invoices purchased weren’t even half of the latest quarter, coming in at $1.238 billion with an average size of $1,524, and a transportation average of $1,378.

But Triumph in 2021 is not the same company it was a year ago, as it purchased the factoring business of Covenant Logistics at the start of the third quarter of 2020.

Part of the impact of that acquisition can be seen in the raw number of invoices the company purchased during the quarter. That stood at 3.165 million for 2021 at a value of $3.427 billion, compared to 767,180 invoices a year ago for a total of $667.4 million.

Yields on factored loans were higher. The average yield for the quarter was 14.99%, compared to 13.85% a year ago.

In the same way that comparing Triumph Bancorp’s second quarter of 2021 to Q2 2020 has an element of apples and oranges to it, given the Covenant acquisition, the third quarter of 2021 will be the first full quarter that Triumph will reflect the acquisition of HubTran. The transaction closed June 1.

Triumph officials have made clear that the merger of TriumphPay and the open loop systems of HubTran, which will be offered to other factoring companies, are the core of the company’s future.

Triumph management will hold a call with analysts early Thursday.

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A bigger Triumph reports a minuscule level of charge-offs for Q2

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