Triumph Financial (TFIN) has revealed key points about its third-quarter results during an earnings call, led by representative Aaron Graft. Notably, TriumphPay, TFIN's payments network, exceeded financial performance expectations. However, the company also highlighted a unique quarter in terms of expenses, which they do not anticipate recurring in the near future. The company expressed bearishness about the short-term freight market but remains optimistic about gaining a larger market share in the long term.
Key takeaways from the call include:
- TriumphPay exceeded financial performance expectations.
- The company had an unusual quarter in terms of expenses, unlikely to repeat shortly.
- The freight market has not rebounded and might worsen.
- Triumph Financial expects to emerge stronger and gain more market share in the long term.
- TriumphPay aims to process payments for 1 out of 2 brokered freight transactions.
- Pricing for new business will include a per transaction fee of $5.
- Modifications have been made for variable rate credits that have experienced price increases in Triumph Bancorp (NASDAQ:TFIN)'s commercial real estate (CRE) loans.
During the call, Graft also shared concerns about the freight market's future, citing the shutdown of Convoy, a prominent freight broker, without a sale. This development, Graft suggested, could indicate that more brokers and carriers may face a similar fate due to artificial support from private equity and venture capital.
However, Triumph Financial is receiving more inquiries and sees itself as an industry leader with the financial capability, operational experience, and technology to navigate the market. Melissa Forman, President of TriumphPay, stated the company's goal is to process payments for 1 out of 2 brokered freight transactions, up from the current rate of 1 out of 3. To achieve this, TriumphPay is expanding its network and bringing on new clients.
Forman also revealed that the pricing for new business has been updated to include a per transaction fee of $5, with potential flexibility in pricing deals to attract clients. TriumphPay is working on incorporating data from audit-only brokers into its conforming transactions to provide value to the factoring industry.
Regarding Triumph Bancorp's commercial real estate (CRE) loans, modifications have been made for variable rate credits that have experienced price increases. More modifications are expected as variable rate borrowers adjust to the new environment.
Despite potential market fluctuations, the speakers emphasized the importance of investing in the freight industry. They expect expenses in the fourth quarter to be similar to the second quarter, particularly in the Payments segment. The company also values the onboarding of large freight brokers as a long-term investment. Triumph Financial remains open to making loans to selective opportunities with strong tenants and borrowers.
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