Triumph Financial, Inc. (TFIN) Q2 2021 Earnings Report, Transcript and Summary

Good day, and welcome to the Triumph Bancorp Incorporated Second Quarter 2021 Earnings Conference Call. All participants will be in a listen-only mode. After today’s presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Luke Wyse. Please go ahead.

Good morning. Welcome to the Triumph Bancorp conference call to discuss our second quarter 2021 financial results. Before we get started, I'd like to remind you that this presentation may include forward-looking statements. Those statements are subject to risks and uncertainties that could cause actual and anticipated results to differ. The company undertakes no obligation to publicly revise any forward-looking statements. If you're logged in to our webcast, please refer to the slide presentation available online, including our safe harbor statement on Slide 2.

Thank you, Luke. Good morning. For the second quarter, we earned net income to common stockholders of $27.2 million or $1.08 per diluted share. Adjusting for closing costs related to the HubTran acquisition, adjusted earnings per share were $1.17. Before I go into specifics on the quarter, I want to address two topics. First, on July 15, we announced that Bryce Fowler will be retiring on September 1. Bryce has been my steady companion since Triumph became a bank. He's a great friend and teammate. He is in the room with me today and will continue to be in the room, as he serves on our bank board of directors following his retirement. We wish him nothing but the best in his well-deserved retirement and all of us joined together and thank him for all he has done. Upon Bryce's retirement, Brad Voss will be promoted to Chief Financial Officer. Brad has also been part of our team since the early days and speaks to the depth of leadership we have built over the last 10 years. Brad's promotion is the culmination of Bryce's mentoring within our succession planning process and investors and team members should witness a seamless transition. Brad has deep experience in broad areas of finance and banking. And most importantly, he is steeped in our culture of transparency, innovation, and servant leadership. The second topic I want to address is a change in the way we present our results. Beginning this quarter, we reconfigured our reporting to break the consolidated entity into four reportable segments, consisting of payments, factoring, banking, and corporate. The Payments segment relate solely to the activities of TriumphPay, making it easier for investors to see and monitor our progress. The Factoring segment is unchanged from before it consists of all factoring, both transportation and non-transportation at Triumph Business Capital. The Banking segment is unchanged from before with the exception of removing TriumphPay and includes our traditional lending and deposit relationship banking activities, as well as our mortgage warehouse lending, ABL, the liquid credit portfolio and equipment lending. The Corporate segment also remains unchanged from before containing our holding company activities and certain expenses to support the overall operations of the company.

Thanks, Aaron. First, I'd like to provide a brief update on our pandemic relief efforts. Loans and pandemic related deferrals are down to $54 million or 1.1% of total loans. Over 80% of our 2020 originated PPP loans have been forgiven and PPP loan forgiveness resulted in $1.8 million in fee recognition during the second quarter. We have another $90 million in PPP loans that were originated earlier this year and all outstanding PPP loans represent another $5.2 million in fees that will be realized as they are forgiven. Moving to our core lending activity. Our equipment finance business represents our steadier source of loan growth with $95 million in new originations in the second quarter, which was our second highest quarter ever. As we've rebuilt our ABL leadership team and sales capacity, our ABL pipeline has grown and represents additional growth potential for the latter half of 2021 and the first half of 2022. Our mortgage warehouse business balances declined $245 million through April and May and then partially rebounded in June and overall mortgage warehouse loan balances remain at elevated levels with deposits growing $111 million during the second quarter as we continue to deepen existing relationships. Our community bank loan balances continue to shrink due primarily to the refinancing of credit only CRE loans, however, community bank deposits and fee income continue to increase as we acquired and expanded more deposit and treasury services clients. For the second quarter, a weighted-average interest rate on new non-PPP originations were 6.1%, led by equipment finance at 6.7% with ABL and general C&I lending at 6.2%. Margins on commercial real estate remain compressed and we expect continued run-off in this portfolio until long-term rates normalize.

Thank you, Todd. With all the talk about transportation and payments, I hope investors appreciate the growth in our high-quality deposit base. Non-interest bearing deposits grew approximately $166 million and now represent about 38% of total deposits. That is up 164% since we announced our plan to focus on this discipline. It is gratifying to see the fruits of that effort. Couple that with a net interest margin of almost 6.5%, a return on assets of just under 2% and a return on tangible common equity of 21%, all while incubating a fintech of considerable upside value and we are very pleased with how things are going. With that, we will turn the call over for questions.

Our first question today comes from Jared Shaw with Wells Fargo Securities. Please go ahead.

Hey, good morning, everybody.

Good morning.

Bryce, congratulations. Wish you the best in retirements. It's been great working with you over the years since Triumph has gone public. Maybe just sticking – starting with expenses, you called out on the delta, I guess this quarter, $3 million of professional fees that are likely to not be there next quarter, but sticking with the $71 million a quarter, where is that $3 million difference going to end up? Is that just going to be a – is that the full quarter impact of HubTran, the $3.6 million you're talking about or is the – this HubTran going up $3.6 million from where it is now?

No, you're right, I mean, if you – on the first part, when we were – the call when we were bullet pointing this out, that was only a partial period for HubTran. So, I believe a full quarter of HubTran will add another $2.3 million to that run rate, the other $700,000 would just be in other investments we're making in TriumphPay and TBC.

Okay. And then just looking, you called out $100 change in average invoice size, equates to $0.26 per share on a full year basis. Is that $0.26 per share of revenue or is that of EPS because I guess average invoice size is up $92 this quarter and we didn't really see that flow through to the biggest thing of that equivalent delta and EPS I think?

Well that's earnings per share, Jared, and the way that, it has a lot to – lot of moving parts in there because it has a lot to do with what the volumes are on a client basis as well, but you've got to remember, we do just as much work on a $1,500 invoices we do on a $2,100 invoice. So those – there's not a lot of difference between revenue and earnings when it comes to those deltas.

Okay. So, I guess just this quarter though when we look at some of the higher comp expenses and incentive expenses that were called out versus I guess the $63.4 million run rate expectation last quarter of total expenses, that's more of a one-time catch up to reflect where the business is now and then additional invoice increases would flow through is the way we should think about that?

Largely, that is correct, Jared. Part of the bonus accrual this quarter was catching up back to Q1 because performance has been so exceptional that the way our internal metrics work, we needed to increase that allocation. Were there to be a meaningful increase from here and invoice sizes were already running so far above plan, I don't think you would see a meaningful bonus increase on top of that, of course, there are the sales commissions and all of those things that are tied to certain metrics. But I think ultimately what we're just trying to help people understand is directionally $100 move in invoices when Triumph Business Capital is approaching 45% of our revenue is going to have an impact on revenue. And there will be other moving parts in there. We just want investors to be able to understand how correlated some of this outperformance is with where the market sits today.

Got it. Okay. Thanks. I mean just finally from me, I guess. Can you give an update on the – the spot freight market continues to be really strong, is it at a level where you're actually seeing people sort of come off the sidelines and either by a truck or drive their truck more. In the past, you've talked about that cycle of spot freight rate being higher, people coming in to the market and then the cycles getting saturated and going back other way, but have we actually started seeing that build yet in terms of an increase in the number of drivers out there on the road?

Yes, Jared. This is Geoff Brenner. We're seeing added capacity in 2021 over the capacity we saw in 2020. There continues to be supply chain and availability of tractors are an issue. For example, we were talking with a very large client of ours last week, who is able to get new tractors because they ordered in advance and did a lot of smart things during the downturn, but the market right now just for used tractors with 250,000 miles on them is almost – he is able to sell those almost for the same prices what he pays for a new one. So, you're seeing lack of availability in terms of the assets you need to move and that's – 42,000 new tractors entered the market, is the best number I've seen and if that equates to about 3% capacity lift, the same report suggested volumes are up 16%. So, there is capacity coming in, but the volumes continue to outstrip it.

And another thing that's happening is as you see the client growth at Triumph Business Capital; many of those truckers were already driving. They were just working for someone else. But as the market conditions have gotten as strong as they are now, they're leaving a larger company that they released on with and getting their own authority and when they do that, they generally need a factoring company to provide liquidity and back office services. So, that creates a bit of a perfect storm for us that – and all – I think probably the entire factoring industry, you're driving more new carrier authorities, but because of a lack of availability of new equipment, you're not adding a bunch of equipment, which in past cycles, trucking companies, a lot like banks don't handle cycles well, right? They do – there would be – too much capacity would come into the system and it would struggle and the market forces with switch and then you'd have a down cycle here that lack of availability of drivers and equipment is plus just elevated demand is helping. So, just understand that new client growth that Triumph Business Capital is capturing, I – we don't have perfect numbers on this, but I would suggest for you the vast majority of those new clients were already driving trucks for someone else. They are now just driving for themselves.

Great. Good color. Thanks a lot guys.

The next question comes from Michael Rose with Raymond James. Please go ahead.

Hey, good morning and thanks for taking my questions. I thought Slide 13 was really interesting, especially as it relates to the TAM for the brokers freight market. It's a little bit larger than I thought it had been or was or at least according to our team here. Do you think that's a temporary number and will come down just because of the pandemic and work from home and things like that or do you think that is actually a sustainable and growing number? Thanks.

We think it's growing. We've called brokered freight $150 billion around here for the last three to four years, but as we dig deeper into the data, as we get better data from TriumphPay integration and what we're seeing, we believe that market is growing. and it would be appropriate Michael to point out here something – we report numbers to you when it comes to TriumphPay, especially. I mean, a 40% almost 50% growth quarter-over-quarter in payment volume. What – I mean, that's an outstanding number when you would look at also the underlying amount of transactions because in a market in which invoice sizes are getting smaller because the market is contracting or pricing is getting weaker, what we still measure for TriumphPay is adoption. So, in a down market and freight, it might – you might say broker freight could drop back to $150 billion or $160 billion. Our overall thesis is that the brokered freight market, brokers are taking more market share just because of superior technology and the way they're able to be nimble, hiring drivers and we don't see that trend changing.

Okay, that's helpful. And then I know you haven't talked a ton about the contracts shipping market and I appreciate the color on Slide 14 just given the outside potential. Can you talk about – so obviously the flip to the open-loop network is focused on the brokered freight market, but can you talk about how – and the role that TriumphPay would play in the contract shipping market, which obviously Slide 13 has a bigger TAM and what the competitive dynamics are in that market relative to the brokered freight market where you're much larger at this point? Thanks.

Sure. So first of all, I would say, we are already processing payments in the shipping market for some very large names including Medtronic and Johnson Controls. We pay truckers on their behalf and we have more Tier 1 names coming in that space and a couple of Tier 2 names even in this coming quarter. I think the way to think about it or the way at least I think about it is TriumphPay has now paid over half of all truckers and those truckers don't just haul in brokered freight, they haul in contract and brokered freight. And at some point in the next 12 months, I suspect, we will have paid 90% of all active truckers at the pace we're going. So, eventually the payments network and how it operates in brokered freight, we believe we'll operate in a similar manner in the shipper market, you have to provide the audit functionality to brokers, provide to contract shippers and certain other things you need to do that brokers are very good at doing for their customers. But eventually if you've got a payment profile on a trucking company and the user experience is so digital, seamless, frictionless, the truckers are in our opinion eventually going to ask anyone they haul for, hey, we want to be paid by TriumphPay because it gives us the freedom to choose of when we get paid, how we get paid, it gives our factor, the fact – whichever factoring company they use, the ability, the tools to process things faster, and so that's our belief that a bit – we think this technology. I mean, we're already more than a couple of billion dollars in the shipper market and we haven't talked about it as much, but it is growing. And as you move into that market more, you're going to be seeing a higher proportion of the trucking companies you pay are going to be large trucking companies. What we happen to think, TriumphPay can provide value to them. They don't need our financing solution or anyone's financing solution in the actual payment process. But if we can streamline cash application and other functionality for them then – and create labor savings, then we think there is a value proposition for both contract shippers and trucking companies that serve that market and the trucking companies that serve that market also serve the brokered freight market. So, we view the total addressable market as $420 billion. It doesn't mean all parts of the market will interact the same way with the payments network, but our intent is to move as much of all that volume on to the network as we can because we think there is value for everyone who touches it.

That's very helpful. Maybe just one more for me. The annualized payments volume at $13.7 billion, is obviously a big number at this point. I know previously you gave us some guidance there with hot trend in the mix at least through year-end. Do you have any – and just what you can see from the clients that you've signed up? I mean, do you have any sense at least by year-end what a reasonable target for payments volume could be? Thanks.

If you annualize the month of June, we're running $16 billion and there is more volume coming from existing Tier 1 integrations that we've already announced and there are more Tier 1 integrations coming in the third quarter. So, honestly, Michael, I don't know that I can hazard a guess that it's – there is a whole lot of opportunity and there's a lot in the queue and part of that will depend upon what the spot market does and invoice prices, but it will go up and I think you'll see it go up significantly. And one thing I would point out and we tried to make this very clear because we don't want to mislead people to the upside, the $13.7 billion in payments is what TriumphPay actually paid. HubTran has integrations with freight brokers that touch another $13 billion of payments, but we are not making those payments and wouldn't count that to our benefit, and lessen until that freight broker becomes a full TriumphPay customer. So, when you think about HubTran, at least between now and the first quarter of 2022, what you ought to be thinking about is the integrations it brings. That's the metric that matters because those integrations give us a warm lead to build into a full TriumphPay relationship, both on the factoring side and the freight broker side. So I can't point you to specific volume, payment volume that will come solely as a result of HubTran being part of our mix, but what I can point you to is 60 factoring integrations and 258 freight broker integrations that HubTran already have that once we have the fully conforming product in first quarter of 2022, will be well situated to come into the network based upon that prior HubTran relationship and that doesn't just include the integration, the API integration, but also just knowing who they're doing business with and getting to know TriumphPay as a result of that existing relationship.

I'll try to follow-up on that. With those coming integrations in the first quarter of 2022, what is the payment volume that HubTran is currently experiencing? I'm just trying to get a ballpark of what that could look like once everything…

HubTran has no payment volume. HubTran provides audit functionality to $13 billion of transactions of its customers. That's what it touches. It does not have payment volume. It never made payments. It was an audit solution that was integrated into the operating processes and procedures of companies doing payments on their own. So, I can't promise anyone that every HubTran customer that currently exists is going to move all that volume on to TriumphPay. I think the value proposition makes it very likely that we will win a majority of that business, but there is – HubTran has added zero payment volume to what TriumphPay has done to date. What it did bring was audit functionality that allows us to finish the build out that we're going to be delivering to the market in the first quarter of 2022 of a network that can provide a fully conforming transaction with presentment, audit and payment with minimal human interaction.

Understood. Thanks for all the color and really appreciate it.

You got it.

The next question comes from Brad Milsaps with Piper Sandler. Please go ahead.

Hey, good morning.

Good morning.

Bryce, congrats on your retirement. We'll definitely miss talking to you. Aaron just kind of curious, as you guys have started to talk about the payments network in the market. I know you've discussed, interchange fee, it's anywhere from 20 basis points, maybe as high as 50, just kind of curious what maybe initially you've heard from customers or as you kind of testings, rather talked about it, have you come any closer to kind of where that fee could potentially settle?

Yes. We have done a lot of work on that, Brad. And one thing I would say is it is unlikely we will be defining this fee as it applies to the market as an interchange fee, just as we've gone out and sat and talked to people and understood what they need, what they want, where the value comes from. It will more likely be a – there'll be a subscription fee for people who use the network and then there will eventually be a network fee that's tied to the number of fully conforming transactions. And, I mean, the general narrative we're telling the factoring community is, whatever we can demonstrate your cost savings to be, we think that – our ask would be roughly half of that, so half of the net value provided to them falls to their bottom line and that doesn't even count fraud mitigation. So, I believe in the future, Brad that on a total fee basis, when you include those, both subscription fees and network fees and our share of the upside created by the network, I still believe we will be within that range we gave you, but it won't start there day one and we have to demonstrate it to the market like they have to tangibly see it and know that it will also likely be a lagging fee. In other words, we have to show people in their bottom line, okay, this is how much you saved this year when we price it for the future. And I mean, we think that's the appropriate way to get the market to adopt what you're doing and make the investments and the operating procedural changes. You can't ask them to pay the money upfront and hope the savings will come. And that's why we were – I made the point of urging patience, revenue is going to keep growing and fee revenue will grow faster than balance sheet revenue in that space, that's what we're targeting. And so I think eventually we will get into that strike zone that you referenced. I don't know that we'll call it interchange fees. Like I said, I think it's more of a subscription fee and a network transaction fee. And so we will have, my intent is, we are meeting with dozens and dozens of factoring companies and freight brokers this quarter to demonstrate the product, demonstrate what it does. And so my expectation is we will be able to give you clarity on exactly what we intend to do with pricing on the third quarter earnings call.

Great, very helpful. And from this point, I mean, I know you talked about $71 million expenses kind of near-term. I mean, what type of investments do you think you continue to make to kind of get the technology where you want to be? I mean, I know there are a lot of comp related expenses in this quarter, but you're up 20% year-over-year, obviously a month of HubTran in there as well, but does that pace begin to slow down or do you think you've got more money to spend to get to where you want to be for this huge revenue opportunity?

The majority of the senior team at TriumphPay is in place, right, we have great leadership, Jordan Graft’s leadership, the vision that he cast, it's exceptional. Ed Schreyer and Melissa Forman, the people we've added underneath them. And so what you saw in this quarter was them starting to realize the stock compensation that they well-deserved, and it's also good for us because that connects them to our future. And so that run rate picks up a lot of those – of the technology staff and the HubTran staff who just started. We have several people who are just – we needed to make sure we're incentivized to stay with us and see this to the end. We still have senior people that we will need to hire along the way, no doubt. But I think the bulk, I don't – I cannot foresee Brad, another quarter where you see a jump like we had between these two quarters. I think this $71 million run rate encapsulates a whole lot of talent that is warehoused in this organization, both technical talent, financial talent, otherwise, because we have to keep a pretty large integrations team right now that is going out. I mean, every time we onboard a new customer, we have to have technical resources available in real-time to do that integration. And so that all lives here now, I would expect any jumps going forward to be incremental, not as significant as you saw on this – between the last two quarters.

Got it. Very helpful. And then just final question for me. Can you add any color to the jump in factoring yield, this quarter was up about 115 basis points? Is that just more seasonal because volumes even stronger or a mix issue, just kind of curious kind of what drove that increase?

It's Geoff Brenner. I think one important – couple of important metrics on the jump. If you look at Q2 and you compare it to Q1, average invoice amounts increased by about 5%, which is this tailwind that we talked about, but our purchases increased by 25%. So you're seeing a lot of growth in purchases and client count that outstrips the increase in the tailwind. And we're not adding proportionally more and more people to capture that volume. If you look back just on the growth from Q1 to Q2, it's mind boggling and the team has managed that incredibly efficiently. So I think you're seeing higher than ever revenues, higher than ever purchases, higher than ever client counts. And it's a trailing staffing and cost matrix that's chasing that. So that's producing better returns.

And to the specific question that he was asking is the yield difference quarter-over-quarter. I think some of that also Brad has to do with the TFS transaction winding down. Those TFS receivables were price low to begin with and they were a drag on a GAAP basis. And so, as you see that go away, we're returning to more normalized historical run rate for us.

Got it. That makes sense. Thanks. Thanks for all the color.

We got it.

The next question comes from Gary Tenner with D.A. Davidson. Please go ahead.

Thanks, good morning, everybody.

Good morning.

Wanted to just ask about taking a step back from TriumphPay and HubTran for a second to Triumph Business Capital, obviously, the performance there has been tremendous. But my understanding or at least from past commentary, is that with the pivot of TriumphPay, there was maybe going to be some additional development of Triumph Business Capital in terms of integration with the bank and offering products to its factoring customers. Can you talk a little bit about kind of plans for that side of the business even as you run that kind of concurrently with growing the payments network?

Yes. Good morning. This is Todd Ritterbusch. Geoff and I and a number of the leaders on our respective teams have been working really hard on this. And so, there are – I call two main elements of this. In the near-term, we're working very hard to get our people to work together, specifically our salespeople, so that we understand one another and the value proposition that we can present together to a TBC client. And so, that work is going really well. We’ve had sales conferences, we’ve aligned incentive plans, working relationships have developed and we're seeing good improvement in referral activity from TBC into the bank to create and manage broader relationships. The longer term is the development of the MyTriumph portal to include all of this as well. So, the MyTriumph portal is the factoring portal that our factoring clients use today. It's a very nice online system for looking at all of the factoring related activity of the client, imagine that being expanded to look more like a holistic online banking platform where you see the factoring dashboard, but you also see key information related to the other products and services that the client uses or banner advertising to cross-sell those products and services to the clients with specific offers. And so that part of the process, that technology development will take a bit longer and will probably not be fully available for at least a year or so.

Great. Thank you.

The next question comes from Brady Gailey with KBW. Please go ahead.

Hey, thanks. Good morning, guys. Most of my questions have been answered, but I did just have one last one. I mean, it seems like everything has gone just great related to the growth in TPay and the build out of that business and the acquisitions. It seems like you guys are clearly on the right path there to create something big and special. Aaron, in your opinion, what are the biggest risks to ultimately being successful with TPay?

Well, I mean, there, of course, whenever you handle the volume that TPay is handling, there is cyber risk to that, I mean, that's just an omnipresent risk that we have to build around. Beyond that, from a strategic perspective, Brady, I think the risk would be to try to monetize it too early. The way we do this right is we demonstrate to each client the savings that they are experiencing, the fraud mitigation that they are experiencing, the data security. For the first time ever in this network, we can prevent people from misusing unmasked data, so protecting everyone's data. And you show people that they need to think about it, they need to see it and they need to plan for how that affects their business processes in the years to come. And so, as long as we stay committed and keep telling investors, hey, if you want to invest in us, you need to understand. This is a long-term play that depends, first of all on getting a level of market adoption, so that a significant portion of transactions become conforming. And so that takes time and so anything we do that jeopardizes the trust that people have for us in the network from the factoring community, they have to trust that they get to compete heads up with our own factoring company. The freight brokers have to trust that we're protecting their data, which we are. And so, anything we do that doesn't allow them to experience that value before we try to get paid for it. To me, jeopardizes the vast amount of goodwill we have right now. And moreover, we have to make sure that payments go to the right people and that sounds really simple for those of you sitting on the other end of the phone, but I will tell you for the team that's here, when you onboard a new Tier 1 broker and now you've got 60,000 new clients that come with that truckers that need to get paid and you have to know which truckers have factoring companies and who gets paid at what address in real-time, every day. It's a significant undertaking, a significant amount of our $71 million of overhead goes into making sure we can pay hundreds of thousands of people every day with precision and there have been times where that has gotten overwhelming for us and we've had to pull it together and add more people to solve the problem. We're now getting better at managing that, projecting that discipline. But if you start – if we were to sell more than we were able to service and therefore, we had misdirected payments, not end up where they should go then there would be a loss of confidence in the network. And so the network has to inspire confidence in everyone who touches it. And I am committed to doing whatever I have to do, whatever resources we have to have to make sure that never happens. And that would be the most existential risk I think Brady to this not working.

All right, that's good color. I don't think you're going to be able to answer this next question, Aaron. But how many years do you think it will take to get TPay where you want it to be?

Well, I mean, I think about that in multiple phases, right. So, the first part of it is establishing for the entire trucking industry that TPay is the preferred way to get paid because of all the value it brings. I don't think that is as far off as you may think. I mean, we – there is not many of the top 1,000 freight brokers we haven't touched, spoken to or already have integrations with. We're already talking to Tier 1 shipper clients and have significant amount of those that we’re engaged with. So in three to five years, I think we will have had all the at-bats where we need to become the ubiquitous payments network for this space. The second and more interesting question is how long does it take for us to monetize this in a way that investors and fintech investors, bank investors, whomever can look at operating margins that they're used to seeing in SaaS type companies. And my guess is that that is going to lag the land grab, if you will – the adding the volume, it's going to lag that by two to three years because you have to give people time to experience the product, change their processes to engage with the product and then you can get paid adequately for the product. So this is a long-term game. I mean, it's a giant addressable market, $400 billion plus in payments being made to 250,000 different trucking companies. And we're going to do whatever it takes to make sure that we deliver value to everyone involved and I'm willing to invest in this for this to be a drag on earnings for us until such point as everyone sees it, adopts it and then we'll start to price for it. So, I gave you a lot of words without a specific timeline because I don't know, I've not done this before, no one has done this before in trucking. But perhaps the specific answer on number of years would be that, what volume we have in the next three to five years would be the tell for how much of the market. It's going to give you a sight line into how much of the market will ultimately come to use this tool.

Okay, got it. Thanks, Aaron. Hey Bryce, good luck in retirement and Brad, look forward to working with you.

Thank you.

The next question comes from Matt Olney with Stephens. Please go ahead.

Hey, good morning, everyone. This is Tom Wendler on for Matt Olney for a couple of quick questions from me. So HubTran payment fees last quarter were about $1 million for one month of being on the books. Is $3 million is going to be a good way about – thinking about that for the remainder of the year?

Yes.

All right, thank you. And then can you give me idea of the mix between refi and new purchase in your mortgage warehouse? And then can you give me any near-term expectations you have for your warehouse balances?

Yes. So, I'd say that the balance mix is shifting pretty significantly. We saw a lot of slowdown in refi activity and for a while, there the new purchase activity was still holding up. But more recently, we've seen new purchase activity declining as well. So, I don't know the mix as of today, but clearly it's been shifting more towards new purchase for a little while now. And it's still decelerating faster in refi than it is new purchase.

All right, thank you. And then just one final one for me. Can you guys give me any early feedback you have from factors that were formerly competitors about adopting TriumphPay?

Yes. There is no uniform answer. We know a lot of these people were respectful competitors to them. I guess, what I would point you to is none of the existing factoring companies who are on HubTran technology left after the acquisition and we added five more. So, the idea that everyone would just vacate the market because they thought we would use this data for our own good, I think we've gotten out in front of that. I mean, we still have work to do to convince factoring companies that this is in their best interest and will help them win going forward, but early returns are – we've added factoring companies, not lost any.

All right. That sounds good. Thank you.

This concludes our question-and-answer session. I would like to turn the conference back over to Aaron Graft for any closing remarks.

Thank you all for being with us today. And again, we do all wish Bryce well in his retirement. And we look forward to talking to you all next quarter. Thank you.

The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.