Truxton Corporation Reports Third Quarter 2021 Results

Rhea-AI Summary

Truxton Corporation (OTCPK: TRUX) reported strong third quarter results for 2021, with net income of $3.9 million, a 53% increase compared to the same period in 2020. Earnings per share rose by 52% to $1.34. Wealth management revenue surged 37%, and total deposits increased by 4% from the prior quarter, reaching $733 million. Although net interest margin slightly declined to 2.69%, asset quality remained stable with no non-performing assets. The company's effective tax rate is approximately 19%, supported by various tax-advantaged income sources.

Positive

• Net income rose by 53% to $3.9 million year-over-year.
• Earnings per diluted share increased by 52% to $1.34.
• Wealth management revenue grew 37% compared to Q3 2020.
• Total deposits increased 4% from the previous quarter, totaling $733 million.
• No non-performing assets reported, indicating strong asset quality.

Negative

• Net interest margin decreased to 2.69%, down 15 basis points year-over-year.
• Cost of funds increased to 0.44% from 0.35% year-over-year.

NASHVILLE, Tenn., Oct. 21, 2021 (GLOBE NEWSWIRE) -- Truxton Corporation (OTCPK: TRUX), the parent company for Truxton Trust Company (“Truxton” or “the Bank”) and subsidiaries, announced its operating results for the quarter ended September 30, 2021. Third quarter net income attributable to common shareholders was $3.9 million or $1.34 per diluted share compared to $2.5 million or $0.88 per diluted share for the same quarter in 2020. Net income rose by 53% for the quarter compared to the third quarter of 2020 while fully diluted earnings per share rose by 52%.

“Truxton’s third quarter 2021 performance was outstanding,” said Chairman and CEO Tom Stumb. “Wealth management revenue increased 37% from the third quarter of 2020. Loans were up 7% compared to September 30, 2020. Excluding amounts under the Paycheck Protection Program (PPP), loans grew 32% from the end of September 2020. This quarter’s strong performance resulted in part from recognition of $409,000 in PPP loan fees, which will continue into the final quarter of the year but at a much lower level.”

Key Highlights

• Non-interest income grew to $4.1 million in the third quarter, an increase of 5% from the second quarter of 2021 and 39% in comparison to the third quarter of 2020. Wealth management services constituted 95% of non-interest income in the third quarter of 2021.
• Loans rose 7% to $482 million compared to June 30, 2021, and were up 18% compared to September 30, 2020. Excluding PPP loans, loans rose by 10% compared to June 30, 2021, and 32% compared to September 30, 2020, but we expect loan growth in the fourth quarter to moderate.
• As noted above, PPP fee recognition driven by loan forgiveness added $409 thousand in pretax income for the quarter, which equates to approximately $0.11 in earnings per diluted share. $2.65 million in PPP loans remained outstanding at quarter end with only $107 thousand in unrecognized fees, almost all of which we expect to recognize in the fourth quarter.
• Total deposits increased 4% from June 30, 2021 to $733 million, and increased 36% in comparison to September 30, 2020. Truxton continues to fund its growth from a single banking location through 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 third quarter of 2021 was 2.69%, a decrease of 2 basis points from the 2.71% experienced in the second quarter of 2021, and a decrease of 15 basis points from the third quarter of 2020. Cost of funds was 0.44% in the third quarter of 2021, down from 0.46% for the quarter ended June 30, 2021, but up from 0.35% for the quarter ended September 30, 2020. The year-over-year increase was the result of the issuance of $15 million of 4.5% subordinated notes in September 2020. We continue to have excess liquidity because the deposit growth we experienced in 2020 has persisted into the third quarter of 2021.
• Asset quality remains sound at Truxton. Truxton had no non-performing assets at September 30, 2021, as our one problem loan was repaid including all of its associated interest.   Truxton had $2,000 of charge-offs in the third quarter of 2021, $1,000 in the trailing quarter, and $0 in the same quarter a year ago. All of these charge-offs are from small loans acquired from a housing not-for-profit.
• Allowance for loan losses was $4.8 million, $4.6 million, and $4.3 million at quarter end September 30, 2021, June 30, 2021, and September 30, 2020, respectively. For the same three periods, the Bank’s allowance was 0.98%, 1.00%, and 1.03%, respectively, of gross loans (including PPP loans) outstanding at period end.
• Tax expense increased by 29% from the June 30, 2021 quarter and by 36% from the September 30, 2020 period because pretax income grew. Truxton believes that the effective tax rate of approximately 19% of pretax net income will persist under current state and federal law. Truxton has several sources of lightly taxed income including 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.
• The Bank’s capital position remains strong. Its Tier 1 leverage ratio was 8.99% at September 30, 2021, 9.47% at June 30, 2021, and 9.43% at September 30, 2020. Book value per common share was $28.14, $27.35, and $25.27 at September 30, 2021, June 30, 2021, and September 30, 2020, respectively. During the twelve months ended September 30, 2021, Truxton Corporation paid dividends of $2.18 per common 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.

Truxton Corporation
Consolidated Balance Sheets
(000's)
(Unaudited)
	September 30, 2021*			June 30, 2021*			September 30, 2020*
ASSETS
Cash and due from financial institutions	$	10,556		$	10,232		$	12,772
Interest bearing deposits in other financial institutions		56,505			92,671			90,836
Federal funds sold		2,929			5,375			2,223
Cash and cash equivalents		69,990			108,278			105,831
Time deposits in other financial institutions		2,538			2,185			2,938
Securities available for sale		269,685			235,032			156,558
Gross loans, excluding Paycheck Protection Program		484,614			441,997			367,689
Allowance for loan losses		(4,779	)		(4,575	)		(4,257	)
Paycheck Protection Program Loans		2,652			15,068			46,684
Net loans		482,487			452,490			410,116
Bank owned life insurance		10,338			10,288			10,132
Restricted equity securities		3,235			3,228			3,206
Premises and equipment, net		371			405			538
Accrued interest receivable		2,331			2,260			2,850
Deferred tax asset, net		-			-			106
Other assets		6,455			6,531			7,044
Total assets	$	847,430		$	820,697		$	699,319
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Non-interest bearing	$	161,614		$	164,176		$	150,083
Interest bearing		571,298			543,238			388,959
Total deposits		732,912			707,414			539,042
Federal Home Loan Bank advances		11,680			12,835			17,867
Paycheck Protection Program Liquidity Facility advances		-			-			46,639
Subordinated debt		14,604			14,748			14,574
Other liabilities		7,193			6,947			9,527
Total liabilities		766,389			741,944			627,649
SHAREHOLDERS' EQUITY
Additional paid-in capital		31,799			31,556			30,832
Retained earnings		46,456			43,446			38,696
Accumulated other comprehensive income (loss)		2,786			3,751			2,142
Total shareholders' equity		81,041			78,753			71,670
Total liabilities and shareholders' equity	$	847,430		$	820,697		$	699,319
*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
	September 30, 2021*			June 30, 2021*			September 30, 2020*			September 30, 2021*			September 30, 2020*
Non-interest income
Wealth management services	$	3,874		$	3,726		$	2,832		$	11,030		$	8,367
Service charges on deposit accounts		97			82			59			239			197
Securities gains (losses), net		0			0			0			0			0
Bank owned life insurance income		51			51			53			153			159
Other		76			50			13			242			197
Total non-interest income		4,098			3,909			2,957			11,664			8,920
Interest income
Loans, including fees	$	5,026		$	4,434		$	4,126		$	13,563		$	12,585
Taxable securities		724			719			471			2,103			1,492
Tax-exempt securities		391			395			299			1,165			740
Interest bearing deposits		75			46			90			183			253
Federal funds sold		1			1			2			2			18
Other interest income		16			47			13			83			59
Total interest income		6,233			5,642			5,001			17,099			15,147
Interest expense
Deposits		590			514			389			1,630			1,490
Short-term borrowings		-			-			-			-			-
Subordinated debentures		194			194			-			586			-
Long-term borrowings		61			72			134			210			353
Total interest expense		845			780			523			2,426			1,843
Net interest income		5,388			4,862			4,478			14,673			13,304
Provision for loan losses		199			-			262			291			865
Net interest income after provision for loan losses		5,189			4,862			4,216			14,382			12,439
Total revenue, net		9,287			8,771			7,173			26,046			21,359
Non interest expense
Salaries and employee benefits		3,316			3,230			2,781			9,652			8,507
Occupancy		247			246			228			714			649
Furniture and equipment		33			42			46			121			107
Data processing		339			327			296			1,010			849
Wealth management processing fees		168			164			102			511			357
Advertising and public relations		25			34			30			99			97
Professional services		164			183			190			474			514
FDIC insurance assessments		57			42			45			141			98
Other		124			221			237			573			720
Total non interest expense		4,473			4,489			3,955			13,295			11,898
Income before income taxes		4,814			4,282			3,218			12,751			9,461
Income tax expense		940			731			693			2,246			1,852
Net income	$	3,874		$	3,551		$	2,525		$	10,505		$	7,609
Earnings per share:
Basic	$	1.35		$	1.23		$	0.89		$	3.64		$	2.73
Diluted	$	1.34		$	1.22		$	0.88		$	3.63		$	2.70
*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)
	September 30, 2021*	June 30, 2021*	September 30, 2020*
Per Common Share Data
Net income attributable to shareholders, per share
Basic	$1.35	$1.23	$0.89
Diluted	$1.34	$1.22	$0.88
Book value per common share	$28.14	$27.35	$25.27
Tangible book value per common share	$28.14	$27.35	$25.27
Basic weighted average common shares	2,809,307	2,814,196	2,758,375
Diluted weighted average common shares	2,822,177	2,825,668	2,789,562
Common shares outstanding at period end	2,879,527	2,879,177	2,836,451
Selected Balance Sheet Data
Tangible common equity (TEC) ratio	9.56%	9.60%	10.25%
Average Loans	$470,746	$446,079	$413,716
Average earning assets (1)	$813,434	$732,416	$642,326
Average total assets	$848,148	$765,391	$677,985
Average stockholders' equity	$81,071	$77,148	$71,183
Selected Asset Quality Measures
Nonaccrual loans	$0	$2,007	$2,044
90+ days past due still accruing	$6	$38	$0
Total nonperforming loans	$6	$2,045	$2,044
Total nonperforming assets	$6	$2,045	$2,044
Net charge offs	$2	$1	$0
Nonperforming loans to assets	0.00%	0.24%	0.29%
Nonperforming assets to total assets	0.00%	0.25%	0.29%
Nonperforming assets to total loans and other real estate	0.00%	0.45%	0.49%
Allowance for loan losses to total loans	0.98%	1.00%	1.03%
Net charge offs to average loans	0.00%	0.00%	0.00%
Capital Ratios (Bank Subsidiary Only)
Tier 1 leverage	8.99%	9.47%	9.43%
Common equity tier 1	13.35%	13.80%	14.60%
Total risk-based capital	14.20%	14.70%	15.58%
Selected Performance Ratios
Efficiency ratio	47.87%	51.67%	53.01%
Return on average assets (ROA)	1.81%	1.86%	1.48%
Return on average stockholders' equity (ROE)	18.96%	18.46%	14.12%
Return on tangible common equity (ROTCE)	18.96%	18.46%	14.12%
Net interest margin	2.69%	2.71%	2.84%
*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
	September 30, 2021*							June 30, 2021*							September 30, 2020*
	Average Balances			Rates/ Yields (%)	Interest Income/ Expense			Average Balances			Rates/ Yields (%)	Interest Income/ Expense			Average Balances			Rates/ Yields (%)		Interest Income/ Expense
Earning Assets
Loans	$	470,746		2.87	$	4,586		$	446,079		3.64	$	4,049		$	413,716		3.74		$	3,891
Loan fees	$	0		0.37	$	440		$	0		0.35	$	385		$	0		0.23		$	240
Loans with fees	$	470,746		4.24	$	5,026		$	446,079		3.99	$	4,433		$	413,716		3.97		$	4,131
Mortgage loans held for sale	$	20		2.70	$	0		$	108		3.16	$	1		$	0		0.00		$	0
Federal funds sold	$	3,085		0.01	$	1		$	2,124		0.06	$	0		$	4,340		0.17		$	2
Deposits with banks	$	96,256		0.31	$	75		$	53,857		0.34	$	46		$	83,360		0.43		$	90
Investment securities - taxable	$	177,782		1.63	$	724		$	164,584		1.75	$	719		$	96,081		1.96		$	471
Investment securities - tax-exempt	$	65,545		3.23	$	391		$	65,665		3.25	$	395		$	44,829		3.61		$	299
Total Earning Assets	$	813,434		3.10	$	6,217		$	732,416		3.14	$	5,594		$	642,326		3.16		$	4,993
Non interest earning assets
Allowance for loan losses		(4,604	)						(4,575	)						(4,122	)
Cash and due from banks	$	11,045						$	10,601						$	11,256
Premises and equipment	$	352						$	403						$	484
Accrued interest receivable	$	1,966						$	2,114						$	2,502
Other real estate	$	0						$	0						$	0
Other assets	$	19,792						$	20,112						$	20,485
Unrealized gain (loss) on inv. securities		6,163							4,320							5,053
Total Assets	$	848,148						$	765,391						$	677,984
Interest bearing liabilities
Interest bearing demand	$	36,078		0.18	$	16		$	34,695		0.18	$	15		$	31,416		(0.03	)	($	3	)
Savings and Money Market	$	634,565		0.34	$	546		$	559,805		0.34	$	470		$	454,105		0.31		$	351
Time deposits - Retail	$	10,882		0.50	$	14		$	9,920		0.61	$	15		$	9,796		1.20		$	30
Time Deposits - Wholesale	$	13,080		0.44	$	14		$	20,271		0.28	$	14		$	15,285		0.27		$	11
Total interest bearing deposits	$	694,605		0.34	$	590		$	624,691		0.33	$	514		$	510,602		0.33		$	389
Federal home Loan Bank advances	$	11,853		2.01	$	61		$	14,603		1.95	$	72		$	25,435		1.43		$	93
Subordinated debt	$	14,864		5.11	$	194		$	14,679		5.23	$	194		$	0		0.00		$	0
Other borrowings	$	878		0.00	$	0		$	1,090		0.98	$	0		$	48,454		0.33		$	41
Total borrowed funds	$	27,595		3.61	$	255		$	30,371		3.47	$	266		$	73,889		0.71		$	134
Total interest bearing liabilities	$	722,200		0.46	$	845		$	655,062		0.48	$	780		$	584,492		0.35		$	523
Net interest rate spread				2.64	$	5,372					2.66	$	4,814					2.81		$	4,470
Non-interest bearing deposits	$	38,742						$	28,186						$	14,564
Other liabilities	$	6,135						$	4,995						$	7,745
Stockholder's equity	$	81,071						$	77,148						$	71,183
Total Liabilities and Stockholder's Equity	$	848,148						$	765,391						$	677,984
Cost of funds				0.44							0.46							0.35
Net interest margin				2.69							2.71							2.84
*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:
	Nine Months Ended							Nine Months Ended
	September 30, 2021*							September 30, 2020*
	Average Balances			Rates/ Yields (%)	Interest Income/ Expense			Average Balances			Rates/ Yields (%)	Interest Income/ Expense
Earning Assets
Loans	$	448,717		3.72	$	12,142		$	400,413		4.05	$	12,142
Loan fees	$	0		0.32	$	467		$	0		0.16	$	467
Loans with fees	$	448,717		4.04	$	12,609		$	400,413		4.21	$	12,609
Mortgage loans held for sale	$	74		3.02	$	2		$	69		4.07	$	2
Federal funds sold	$	2,464		0.08	$	18		$	4,285		0.54	$	18
Deposits with banks	$	72,445		0.34	$	253		$	52,832		0.64	$	253
Investment securities - taxable	$	163,932		1.71	$	1,492		$	91,351		2.18	$	1,492
Investment securities - tax-exempt	$	64,543		3.25	$	740		$	35,425		3.77	$	740
Total Earning Assets	$	752,175		3.10	$	15,114		$	584,375		3.51	$	15,114
Non interest earning assets
Allowance for loan losses		(4,574	)						(3,747	)
Cash and due from banks	$	10,666						$	9,558
Premises and equipment	$	405						$	397
Accrued interest receivable	$	2,096						$	2,049
Other real estate	$	0						$	0
Other assets	$	19,840						$	19,824
Unrealized gain (loss) on inv. securities		5,442							3,145
Total Assets	$	786,050						$	615,601
Interest bearing liabilities
Interest bearing demand	$	35,766		0.25	$	72		$	32,453		0.29	$	72
Savings and Money Market	$	575,310		0.34	$	1,256		$	410,521		0.41	$	1,256
Time deposits - Retail	$	9,707		0.60	$	101		$	10,421		1.30	$	101
Time Deposits - Wholesale	$	19,176		0.28	$	61		$	7,648		1.07	$	61
Total interest bearing deposits	$	639,959		0.34	$	1,490		$	461,043		0.43	$	1,490
Federal home Loan Bank advances	$	14,130		1.96	$	285		$	27,361		1.37	$	285
Subordinated debt	$	14,781		5.22	$	586		$	185		0.00	$	0
Other borrowings	$	1,034		0.86	$	0		$	27,505		0.33	$	69
Total borrowed funds	$	29,945		3.50	$	871		$	55,051		0.84	$	354
Total interest bearing liabilities	$	669,904		0.48	$	2,361		$	516,094		0.48	$	1,844
Net interest rate spread				2.61	$	12,753					3.03	$	13,270
Non-interest bearing deposits	$	31,761						$	24,414
Other liabilities	$	5,687						$	7,139
Stockholder's equity	$	78,702						$	67,952
Total Liabilities and Stockholder's Equity	$	786,054						$	615,599
Cost of funds				0.46							0.45
Net interest margin				2.67							3.09
*The information is preliminary, unaudited and based on company data available at the time of presentation.

Investor Relations	Media Relations
Andrew May	Tamara Schoeplein
615-515-1707	615-515-1714
andrew.may@truxtontrust.com	tamara.schoeplein@truxtontrust.com

FAQ

What were Truxton Corporation's earnings for Q3 2021?

Truxton Corporation reported net income of $3.9 million for Q3 2021.

How much did earnings per share increase in Q3 2021 for TRUX?

Earnings per diluted share for TRUX increased by 52% to $1.34 in Q3 2021.

What was the wealth management revenue growth in Q3 2021 for Truxton?

Wealth management revenue grew by 37% in Q3 2021 compared to the same quarter in 2020.

How did Truxton's total deposits change in Q3 2021?

Total deposits increased by 4% from the previous quarter, totaling $733 million.

What is the net interest margin for Truxton Corporation in Q3 2021?

The net interest margin for Truxton in Q3 2021 was 2.69%.