Truxton Corporation Reports Fourth Quarter and Full Year 2023 Results

January 25, 2024

NASHVILLE, Tenn., Jan. 25, 2024 (GLOBE NEWSWIRE) -- Truxton Corporation, the parent company for Truxton Trust Company (“Truxton” or “the Bank”) and subsidiaries, announced its operating results for the quarter and year ended December 31, 2023. Fourth quarter net income attributable to common shareholders was $4.2 million, or $1.46 earnings per diluted share, compared with $4.1 million, or $1.40 earnings per diluted share, for the same quarter in 2022.

For the year ended December 31, 2023, net income increased by 4% to $17.5 million from $16.7 million in 2022. For the year ended December 31, 2023, earnings per diluted share rose to $6.02 from $5.75, an increase of 5% from 2022.

“In what was a very challenging year for all banks, we are pleased with our financial results,” said Chairman and CEO Tom Stumb. “The strength of our business model and value to our customers was once again on display as Wealth Management revenue grew 8%, helping to offset Net Interest Margin compression. We earned a return on average equity for the year of 22.3% - an outstanding achievement in any environment.”

Key Highlights

Truxton partially restructured its fixed income investment portfolio in December and realized $445 thousand in losses on the sale of $8 million of investments. This restructuring allowed Truxton to improve its interest rate risk profile and should contribute to an increase in its future earnings. The after-tax cost of these losses lowered earnings per share by approximately $0.12 per share in the fourth quarter of 2023. Excluding these losses, earnings per diluted share for the quarter would have been approximately $1.58, up from $1.57 in the third quarter of 2023 and $1.56 in the fourth quarter of 2022, excluding approximately $0.16 per share of securities restructuring realized losses in that quarter.
Non-interest income, excluding the restructuring losses, was $4.7 million in the fourth quarter of 2023, a decline of 4% from the third quarter of 2023 and up 8% in comparison to the fourth quarter of 2022. Wealth management services constituted 94% of non-interest income, excluding restructuring losses, in the fourth quarter of 2023.
Loans rose 2.5% to $658 million at year end compared to $642 million on September 30, 2023, and were up 6% compared to $619 million on December 31, 2022.
Total deposits increased less than 1% from September 30, 2023, to $782 million at December 31, 2023, and declined 3% in comparison to December 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 (NIM) for the fourth quarter of 2023 was 2.78%, an increase of 17 basis points from the 2.61% experienced in the third quarter of 2023, but a decline of 5 basis points from the fourth quarter of 2022. Approximately half of the increase in quarter-over-quarter NIM was driven by a one-time loan prepayment fee. Cost of funds was 3.15% in the fourth quarter of 2023, up from 3.05% for the quarter ended September 30, 2023, and an increase from 1.73% in the quarter ended December 31, 2022.
Asset quality remains sound at Truxton. The Bank had no non-performing assets at December 31, 2023. Truxton had $8 thousand of recoveries in the fourth quarter of 2023, $1 thousand in the trailing quarter, and $2 thousand in the fourth quarter of 2022.
Truxton adopted the mandated Current Expected Credit Loss accounting methodology for calculating its allowance for credit losses effective January 1, 2023. The Allowance for Credit Losses was $6.3 million at quarter end December 31, 2023, and $6.0 million at quarter end September 30, 2023, excluding $0.4 million and $0.5 million in allowance for unfunded commitments, respectively, compared to Allowance for Loan and Lease Losses of $5.8 million at December 31, 2022. For the same three periods, the Bank’s loan-related allowance was 0.96%, 0.94%, and 0.93%, respectively, of gross loans outstanding at period end.
The Bank’s capital position remains strong. The Tier 1 leverage ratio was 10.53% at December 31, 2023, 10.36% at September 30, 2023, and 9.78% at December 31, 2022. Book value per common share was $30.31, $27.43, and $25.39 at December 31, 2023, September 30, 2023, and December 31, 2022, respectively.
During the twelve months ended December 31, 2023, Truxton Corporation paid dividends of $2.52 per common share, inclusive of a $1 special cash dividend, and repurchased 18 thousand shares of its common stock for $1.1 million, an average price of $59.95 per share.

About Truxton
Truxton Trust Company is a provider of wealth, banking, 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)

	December 31, 2023*			September 30, 2023*			December 31, 2022
ASSETS
Cash and due from financial institutions	$	4,272		$	5,040		$	5,405
Interest bearing deposits in other financial institutions		3,417			7,589			1,094
Federal funds sold		1,537			956			-
Cash and cash equivalents		9,226			13,585			6,499

Time deposits in other financial institutions		490			740			3,833
Securities available for sale		259,926			259,543			257,257

Gross loans, excluding Paycheck Protection Program		657,781			641,697			618,847
Allowance for credit losses**		(6,304	)		(6,031	)		(5,761	)
Paycheck Protection Program Loans		59			69			101
Net loans		651,536			635,735			613,187

Bank owned life insurance		10,808			10,751			10,592
Restricted equity securities		1,858			1,940			3,227
Premises and equipment, net		189			129			209
Accrued interest receivable		4,388			4,310			3,512
Deferred tax asset, net		6,010			7,910			7,161
Other assets		10,839			13,922			11,803

Total assets	$	955,270		$	948,566		$	917,280


LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Non-interest bearing	$	123,918		$	116,918		$	153,870
Interest bearing	$	658,061		$	663,950			653,880
Total deposits		781,979			780,868			807,750

Federal funds purchased		-			-			4,933
Swap counterparty cash collateral		4,060			4,820			4,090
Federal Home Loan Bank advances		4,500			4,500			4,500
Federal Reserve Bank Term Funding Program advances		53,800			55,000			-
Subordinated debt		14,327			14,291			14,727
Other liabilities		8,922			9,544			7,904
Total liabilities		867,588			869,023			843,904

SHAREHOLDERS' EQUITY
Common stock, $0.10 par value	$	289		$	288		$	289
Additional paid-in capital		31,457			31,335			31,107
Retained earnings		51,679			52,780			42,766
Accumulated other comprehensive income (loss)		(13,279	)		(18,167	)		(17,512	)
Net Income	$	17,536		$	13,307		$	16,726
Total shareholders' equity		87,682			79,543			73,376

Total liabilities and shareholders' equity	$	955,270		$	948,566		$	917,280

*The information is preliminary, unaudited and based on company data available at the time of presentation.
**2022 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 recorded in Other liabilities in 2023.

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

	Three Months Ended								Year To Date
	December 31, 2023*			September 30, 2023*		December 31, 2022*			December 31, 2023*			December 31, 2022
Non-interest income
Wealth management services	$	4,435		$	4,608	$	4,126		$	17,657		$	16,377
Service charges on deposit accounts		111			123		111			461			415
Securities gains (losses), net		(445	)		0		(588	)		(387	)		(636	)
Bank owned life insurance income		56			54		51			216			203
Other		52			146		63			309			253
Total non-interest income		4,208			4,931		3,763			18,256			16,612

Interest income
Loans, including fees	$	10,495		$	9,714	$	8,017		$	37,804		$	25,125
Taxable securities		2,554			2,575		1,620			9,350			5,247
Tax-exempt securities		210			216		373			876			1,568
Interest bearing deposits		194			69		303			695			469
Federal funds sold		41			30		26			101			39
Other interest income		63			105		59			216			156
Total interest income		13,558			12,709		10,398			49,042			32,604

Interest expense
Deposits		6,048			5,679		3,485			20,881			6,792
Short-term borrowings		685			61		42			2,154			52
Long-term borrowings		23			716		72			490			141
Subordinated debentures		187			195		194			771			776
Total interest expense		6,943			6,650		3,793			24,296			7,761

Net interest income		6,615			6,059		6,605			24,746			24,843

Provision for credit losses		215			6		9			296			984

Net interest income after provision for loan losses		6,400			6,053		6,596			24,450			23,859

Total revenue, net		10,608			10,984		10,359			42,706			40,471

Non interest expense
Salaries and employee benefits		3,563			3,819		3,823			14,810			14,587
Occupancy		272			313		278			1,185			1,034
Furniture and equipment		24			7		25			76			112
Data processing		389			470		400			1,703			1,486
Wealth management processing fees		166			178		179			729			666
Advertising and public relations		109			58		78			248			162
Professional services		285			127		177			941			793
FDIC insurance assessments		225			85		55			460			246
Other		322			256		196			901			879
Total non interest expense		5,355			5,314		5,211			21,053			19,965

Income before income taxes		5,253			5,670		5,148			21,653			20,506

Income tax expense		1,029			1,109		1,098			4,117			3,780

Net income	$	4,225		$	4,560	$	4,050		$	17,536		$	16,726

Earnings per share:
Basic	$1.46			$1.57		$1.40			$6.04			$5.78
Diluted	$1.46			$1.57		$1.40			$6.02			$5.75
*The information is preliminary, unaudited and based on company data available at the time of presentation. Totals may not foot due to rounding.

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

	December 31, 2023*	September 30, 2023*	December 31, 2022

Per Common Share Data
Net income attributable to shareholders, per share
Basic	$1.46	$1.57	$1.40
Diluted	$1.46	$1.57	$1.40
Book value per common share	$30.31	$27.43	$25.39
Tangible book value per common share	$30.31	$27.43	$25.39
Basic weighted average common shares	2,821,846	2,829,139	2,810,702
Diluted weighted average common shares	2,828,274	2,836,187	2,822,538
Common shares outstanding at period end	2,893,064	2,900,171	2,887,362


Selected Balance Sheet Data
Tangible common equity (TCE) ratio	9.18%	8.39%	8.00%
Average Loans	$653,804	$634,179	$616,609
Average earning assets (1)	$956,793	$943,584	$939,763
Average total assets	$960,852	$949,754	$943,900
Average shareholders' equity	$81,759	$80,535	$70,128


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)	($8)	($1)	($2)
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**	0.96%	0.94%	0.93%
Net charge offs to average loans	-0.00%	-0.00%	-0.00%


Capital Ratios (Bank Subsidiary Only)
Tier 1 leverage	10.53%	10.36%	9.78%
Common equity tier 1	14.58%	14.11%	13.36%
Total risk-based capital	15.53%	15.04%	14.20%

Selected Performance Ratios
Efficiency ratio	47.07%	47.87%	48.55%
Return on average assets (ROA)	1.75%	1.91%	1.70%
Return on average shareholders' equity (ROE)	20.52%	22.48%	22.92%
Return on average tangible common equity (ROTCE)	20.52%	22.48%	22.92%
Net interest margin	2.78%	2.61%	2.83%

*The information is preliminary, unaudited and based on company data available at the time of presentation.
**2022 data shows Allowance for loan losses. Truxton adopted the Current Expected Credit Loss methodology as of January 1, 2023. 2023 ratios do not include 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
	December 31, 2023*				September, 30 2023*				December 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	$653,804		6.18	$10,183	$634,179		6.01	$9,602	$616,609		5.01	$7,905
Loan fees	$0		0.19	$312	$0		0.07	$112	$0		0.07	$112
Loans with fees	$653,804		6.37	$10,495	$634,179		6.08	$9,714	$616,609		5.16	$8,017
Mortgage loans held for sale	$0		0.00	$0	$0		0.00	$0	$0		0.00	$0
Federal funds sold	$2,985		5.41	$41	$2,293		5.20	$30	$2,688		3.76	$26
Deposits with banks	$14,240		5.51	$198	$13,213		5.34	$178	$31,462		3.82	$303
Investment securities - taxable	$248,778		4.11	$2,554	$255,822		4.03	$2,575	$228,108		2.84	$1,620
Investment securities - tax-exempt	$36,986		3.39	$210	$38,077		3.38	$216	$60,897		3.31	$372
Total Earning Assets	$956,793		5.65	$13,498	$943,584		5.40	$12,713	$939,764		4.43	$10,338
Non interest earning assets
Allowance for loan losses		(6,123)				(5,989)				(5,783)
Cash and due from banks	$5,402				$5,814				$6,871
Premises and equipment	$119				$134				$224
Accrued interest receivable	$3,575				$3,443				$2,935
Other real estate	$0				$0				$0
Other assets	$30,404				$29,298				$30,251
Unrealized gain (loss) on inv. securities		(29,318)				(26,530)				(30,362)
Total Assets	$960,852				$949,754				$943,900
Interest bearing liabilities
Interest bearing demand	$345,966		3.42	$2,984	$354,018		3.43	$3,062	$380,638		2.23	$2,140
Savings and money market	$138,244		2.95	$1,027	$132,842		2.67	$895	$142,369		1.44	$515
Time deposits - retail	$16,343		3.18	$131	$17,334		2.67	$117	$24,280		1.41	$86
Time deposits - wholesale	$165,756		4.56	$1,906	$147,046		4.33	$1,605	$128,619		2.29	$744
Total interest bearing deposits	$666,309		3.6	$6,048	$651,240		3.46	$5,679	$675,906		2.05	$3,485
Federal Home Loan Bank advances	$4,500		1.98	$23	$9,337		3.79	$91	$9,957		2.85	$72
Subordinated debt	$14,422		5.08	$187	$15,030		5.09	$195	$14,827		5.12	$194
Other borrowings	$60,859		4.39	$685	$60,606		4.40	$682	$4,760		4.33	$42
Total borrowed funds	$79,781		4.39	$895	$84,973		4.46	$968	$29,544		4.08	$308
Total interest bearing liabilities	$746,090		3.69	$6,943	$736,213		3.57	$6,647	$705,450		2.13	$3,793
Net interest rate spread			1.96	$6,555			1.83	$6,066			2.30	$6,545
Non-interest bearing deposits	$126,534				$127,389				$163,653
Other liabilities	$6,469				$5,308				$4,671
Shareholder's equity	$81,759				$80,535				$70,128
Total Liabilities and Shareholder's Equity	$960,852				$949,445				$943,902
Cost of funds			3.15				3.05				1.73
Net interest margin			2.78				2.61				2.83

*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.

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:


	Twelve Months Ended				Twelve Months Ended
	December 31, 2023*				December 31, 2022
	Average Balances		Rates/ Yields (%)	Interest Income/ Expense	Average Balances		Rates/ Yields (%)	Interest Income/ Expense

Earning Assets
Loans	$635,059		5.85	$37,150	$562,647		4.35	$24,470
Loan fees	$0		0.10	$654	$0		0.12	$654
Loans with fees	$635,059		5.95	$37,804	$562,647		4.47	$25,124
Mortgage loans held for sale	$0		0.00	$0	$28		4.13	$1
Federal funds sold	$1,907		5.21	$101	$2,102		1.85	$39
Deposits with banks	$13,711		5.07	$695	$27,043		1.73	$469
Investment securities - taxable	$247,483		3.78	$9,350	$232,515		2.26	$5,247
Investment securities - tax-exempt	$38,410		3.40	$876	$64,684		3.28	$1,568
Total Earning Assets	$936,570		5.26	$48,826	$889,019		3.71	$32,448
Non interest earning assets
Allowance for loan losses		(6,087)				(5,318)
Cash and due from banks		5,960			$7,789
Premises and equipment	$154				$251
Accrued interest receivable	$3,271				$2,453
Other real estate	$0				$0
Other assets	$29,175				$25,359
Unrealized gain (loss) on inv. securities		(26,891)				(17,031)
Total Assets	$942,152				$902,522
Interest bearing liabilities
Interest bearing demand	$351,956		3.20	$11,247	$366,943		1.19	$4,350
Savings and Money Market	$134,518		2.50	$3,368	$143,591		0.68	$975
Time deposits - Retail	$17,168		2.53	$435	$19,072		1.08	$205
Time Deposits - Wholesale	$143,922		4.05	$5,832	$89,916		1.40	$1,262
Total interest bearing deposits	$647,564		3.22	$20,882	$619,522		1.10	$6,792
Federal home Loan Bank advances	$12,355		3.91	$490	$6,511		2.14	$141
Subordinated debt	$14,831		5.12	$771	$14,853		5.21	$780
Other borrowings	$47,985		4.42	$2,153	$2,124		2.54	$48
Total borrowed funds	$75,171		4.48	$3,414	$23,488		4.07	$969
Total interest bearing liabilities	$722,735		3.36	$24,296	$643,010		1.20	$7,761
Net interest rate spread			1.90	$24,530			2.51	$24,687
Non-interest bearing deposits	$135,909				$180,665
Other liabilities	$4,810				$4,142
Shareholder's equity	$78,619				$74,771
Total Liabilities and Shareholder's Equity	$942,073				$902,588
Cost of funds			2.82				0.94
Net interest margin			2.67				2.84

*The information is preliminary, unaudited and based on company data available at the time of presentation.

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.