Truxton : Q3 Financial Results

Q3 2023 Financial

Results

Financial Update and Quarterly Reports

October 19, 2023

Q3 2023 Financial Highlights

($000s)
Income Summary	3Q 2023	3Q 2022	% Change
Net Interest Income	$6,059	$6,564	-7.7%
Provision for Loan Losses	$6	$284	-97.9%
Non-Interest Income	$4,931	$4,267	15.6%
Non-Interest Expense	$5,314	$5,206	2.1%
Earnings Before Taxes	$5,670	$5,341	6.2%
Income Tax Expense	$1,109	$1,002	10.7%
Net Income	$4,560	$4,339	5.1%
Balance Sheet
Assets	$948,566	$916,758	3.5%
Loans	$641,697	$611,946	4.9%
Deposits	$780,868	$789,552	-1.1%
Stockholders' Equity	$79,543	$68,870	15.5%
Asset Quality
Allowance for Credit Losses	$6,031	$5,750	4.9%
Allowance to Gross Loans	0.94%	0.94%

2

Safe and Reliable Credit Quality

• No 30 days+ past due loans
• Non-performingassets (NPAs): $0
• No other real estate owned (OREO)

Allowance vs. Non-Performing

$6,500 $6,000 $5,500 $5,000 $4,500 $4,000 $3,500 $3,000 $2,500 $2,000 $1,500 $1,000

$500 $-

2018	2019	2020	2021	2022	3Q23
		Allowance		Non-Performing Loans

Reserves / Loans

0.98%

0.97%

0.96%

0.95%

0.94%

0.93%

0.92%

0.91%

Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3
2021	2022	2022	2022	2022	2023	2023	2023

*Charts above do NOT include ACL on unfunded commitments

3

Loan Yield & Concentrations

• Commercial Real Estate concentration was 236% of capital at quarter end
• Acquisition, Construction, and Development loans was 46% of capital at quarter end
• Average loan yields excluding fees rose 29bps to 6.01% in 3Q23 compared to 5.72% in 2Q23

Average Loan Yields

Avg. Loan Yield		Avg. Loan Yield, ex. Fees

6.50%

6.00%

5.50%

5.00%

4.50%

4.00%

3.50%

3.00%

Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

2021 2021 2021 2022 2022 2022 2022 2023 2023 2023

Commercial Real Estate

ACD regulatory guideline = 100%		ACD	CRE
CRE regulatory guideline = 300%
100%							300%
75%							225%
50%							150%
25%							75%
0%							0%
2018	2019	2020	2021	2022	Q1	Q2	Q3
					2023	2023	2023

4

Deposit Costs Rising

• Non-interest-bearingaccount (NIBA) balances declined as a percentage of total deposits, driven by clients establishing interest-bearing sweep accounts for their excess operational funds
• Deposit costs continued to rise but at a slowing rate

NIBA / Total Deposits

30%
					26.7%
25%									23.2%
22.1%
20%								20.6% 19.5% 19.0% 19.7% 19.3%
15%						15.0%
10%
5%

0%

Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3
2021	2021	2022	2022	2022	2022	2023	2023	2023

Cost of Funds

6.00%
5.00%
4.00%
3.00%
2.00%
1.00%
0.00%
Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3
2021	2021	2022	2022	2022	2022	2023	2023	2023
Cost of Funds		Average Effective Fed Funds Rate

5

Net Interest Margin

• NIM increased 7bps in Q3 2023 compared to Q2 2023 as the increased yields on earning assets outpaced growing funding costs, driven by large loans repricing at the beginning of the 3rd quarter and end of the prior quarter

NIM

3.9%

3.7%

3.5%

3.3%

3.1%

2.9%

2.7%

2.5%

2.3%

NIM vs. Cost of Funds

3.5%
3.0%
2.5%	Fundsof
2.0%
1.5%	Cost
1.0%

0.5%

0.0%

Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

2021 2021 2022 2022 2022 2022 2023 2023 2023

NIM	Cost of Funds

NIM vs. Fed Funds

6.00%

5.00%

4.00%

3.00%

2.00%

1.00%

0.00%

Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3
2021	2021 2022 2022 2022 2022 2023 2023 2023
		NIM			Fed Funds (Upper Bound)

6

ROAE and Efficiency Ratio

ROAE vs. Efficiency Ratio

25%

20%

15%

ROAE

10%

5%

0%

45%
47%
49%
51%	Ratio
53%
Efficiency
55%
57%
59%
61%
63%
65%

2015	2016	2017	2018	2019	2020	2021	2022	2023 YTD
				ROAE		Efficiency Ratio

7

Pre-Tax,Pre-Provision Net Revenue (PPNR)

Net Interest Income (+)			Non-Interest Expense (-)
Non-Interest Income (+)				Pre-Tax,Pre-Provision Net Revenue(=)

Q3 2023 vs.

Q3 2022: +1.0%

	Q3 2022			Q2 2023			Q3 2023
11,000			11,000				11,000
10,000			10,000				10,000
9,000	$4,267		9,000				9,000	$4,931
							$5,314
8,000	$5,206		8,000	$4,769	$5,070		8,000
7,000			7,000				7,000
6,000			6,000				6,000
5,000			5,000				5,000
4,000			4,000				4,000
3,000	$6,564	$5,625	3,000	$5,797		$5,496	3,000	$6,059		$5,676
2,000			2,000				2,000
1,000			1,000				1,000
0			0				0

8

Wealth Management Growth Continues

• Wealth management services represented 42% of net revenue in Q3 2023
• Wealth management services represented 93% of total non-interest income in Q3 2023
• Wealth management revenue increased 14.8% in Q3 2023 compared to Q3 2022

Wealth Management Revenue (000s)

$18,000
$16,000
$14,000
$12,000
																																				Q3
$10,000																																			$4,608
																														$	16,377
$8,000
					$15,102			Q2
$6,000
																																		$4,442
																	$	11,469
						$10,746
						$9,843
$4,000						$9,108
						$	7,646
	$7,204
	$6,245																																Q1
$2,000
																																		$4,171
$0

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Wealth Management Revenue (000s)

4,700

4,600

4,500

4,400

4,300

4,200

4,100

4,000

3,900

3,800

3,700

Q3 2022

Q4 2022

Q1 2023

Q2 2023

Q3 2023

9

TRUX Financial Returns

• Efficiency Ratio down 20 basis points compared to Q3 2022
• Net interest margin (NIM) down 34 basis points compared to Q3 2022
• Return on average assets (ROAA) up 2 basis points from Q3 2022
• Return on average equity (ROAE) down 113 basis points from Q3 2022
• Tier 1 Leverage Ratio for the Bank up 58 basis points from Q3 2022
• While not all trending the right direction, all key metrics remain strong

Key Ratios	Q3 2022 Q4 2022	Q1 2023	Q2 2023	Q3 2023
Efficiency Ratio	48.07%	48.55%	51.32%	48.56%	47.87%
Net Interest Margin	2.95%	2.83%	2.75%	2.54%	2.61%
ROAA	1.89%	1.70%	1.89%	1.90%	1.91%
ROAE	23.61%	22.92%	23.05%	23.33%	22.48%
Tier 1 Leverage Ratio (Bank)	9.78%	9.78%	10.29%	10.39%	10.36%
Tangible Equity / Tangible Assets	7.51%	8.00%	8.11%	8.15%	8.39%

10