Everything was bigger in fourth quarter for factoring business at Triumph

The number of invoices purchased in the fourth quarter rose 15.7% from the third quarter of last year and was up 32.6% from the corresponding quarter of 2019.

The average invoice size clearly reflects the stronger freight market. The figure of $2,070 in the fourth quarter was up 7.1% from the third-quarter figure of $1,931, and was up 24.5% from the $1,662 posted in the final quarter of 2019.

Triumph’s average invoice size figure is affected by non-transportation loans. But the breakout for just transportation loans shows an even larger increase for the size of the average invoice. The average transportation invoice of $1,943 in the fourth quarter was 8.7% more than the third quarter, and was up 28.9% from the final quarter of 2019.

The acquisition of TFS from Covenant was announced in July. But its completion was delayed until the end of the third quarter by a dispute over certain loans, and the Triumph earnings statement has numbers that suggest the size of the dispute. 

Triumph said it had recognized $11.5 million in credit loss expenses to increase the reserve on what it described as “over-advances to the largest over-formula advance carrier.” 

Additionally, of Triumph’s 1.15% nonperforming assets ratio, $10 million can be attributed to TFS loans, net of indemnification. That consists of 17 basis points of the 1.15% figure; there’s an additional 10 basis points due to a category the bank called Misdirected Payments. That is part of an ongoing dispute with the U.S. Postal Service. These loans also impact Triumph’s past-due loan ratio. 

The Triumph statement said there is a still unresolved financial arrangement with Covenant, depending upon the outcome of the issues with the over-advanced payments. If those over advances are charged off, Triumph said, Covenant will owe Triumph $35.8 million.

Even with the additional impact from the TFS loans carrying a significant risk of nonperformance, the company’s ratio of nonperforming assets to total assets improved to 1.15% from 1.52% in the third quarter. However, that was still higher than the 0.87% of a year ago.

Triumph’s overall performance beat Wall Street estimates. Its fourth-quarter earnings per share based on GAAP principles was $1.25, better than Wall Street consensus estimates by 46 cents, according to Seeking Alpha. Revenue of $105.98 million was better than consensus by $21.1 million. 

Triumph holds its earnings call with analysts the day after the earnings release. 

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