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Average size of factored invoice rises at Triumph Bancorp

(Editor’s note: this story has been amended to reflect additional information from Triumph).

Triumph Bancorp’s factoring business, which got a big increase in size at the end of the third quarter, saw the average size of its invoice in the factoring business rise during the quarter.

Triumph, after disagreements with seller Covenant Logistics that slowed the completion of the sale first announced in July, acquired Covenant’s factoring business, Transport Financial Solutions. The deal closed Sept. 30. An email to Triumph about whether the third-quarter earnings data includes the TFS business had not been answered by publication time. 

In announcing its third-quarter earnings, Triumph, one of the largest factoring companies serving the trucking sector, reported an average invoice size for the quarter of $1,931, up from $1,524 in the second quarter. The figure for the third quarter was also significantly larger than the $1,628 reported for the third quarter of 2019, suggesting the higher freight rates — and the larger invoices that come with that — contributed to the big number for Q3 2019.

The factoring number is not just for transportation. But Triumph reported that the average size of its invoice for transportation business was $1,787 for the quarter. That’s up from $1,387 in the second quarter of this year, and $1,497 in the second quarter of last year. (Nontransportation factored loans averaged $5,181).

Triumph reported a significantly larger book of factored receivables, coming in at $1.016 billion. That was up from $561.6 million in the second quarter and just under $600 million in the third quarter of last year. According to a Triumph spokesman, that figure does reflect the business acquired from TFS. But that only accounted for approximately $107 million at the time of the acquisition, indicating significant organic growth.

The yield on the average factoring balance was 15.65%, up slightly from 15.48% in the second quarter of this year but significantly down from the 18.23% of 2019’s third quarter. The spokesman said that was not as a result of lower interest rates but rather several factors, including Triumph Capital pushing into larger more competitive businesses.

In a presentation released with the earnings, Triumph said its transportation factoring business process $2.92 billion in payments in the quarter. Ofr that, about 60% went through Triumph Capital, and 40% through TriumphPay, Triumph Bancorp’s payments program that works through brokers to put funds into the hands of carriers.

The rolling 12-quarter annual charge-off rate, an indicator of loans that are impaired, was 0.43%. That is unchanged from the prior quarter but somewhat bigger than the 0.36% at the end of 2019’s third quarter.

One area of troubled loans that wouldn’t show up in any sort of impaired figures is what Triumph calls short-term deferrals “to assist customers impacted by COVID-19.” The deferrals total $103 million. But given provisions in the federal CARES Act, those deferrals “are not considered troubled debt restructurings.”

The company’s overall earnings were positive. Its non-GAAP earnings of 91 cents per share beat consensus estimates by 42 cents per share, according to SeekingAlpha. Its revenue of $84.9 million, up 17.1% from the third quarter of 2019, was 89 cents per share and beat consensus estimates by 40 cents per share.

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John Kingston

John has an almost 40-year career covering commodities, most of the time at S&P Global Platts. He created the Dated Brent benchmark, now the world’s most important crude oil marker. He was Director of Oil, Director of News, the editor in chief of Platts Oilgram News and the “talking head” for Platts on numerous media outlets, including CNBC, Fox Business and Canada’s BNN. He covered metals before joining Platts and then spent a year running Platts’ metals business as well. He was awarded the International Association of Energy Economics Award for Excellence in Written Journalism in 2015. In 2010, he won two Corporate Achievement Awards from McGraw-Hill, an extremely rare accomplishment, one for steering coverage of the BP Deepwater Horizon disaster and the other for the launch of a public affairs television show, Platts Energy Week.