Truxton Corporation Reports Third Quarter 2022 Results

Rhea-AI Summary

Truxton Corporation reported a net income of $4.3 million, or $1.49 per diluted share, for Q3 2022, marking a 12% increase from Q3 2021. The bank achieved its highest loan growth, with net loans rising 7% to $606 million. Wealth Management revenue remained stable despite lower asset values, contributing 94% to non-interest income of $4.3 million. The net interest margin improved to 2.95%. Truxton maintained a strong capital position with a Tier 1 leverage ratio of 9.78% and $0 in non-performing assets.

Positive

• Net income increased by 12% year-over-year.
• Net loans grew by 7% from the previous quarter and 26% year-over-year.
• Non-interest income rose by 1% from the previous quarter and 4% year-over-year.
• Net interest margin improved to 2.95%, up 26 basis points from Q3 2021.
• Strong capital position with a Tier 1 leverage ratio of 9.78%.

Negative

• Decline in book value per share from $28.14 in Q3 2021 to $23.84 in Q3 2022 due to lower bond portfolio valuations.
• Cost of funds increased to 1.02%, up from 0.44% in Q3 2021.

NASHVILLE, Tenn., Oct. 20, 2022 (GLOBE NEWSWIRE) -- Truxton Corporation, the parent company for Truxton Trust Company (“Truxton” or “the Bank”) and subsidiaries, announced its operating results for the quarter ended September 30, 2022. Third quarter net income attributable to common shareholders was $4.3 million or $1.49 per diluted share compared to $3.9 million or $1.34 per diluted share for the same quarter in 2021. Net income for the quarter rose by 12% and fully diluted earnings per share by 11% compared to the third quarter of 2021.

“Truxton has managed effectively through a period of rapidly rising interest rates and declining stock and bond valuations,” said Chairman and CEO Tom Stumb. “Our bankers and loan administration staff have worked tirelessly to deliver the largest growth in loans in our history. This new volume at prevailing higher interest rates has preserved our net interest margin. Wealth Management revenue was stable in the third quarter despite lower asset values as we continue to attract new clients who see the value in Truxton’s comprehensive approach. Volatile market conditions will continue to create challenges in the quarters ahead.”

Key Highlights

• Pre-Provision Net Revenue (PPNR) for the third quarter was $5.63 million, an increase of 0.8% from the second quarter of 2022 and an increase of 11% compared to the third quarter of 2021. PPNR for the first nine months of 2022 was 25% higher than the first nine months of 2021.
• Non-interest income was $4.3 million in the third quarter, an increase of 1% from the second quarter of 2022 and a 4% increase compared to the third quarter of 2021. Wealth management services constituted 94% of non-interest income in the third quarter of 2022.
• Net Loans rose by 7% to $606 million compared to June 30, 2022, and were up 26% compared to September 30, 2021.
• Total deposits increased by 1% from June 30, 2022, to $790 million on September 30, 2022, and increased by 8% in comparison to September 30, 2021. Wholesale and brokered deposits were a larger percentage of the funding mix in the third quarter of 2022 and contributed to funding costs rising more swiftly.
• Net interest margin for the third quarter of 2022 was 2.95%, an increase of 12 basis points from the 2.83% experienced in the second quarter of 2022, and an increase of 26 basis points from the third quarter of 2021. Cost of funds was 1.02% in the third quarter of 2022, up from 0.50% for the quarter ended June 30, 2022, and up from 0.44% for the quarter ended September 30, 2021.    
• Asset quality remains sound at Truxton. Truxton had $0 in non-performing assets on September 30, 2022. Truxton also had $0 of net charge-offs in the quarter, $0 in the second quarter of 2022, and $2 thousand in the third quarter of 2021.
• Allowance for loan losses was $5.8 million, $5.5 million, and $4.8 million at quarter end September 30, 2022, June 30, 2022, and September 30, 2021, respectively. For the same three periods, the Bank’s allowance was 0.94%, 0.96%, and 0.98%, respectively, of gross loans (including PPP loans) outstanding at period end.
• The Bank’s capital position remains strong. Its Tier 1 leverage ratio was 9.78% at September 30, 2022, 9.63% at June 30, 2022, and 8.99 % at September 30, 2021. Book value per common share was $23.84, $24.49, and $28.14 at September 30, 2022, June 30, 2022, and September 30, 2021, respectively. Lower bond portfolio valuations caused largely by the rising interest rate environment continued to drive the decline in book value.
• During the third quarter of 2022, Truxton Corporation repurchased 10,000 shares of its common stock for $663 thousand, a price of $66.30 per share. During the nine months ended September 30, 2022, Truxton Corporation paid dividends of $2.02 per common share.
  

About Truxton Trust
Truxton Trust Company is a provider of private banking, wealth management, trust, capital markets, 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	Tamara Schoeplein
615-515-1707	615-515-1714
andrew.may@truxtontrust.com	tamara.schoeplein@truxtontrust.com

 

Truxton Corporation
Consolidated Balance Sheets
(000's)
(Unaudited)
	September 30, 2022*			June 30, 2022*			September 30, 2021*
ASSETS
Cash and due from financial institutions	$	5,101		$	6,146		$	10,559
Interest bearing deposits in other financial institutions		3,906			915			56,501
Federal funds sold		-			114			2,930
Cash and cash equivalents		9,007			7,175			69,990
Time deposits in other financial institutions		1,835			2,038			2,538
Securities available for sale		263,144			273,689			269,685
Gross loans, excluding Paycheck Protection Program		611,946			569,969			484,614
Allowance for loan losses		(5,750	)		(5,468	)		(4,779	)
Paycheck Protection Program Loans		111			121			2,652
Net loans		606,307			564,622			482,487
Bank owned life insurance		10,541			10,490			10,338
Restricted equity securities		2,688			3,258			3,235
Premises and equipment, net		241			223			371
Accrued interest receivable		3,207			2,748			2,331
Deferred tax asset, net		7,371			5,335			-
Other assets		9,051			7,192			6,455
Total assets	$	913,392		$	876,770		$	847,430
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Non-interest bearing	$	154,049		$	190,911		$	161,614
Interest bearing		635,503			591,081			571,298
Total deposits		789,552			781,992			732,912
Federal Home Loan Bank advances		25,500			4,500			11,680
Federal funds purchased		6,517			-			-
Subordinated debt		14,703			14,847			14,604
Other liabilities		8,253			4,469			7,193
Total liabilities		844,525			805,808			766,389
SHAREHOLDERS' EQUITY
Additional paid-in capital		30,956			31,258			31,799
Retained earnings		56,424			53,070			46,456
Accumulated other comprehensive income (loss)		(18,513	)		(13,366	)		2,786
Total shareholders' equity		68,867			70,962			81,041
Total liabilities and shareholders' equity	$	913,392		$	876,770		$	847,430
*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, 2022*			June 30, 2022*				September 30, 2021*			September 30, 2022*				September 30, 2021*
Non-interest income
Wealth management services	$	4,014		$	4,056			$	3,874		$	12,251			$	11,030
Service charges on deposit accounts		99			106				97			304				239
Securities gains (losses), net		0			(30	)			0			(47	)			0
Bank owned life insurance income		51			51				51			151				153
Other		103			38				76			190				252
Total non-interest income		4,267			4,221				4,098			12,849				11,674
Interest income
Loans, including fees	$	6,797		$	5,473			$	5,026		$	17,108			$	13,563
Taxable securities		1,370			1,143				724			3,627				2,103
Tax-exempt securities		403			397				391			1,195				1,166
Interest bearing deposits		87			48				75			165				183
Federal funds sold		10			3				1			14				1
Other interest income		34			46				16			97				83
Total interest income		8,701			7,110				6,233			22,206				17,099
Interest expense
Deposits		1,914			807				590			3,307				1,630
Short-term borrowings		6			4				-			10				-
Subordinated debentures		194			194				194			582				585
Long-term borrowings		23			23				61			69				210
Total interest expense		2,137			1,028				845			3,968				2,425
Net interest income		6,564			6,082				5,388			18,238				14,674
Provision for loan losses		284			586				199			975				291
Net interest income after provision for loan losses		6,280			5,496				5,189			17,263				14,383
Total revenue, net		10,547			9,717				9,287			30,112				26,057
Non interest expense
Salaries and employee benefits		3,784			3,469				3,316			10,764				9,652
Occupancy		261			243				247			756				714
Furniture and equipment		25			29				33			87				121
Data processing		367			354				339			1,086				1,010
Wealth management processing fees		163			159				168			487				511
Advertising and public relations		30			21				25			84				99
Professional services		271			179				164			616				474
FDIC insurance assessments		77			57				57			191				141
Other		228			213				123			682				584
Total non interest expense		5,206			4,724				4,472			14,753				13,306
Income before income taxes		5,341			4,993				4,815			15,359				12,751
Income tax expense		1,002			883				941			2,683				2,246
Net income	$	4,339		$	4,110			$	3,874		$	12,676			$	10,505
Earnings per share:
Basic	$	1.50		$	1.41			$	1.35		$	4.37			$	3.64
Diluted	$	1.49		$	1.41			$	1.34		$	4.35			$	3.63
*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, 2022*		June 30, 2022*		September 30, 2021*
Per Common Share Data
Net income attributable to shareholders, per share
Basic	$1.50		$1.41		$1.35
Diluted	$1.49		$1.41		$1.34
Book value per common share	$23.84		$24.49		$28.14
Tangible book value per common share	$23.84		$24.49		$28.14
Basic weighted average common shares	2,811,768		2,822,292		2,809,307
Diluted weighted average common shares	2,825,084		2,835,394		2,822,177
Common shares outstanding at period end	2,888,567		2,898,167		2,879,527
Selected Balance Sheet Data
Tangible common equity (TEC) ratio	7.54%		8.09%		9.56%
Average Loans	$470,746		$544,496		$470,746
Average earning assets (1)	$813,434		$875,238		$813,434
Average total assets	$848,148		$890,088		$848,148
Average stockholders' equity	$81,071		$83,192		$81,071
Selected Asset Quality Measures
Nonaccrual loans	$0		$0		$0
90+ days past due still accruing	$0		$0		$6
Total nonperforming loans	$0		$0		$6
Total nonperforming assets	$0		$0		$6
Net charge offs	$0		$0		$2
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	0.94%		0.96%		0.98%
Net charge offs to average loans	0.00%		0.00%		0.00%
Capital Ratios (Bank Subsidiary Only)
Tier 1 leverage	9.78%		9.63%		8.99%
Common equity tier 1	12.64%		12.97%		13.35%
Total risk-based capital	13.46%		13.80%		14.20%
Selected Performance Ratios
Efficiency ratio	48.07%		45.85%		47.87%
Return on average assets (ROA)	1.89%		1.85%		1.81%
Return on average stockholders' equity (ROE)	23.61%		22.52%		18.96%
Return on tangible common equity (ROTCE)	23.61%		22.52%		18.96%
Net interest margin	2.95%		2.83%		2.69%
*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, 2022*							June 30, 2022*							September 30, 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	$589,142			4.50	$6,680			$544,496			3.90	$5,299			$470,746			2.87	$4,586
Loan fees	$0			0.08	$117			$0			0.13	$174			$0			0.37	$440
Loans with fees	$589,142			4.58	$6,797			$544,496			4.03	$5,473			$470,746			4.24	$5,026
Mortgage loans held for sale	$0			0.00	$0			$53			4.53	$1			$20			2.70	$0
Federal funds sold	$1,722			2.22	$10			$2,255			0.55	$3			$3,085			0.01	$1
Deposits with banks	$14,641			2.35	$87			$28,206			0.68	$48			$96,184			0.31	$75
Investment securities - taxable	$227,715			2.41	$1,370			$234,780			1.95	$1,143			$177,782			1.63	$724
Investment securities - tax-exempt	$65,706			3.31	$402			$65,448			3.27	$396			$65,545			3.23	$391
Total Earning Assets	$898,926			3.89	$8,666			$875,238			3.30	$7,064			$813,362			3.10	$6,217
Non interest earning assets
Allowance for loan losses		(5,592	)						(5,105	)						(4,604	)
Cash and due from banks	$7,018							$9,244							$11,117
Premises and equipment	$236							$248							$383
Accrued interest receivable	$2,526							$2,278							$1,966
Other real estate	$0							$0							$0
Other assets	$26,238							$24,350							$19,761
Unrealized gain (loss) on inv. securities		(20,599	)						(16,166	)						6,163
Total Assets	$908,753							$890,087							$848,148
Interest bearing liabilities
Interest bearing demand	$358,489			0.20	$18			$365,521			0.05	$44			$368,307			0.18	$16
Savings and Money Market	$133,119			4.36	$1,463			$135,122			1.76	$594			$166,267			0.34	$546
Time deposits - Retail	$24,663			1.14	$71			$16,400			0.87	$36			$10,882			0.50	$14
Time Deposits - Wholesale	$107,704			1.34	$363			$82,376			0.65	$134			$13,080			0.44	$14
Total interest bearing deposits	$623,975			1.22	$1,915			$599,419			0.54	$807			$558,536			0.34	$590
Federal home Loan Bank advances	$5,283			1.69	$23			$4,500			1.98	$22			$11,853			2.01	$61
Subordinated debt	$14,943			5.07	$194			$14,776			5.19	$194			$14,864			5.11	$194
Other borrowings	$1,213			2.70	$5			$1,236			2.23	$4			$878			0.00	$0
Total borrowed funds	$21,439			4.06	$222			$20,512			4.25	$220			$27,595			3.61	$255
Total interest bearing liabilities	$645,414			1.31	$2,137			$619,931			0.66	$1,027			$586,131			0.46	$845
Net interest rate spread				2.58	$6,529						2.64	$6,037						2.64	$5,372
Non-interest bearing deposits	$185,567							$193,872							$174,464
Other liabilities	$4,854							$3,092							$6,482
Stockholder's equity	$72,918							$73,192							$81,071
Total Liabilities and Stockholder's Equity	$908,753							$890,087							$848,148
Cost of funds				1.02							0.50							0.44
Net interest margin				2.95							2.83							2.69
*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, 2022*								September 30, 2021*
	Average   Balances			Rates/  Yields (%)	Interest Income/ Expense				Average Balances			Rates/  Yields (%)	Interest Income/ Expense
Earning Assets
Loans	$544,462			4.07	$16,565				$448,717			3.72	$12,496
Loan fees	$0			0.14	$551				$0			0.32	$1,068
Loans with fees	$544,462			4.20	$17,116				$448,717			4.04	$13,564
Mortgage loans held for sale	$38			4.12	$1				$74			3.02	$2
Federal funds sold	$1,904			0.95	$14				$2,464			0.08	$1
Deposits with banks	$25,553			0.87	$165				$72,445			0.34	$182
Investment securities - taxable	$234,000			2.07	$3,627				$163,932			1.71	$2,103
Investment securities - tax-exempt	$65,961			3.26	$1,195				$64,543			3.25	$1,166
Total Earning Assets	$871,918			3.45	$22,118				$752,175			3.10	$17,018
Non interest earning assets
Allowance for loan losses		(5,161	)							(4,574	)
Cash and due from banks	$8,099								$10,666
Premises and equipment	$260								$405
Accrued interest receivable	$2,291								$2,096
Other real estate	$0								$0
Other assets	$23,710								$19,840
Unrealized gain (loss) on inv. securities		(12,538	)							5,442
Total Assets	$888,579								$786,050
Interest bearing liabilities
Interest bearing demand	$362,327			0.03	$90				$329,007			0.03	$67
Savings and Money Market	$144,003			2.40	$2,580				$146,909			1.34	$1,479
Time deposits - Retail	$17,317			0.92	$119				$9,707			0.60	$44
Time Deposits - Wholesale	$76,873			0.90	$518				$19,176			0.28	$40
Total interest bearing deposits	$600,520			0.74	$3,307				$504,799			0.43	$1,630
Federal home Loan Bank advances	$5,350			1.69	$69				$14,130			1.96	$210
Subordinated debt	$14,861			5.16	$582				$14,781			5.22	$586
Other borrowings	$1,112			2.31	$10				$1,034			0.86	$0
Total borrowed funds	$21,323			4.09	$661				$29,945			3.50	$796
Total interest bearing liabilities	$621,843			0.85	$3,968				$534,744			0.60	$2,426
Net interest rate spread				2.60	$18,150							2.49	$14,592
Non-interest bearing deposits	$186,398								$166,712
Other liabilities	$4,002								$5,892
Stockholder's equity	$76,336								$78,702
Total Liabilities and Stockholder's Equity	$888,579								$786,050
Cost of funds				0.65								0.46
Net interest margin				2.85								2.67
*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 was Truxton Corporation's net income for Q3 2022?

Truxton Corporation's net income for Q3 2022 was $4.3 million.

How much did the net loans increase for Truxton Corporation?

Net loans for Truxton Corporation rose by 7% to $606 million in Q3 2022.

What is the net interest margin for Truxton Corporation in Q3 2022?

The net interest margin for Truxton Corporation in Q3 2022 was 2.95%.

What percentage of non-interest income did Wealth Management services contribute in Q3 2022?

Wealth Management services constituted 94% of non-interest income in Q3 2022.

What was the Tier 1 leverage ratio for Truxton Corporation at the end of Q3 2022?

The Tier 1 leverage ratio for Truxton Corporation at the end of Q3 2022 was 9.78%.