Triumph Financial, Inc.

Good morning, it's 9.30 and a beautiful morning in Dallas. We'd like to start the call today by thanking you for the interest in TFIN and your attendance today. We know it's a busy day for earnings and we appreciate the time to discuss our third quarter results with you. With that, let's get to the business at hand. We had a strong third quarter and a lot of things break our way, but the quarter continued to present a challenging freight environment, one which we do not yet see improving. We remain excited about the possibilities and our progress in spite of that. Last evening, we published our quarterly shareholder letter. That letter and our quarterly results will form the basis of our call today. However, before we get started, I would like to remind you that this call 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 statement. For details, please refer to the safe harbor statement in our shareholder letter published last evening. All comments made during today's call are subject to that safe harbor statement. With that, I'd like to turn the call over to Aaron for a welcome and to kick off our Q&A. Aaron?

Thank you, Luke, and good morning. Thank you all for joining us. We made significant progress in the third quarter on several fronts. Our financial results were also better than in prior periods. the shareholder letter released last night i outlined four things that i thought were important to communicate to our investors about the quarter those included first triumph pay's momentum and financial performance has exceeded even our own expectations second we had a unique quarter from an expense perspective that is unlikely to repeat in the near term third The freight market has not rebounded, and it could get worse before it gets better. And finally, related to that, the things that make us uncomfortable in the short term we believe will create value for us in the long term. As it relates to those third and fourth points, the last few days have produced some interesting headlines. Two days ago, Freight Waves broke a story detailing that Convoy, a well-known tech-enabled freight broker, had pulled its loads and that an announcement was forthcoming. We now know that Convoy is in the process of shutting down without a sale. That is something that would have been hard to imagine just a few months ago. Additional stories have followed, speculating that several more freight brokers and carriers could face a similar fate. I'm friends with many people in this industry, and it saddens me to think about the disruption this will bring to many employees and customers. But however I feel about it, that is the reality of how capitalism works. Companies that are not profitable will eventually fail. And one of the reasons I am bearish on freight over the short term is because I believe that private equity and venture capital have artificially propped up some companies that were attempting to bring disruption to the industry without ever achieving profitability. I believe a significant amount of money will exit the stage in the freight industry and may not return anytime soon. I also believe that Triumph Financial and specifically what we're doing at Triumph Pay is bringing innovation to the industry. And I know that this change is another healthy force of capitalism. The difference is that we are able to earn our cost of capital while bringing about this advancement instead of being beholden to additional outside funding. My journey into banking started in 2008 and 2009, and going through that process leaves you with a deep appreciation of the need to remain profitable, even through the toughest cycles. And that is what we are built to do. As it relates to Convoy, Triumph has less than 300,000 of counterparty risk outstanding, some of which we expect to collect in short order. And as additional brokers go through difficult times, we will continue to focus our attention on servicing the needs of the industry while we remain vigilant in protecting our own balance sheet as we always have. Before turning it over for questions, let me explain that while my bearishness about the next 12 months or so is real, it also makes me extremely bullish on the long-term future for Triumph Financial. We have a business plan and a balance sheet that is prepared for a soft freight market. We will be one of those companies who emerge stronger through this, and we should have a materially greater market share than we do now. We are receiving more inbound inquiries than I can recall at any time in the past. As companies in the industry look to partner with a known industry leader with the financial wherewithal, operational experience, and technology stack to help them navigate this market. And if the market ends up performing better than I expected in the short term, we will be more profitable, and that would be great. But I am far more interested in creating value for the long term. In conclusion, Triumph Financial is not a typical bank, nor do we desire to be one. We are building a payments network in a market that needs one now more than ever. Communicating that requires effort, so we put a significant amount of time and energy into our shareholder letters to help investors achieve an informed view. I hope you find those efforts valuable. With that, we're ready to take your questions.

We will not go to Q&A. If you have connected via Zoom and would like to ask a question, please use the raise hand feature at the bottom of your Zoom window. Or if you have dialed in, press star nine. Once called upon, please feel free to unmute and ask your question. Our first question comes from Michael Perito from KBW. Michael, please go ahead.