The year 2013 was a transformative year for Triumph. In October, we acquired National Bancshares, Inc. (“NBI”), the parent company of THE National Bank (“TNB”). This acquisition has increased the size of our balance sheet to approximately $1.3 billion. This scale has improved Triumph’s competitive advantage remarkably.
We now view Triumph as having three disciplines within the organization: specialty finance, community banking and institutional money management. Our specialty finance platform includes our equipment finance, factoring and asset-based lending businesses. These businesses had a great year. Advance Business Capital, LLC (“ABC”) had a record year, and its net funds employed[1] have grown 85% since we acquired the business in January 2012. Triumph Commercial Finance’s (“TCF”) outstanding loan volume grew from approximately $10 million on January 1, 2013 to over $85 million as of December 31, 2013. Both ABC and TCF continue to grow, producing yields well in excess of traditional bank returns.
TNB is our community banking subsidiary with 19 branch locations in Illinois, Iowa and Wisconsin. TNB ended the year with $880 million in assets, of which $599 million were in loans and $150 million in securities. Bank deposits were $758 million as of December 31, 2013, with $537 million in core checking account and money market products. Through December 31, 2013, TNB has put $44 million of loans on its balance sheet through participations from its sister bank, Triumph Savings Bank, SSB. The goal of using TNB’s low cost deposits to fund growth in our specialty finance platform will continue in earnest in 2014. Importantly, we have seen few, if any, customers defect from TNB as a result of the change in ownership, and the bank’s employees have been culturally melding very well with Triumph’s staff.
Triumph Capital Advisors (“TCA”) has plans to be a broad based asset management firm generating income through management fee revenue across multiple asset classes. However, the initial focus for TCA has been on issuing collateralized loan obligations (“CLOs”) and managing portfolios of senior secured bank loans within those CLOs. TCA’s assets under management have grown to over $100 million since it began operations in early 2013. TCA anticipates issuing its first CLO in the first half of 2014 and its second CLO in the second half of 2014, with the expectation to end the year with approximately $600 million of assets under management.
As I stated previously, this has been a triumphant year for our company. The numbers speak for themselves—we are growing. We celebrate 2013’s successes knowing that we can’t and won’t stay complacent in 2014. We will keep moving forward and continue seeking excellence in the markets we serve.
(This post is a modified version of the annual shareholder letter.)
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[1] The term “net funds employed” represents the amount of funds actually advanced in factoring relationships – normally the purchased accounts less client reserves. This number is roughly equivalent to an outstanding loan balance, which is how it is reported for regulatory purposes.