Edgar Filing: Triumph Bancorp, Inc.

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2014

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-36722

TRIUMPH BANCORP, INC.

(Exact name of registrant as specified in its charter)

Texas

20-0477066

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

12700 Park Central Drive, Suite 1700

Dallas, Texas 75251

(Address of principal executive offices)

(214) 365-6900

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ¨ No x

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	¨	Accelerated filer	¨

Non-accelerated filer	x (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Common Stock — $0.01 par value, 17,963,783 shares, as of December 17, 2014

TRIUMPH BANCORP, INC.

FORM 10-Q

SEPTEMBER 30, 2014

TABLE OF CONTENTS

PART I — FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Balance Sheets	4
	Consolidated Statements of Income	5
	Consolidated Statements of Comprehensive Income	6
	Consolidated Statements of Changes in Equity	7
	Consolidated Statements of Cash Flows	8
	Condensed Notes to Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	37
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	75
Item 4.	Controls and Procedures	77

PART II — OTHER INFORMATION
Item 1.	Legal Proceedings	77
Item 1A.	Risk Factors	77
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	77
Item 6.	Exhibits	78

PART I – FINANCIAL INFORMATION

ITEM 1

FINANCIAL STATEMENTS

TRIUMPH BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

September 30, 2014 and December 31, 2013

(Dollar amounts in thousands, except per share amounts)

	September 30,			December 31,
	2014			2013
	(Unaudited)
ASSETS
Cash and due from banks	$	21,567		$	25,352
Interest-bearing deposits with other banks		54,058			60,445
Total cash and cash equivalents		75,625			85,797
Securities - available for sale		165,489			184,654
Securities - held to maturity, fair value of $750 and $745, respectively		745			743
Loans held for sale		7,295			5,393
Loans		977,139			881,099
Allowance for loan and lease losses		(7,320	)		(3,645	)
Loans, net		969,819			877,454
Federal Home Loan Bank and Federal Reserve Bank stock, at cost		5,826			5,802
Premises and equipment, net		21,744			23,344
Other real estate owned (OREO), net		10,019			13,783
Goodwill and intangible assets, net		29,783			28,518
Bank-owned life insurance		28,955			28,554
Other assets		32,498			34,197
Total assets	$	1,347,798		$	1,288,239
LIABILITIES AND EQUITY
Liabilities
Deposits
Noninterest bearing	$	154,750		$	150,238
Interest bearing		950,874			894,616
Total deposits		1,105,624			1,044,854
Customer repurchase agreements		15,644			11,330
Federal Home Loan Bank advances		—			21,000
Senior secured note		11,630			12,573
Junior subordinated debentures		24,359			24,171
Other liabilities		14,713			13,714
Total liabilities		1,171,970			1,127,642
Commitments and contingencies - See Note 10
Equity - See Note 13
Stockholders’ equity
Preferred Stock Series A		4,550			4,550
Preferred Stock Series B		5,196			5,196
Common stock		99			98
Additional paid-in-capital		105,304			104,631
Treasury stock, at cost		(68	)		—
Retained earnings		34,014			18,992
Accumulated other comprehensive income		836			133
Total stockholders’ equity		149,931			133,600
Noncontrolling interests		25,897			26,997
Total equity		175,828			160,597
Total liabilities and equity	$	1,347,798		$	1,288,239

See accompanying condensed notes to consolidated financial statements.

TRIUMPH BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

For the Three and Nine Months Ended September 30, 2014 and 2013

(Dollar amounts in thousands, except per share amounts)

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Interest income:
Interest and fees on loans	$	13,706		$	3,915		$	41,942		$	10,356
Interest and fees on factored receivables		7,681			4,881			19,791			12,733
Interest and dividends on securities		666			179			1,986			607
Interest on tax exempt securities		15			—			46			—
Interest on cash deposits		50			46			185			92
Total interest income		22,118			9,021			63,950			23,788
Interest expense:
Deposits		1,289			890			3,538			2,457
Federal Home Loan Bank advances		19			3			43			5
Senior secured note		134			—			411			—
Junior subordinated debentures		276			—			819			—
Other		5			—			8			1
Total interest expense		1,723			893			4,819			2,463
Net interest income		20,395			8,128			59,131			21,325
Provision for loan losses		1,375			1,735			4,047			2,355
Net interest income after provision for loan losses		19,020			6,393			55,084			18,970
Noninterest income:
Service charges on deposits		838			—			2,451			—
Card income		544			—			1,582			—
Net realized gains (losses) and valuation adjustments on OREO		(11	)		87			(340	)		67
Net gains on sale of loans		484			276			1,058			352
Fee income		448			324			1,267			834
Gain on branch sale		12,619			—			12,619			—
Asset management fees		374			—			503			—
Other		508			30			1,906			238
Total noninterest income		15,804			717			21,046			1,491
Noninterest expense:
Salaries and employee benefits		11,032			4,540			29,379			12,415
Occupancy, furniture and equipment		1,333			488			3,960			1,346
FDIC insurance assessment		280			79			821			216
Carrying costs for OREO		73			28			305			181
Professional fees		1,043			345			2,428			1,005
Amortization of intangible assets		746			—			2,196			—
Advertising and promotion		1,102			175			2,228			460
Communications and technology		954			230			2,787			659
Other		1,898			662			5,413			1,785
Total noninterest expense		18,461			6,547			49,517			18,067
Net income before income tax		16,363			563			26,613			2,394
Income tax expense		6,089			211			9,631			684
Net income		10,274			352			16,982			1,710
Effect of noncontrolling interests and preferred shares		(779	)		(116	)		(2,054	)		(1,189	)
Net income available to common stockholders	$	9,495		$	236		$	14,928		$	521
Earnings per common share
Basic	$	0.96		$	0.03		$	1.52		$	0.06
Diluted	$	0.91		$	0.03		$	1.47		$	0.06

See accompanying condensed notes to consolidated financial statements.

TRIUMPH BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the Three and Nine Months Ended September 30, 2014 and 2013

(Dollar amounts in thousands, except per share amounts)

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013


Net income	$	10,274		$	352		$	16,982		$	1,710

Other comprehensive income:
Unrealized gains (losses) on securities:
Unrealized holding gains (losses) arising during the period		(31	)		(70	)		1,138			(326	)
Reclassification of amount realized through sale of securities		10			—			(26	)		—
Tax effect		16			24			(409	)		111
Total other comprehensive income (loss)		(5	)		(46	)		703			(215	)

Comprehensive income		10,269			306			17,685			1,495

Income attributable to noncontrolling interests		(779	)		(116	)		(2,054	)		(1,189	)

Comprehensive income attributable to common stockholders	$	9,490		$	190		$	15,631		$	306

See accompanying condensed notes to consolidated financial statements.

TRIUMPH BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

For the Nine Months Ended September 30, 2014 and 2013

(Dollar amounts in thousands, except per share amounts)

(Unaudited)

	Preferred Stock – Series A						Preferred Stock – Series B				Common Stock							Treasury Stock								Accumulated
				Liquidation					Liquidation							Additional										Other			Non
	Shares			Preference			Shares		Preference		Shares			Par		Paid-in-		Shares					Retained			Comprehensive			Controlling			Total
	Outstanding			Amount			Outstanding		Amount		Outstanding			Amount		Capital		Outstanding		Cost			Earnings			Income			Interest			Equity
Balance, January 1, 2013		50,000		$	5,000			—	$	—		4,586,356		$	46	$	43,924		—	$	—		$	7,086		$	456		$	6,962		$	63,474
Exchange offer		(4,500	)		(450	)		—		—		545,069			5		6,307		—		—			(461	)		—			(5,862	)		(461	)
Common stock issuance, net of costs		—			—			—		—		3,672,115			37		42,365		—		—			—			—			—			42,402
Stock based compensation		—			—			—		—		—			—		86		—		—			—			—			—			86
TBI Series A Preferred dividends		—			—			—		—		—			—		—		—		—			(542	)		—			—			(542	)
TCF Class B distributions		—			—			—		—		—			—		—		—		—			(188	)		—			—			(188	)
Net income		—			—			—		—		—			—		—		—		—			1,710			—			—			1,710
Other comprehensive loss		—			—			—		—		—			—		—		—		—			—			(215	)		—			(215	)
Balance, September 30, 2013		45,500		$	4,550			—	$	—		8,803,540		$	88	$	92,682		—	$	—		$	7,605		$	241		$	1,100		$	106,266

Balance, January 1, 2014		45,500		$	4,550			51,956	$	5,196		9,832,585		$	98	$	104,631		—	$	—		$	18,992		$	133		$	26,997		$	160,597
Vesting of restricted stock units		—			—			—		—		58,395			1		54		—		—			—			—			—			55
Stock based compensation		—			—			—		—		—			—		613		—		—			—			—			—			613
Common stock issuance, net of costs		—			—			—		—		444			—		6		—		—			—			—			—			6
Purchase of treasury stock		—			—			—		—		(4,646	)		—		—		4,646		(68	)		—			—			—			(68	)
Series T-1 and T-2 dividends		—			—			—		—		—			—		—		—		—			(1,313	)		—			—			(1,313	)
TBI Series A Preferred dividends		—			—			—		—		—			—		—		—		—			(272	)		—			—			(272	)
TBI Series B Preferred dividends		—			—			—		—		—			—		—		—		—			(311	)		—			—			(311	)
TCF Class B distributions		—			—			—		—		—			—