In 2021, the management team at Triumph Financial decided to disrupt the bank before someone did it for them.
At the time, the Dallas-based bank enjoyed a dominant market share in the factoring space, focused on the freight and trucking industry, along with the high rate of return that came with that niche. But executives, including CEO Aaron Graft, increasingly saw how fragmented and inefficient that industry was, especially when it came to payments. They had a choice: They could take the initiative to build technology that would give shippers and truckers greater confidence and efficiency when it came to making and receiving payments — or they could wait for another firm to build it and displace their pole position.
Today, executives and the board are balancing investing in a long-term vision against the pressure of short-term financial results. Since 2021, the now-$6.3 billion Triumph has deemphasized balance sheet growth in favor of building technology-driven products designed to improve transaction confidence in the transportation industry — initiatives it is still pursuing. On its face, the short-term results have been arguably negative so far. The freight industry is in a recession. Earnings have recently cratered, and the stock has lost the enviable premium it notched several years ago. The bank is entering a “show me” phase from this apparent trough as these projects wrap up and begin onboarding clients.
Through that, the vision remains unchanged. “We don’t care about asset growth,” says Graft. “We care about growing value, which ultimately [speaks to] growing earnings and profitability.”
Triumph is on a course to unify many of the areas in freight that involve money movement. To do that, the bank had to develop its own technology because what it wanted didn’t exist in the market from existing providers, Graft says. The payments network now touches more than 50% of the brokered freight market; its development uncovered additional opportunities to service customers, leading to additional, newer projects, according to a January 2025 letter to shareholders about the bank’s fourth quarter results. That includes a data intelligence platform that leverages information from transactions and transfers. In February, it acquired logistics pricing solution Greenscreens.ai for $160 million in cash and stock to bolster that initiative. Graft puts the total tab of the bank’s investments in its transportation technology platforms at about $500 million in the last five years.
“They’re doing things that nobody else has ever done before,” says Matt Olney, a managing director at Stephens who covers Triumph as part of his coverage of Southeast banks. “That comes with lots of investments and lots of resources, and they’ve had to tweak their strategy a lot in the last few years.”
The hazard, of course, is that these projects become a sinkhole of profitability if they fail to launch. For the full year 2024, it earned $12.9 million in net income available to common shareholders, or 54 cents per diluted share. But in the fourth quarter, Triumph recorded net income of $3 million, or 13 cents per diluted share, compared to $8.8 million, or 37 cents, the year prior. The bank recorded an $800,000 loss, or negative 3 cents a share, in the first quarter, compared to $3.4 million, or 14 cents, a year earlier. But also in the first quarter, Triumph announced it was about 21% toward its long-term goal of $1 billion in annualized transportation revenue, mostly from factoring and payments.
Some investors have exited their stakes in the bank as it has gone on this journey. Shares have fallen from a lofty valuation in November 2021 of 6.7x on a price to tangible book value basis to 2.4x as of June 22.
The expense of its technology investments isn’t the only thing weighing on the bank’s revenue. The freight industry has also been in a recession for years. Continuing to invest in a downcycle helps Triumph “expand its moat” away from any potential competitors in a large but fragmented market, says Michael Perito, head of bank strategy at executive search and talent advisory firm Travillian. Perito used to cover Triumph when he worked at an investment bank and says its creative approach “is a rarity” in banking.
Both Olney and Perito credit bank management for doing a great job communicating their vision, quantifying the addressable market and breaking down the steps they’ll need to achieve those goals. Perito adds that the shareholders still invested in the bank know what to expect — including that these investments may take some time to create returns — which helps them stomach poor quarterly earnings.
In his quarterly updates, Graft has indicated that some of the tech projects and products are transitioning out of development and into production. The bank has wrapped up much of the expenses on two products, which should generate more meaningful revenue in the second half of the year. The plan now is to stick to the plan that was laid out in 2021 — four years and $500 million later.
“Our view is that your vision should not change,” Graft says. “We believe in the vision. We think the strategy is sound; we modify it at the edges and the tactics change all the time. But the vision remains, and we are still committed, no matter how tough it feels to be doing this.”
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