Truxton Corporation Reports Fourth Quarter and Full Year 2022 Results

Rhea-AI Summary

Truxton Corporation announced its operating results for the year ending December 31, 2022, revealing a 15% increase in net income to $16.7 million compared to $14.5 million in 2021. Earnings per diluted share rose to $5.75, up from $5.02. The Bank reported a fourth-quarter net income of $4.1 million, slightly up from $4.0 million year-over-year, with a net loan growth exceeding $120 million. Non-interest income, excluding bond losses, reached $4.4 million, primarily driven by wealth management services. However, the net interest margin decreased to 2.83%. Truxton's strong capital position is noted, alongside a dividend payout of $2.36 per share and a share repurchase program.

Positive

• Net income for 2022 increased by 15% to $16.7 million.
• Earnings per diluted share rose to $5.75, marking a 15% increase.
• Q4 net income attributable to common shareholders was $4.1 million, up slightly from Q4 2021.
• Net loan growth exceeded $120 million for the year.
• Non-interest income, excluding bond losses, grew to $4.4 million in Q4 2022.
• Strong capital position with a Tier 1 leverage ratio of 9.78%.

Negative

• Net interest margin decreased to 2.83%, down from 2.95% in Q3 2022.
• After-tax losses of $588,000 due to bond portfolio restructuring lowered EPS by approximately $0.16.
• Book value per common share declined to $25.39, down from $29.19 in 2021 due to bond value losses.

NASHVILLE, Tenn., Jan. 26, 2023 (GLOBE NEWSWIRE) -- Truxton Corporation, the parent company for Truxton Trust Company (“Truxton” or “the Bank”) and subsidiaries, announced its operating results for the quarter and year ended December 31, 2022. Fourth quarter net income attributable to common shareholders was $4.1 million, or $1.40 earnings per diluted share, compared to $4.0 million, or $1.39 earnings per diluted share, for the same quarter in 2021.

For the year ended December 31, 2022, net income increased by 15% to $16.7 million from $14.5 million in 2021. For the year ended December 31, 2022, earnings per diluted share rose to $5.75 from $5.02, an increase of 15% from 2021.

“The year just completed was challenging, but Truxton grew more and earned more than ever before,” said Chairman and CEO Tom Stumb. “Net loan growth of more than $120 million represents a tremendous effort by our lenders and the managers and teams who support them. Our wealth management revenue grew 8% in a year when both stock and bond prices fell precipitously, reflecting both relatively strong investment performance and the addition of many new client relationships.”

Key Highlights

• Truxton partially restructured the bond portfolio in December and realized $588 thousand of losses on the sale of $20 million in securities. This allowed us to improve our interest rate risk profile and should contribute to an increase in our future earnings compared to what we would have achieved on these bonds had we not sold them. The after-tax cost of these losses lowered earnings per share by approximately $0.16. Excluding these losses, earnings per diluted share for the quarter would have been approximately $1.56, which is 5% higher than $1.49 in the third quarter of 2022 and 12% higher than $1.39 in the fourth quarter of 2021.
• Non-interest income, excluding bond losses, grew to $4.4 million in the fourth quarter of 2022, an increase of 2% from the third quarter of 2022 and 2% in comparison to the fourth quarter of 2021. Wealth management services constituted 95% of non-interest income, excluding bond losses, in the fourth quarter of 2022.
• Loans rose 1% to $619 million at year end compared to $612 million on September 30, 2022 and were up 25% compared to $495 million on December 31, 2021.
• Total deposits increased 2% from September 30, 2022, to $808 million at December 31, 2022, and increased less than 1% in comparison to December 31, 2021. Truxton continues to fund its growth from a single banking location led by its commitment to provide what it believes is superior deposit operations service and technology. As a result, occupancy expenditures and fixed asset investments are a fraction of typical peers.
• Net interest margin for the fourth quarter of 2022 was 2.83%, a decrease of 12 basis points from the 2.95% experienced in the third quarter of 2022, but an increase of 35 basis points from the fourth quarter of 2021. Cost of funds was 1.73% in the fourth quarter of 2022, up from 1.02% for the quarter ended September 30, 2022, and an increase from 0.47% in the quarter ended December 31, 2021.
• Asset quality remains sound at Truxton. Truxton had no non-performing assets at December 31, 2022. Truxton had $2 thousand of recoveries in the fourth quarter of 2022, $0 in the trailing quarter, and $5 thousand of charge-offs in the fourth quarter of 2021.
• Allowance for loan losses was $5.8 million, $5.8 million, and $4.8 million at quarter end December 31, 2022, September 30, 2022, and December 31, 2021, respectively. For the same three periods, the Bank’s allowance was 0.93%, 0.94%, and 0.97%, respectively, of gross loans (including PPP loans) outstanding at period end. Truxton will adopt the Current Expected Credit Loss accounting methodology for purposes of calculating its allowance for credit losses effective January 1, 2023.
• Truxton has several sources of lightly taxed income including the yield on bank-owned life insurance, the earnings of the bank’s captive insurance company, and the interest income from the bank’s tax-exempt bond portfolio that cause its effective rate to be below the combined statutory rates, but the effective tax rate for 2022 increased to 18.4% from 16.5% in 2021 as the proportion of fully taxable income grew.
• The Bank’s capital position remains strong. The Tier 1 leverage ratio was 9.78% at December 31, 2022, 9.78% at September 30, 2022, and 8.95% at December 31, 2021. Book value per common share was $25.39, $23.84, and $29.19 at December 31, 2022, September 30, 2022, and December 31, 2021, respectively. The decline in book value per share at December 31, 2022, when compared to December 31, 2021, was the result of accumulated other comprehensive losses associated with declining values in the Company’s bond portfolio caused by the rising interest rate environment.
• During the twelve months ended December 31, 2022, Truxton Corporation paid dividends of $2.36 per common share and repurchased 32,000 shares of its common stock for $2.2 million total, an average price of $68.88 per share.

About Truxton Trust
Truxton Trust Company is a provider of private banking, wealth management, trust, and family office services for wealthy individuals, their families, and their business interests. Serving clients across the world, Truxton’s vastly experienced team of professionals provides customized solutions to its clients’ complex financial needs. Founded in 2004 in Nashville, Tennessee, Truxton Trust upholds its original guiding principle: do the right thing. Truxton Trust Company is a subsidiary of financial holding company, Truxton Corporation (OTCPK: TRUX). For more information, visit truxtontrust.com.

Investor Relations		Media Relations
Andrew May		Swan Burrus
615-515-1707		615-250-0773
andrew.may@truxtontrust.com		swan.burrus@truxtontrust.com

Truxton Corporation
Consolidated Balance Sheets
(000's)
(Unaudited)
	December 31, 2022*			September 30, 2022*			December 31, 2021*
ASSETS
Cash and due from financial institutions	$	5,405		$	5,101		$	9,321
Interest bearing deposits in other financial institutions		1,094			3,906			88,743
Federal funds sold		-			-			1,425
Cash and cash equivalents		6,499			9,007			99,489
Time deposits in other financial institutions		3,833			1,835			2,780
Securities available for sale		257,257			263,144			302,502
Gross loans, excluding Paycheck Protection Program		618,847			611,946			494,292
Allowance for loan losses		(5,761	)		(5,750	)		(4,775	)
Paycheck Protection Program Loans		101			111			506
Net loans		613,187			606,307			490,023
Bank owned life insurance		10,592			10,541			10,389
Restricted equity securities		3,227			2,688			3,242
Premises and equipment, net		209			241			316
Accrued interest receivable		3,512			3,207			2,346
Deferred tax asset, net		7,161			7,371			99
Other assets		11,803			12,417			6,073
Total assets	$	917,280		$	916,758		$	917,259
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Non-interest bearing	$	153,870		$	154,049		$	215,696
Interest bearing		653,880			635,503			591,779
Total deposits		807,750			789,552			807,475
Federal funds purchased		4,933			6,517			-
Federal Home Loan Bank advances		4,500			25,500			4,500
Subordinated debt		14,727			14,703			14,628
Swap counterparty cash collateral		4,090			4,000			-
Deferred tax liability, net		-			-			-
Other liabilities		7,904			7,619			6,605
Total liabilities		843,904			847,891			833,208
SHAREHOLDERS' EQUITY
Common stock, $0.10 par value	$	289		$	288		$	288
Additional paid-in capital		31,107			30,668			31,790
Retained earnings		59,492			56,424			49,628
Accumulated other comprehensive income (loss)		(17,512	)		(18,513	)		2,345
Total shareholders' equity		73,376			68,867			84,051
Total liabilities and shareholders' equity	$	917,280		$	916,758		$	917,259
*The information is preliminary, unaudited and based on company data available at the time of presentation.

Truxton Corporation
Consolidated Statements of Net Income
(000's)
(Unaudited)
	Three Months Ended										Year To Date
	December 31, 2022*				September 30, 2022*			December 31, 2021*			December 31, 2022*				December 31, 2021*
Non-interest income
Wealth management services	$	4,126			$	4,014		$	4,072		$	16,377			$	15,102
Service charges on deposit accounts		111				99			95			415				334
Securities gains (losses), net		(588	)			0			0			(636	)			0
Bank owned life insurance income		51				51			51			203				204
Other		63				103			28			253				281
Total non-interest income		3,763				4,267			4,246			16,612				15,921
Interest income
Loans, including fees	$	8,017			$	6,797		$	4,762		$	25,125			$	18,325
Taxable securities		1,620				1,370			928			5,247				3,031
Tax-exempt securities		373				403			399			1,568				1,565
Interest bearing deposits		303				87			54			469				236
Federal funds sold		26				10			1			39				2
Other interest income		59				34			40			156				124
Total interest income		10,398				8,701			6,184			32,604				23,283
Interest expense
Deposits		3,485				1,914			617			6,792				2,247
Subordinated debentures		194				194			194			776				780
Short-term borrowings		42				6			-			52				-
Long-term borrowings		72				23			101			141				310
Total interest expense		3,793				2,137			912			7,761				3,337
Net interest income		6,605				6,564			5,272			24,843				19,946
Provision for loan losses		9				284			0			984				291
Net interest income after provision for loan losses		6,596				6,280			5,272			23,859				19,655
Total revenue, net		10,359				10,547			9,518			40,471				35,576
Non interest expense
Salaries and employee benefits		3,823				3,784			3,595			14,587				13,247
Occupancy		278				261			253			1,034				967
Furniture and equipment		25				25			33			112				154
Data processing		400				367			281			1,486				1,291
Wealth management processing fees		179				163			133			666				644
Advertising and public relations		78				30			116			162				215
Professional services		177				271			171			793				645
FDIC insurance assessments		55				77			73			246				214
Other		196				228			203			879				789
Total non interest expense		5,211				5,206			4,858			19,965				18,166
Income before income taxes		5,148				5,341			4,660			20,506				17,410
Income tax expense		1,098				1,002			623			3,780				2,869
Net income	$	4,050			$	4,339		$	4,037		$	16,726			$	14,541
Earnings per share:
Basic	$	1.40			$	1.50		$	1.40		$	5.78			$	5.05
Diluted	$	1.40			$	1.49		$	1.39		$	5.75			$	5.02
*The information is preliminary, unaudited and based on company data available at the time of presentation.

Truxton Corporation
Selected Quarterly Financial data
At Or For The Three Months Ended
(000's)
(Unaudited)
	December 31, 2022*			September 30, 2022*			December 31, 2021
Per Common Share Data
Net income attributable to shareholders, per share
Basic	$1.40			$1.50			$1.40
Diluted	$1.40			$1.49			$1.39
Book value per common share	$25.39			$23.84			$29.19
Tangible book value per common share	$25.39			$23.84			$29.19
Basic weighted average common shares	2,810,702			2,811,768			2,807,863
Diluted weighted average common shares	2,822,538			2,825,084			2,822,942
Common shares outstanding at period end	2,887,362			2,888,567			2,879,284
Selected Balance Sheet Data
Tangible common equity (TEC) ratio	8.00%			7.51%			9.16%
Average Loans	$616,609			$589,143			$477,005
Average earning assets (1)	$939,763			$898,926			$853,925
Average total assets	$943,900			$908,753			$884,235
Average stockholders' equity	$70,128			$72,918			$82,430
Selected Asset Quality Measures
Nonaccrual loans	$0			$0			$0
90+ days past due still accruing	$0			$0			$21
Total nonperforming loans	$0			$0			$21
Total nonperforming assets	$0			$0			$21
Net charge offs (recoveries)	($2)			$0			$5
Nonperforming loans to assets	0.00%			0.00%			0.00%
Nonperforming assets to total assets	0.00%			0.00%			0.00%
Nonperforming assets to total loans and other real estate	0.00%			0.00%			0.00%
Allowance for loan losses to total loans	0.93%			0.94%			0.97%
Net charge offs to average loans	0.00%			0.00%			0.00%
Capital Ratios (Bank Subsidiary Only)
Tier 1 leverage	9.78%			9.78%			8.95%
Common equity tier 1	13.36%			12.64%			13.82%
Total risk-based capital	14.20%			13.46%			14.66%
Selected Performance Ratios
Efficiency ratio	48.55%			48.07%			51.04%
Return on average assets (ROA)	1.70%			1.89%			1.81%
Return on average stockholders' equity (ROE)	22.92%			23.61%			19.42%
Return on average tangible common equity (ROTCE)	22.92%			23.61%			19.42%
Net interest margin	2.83%			2.95%			2.48%
*The information is preliminary, unaudited and based on company data available at the time of presentation.
(1) Average earning assets is the daily average of earning assets. Earning assets consists of loans, mortgage loans held for sale, federal funds sold, deposits with banks, investment securities and restricted equity securities.

Truxton Corporation
Yield Tables
For The Periods Indicated
(000's)
(Unaudited)
The following table sets forth the amount of our average balances, interest income or interest expense for each category of interest earning assets and interest bearing liabilities and the average interest rate for interest earning assets and interest bearing liabilities, net interest spread and net interest margin for the periods indicated below:
		Three Months Ended								Three Months Ended								Three Months Ended
		December 31, 2022*								September 30, 2022*								December 31, 2021
		Average Balances			Rates/ Yields (%)		Interest Income/ Expense			Average Balances			Rates/ Yields (%)		Interest Income/ Expense			Average Balances			Rates/ Yields (%)		Interest Income/ Expense
Earning Assets
Loans		$	616,609		5.01		$	7,905		$	589,142		4.50		$	6,680		$	477,005		3.75		$	4,513
Loan fees		$	0		0.07		$	1,112		$	0		0.08		$	117		$	0		0.21		$	249
Loans with fees		$	616,609		5.16		$	8,017		$	589,142		4.58		$	6,797		$	477,005		3.96		$	4,762
Mortgage loans held for sale		$	0		0.00		$	0		$	0		0.00		$	0		$	0		0.00		$	0
Federal funds sold		$	2,688		3.76		$	26		$	1,722		2.22		$	10		$	2,902		0.09		$	1
Deposits with banks		$	31,462		3.82		$	303		$	14,641		2.35		$	87		$	86,039		0.25		$	54
Investment securities - taxable		$	228,108		2.84		$	1,620		$	227,715		2.41		$	1,370		$	219,861		1.69		$	928
Investment securities - tax-exempt		$	60,897		3.31		$	372		$	65,706		3.31		$	402		$	68,118		3.17		$	399
Total Earning Assets		$	939,764		4.43		$	10,338		$	898,926		3.89		$	8,666		$	853,925		2.93		$	6,144
Non interest earning assets
Allowance for loan losses			(5,783	)							(5,592	)							(4,778	)
Cash and due from banks		$	6,871							$	7,018							$	9,528
Premises and equipment		$	224							$	236							$	346
Accrued interest receivable		$	2,935							$	2,526							$	2,078
Other real estate		$	0							$	0							$	0
Other assets		$	30,251							$	26,238							$	19,929
Unrealized gain (loss) on inv. securities			(30,362	)							(20,599	)							3,207
Total Assets		$	943,900							$	908,753							$	884,235
Interest bearing liabilities
Interest bearing demand		$	380,638		2.23		$	2,140		$	358,489		1.28		$	1,160		$	386,173		0.55		$	533
Savings and money market		$	142,369		1.44		$	515		$	133,119		0.96		$	321		$	165,479		0.13		$	56
Time deposits - retail		$	24,280		1.41		$	86		$	24,663		1.14		$	71		$	10,917		0.48		$	13
Time deposits - wholesale		$	128,619		2.29		$	744		$	107,704		1.34		$	363		$	16,466		0.37		$	15
Total interest bearing deposits		$	675,906		2.05		$	3,485		$	623,975		1.22		$	1,915		$	579,035		0.42		$	617
Federal Home Loan Bank advances		$	9,957		2.85		$	72		$	5,283		1.69		$	23		$	10,683		5.27		$	144
Subordinated debt		$	14,827		5.12		$	194		$	14,943		5.07		$	194		$	14,757		5.15		$	194
Other borrowings		$	4,760		4.33		$	42		$	1,213		2.70		$	5		$	825		0.00		$	0
Total borrowed funds		$	29,544		4.08		$	308		$	21,439		4.06		$	222		$	26,265		5.05		$	338
Total interest bearing liabilities		$	705,450		2.13		$	3,793		$	645,414		1.31		$	2,137		$	605,300		0.62		$	955
Net interest rate spread					2.30		$	6,545					2.58		$	6,529					2.30		$	5,189
Non-interest bearing deposits		$	163,653							$	185,567							$	190,156
Other liabilities		$	4,671							$	4,854							$	6,347
Stockholder's equity		$	70,128							$	72,918							$	82,430
Total Liabilities and Stockholder's Equity		$	943,902							$	908,753							$	884,233
Cost of funds					1.73								1.02								0.47
Net interest margin					2.83								2.95								2.48
*The information is preliminary, unaudited and based on company data available at the time of presentation.
Yield Table Assumptions - Average loan balances are inclusive of nonperforming loans. Yields computed on tax-exempt instruments are on a tax equivalent basis. Net interest spread is calculated as the yields realized on interest-bearing assets less the rates paid on interest-bearing liabilities. Net interest margin is the result of net interest income calculated on a tax-equivalent basis divided by average interest earning assets for the period. Changes in net interest income are attributed to either changes in average balances (volume change) or changes in average rates (rate change) for earning assets and sources of funds on which interest is received or paid. Volume change is calculated as change in volume times the previous rate while rate change is change in rate times the previous volume. Changes not due solely to volume or rate changes are allocated to volume change and rate change in proportion to the relationship of the absolute dollar amounts of the change in each category.

Truxton Corporation
Yield Tables
For The Periods Indicated
(000's)
(Unaudited)
The following table sets forth the amount of our average balances, interest income or interest expense for each category of interest earning assets and interest bearing liabilities and the average interest rate for interest earning assets and interest bearing liabilities, net interest spread and net interest margin for the periods indicated below:
		Twelve Months Ended									Twelve Months Ended
		December 31, 2022*									December 31, 2021
		Average Balances			Rates/ Yields (%)		Interest Income/ Expense				Average Balances			Rates/ Yields (%)		Interest Income/ Expense
Earning Assets
Loans		$	562,647		4.35		$	24,470			$	455,847		3.73		$	17,009
Loan fees		$	0		0.12		$	654			$	0		0.29		$	1,314
Loans with fees		$	562,647		4.47		$	25,124			$	455,847		4.02		$	18,323
Mortgage loans held for sale		$	28		4.13		$	1			$	56		3.02		$	2
Federal funds sold		$	2,102		1.85		$	39			$	2,574		0.08		$	2
Deposits with banks		$	27,043		1.73		$	469			$	75,854		0.31		$	236
Investment securities - taxable		$	232,515		2.26		$	5,247			$	178,029		1.70		$	3,031
Investment securities - tax-exempt		$	64,684		3.28		$	1,568			$	65,444		3.23		$	1,565
Total Earning Assets		$	889,019		3.71		$	32,448			$	777,804		3.05		$	23,159
Non interest earning assets
Allowance for loan losses			(5,318	)								(4,625	)
Cash and due from banks		$	7,789								$	10,397
Premises and equipment		$	251								$	379
Accrued interest receivable		$	2,453								$	2,091
Other real estate		$	0								$	0
Other assets		$	25,359								$	19,874
Unrealized gain (loss) on inv. securities			(17,031	)								4,878
Total Assets		$	902,522								$	810,798
Interest bearing liabilities
Interest bearing demand		$	366,943		1.19		$	4,350			$	343,416		0.56		$	1,928
Savings and Money Market		$	143,591		0.68		$	975			$	151,590		0.14		$	207
Time deposits - retail		$	19,072		1.08		$	205			$	10,012		0.57		$	57
Time deposits - wholesale		$	89,916		1.40		$	1,262			$	18,493		0.30		$	55
Total interest bearing deposits		$	619,522		1.10		$	6,792			$	523,511		0.43		$	2,247
Federal Home Loan Bank advances		$	6,511		2.14		$	141			$	13,262		2.63		$	354
Subordinated debt		$	14,853		5.21		$	780			$	14,767		5.21		$	780
Other borrowings		$	2,124		2.54		$	48			$	963		0.00		$	0
Total borrowed funds		$	23,488		4.07		$	969			$	28,992		3.86		$	1,134
Total interest bearing liabilities		$	643,010		1.20		$	7,761			$	552,503		0.61		$	3,381
Net interest rate spread					2.51		$	24,687						2.44		$	19,778
Non-interest bearing deposits		$	180,665								$	172,621
Other liabilities		$	4,142								$	6,010
Stockholder's equity		$	74,771								$	79,641
Total Liabilities and Stockholder's Equity		$	902,588								$	810,775
Cost of funds					0.94									0.46
Net interest margin					2.84									2.62
*The information is preliminary, unaudited and based on company data available at the time of presentation.
Yield Table Assumptions - Average loan balances are inclusive of nonperforming loans. Yields computed on tax-exempt instruments are on a tax equivalent basis. Net interest spread is calculated as the yields realized on interest-bearing assets less the rates paid on interest-bearing liabilities. Net interest margin is the result of net interest income calculated on a tax-equivalent basis divided by average interest earning assets for the period. Changes in net interest income are attributed to either changes in average balances (volume change) or changes in average rates (rate change) for earning assets and sources of funds on which interest is received or paid. Volume change is calculated as change in volume times the previous rate while rate change is change in rate times the previous volume. Changes not due solely to volume or rate changes are allocated to volume change and rate change in proportion to the relationship of the absolute dollar amounts of the change in each category.

FAQ

What were Truxton Corporation's earnings per share for 2022?

Truxton Corporation's earnings per diluted share for 2022 were $5.75, an increase from $5.02 in 2021.

How much did net income increase for Truxton in 2022?

Net income for Truxton Corporation increased by 15% to $16.7 million in 2022.

What was the net loan growth reported by Truxton for 2022?

Truxton reported net loan growth of over $120 million for the year ended December 31, 2022.

How did Truxton's non-interest income perform in Q4 2022?

Non-interest income, excluding bond losses, reached $4.4 million in Q4 2022, a 2% increase from both Q3 2022 and Q4 2021.

What was the reason for Truxton's decline in book value per share?

The decline in book value per share to $25.39 was primarily due to accumulated losses from declining bond values amid rising interest rates.