Triumph Financial, Inc. (TFIN) Earnings Call Transcript & Summary

Hello, and welcome, everyone, to the Annual Stockholders Meeting of Triumph Bancorp. My name is Carlos Sepulveda, and I serve as Chairman of the Board. I'd like to welcome all those attending this meeting by webcast. And those of you here in person, I'd like to ask you to turn off your cell phones and also be aware that we have automatic cameras here. So if there's any talking, you may find yourself on the screen. So just be ready for that. I'd also like to introduce my fellow Board members that are attending here: Chuck Anderson; Harrison Barnes; Debra Bradford; Laura Easley; Aaron Graft; Maribess Miller; Mike Rafferty; and Todd Sparks. I'd also like to take this opportunity to thank Fred Perpall, who is not standing for reelection at this meeting. Fred has been serving us in a dedicated manner and has served on the board since 2016. Also present are executive officers of the company, other members of senior management of the company and its subsidiaries as well as directors of our bank subsidiary. Some of those in attendance are Brad Voss, EVP and CFO of the company and TBK Bank; Ed Schreyer, EVP and COO of the company and the bank; Gail Lehmann, EVP, Secretary and Chief Regulatory and Governance Officer of the company and the bank; Adam Nelson, EVP and General Counsel of the company and TBK Bank; Todd Ritterbusch, President of TBK Bank; Geoff Brenner, CEO, Triumph Business Capital; Melissa Forman, President of TriumphPay; and Mark Daigle, COO and TBK Bank Director. Gail Lehmann, our EVP and Secretary, will act as Secretary of today's meeting; and Adam Nelson, our EVP and General Counsel, will act as the inspector of elections. I'll now turn the meeting over to Aaron Graft, the company's Vice President, Vice Chairman and CEO.

Thank you, Carlos. And we're going to go through the formal part of the meeting and then do a presentation that many of you here have seen, but not everyone on the webcast have seen. So I'm Aaron Graft, I'm the President and Chief Executive Officer of the company, and I will serve as the Chairman of this meeting. I now officially call the meeting to order. The business items on the agenda today were outlined in the company's notice and proxy provided to all stockholders. The matters to be voted on at this meeting consist of: The election of each of the directors named in the proxy statement for the election to the Board for a term to expire at the next Annual Meeting of Stockholders; approval of a nonbinding advisory resolution regarding the compensation of the company's named executive officers as disclosed in the proxy statement; approval of an amendment to our certificate of formation to change the name of the company to Triumph Financial, Inc.; and ratification of the appointment of Crowe LLP as our independent registered public accounting firm for the current fiscal year. At this time, could those stockholders who hold proxies please deliver them to the inspector of elections. And those stockholders who desire to vote in person, please give their names to the inspector of elections. The inspector of elections will give you a ballot for matters to be voted upon today. While we are waiting for the inspector of elections to determine if a quorum is present, let me ask the Secretary whether proper notice was given for this meeting.

I have available a certified list of the holders of the common stock of the company at the close of business on February 28, 2022, the date fixed by the Board of Directors for determining the stockholders entitled to notice of and to vote at this meeting. I also have available the notice of meeting, proxy statement and proxy and affidavits of the company's representatives as to the due mailing thereof.

Thank you. I would ask that those documents be filed with the records of the company. This now brings us to the determination of a quorum. Our bylaws provide that the presence in person or by proxy of a majority of the votes entitled to be cast on a matter constitutes a quorum. May I now have the report on whether a quorum is present.

There are present in person or represented by proxy the holders of 20,756,550 shares of common stock, or 82.50% of all shares authorized to vote at this meeting. Consequently, a quorum is duly present and authorized to transact business on the matters that were submitted to the stockholders for approval.

Will the Secretary please introduce each order of business for the meeting.

First order of business is the election of each of the directors named in the proxy statement to our Board of Directors for a term to last until the next Annual Meeting of Stockholders. A summary of the proposal begins on Page 5 of the proxy statement.

I move to approve the election of such directors.

I second the motion.

Our bylaws require stockholders to provide advance notice of their intent to nominate candidates for directors. No stockholder has provided notice. I, therefore, declare the nominations for director closed.

The next order of business is the approval of the nonbinding advisory resolution regarding the compensation of the company's named executive officers, as disclosed in the proxy statement. A summary of the proposal begins on Page 48 of the proxy statement.

I move to approve such nonbinding advisory resolution.

I second the motion.

The next order of business is the approval of the amendment to our certificate of formation to change the name of the company to Triumph Financial, Inc. A summary of the proposal begins on Page 49 of the proxy statement.

I move to approve such amendment.

I second the motion.

The next order business is the ratification of the appointees Crowe LLP as our independent registered public accounting firm for our current fiscal year. A summary of the proposal begins on Page 50 of the proxy statement.

I now move to ratify such appointment.

I second the motion.

At this time, we ask each stockholder voting in person to mark your ballot and to deliver your completed ballot to the inspector of elections. [Voting]

Seeing none, all the stockholders present in person or by proxy have had an opportunity to vote. I now declare the polls closed. It is -- what is the time at present? 10:07, April 26, 2022. Will the inspector of elections examine the proxies and ballots submitted? Mr. Nelson, would you please provide the results of the vote?

With respect to the election of directors, 19,331,591 shares were voted in favor of Mr. Sepulveda, with 202,650 shares voted against, 3,958 shares withheld or abstaining and 1,218,351 broker non-votes; 19,334,082 shares were voted in favor of Mr. Graft, with 201,300 shares voted against, 2,817 shares withheld or abstaining and 1,218,351 broker non-votes; 19,137,317 shares were voted in favor of Mr. Anderson, with 397,063 shares voted against, 3,818 shares withheld or abstaining and 1,218,351 broker non-votes. 19,526,835 shares were voted in favor of Mr. Barnes, with 8,608 shares voted against, 2,756 shares withheld or abstaining, and 1,218,351 broker nonvotes; 19,460,789 shares were voted in favor of Ms. Bradford, with 73,574 shares voted against, 3,835 shares withheld or abstaining and 1,218,352 broker nonvotes; 18,123,129 shares were voted in favor of Mr. Davis, with 1,411,211 shares voted against, 3,858 shares withheld or abstaining, and 1,218,352 broker non-votes; 19,348,342 shares were voted in favor of Ms. Easley, with 186,021 shares voted against, 3,835 shares withheld or abstaining and 1,218,351 broker nonvotes. 19,310,378 shares were voted in favor of Ms. Miller, with 223,955 shares voted against, 3,866 shares withheld or abstaining and 1,218,351 broker nonvotes; 19,461,098 shares were voted in favor of Mr. Rafferty, with 73,243 shares voted against, 3,858 shares withheld or abstaining and 1,218,351 broker nonvotes; and 19,294,839 shares were voted in favor of Mr. Sparks, with 239,502 shares voted against, 3,858 shares withheld or abstaining and 1,218,352 broker nonvotes. Consequently, each of the directors nominated to stand for election as set forth in our proxy statement have hereby been elected for a term to last until our next Annual Meeting of Stockholders. With respect to the proposal to approve the nonbinding advisory resolution regarding the compensation of the company's named executive officers as disclosed in the proxy statement, 19,081,922 shares were voted in favor of such proposal, with 384,998 opposed, 71,278 abstentions and 1,218,352 broker nonvotes. Consequently, such proposal is hereby adopted. With respect to the proposal to approve the amendment to our certificate of formation to change the name of the company to Triumph Financial, Inc., 20,751,784 shares were voted in favor of such proposal, with 1,174 opposed and 3,592 abstentions. Consequently, such proposal is hereby adopted. With respect to the proposal to ratify the appointment of Crowe LLP as our independent registered public accounting firm for our current fiscal year, 20,646,373 shares were voted in favor of such proposal, with 105,433 opposed and 4,742 abstentions. Consequently, such proposal is hereby adopted.

With no further business, I hereby make a motion that this meeting be adjourned.

I second that motion.

As previously noted in Carlos' remarks to start the meeting, we would now like to take a few minutes to update our stockholders on Triumph's previous fiscal year and its activity to date this year. Before I begin, let me remind you that we may make comments that might be characterized as forward-looking statements under the Private Securities Litigation Reform Act of 1995. Generally speaking, comments regarding the company's or management's beliefs, expectations, intentions, goals, plans, outlooks or predictions of the future are forward-looking statements. These statements involve a number of risks and uncertainties that could cause actual results to vary materially from the anticipated results implied by these forward-looking statements. These risks and uncertainties are detailed in the company's filings with the SEC, which are publicly available on the SEC's website. And now we actually get to talk business. So thank you for bearing with us for the formalities. Our theme this year -- and they said they could only -- on the webcast, they can only see my head. Am I standing in the right spot? Am I in a good spot now, though? So a clear path forward. Now many of you have seen this, some of you have not, and certainly some of you -- some of the participants on the webcast have not. And we just want to take a few minutes of your time to talk about what's happened in what was a remarkable year of 2021, what is happening in 2022 and what our plans are going forward. So first, again, we paid lawyers to draft that. I encourage you to read it if you want to. 2021, this on the left-hand side is our net income. Since November 5, 2010, when we bought a failing $200 million bank that not a lot of people thought we could get done, many of you in this room were part of that journey. And you see in 2010 and 2011, we didn't earn a lot of money. But we were planting the seeds that you could see have led to some pretty remarkable growth, especially in 2021, when we earned just under $120 million in net income. Over this same period of time, if you look at the right-hand side, you can see our assets have grown from $200 million to just under $6 billion in assets, both organic growth and through acquisitions. I think this is a cool chart to look at. Inception to date, cumulative net income is just between $400 million and $450 million. That is net income after tax we have generated over the last 10 years that we've redeployed into building this franchise into what it is today. An interesting fact is 25% of that was last year. So this has been a perpetual building project. We never quite think we're there. We never quite think we're mature as a company. There's always the next thing to work on. Many of my team members in this room who've been here since 2010 are like, "Are we done yet?" And the answer is no. We're never done. We're always going to invest for the future, and this is the why. I mean it was a remarkable year in the economy for what we did and what we do. But if you don't invest to build it, you can't catch that remarkable economic tailwind like we did last year. So here is Triumph's performance against the S&P Bank Index. You go back to November -- what was it? November 10, 2014 -- November 7, 2014 was the day we went public. My daughter and my wife were there that day. I feel like a low point for me professionally because, man, I wanted to price it at $14 a share or that was the range, right? It had to be more than $14%. We priced to $12. Big bummer for me. My daughter was sick. I was tired. Like it was like, this is not what I thought going public was going to be like. Like where is the champagne? Where's the -- all the stuff that goes with it. But we made the decision to do it. And had you invested with us at that time, you can see in the red line the growth in the value of that investment over time. And of course, we've seen a dramatic reversal in the tech -- the headwinds in the tech space since late last -- or really the first part of this year, which has certainly pulled down our performance relative to the index, but I would still -- you look over that longitude somewhere above the 90th percentile of all banks for compounding value per shareholders, which is what you pay management to do, which compounds our value over time. This is an interesting chart just to show the change in the perception of what it is we do and who it is we are. So Veritex, great Texas bank. Malcolm Holland, Chairman and CEO, dear friend of mine, they went public just about the same time we did. And so it was always a proxy for us of how does the market look at a Texas bank versus whatever you call Triumph. Like what is Triumph? The market's spent a lot of years trying to figure that out. And so we look at it on a price to tangible book value basis. And so you can see in the early days, Veritex being the gray, that the market put a discount on what it is they did. They didn't understand a bank that was focused on trucking. They didn't really have comfort with a bank that had a branch network spread across 5 noncontiguous states. And had we told them about a payments network, they would have totally freaked out. But we held that back until several years down the road. But you can see, starting in Q3 of 2020, there started to be a dislocation between how the market looks at us versus how the market looks at a very well-run Texas bank. And that dislocation is associated with our pivot away from just trying to grow the community bank into truly creating a financial technology with a use case in a very large industry. And a catalyst for that was our acquisition of HubTran, the conversion to the open loop payments network, which there was a lot of thought that went into that. And there were even some concerns about how that would be executed, but you can see how the market received that. So here's where we sit today. There's 3 things to what we do. And I borrowed this from one of my teammates who set it, and I think it sums us up really well. We view the bank as the gold standard, right? Think about the bank that, when people think of a bank, it should be safe, it should be sound, it should be well capitalized, it should have a strong deposit base. It's the kind of entity that a large company would want to do business with. So the bank is the gold standard. It's the gold standard for how we achieve regulatory excellence, cyber risk excellence, all the things we need to do so that our team members and our customers can trust that they're dealing with an enterprise that can survive whatever is going to happen coming down the road, whether it's economic turmoil, anything. The bank has to be built to withstand that. The factoring business is the golden goose, because our factoring business will generate this year probably close to $240 million of revenue and deliver net income and operating margins that are unseen in any other scaled business in banking. There is not a more profitable, long-term sustainable business in banking that I have ever seen than what we have built Triumph Business Capital to be. And I was in the room when we ground our teeth over spending $9 million to -- that was the premium we had to buy -- to pay in January of 2013 to buy what was then called Advance Business Capital -- actually, January of 2012. And we have compounded that investment into -- it's really changed everything around here. So it is the golden goose. And then lastly, payments. That would be TriumphPay, and we would say that is the golden ticket. If you're a Willy Wonka fan, you know that the golden ticket changes your life if you get it. We believe the creation of a ubiquitous, invisible scaled payments network for trucking changes everything for our institution. We think it will also disrupt the industry as it currently exists. And so the 3 of those work really well together to provide the confidence for us to do business with Fortune 500 companies in our payments business, to provide the capital we need to reinvest into what we're doing and to just make us subject matter experts. If you're a shareholder here or you're a team member here, you're part of an entity that I think I can say with all appropriate humility that is the best in the world at paying truckers. It's not what I thought Triumph was going to turn out to be, but that's where time and opportunity has taken us. We pay more truckers than anyone in the world. And we're going to parlay that excellence, that subject matter expertise into something that I think creates a lot of value for shareholders. So this -- what I'm going to show you, and we've not done this before. I'm going to show you the -- actually the 5 drivers that I wrote for our team. This is inside baseball. This is what we are endeavoring to do on a go-forward basis. So number one, primary driver number one, TriumphPay establishes the payments network for trucking, demonstrating scalable and defensible revenue growth. Nothing will drive value for us over the long term anywhere close to achieving #1. This is our primary objective. How we do it, we hire the best talent. You all probably saw the announcement of TriumphX, which has given us a recruiting platform to bring technical talent into this organization in a way that we haven't done before. We want to land and expand. And what we mean by that is as we solve one problem for a customer, that gives you the opportunity to solve more. And so if you create an integration, if you create a relationship and you demonstrate excellence in how you solve your customers' problems, we think we can expand the reach of what TriumphPay does to be a more multifaceted solution. Third, we want to acquire shipper market share. TriumphPay run rate exiting the first quarter was $24 billion in payments. Of that $24 billion, approximately $3 billion of that is shipper. The rest of it would be tied to brokered freight market. The shipper market is $250-billion plus. There's a tremendous opportunity for us to grow in that space. And then lastly, defend the fortress. And here's real-time deal -- something we're dealing with. Several people in this room, we call it hack. 22 of our clients -- we have thousands and thousands of clients who use TriumphPay, their credentials were stolen and available on the dark web. And sophisticated, possibly state-sponsored actors from Eastern Europe, including one addressed from Russia, was using those credentials to try to test our system. And that's a big deal because: number one, we caught it and stopped it before there was any financial loss; but number two, we were able to go to our customers and say, "Hey, you need to know that your credentials have been hacked." And so it turned into a nonevent. And you should know every financial institution is potentially in danger of being hacked, so we have to be vigilant around that. And so for us, defending the fortress is a big deal. We have to make sure that we continue to protect the network, and as much as we can, we want to be valuable to our clients. So we think a lot about that, and we work really hard at that. And we turned what could have been an event into a nonevent. And that's what a network should do. That's what a trusted partner should do. Number two, Triumph Business Capital enhances its operational platform and technology stack to maintain its market position. Triumph Business Capital is the second-largest factor in the United States in the transportation space. We are 15% of the market. I do not materially see that growing, I don't think. It's not our goal to be 40% or 50% of the market. We want to maintain our market-leading position, but we want to do more things for our customers. And so we're spending time thinking about how do we deliver value? Who is our target market segment? There's 250,000 trucking companies in the United States. 96% of them have 4 trucks or less. How do we serve those customers? And what are their needs versus some of our largest factoring customers that have 500 trucks? And so how -- each channel that we serve has different needs. And so we really want to be tight on what that market segment is and what the value proposition is. Number two, technology-driven efficiency. We buy $60 million plus, $60 million of invoices per day, $2,300 at a time, with 375 team members. It is -- this business is a flow business. And to the extent you can use technology to leverage what your people are doing, you create a tremendous advantage. And we are in the process of doing the things that will allow us to do that better. And then lastly, own the user experience. Customers who -- I mean if you think about it, all -- every one of you who interact with financial services expect it to feel like Apple. You expect it to feel like Google, right? A very tight user interface, simple log on, all your data in one place, and that hasn't historically existed in trucking, for sure, and even in community banking as well as it should. And so we have invested and are investing to build something -- ultimately, the question we asked ourselves is, what if a bank were built by truckers for truckers? What would the app look like? If you were driving a truck for a living, what would you want in your app on your phone to see? Do you want to know about your -- when you're going to get paid on invoices you sold? You want to know, possibly, about your checking account balance, your fuel card, your insurance? And so we're reimagining what it is a trucker would want. And can we deliver that to them through our platform, and I believe we can and we will. I thought this was a great chart just to show you Triumph Business Capital performance on a gross revenue basis over the last 4 years. So you can see this also demonstrates some of the seasonality that we see in trucking. Just the first quarter is generally slower. It grows towards the back half of the year, really starting about now is when produce season happens, so a lot of trucks get allocated to hauling fruits and vegetables out of the inland empire. And then, of course, you just got macroeconomic things that move trucking. Trucking is very tied to what the economy is doing in real time. But I thought this was an interesting start to the year 2022, averaging roughly $20 million in gross revenue per month compared to any other year, including last year, which was a record year. We're starting on a much higher basis. Now you can see how last year really peaked at the end of that red line because of tightness in the trucking market. I make no predictions of what the trucking market is going to do between here and the end of the year. I don't think you're going to see a peak certainly like you did last year that it continues to go up. But even if it stays level, we're generating a significant amount of revenue above and beyond what we've ever done in the past in that business. The third thing, the golden standard, the TBK Bank. What do we need to do to make TBK Bank excellent? We want to improve efficiency, maintain credit quality and grow fee income and deposits. So you can see the 4 things we work on. We want to maintain operational leverage, meaning we need to grow revenue faster than expenses. We want to have moderate loan growth. We do want to grow loans, but we're not looking at this time in this market to grow loans at a fast clip. We think the risks are such that, that is not wise. We always want to grow transactional accounts because transactional accounts are the lifeblood of any healthy community bank. And it's something we had none of. When we showed up here in November 5, 2010, there were no transactional accounts. It was all CDs, it was all hot money, and it has been a long-term effort to rebuild that. And then lastly, credit vigilance. You have to defend the fortress. Just like you have to defend it from cyber risk, you have to defend it from credit losses. So going back to that deposit comment, I want to show you this. The gray line, moving left to right, is the number of transactional deposits. Okay, the total amount, and you can see that on the left side of the screen. If you look back at 2013, we had just over $500 million in transactional deposits. And just so we're clear, transactional deposits are either noninterest-bearing demand accounts or interest-bearing demand accounts. And the reason you want them, especially the reason they're valuable right now is they have low beta. As rates start to rise, transactional accounts, the interest the bank pays does not go up at the same rate that rates are rising because the Fed is moving. They are more and more valuable. The higher the Fed raises rates to tamp down inflation, the more valuable transactional accounts become. So you can see the growth in transactional accounts from just over $500 million to where it stands today, which is about $3.7 billion. And most of that growth, not all, but most of that growth was organic. And a lot of it happened -- you see this red dotted line? That was when we made the strategic shift. We talked about it a few years ago, we talked about it on earnings calls, but we just said we're done trying to just grow, grow, grow. Instead, we're going to grow where we're great. We're going to focus on what we're great at. So we're going to double down on trucking and we're going to -- instead of the community bank just growing assets, we're going to grow transactional deposits. And you can see that as a result of that work, the blue line. Our cost of total deposits has fallen from just over 1% to about, I think it's 25 basis points, is that right, Brad? 25 basis points. Remarkable. We have gone from being considered by the industry a poor performer on deposit quality to a very good performer on deposit quality, just because we made up our mind to go do it and we invested. And we -- what gets measured is what gets done. And we made it an internal goal to do this. And so our deposit -- where we stand as an institution, our deposit footprint is better than it's ever been, and it's a great time for it to be so, if we're going to continue to see interest rate spreads. Two more. We have to incent all our business units, whether you work for the bank, whether you work for TriumphPay, whether you work for Triumph Business Capital, it doesn't matter. You work for Triumph. We win and lose as a team. Just like there's an offense and a defense and a special team, you're all still on the same team. And so we have to make sure at 1,277 team members spread across 12 states, that everybody knows where we're going and is excited about where we're going and understands what it means for them if we achieve where we're going. So you can see -- I mean, we incent the desired behavior. As a team, whether you work for TriumphPay or not, it matters economically to you, whether TriumphPay achieves its volume targets. As a team, whether or not you're engaged in lending, it matters to you whether we maintain pristine credit quality. So we want everyone focused on all of the KPIs, the key performance indicators, for us going forward. We want that understood throughout the enterprise. Number two, we want to be ready for an agile response to a pullback. We have built up a significant amount of capital. We're earning about $25 million after tax per quarter. We have the ability to buy back a significant amount of our stock. And in light of the recent pullback, you should know, that's something that's on the table for us to look at. We always want to weigh that with the opportunity to do an acquisition that enhances specifically what TriumphPay is doing, but we are more than prepared to buy back a significant amount of our stock. We have a $50 million buyback authorization outstanding right now, and we certainly would have more dry powder to go above that should the Board decide that's the right thing to do. We want to maintain regulatory excellence, mitigate cyber risk. I already told you about one event, that's one of many events that all financial institutions are facing right now. Whether it's from state-sponsored actors or just local hackers, it's something you have to be mindful of. And then lastly, maintain our winning culture, prioritize team member well-being. If you take care of the team, the team takes care of the customer and the customer takes care of the shareholder. I've always believed that. You should always be wary of people telling you how great their culture is, right? That's -- I think it's better for you to hear it from others. But I would say to any stockholder who wants to investigate that or any board member, just find someone in the halls here and talk to them. We're not perfect. We do not get culture perfectly. But we have lived out to the best of our ability the concept of servant leadership and transparency over these last 10 years, and there's a very few people who leave this place. Very few. And that's -- the people are what makes it happen, right? It's not the CEO, it's not the Chairman, it's not the Board. It's the people that we hopefully train, coach, give a plan to and then allow them to go execute. And you can see the results of what happened as a result of that. And then we're broadening our Investor Relations. We are no longer a community bank that owns a financial technology company. We are a financial technology company that's part of a bank, and that changes the investor base of who we talk to. And so that's something I spend a lot of time doing is trying to explain to the market who Triumph is, who Triumph was, who it is and what we're going to be in the future. And so those 5 things and how we touch the 3 legs of the stool is how we maintain culture and how we prepare ourselves if there are economic headwinds. The great news is, we're very profitable. We have excess capital. We're more than prepared for anything that might come down. And that's it. No more than 5. You got to know those 5 things, you got to live them. You got to do them. And with that, we'll turn it over for questions, if there are any. And I assume they can't ask questions on the webcast. Awkward silence doesn't bother me.

You have time for the question.

Be my guest.

So if I was listening and just all the media stuff around, where things are in the industry, right. Transportation being challenged right now, supply chain challenges. Clearly, the market has a correction of our own stock. Maybe just your view on where we're heading around supply chain.

Yes. anyone who tells you and pound the table with conviction that they know what's happening in the supply chain on a predicted basis is either lying to themselves or they're lying to you. Like it is so -- the market is -- there are so many factors at play. And what's happening in China -- like everybody is talking about Elon Musk buying Twitter. We ought to be talking about what's happening in China. Because lockdowns in Shanghai and Beijing, that is going to dramatically affect supply chains, including trying to get microchips. I mean there's so much in play. Or what's happening in Ukraine. You need neon gas to make the chips that we use to build trucks. Well, it's kind of hard to get those out of Ukraine right now. The view from -- Triumph's view and you have to understand, trucking is a leading indicator of the economy, I do believe that, is that we are coming off of what we were seeing in Q4 was an unsustainable high. $4 per mile on dry van is just -- that can't last. And so we're coming -- we're returning to a more normalized place. Now the question is, is that $3 a mile? Is it $2.50 a mile? Is it $2 a mile? If it drops to $2 a mile, that's a problem. Most lanes, we don't -- at least for the rest of this year, it seems unlikely that, that happens. You've got a shortage of equipment, OEM producers are -- if you order a truck today, you'll get it sometime in 2023. There's a shortage of drivers. Now we have seen new trucking companies come into the market, but those aren't new drivers. Those are drivers who left big trucking companies to start small trucking companies. It's difficult to find someone who wants to be going 3 nights a week, can pass the driving test and pass the drug test. It's just hard. We're 80,000 drivers short. Unemployment at around 3%. The consumer still has money to spend. So all these people are predicting this blood bath in trucking that has driven a lot of -- has driven down a lot of transport stocks and us along with them, we don't share that conviction. I don't think it materially goes up from here. We think it muddles along. And if it muddles along, where we're at right now, then Triumph is exceptionally profitable. I'll leave you with that. In the first quarter, we generated a 1.7% return on average assets, which is a 17% return on average -- return on tangible common equity. That would put us in the top 10% of all banks. All banks. We did that while investing just under $7 million into our -- the drag on earnings from TriumphPay was $7 million, okay? If you normalize that, if you just say TriumphPay breaks even, our ROA for the quarter would have been over 2% and our return on tangible common equity would have been over 20%. And that would put us in the top 1% of all banks. So this institution is exceptionally profitable, even while choosing to invest in trucking. And to date, between the M&A we've done and just the organic feeding of TriumphPay, we've invested, I would say, close to $200 million in this technology. And we think the upside is many multiples of that or we wouldn't continue doing it. So if trucking moderates, certainly it will add revenue volatility for us. But because of the diversity of our asset base, because of how we're positioned, we will be profitable enough to continue, in my view, doing what we're doing. Yes, sir?

Two questions. One, Triumph Business Capital, you mentioned #2 in the U.S., 15% of the market today. Why not the goal to grow that substantially? Or did I mishear that or just the rationale behind that? And then two, long term, what are the impacts, if any, do you see if more manufacturing is brought onshore, as far as trucking and the clients we serve. Is that a net positive, negative? It doesn't matter?

Yes. So taking the second question first. Our belief and if you talk to the trucking companies we do business with, is COVID plus Trump's tariffs against China is going to make Mexico great again, right? We -- our expectation is you're going to see a lot of onshoring in Mexico manufacturing. It won't happen overnight because supply chains are super -- it's difficult to move. But we already believe we're going to see more freight coming through Laredo and through those southern ports would be an expectation. So -- and if it onshores even domestically, it doesn't really affect the trucking industry. Because whether we're moving -- our customers are moving things from the Port of Long Beach or from a manufacturing facility in Mississippi, it still has to leave that facility and go to a distribution facility and ultimately to the end user. So I don't see that changing things. There is some -- a value proposition for TriumphPay. We think of tracking things from -- ultimately, our long-term plan, we'll be able to track things from the point of manufacturer to the last mile. That would be an amazing value delivery back to the market. But that's a long journey to build that -- all those integrations. On the first question with Triumph Business Capital. We want Triumph Business Capital to be -- grow in profitability and grow with the market. And we should just pause on this. For years, people have been predicting that factoring was going to get disintermediated in trucking. They've also predicted that small truckers would no longer be able to compete. And despite that's what the industry experts are telling you, what we see is small truckers are growing faster than anything else and factoring is taking more market share. In brokered freight, we used to say 1 out of every 2 invoices were purchased by a factoring company. It's kind of remarkable. If you think about a freight broker, they're not actually paying a trucker, they're paying a factoring company. They already bought the invoice from a trucker. Real-time data, depending upon which freight broker you look at, it's closer to 65% of all invoices are going into the factoring industry. So I think the factoring industry as a whole in transportation is approaching something like $100 billion in purchases. It's -- there's 385 factoring companies that are active in transportation, and the top 20 controls 75% of the market. We have never historically seen that level of consolidation at the top end of the market. So remember what TriumphPay does. TriumphPay has a value proposition, not just for the carrier, not just for the freight broker, not just for the shipper, but also for the factoring industry. Because they are a significant payee, they are our customers. 72 factoring companies use TriumphPay in order to process their invoices in our -- inside of our technology platform rather than doing it the way they used to do it. So if that's true, then it's difficult for us to also have a plan to go try to disintermediate all of those factoring companies on their same playing field. So when I talked about defining the market segment, Triumph Business Capital still serves small truckers. We still serve owner operators. Where I think we're really good compared to the rest of the market is serving larger fleets, because we have the bank balance sheet to lower cost of funds, and it also takes us out of competition with a lot of the people we want to be clients for tracking. The second value proposition is instead of just growing market share and winning deals from other factoring companies, what are the other services that being a bank allows us to provide? And if you remember what I said about that user experience: insurance, bank accounts, fuel cards. How can we build a product that would be compatible with what other factoring companies do, not just competitive? We're happy to compete. If we need to compete, we will. But if we're playing the long game, the value of revenue -- dollar of revenue coming from TriumphPay is going to be 10x revenue, right? A fast-growth payments network should, in a normal market be valued at that. The growth of $1 of revenue in Triumph Business Capital is going to be 12 to 14x earnings, not revenue, right, because it's a commercial finance company. So if we're thinking about long-term value creation for the entire enterprise, we have to think about that. So Triumph Business Capital is a core part of what we're doing. It's a core value provider. It's here. But I just -- I think the market deserves to know. It's not our goal for it to be the largest factoring company in the industry, it's our goal for it to be the best at what it does. Okay. Thank you all for coming. Feel free to mill around. This is our new floor, by the way. Where is Gail? In addition to being the secretary, inspector of elections, Chief Regulatory Officer, she's also Chief Architect and builder of all the space you see around here. So we call this the arena. There's a quote behind on this wall that comes from Teddy Roosevelt about, "It's not the critic who counts, it's the person in the arena". That's what we like to think about. There have been lots of people who said, Triumph can't do this, you won't do this. You're too young, you're too small and our view is just get in the arena. Don't talk about it, get in it. And so this is where we do in a lot of our meetings. So thank you all for coming. We appreciate your support. Have a great day.