Triumph Financial, Inc. (NASDAQ:TFIN) Q1 2024 Earnings Call Transcript

Brad Voss: I’ll take that one. So I would say generally, transportation is the focus, but within transportation, equipment finance is definitely the focus. So when you think about what’s going to happen in equipment finance going forward, first, I would say don’t use the first quarter loss as a proxy for what’s going to happen every quarter. That was an anomalous situation that probably won’t repeat itself. As we look forward, we think the losses are contained, and they’re contained for a couple of reasons. First of all, even 24 months into this recession, most of our clients are continuing to pay as agreed. For that small minority that’s not paying as agreed, we’ve got good collateral positions that we’re shoring up further as we’re offering payment relief in its various forms and so that contains it.

But I think the most important thing is the team that we have in place. So we’ve talked before about how they’ve served the industry through the cycles and handled those cycles. I can tell you, working with them every day, they are doing a terrific job on a customer-by-customer basis. They have great relationships, they have great outlets for equipment, and that gives me a great confidence. It’s a real competitive advantage for us.

Frank Shiraldi: Okay. And on the commercial real estate side, I mean, I know you guys have very low LTV, so I’m sure that makes you feel pretty good about potential loss there. But just seeing some of that stress, we’re seeing industry-wide, is it reasonable to think, we’ll see some deterioration in terms of criticized classifieds, maybe non-performers, while not seeing maybe ultimate losses, is that reasonable?

Brad Voss: I’d say it’s possible. It’s not necessarily our forecast in commercial real estate. So you nailed it. Like, we’ve historically drawn a lot of comfort from our loan-to-value positions, but more recently, we focused on price discovery. So as we begin to look at these properties and see what they’re valued at today, not what we thought they were valued at a year or two or three years ago, we’re increasingly comfortable and reaffirm that we’re fine with those. The modifications we’ve made have been for the purpose of making sure that those properties continue to cash flow and their owners have a reason to stay in those properties and that’s what’s happened? That’s why those modifications haven’t required further modification.

You also noted that we didn’t put more modifications on this quarter. We don’t expect a lot more. If we have to put on a few more, it will just be for the purpose of adjusting the rate primarily to something that’s sustainable for those properties over the longer term. And for that reason, they wouldn’t necessarily become non-performing assets.

Frank Shiraldi: Okay, great. I appreciate all the color. Thanks.

Aaron Graft: For sure.

Operator: There are no further questions at this time. Thank you.

Aaron Graft: Well, thank you all for joining us. Hope you enjoy the rest of your week and we look forward to speaking to you again soon. Thank you.