Edgar Filing: Triumph Bancorp, Inc.

tbk-10q_20150930.htm

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, 2015

¨	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 x No ¨

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, 18,040,072 shares, as of October 30, 2015

TRIUMPH BANCORP, INC.

FORM 10-Q

September 30, 2015

TABLE OF CONTENTS

PART I — FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Balance Sheets	2
	Consolidated Statements of Income	3
	Consolidated Statements of Comprehensive Income	4
	Consolidated Statements of Changes in Equity	5
	Consolidated Statements of Cash Flows	6
	Condensed Notes to Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	33
Item 3.	Quantitative and Qualitative Disclosures About Market Risks	69
Item 4.	Controls and Procedures	70

PART II — OTHER INFORMATION
Item 1.	Legal Proceedings	71
Item 1A.	Risk Factors	71
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	71
Item 3.	Defaults Upon Senior Securities	71
Item 4.	Mine Safety Disclosures	71
Item 5.	Other Information	71
Item 6.	Exhibits	72

PART I – FINANCIAL INFORMATION

ITEM 1

FINANCIAL STATEMENTS

TRIUMPH BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

September 30, 2015 and December 31, 2014

(Dollar amounts in thousands, except per share amounts)

	September 30,			December 31,
	2015			2014
	(Unaudited)
ASSETS
Cash and due from banks	$	23,256		$	21,312
Interest bearing deposits with other banks		92,527			139,576
Total cash and cash equivalents		115,783			160,888
Securities - available for sale		156,820			162,024
Securities - held to maturity, fair value of $745 and $750, respectively		747			745
Loans held for sale, at fair value		2,174			3,288
Loans, net of allowance for loan and lease losses of $11,544 and $8,843, respectively		1,173,757			997,035
Federal Home Loan Bank and Federal Reserve Bank stock, at cost		7,992			4,903
Premises and equipment, net		21,807			21,933
Other real estate owned, net		6,201			8,423
Goodwill		15,968			15,968
Intangible assets, net		13,027			13,089
Bank-owned life insurance		29,406			29,083
Deferred tax assets, net		15,838			15,956
Other assets		21,943			14,563
Total assets	$	1,581,463		$	1,447,898
LIABILITIES AND EQUITY
Liabilities
Deposits
Noninterest bearing	$	167,931		$	179,848
Interest bearing		1,032,105			985,381
Total deposits		1,200,036			1,165,229
Customer repurchase agreements		15,584			9,282
Federal Home Loan Bank advances		61,000			3,000
Junior subordinated debentures		24,620			24,423
Other liabilities		16,304			8,455
Total liabilities		1,317,544			1,210,389
Commitments and contingencies - See Note 8 and Note 9
Stockholders' equity - See Note 12
Preferred Stock Series A		4,550			4,550
Preferred Stock Series B		5,196			5,196
Common stock		181			180
Additional paid-in-capital		193,465			191,049
Treasury stock, at cost		(184	)		(161	)
Retained earnings		59,785			35,744
Accumulated other comprehensive income		926			951
Total stockholders’ equity		263,919			237,509
Total liabilities and stockholders' equity	$	1,581,463		$	1,447,898

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, 2015 and 2014

(Dollar amounts in thousands, except per share amounts)

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
Interest and dividend income:
Loans, including fees	$	15,716		$	13,706		$	46,113		$	41,942
Factored receivables, including fees		8,829			7,681			24,992			19,791
Taxable securities		649			666			1,987			1,986
Tax exempt securities		17			15			45			46
Cash deposits		92			50			342			185
Total interest income		25,303			22,118			73,479			63,950
Interest expense:
Deposits		1,764			1,289			5,001			3,538
Senior secured note		—			134			—			411
Junior subordinated debentures		283			276			833			819
Other borrowings		25			24			44			51
Total interest expense		2,072			1,723			5,878			4,819
Net interest income		23,231			20,395			67,601			59,131
Provision for loan losses		165			1,375			3,351			4,047
Net interest income after provision for loan losses		23,066			19,020			64,250			55,084
Noninterest income:
Service charges on deposits		710			811			1,988			2,363
Card income		574			544			1,675			1,582
Net OREO gains (losses) and valuation adjustments		(58	)		(11	)		20			(340	)
Net gains on sale of securities		15			10			257			26
Net gains on sale of loans		363			484			1,396			1,058
Fee income		542			448			1,466			1,267
Bargain purchase gain		1,708			—			14,217			—
Gain on branch sale		—			12,619			—			12,619
Asset management fees		1,744			374			3,976			503
Other		700			525			2,731			1,968
Total noninterest income		6,298			15,804			27,726			21,046
Noninterest expense:
Salaries and employee benefits		12,416			11,032			37,727			29,379
Occupancy, furniture and equipment		1,575			1,319			4,702			4,044
FDIC insurance and other regulatory assessments		252			280			786			821
Professional fees		1,344			1,043			3,523			2,428
Amortization of intangible assets		1,179			746			2,838			2,196
Advertising and promotion		618			1,102			1,687			2,228
Communications and technology		951			954			2,764			2,787
Other		2,210			1,985			6,936			5,634
Total noninterest expense		20,545			18,461			60,963			49,517
Net income before income tax		8,819			16,363			31,013			26,613
Income tax expense		2,891			6,089			6,389			9,631
Net income		5,928			10,274			24,624			16,982
Income attributable to noncontrolling interests		—			(582	)		—			(1,471	)
Net income attributable to Triumph Bancorp, Inc.		5,928			9,692			24,624			15,511
Dividends on preferred stock		(196	)		(197	)		(583	)		(583	)
Net income available to common stockholders	$	5,732		$	9,495		$	24,041		$	14,928
Earnings per common share
Basic	$	0.32		$	0.96		$	1.36		$	1.52
Diluted	$	0.32		$	0.91		$	1.33		$	1.47

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, 2015 and 2014

(Dollar amounts in thousands, except per share amounts)

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
Net income	$	5,928		$	10,274		$	24,624		$	16,982
Other comprehensive income:
Unrealized gains (losses) on securities:
Unrealized holding gains (losses) arising during the period		(204	)		(31	)		226			1,138
Reclassification of amount realized through sale of securities		(15	)		10			(257	)		(26	)
Tax effect		81			16			6			(409	)
Total other comprehensive income (loss)		(138	)		(5	)		(25	)		703
Comprehensive income		5,790			10,269			24,599			17,685
Income attributable to noncontrolling interests		—			(582	)		—			(1,471	)
Comprehensive income attributable to Triumph Bancorp, Inc.	$	5,790		$	9,687		$	24,599		$	16,214

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, 2015 and 2014

(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, 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	)
Series A Preferred dividends		—		—		—		—		—			—		—			—		—			(272	)		—		—			(272	)
Series B Preferred dividends		—		—		—		—		—			—		—			—		—			(311	)		—		—			(311	)
TCF Class B distributions		—		—		—		—		—			—		—			—		—			(64	)		—		—			(64	)
TCF Class B redemption		—		—		—		—		—			—		—			—		—			—			—		(1,100	)		(1,100	)
Net income		—		—		—		—		—			—		—			—		—			16,982			—		—			16,982
Other comprehensive income		—		—		—		—		—			—		—			—		—			—			703		—			703
Balance, September 30, 2014		45,500	$	4,550		51,956	$	5,196		9,886,778		$	99	$	105,304			4,646	$	(68	)	$	34,014		$	836	$	25,897		$	175,828

Balance, January 1, 2015		45,500	$	4,550		51,956	$	5,196		17,963,783		$	180	$	191,049			10,984	$	(161	)	$	35,744		$	951	$	—		$	237,509
Issuance of restricted stock awards		—		—		—		—		77,956			1		(1	)		—		—			—			—		—			—
Forfeiture of restricted stock awards		—		—		—		—		(1,667	)		—		23			1,667		(23	)		—			—		—			—
Stock based compensation		—		—		—		—		—			—		2,394			—		—			—			—		—			2,394
Series A Preferred dividends		—		—