Truxton Corporation Reports Third Quarter 2021 Results
FOR IMMEDIATE RELEASE
NASHVILLE, TN, October 21, 2021 – 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.”
- 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.