Truxton Corporation Reports First Quarter 2023 Results

April 20, 2023

NASHVILLE, Tenn., April 20, 2023 (GLOBE NEWSWIRE) -- Truxton Corporation, the parent company for Truxton Trust Company (“Truxton” or “the Bank”) and subsidiaries, announced its operating results for the quarter ended March 31, 2023. First quarter net income attributable to common shareholders was $4.3 million or $1.47 per diluted share compared to $4.2 million or $1.45 per diluted share for the same quarter in 2022. Net income and fully diluted earnings per share for the quarter rose by 2% and 1%, respectively, compared to the first quarter of 2022.

“Truxton performed well in the first quarter of 2023 despite continued financial market turbulence,” said Chairman and CEO Tom Stumb. “In light of recent banking industry turmoil, it is important to highlight that our conservative asset liability management has always been a key pillar of strength for our business. Volatility in stock and bond markets also continues to be a headwind. Wealth Management Services revenue was down only $10 thousand for the quarter compared to first quarter 2022 while many market indices were down more than 10% over the same period. Net interest margin for the quarter held steady year-over-year despite a dramatic shift in the interest rate environment during the same period. The market environment remains challenging, but we continue to seek to serve our shareholders well by striving to serve our clients well.”

Key Highlights

Non-interest income, excluding gains and losses on the sale of securities, grew to $4.5 million in the first quarter, an increase of 2% from the fourth quarter of 2022 and 2% higher in comparison to the first quarter of 2022. Wealth management services constituted 94% of non-interest income, excluding those same gains and losses, in the first quarter of 2023 compared to 95% in the fourth quarter of 2022 and 96% in the first quarter of 2022.
Loans rose by 1% to $626 million at quarter end compared to $619 million on December 31, 2022 and were up 24% compared to $505 million on March 31, 2022.
Total deposits decreased by 4% from $808 million at December 31, 2022, to $771 million at March 31, 2023, and were less than 1% lower in comparison to $778 million at March 31, 2022. Truxton continues to fund its growth from a single banking location led by its commitment to provide what it believes is 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 first quarter of 2023 was 2.75%, a decrease of 8 basis points from the 2.83% experienced in the quarter ended December 31, 2022, and the same as in the quarter ended March 31, 2022. Cost of funds was 2.27% in the first quarter of 2023, up from 1.73% for the quarter ended December 31, 2022, and up from 0.42% for the quarter ended March 31, 2022.
Asset quality remains sound at Truxton. Truxton had $0 in non-performing assets on March 31, 2023. Truxton had $12 thousand of net charge-offs in the first quarter of 2023, $2 thousand in recoveries in the trailing quarter, and $0 in the first quarter of 2022.
Truxton adopted the mandated Current Expected Credit Loss accounting methodology for calculating its allowance for credit losses effective January 1, 2023. Allowance for credit losses, excluding $507 thousand for unfunded commitments, was $6.0 million at quarter end March 31, 2023, compared to Allowance for loans losses of $5.8 million at December 31, 2022, and $4.9 million at March 31, 2022. For the same three periods, the Bank’s allowance was 0.95%, 0.93%, and 0.97%, respectively, of gross loans outstanding at period end.
The Bank’s capital position remains strong. Its Tier 1 leverage ratio was 10.29% at March 31, 2023, compared to 9.78% at December 31, 2022, and 9.48% at March 31, 2022. Book value per common share was $25.71, $25.39, and $25.77 at March 31, 2023, December 31, 2022, and March 31, 2022, respectively. During the three months ended March 31, 2023, Truxton Corporation paid dividends of $1.38 per common share, inclusive of a $1.00 special cash dividend paid on March 25, 2023.

About Truxton Trust
Truxton Trust Company is a provider of private banking, wealth management, trust, capital markets 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.

Investor Relations	Media Relations
Austin Branstetter	Swan Burrus
615-250-0783	615-250-0773
austin.branstetter@truxtontrust.com	swan.burrus@truxtontrust.com

Truxton Corporation
Consolidated Balance Sheets
(000's)
(Unaudited)

	March 31, 2023*			December 31, 2022*			March 31, 2022*
ASSETS
Cash and due from financial institutions	$	8,955		$	5,405		$	8,837
Interest bearing deposits in other financial institutions		4,322			1,094			42,375
Federal funds sold		10			-			2,985
Cash and cash equivalents		13,288			6,499			54,197

Time deposits in other financial institutions		1,260			3,833			2,284
Securities available for sale		253,372			257,257			293,588

Gross loans, excluding Paycheck Protection Program		625,626			618,847			504,235
Allowance for credit losses**		(5,961	)		(5,761	)		(4,881	)
Paycheck Protection Program Loans		90			101			409
Net loans		619,754			613,187			499,763

Bank owned life insurance		10,644			10,592			10,439
Restricted equity securities		5,391			3,227			3,250
Premises and equipment, net		222			209			267
Accrued interest receivable		9,752			3,512			2,479
Deferred tax asset, net		6,842			7,161			3,107
Other assets		1,369			11,803			5,790

Total assets	$	921,894		$	917,280		$	875,164


LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Non-interest bearing	$	151,956		$	153,870		$	180,743
Interest bearing		619,542			653,880			597,310
Total deposits		771,499			807,750			778,053

Federal funds purchased		2,417			4,933			-
Swap counterparty cash collateral		2,860			4,090			-
Federal Home Loan Bank advances		9,500			4,500			4,500
Federal Reserve Bank Term Funding Program advances		40,000			-			-
Subordinated debt		14,752			14,727			14,653
Other liabilities		6,078			7,904			2,789
Total liabilities		847,106			843,904			799,995

SHAREHOLDERS' EQUITY
Common stock, $0.10 par value	$	289		$	289		$	287
Additional paid-in capital		31,336			31,107			32,113
Retained earnings		59,281			59,492			49,946
Accumulated other comprehensive income (loss)		(16,118	)		(17,512	)		(7,177	)

Total shareholders' equity		74,788			73,376			75,169

Total liabilities and shareholders' equity	$	921,894		$	917,280		$	875,164

The information is preliminary, unaudited and based on company data available at the time of presentation. *Prior quarter data shows Allowance for loan losses. Truxton adopted the Current Expected Credit Loss methodology as of January 1, 2023. The total excludes reserve for credit losses on unfunded commitments of $507, recorded in Other liabilities, as of March 31, 2023.

Truxton Corporation
Consolidated Statements of Net Income
(000's)
(Unaudited)

	Three Months Ended
	March 31, 2023*			December 31, 2022*			March 31, 2022*
Non-interest income
Wealth management services	$	4,171		$	4,126		$	4,182
Service charges on deposit accounts		136			111			99
Securities gains (losses), net		58			(588	)		(18	)
Bank owned life insurance income		52			51			50
Other		91			63			48
Total non-interest income		4,508			3,763			4,361

Interest income
Loans, including fees	$	8,487		$	8,017		$	4,838
Taxable securities		1,954			1,620			1,114
Tax-exempt securities		233			373			396
Interest bearing deposits		61			303			31
Federal funds sold		11			26			1
Other interest income		65			59			16
Total interest income		10,812			10,398			6,396

Interest expense
Deposits		4,216			3,485			586
Short-term borrowings		58			42			194
Long-term borrowings		237			72			23
Subordinated debentures		194			194			1
Total interest expense		4,705			3,793			804

Net interest income		6,107			6,605			5,592

Provision for credit losses		59			9			105

Net interest income after provision for loan losses		6,048			6,596			5,487

Total revenue, net		10,556	0		10,359			9,848

Non interest expense
Salaries and employee benefits		3,766			3,823			3,511
Occupancy		286			278			252
Furniture and equipment		25			25			32
Data processing		427			400			366
Wealth management processing fees		176			179			165
Advertising and public relations		46			78			32
Professional services		116			177			166
FDIC insurance assessments		75			55			57
Other		397			196			242
Total non interest expense		5,314			5,211			4,823

Income before income taxes		5,242			5,148			5,025

Income tax expense		951			1,098			798

Net income	$	4,291		$	4,050		$	4,227

Earnings per share:
Basic	$	1.48		$	1.40		$	1.46
Diluted	$	1.47		$	1.40		$	1.45
*The information is preliminary, unaudited and based on company data available at the time of presentation.

Truxton Corporation
Selected Quarterly Financial data
At Or For The Three Months Ended
(000's)
(Unaudited)

	March 31, 2023*	December 31, 2022*	March 31, 2022*

Per Common Share Data
Net income attributable to shareholders, per share
Basic	$1.48	$1.40	$1.46
Diluted	$1.47	$1.40	$1.45
Book value per common share	$25.71	$25.39	$25.77
Tangible book value per common share	$25.71	$25.39	$25.77
Basic weighted average common shares	2,820,892	2,810,702	2,793,014
Diluted weighted average common shares	2,830,504	2,822,538	2,807,866
Common shares outstanding at period end	2,908,483	2,887,362	2,917,044


Selected Balance Sheet Data
Tangible common equity (TCE) ratio	8.11%	8.00%	8.59%
Average Loans	$622,012	$616,609	$498,755
Average earning assets (1)	$912,603	$939,763	$840,952
Average total assets	$918,440	$943,900	$866,432
Average stockholders' equity	$75,557	$70,128	$83,009


Selected Asset Quality Measures
Nonaccrual loans	$0	$0	$0
90+ days past due still accruing	$0	$0	$0
Total nonperforming loans	$0	$0	$0
Total nonperforming assets	$0	$0	$0
Net charge offs (recoveries)	$12	($2)	$0
Nonperforming loans to assets	0.00%	0.00%	0.00%
Nonperforming assets to total assets	0.00%	0.00%	0.00%
Nonperforming assets to total loans and other real estate	0.00%	0.00%	0.00%
Allowance for credit losses to total loans**	0.95%	0.93%	0.97%
Net charge offs to average loans	0.00%	0.00%	0.00%


Capital Ratios (Bank Subsidiary Only)
Tier 1 leverage	10.29%	9.78%	9.48%
Common equity tier 1	13.79%	13.36%	14.00%
Total risk-based capital	14.74%	14.20%	14.83%

Selected Performance Ratios
Efficiency ratio	51.32%	48.55%	48.46%
Return on average assets (ROA)	1.89%	1.70%	1.98%
Return on average stockholders' equity (ROE)	23.05%	22.92%	20.64%
Return on average tangible common equity (ROTCE)	23.05%	22.92%	20.64%
Net interest margin	2.75%	2.83%	2.75%

*The information is preliminary, unaudited and based on company data available at the time of presentation.
**Prior quarter data shows Allowance for loan losses. Truxton adopted the Current Expected Credit Loss methodology as of January 1, 2023. March 31, 2023 ratio does not include $507 reserve for unfunded commitments
(1) Average earning assets is the daily average of earning assets. Earning assets consists of loans, mortgage loans held for sale, federal funds sold, deposits with banks, and investment securities.

Truxton Corporation
Yield Tables
For The Periods Indicated
(000's)
(Unaudited)

The following table sets forth the amount of our average balances, interest income or interest expense for each category of interest earning assets and interest bearing liabilities and the average interest rate for interest earning assets and interest bearing liabilities, net interest spread and net interest margin for the periods indicated below:
	Three Months Ended					Three Months Ended					Three Months Ended
	March 31, 2023*					December 31, 2022*					March 31, 2022*

	Average Balances			Rates/ Yields (%)	Interest Income/ Expense	Average Balances			Rates/ Yields (%)	Interest Income/ Expense	Average Balances			Rates/ Yields (%)	Interest Income/ Expense

Earning Assets
Loans	$622,012			5.46	$8,376	$616,609			5.01	$7,905	$498,755			3.73	$4,586
Loan fees	$0			0.07	$111	$0			0.07	$112	$0			0.20	$252
Loans with fees	$622,012			5.53	$8,487	$616,609			5.16	$8,017	$498,755			3.93	$4,837
Mortgage loans held for sale	$0			0.00	$0	$0			0.00	$0	$61			3.72	$1
Federal funds sold	$866			5.15	$11	$2,688			3.76	$26	$1,735			0.17	$1
Deposits with banks	$11,749			4.38	$127	$31,462			3.82	$303	$34,026			0.37	$31
Investment securities - taxable	$237,601			3.29	$1,954	$228,108			2.84	$1,620	$239,635			1.86	$1,114
Investment securities - tax-exempt	$40,376			3.45	$233	$60,897			3.31	$372	$66,739			3.21	$396
Total Earning Assets	$912,603			4.84	$10,812	$939,764			4.43	$10,338	$840,952			3.13	$6,380
Non interest earning assets
Allowance for loan losses		(6,279	)				(5,783	)				(4,776	)
Cash and due from banks	$6,547					$6,871					$8,046
Premises and equipment	$202					$224					$256
Accrued interest receivable	$2,843					$2,935					$2,065
Other real estate	$0					$0					$0
Other assets	$28,601					$30,251					$20,519
Unrealized gain (loss) on inv. securities		(26,077	)				(30,362	)				(630	)
Total Assets	$918,440					$943,900					$866,432
Interest bearing liabilities
Interest bearing demand	$366,260			2.80	$2,529	$380,638			2.23	$2,140	$37,019			0.32	$29
Savings and money market	$127,422			1.70	$533	$142,369			1.44	$515	$68,248			0.33	$523
Time deposits - retail	$18,256			1.93	$87	$24,280			1.41	$86	$10,734			0.48	$13
Time deposits - wholesale	$133,704			3.24	$1,067	$128,619			2.29	$744	$39,793			0.22	$21
Total interest bearing deposits	$645,642			2.65	$4,216	$675,906			2.05	$3,485	$725,793			0.33	$586
Federal Home Loan Bank advances	$16,844			4.09	$172	$9,957			2.85	$72	$6,278			1.48	$23
Subordinated debt	$15,001			5.17	$194	$14,827			5.12	$194	$14,863			5.22	$194
Other borrowings	$11,451			4.29	$123	$4,760			4.33	$42	$882			1.23	$1
Total borrowed funds	$43,296			4.52	$489	$29,544			4.08	$308	$22,023			3.96	$218
Total interest bearing liabilities	$688,938			2.77	$4,705	$705,450			2.13	$3,793	$747,817			0.43	$804
Net interest rate spread				2.08	$6,107				2.30	$6,545				2.70	$5,576
Non-interest bearing deposits	$150,259					$163,653					$31,724
Other liabilities	$3,686					$4,671					$3,882
Stockholder's equity	$75,557					$70,128					$83,009
Total Liabilities and Stockholder's Equity	$918,440					$943,902					$866,432
Cost of funds				2.27					1.73					0.42
Net interest margin				2.75					2.83					2.75

*The information is preliminary, unaudited and based on company data available at the time of presentation. Totals may not foot due to rounding.

Yield Table Assumptions - Average loan balances are inclusive of nonperforming loans. Yields computed on tax-exempt instruments are on a tax equivalent basis. Net interest spread is calculated as the yields realized on interest-bearing assets less the rates paid on interest-bearing liabilities. Net interest margin is the result of net interest income calculated on a tax-equivalent basis divided by average interest earning assets for the period. Changes in net interest income are attributed to either changes in average balances (volume change) or changes in average rates (rate change) for earning assets and sources of funds on which interest is received or paid. Volume change is calculated as change in volume times the previous rate while rate change is change in rate times the previous volume. Changes not due solely to volume or rate changes are allocated to volume change and rate change in proportion to the relationship of the absolute dollar amounts of the change in each category.

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Source: Truxton Trust Company