Edgar Filing: Triumph Bancorp, Inc.

tbk-10q_20160630.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 June 30, 2016

¨	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	x

Non-accelerated filer	¨ (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, 18,107,493 shares, as of August 1, 2016

TRIUMPH BANCORP, INC.

FORM 10-Q

June 30, 2016

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	32
Item 3.	Quantitative and Qualitative Disclosures About Market Risks	67
Item 4.	Controls and Procedures	68

PART II — OTHER INFORMATION
Item 1.	Legal Proceedings	68
Item 1A.	Risk Factors	68
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	68
Item 3.	Defaults Upon Senior Securities	69
Item 4.	Mine Safety Disclosures	69
Item 5.	Other Information	69
Item 6.	Exhibits	69

PART I – FINANCIAL INFORMATION

ITEM 1

FINANCIAL STATEMENTS

TRIUMPH BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

June 30, 2016 and December 31, 2015

(Dollar amounts in thousands, except per share amounts)

	June 30,			December 31,
	2016			2015
	(Unaudited)
ASSETS
Cash and due from banks	$	22,567		$	23,447
Interest bearing deposits with other banks		39,183			81,830
Total cash and cash equivalents		61,750			105,277
Securities - available for sale		159,790			163,169
Securities - held to maturity, fair value of $28,362 and $0, respectively		27,502			—
Loans held for sale, at fair value		—			1,341
Loans, net of allowance for loan and lease losses of $13,772 and $12,567, respectively		1,396,746			1,279,318
Federal Home Loan Bank stock, at cost		6,368			3,818
Premises and equipment, net		19,629			22,227
Other real estate owned, net		6,074			5,177
Goodwill		15,968			15,968
Intangible assets, net		10,192			11,886
Bank-owned life insurance		29,786			29,535
Deferred tax assets, net		15,042			15,945
Other assets		34,548			37,652
Total assets	$	1,783,395		$	1,691,313
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits
Noninterest bearing	$	170,834		$	168,264
Interest bearing		1,104,320			1,080,686
Total deposits		1,275,154			1,248,950
Customer repurchase agreements		13,635			9,317
Federal Home Loan Bank advances		180,500			130,000
Junior subordinated debentures		24,823			24,687
Other liabilities		9,520			10,321
Total liabilities		1,503,632			1,423,275
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		182			181
Additional paid-in-capital		195,711			194,297
Treasury stock, at cost		(741	)		(560	)
Retained earnings		73,340			64,097
Accumulated other comprehensive income		1,525			277
Total stockholders’ equity		279,763			268,038
Total liabilities and stockholders' equity	$	1,783,395		$	1,691,313

See accompanying condensed notes to consolidated financial statements.

TRIUMPH BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

For the Three and Six Months Ended June 30, 2016 and 2015

(Dollar amounts in thousands, except per share amounts)

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
Interest and dividend income:
Loans, including fees	$	18,547		$	17,158		$	34,635		$	30,397
Factored receivables, including fees		8,639			8,654			16,461			16,163
Taxable securities		965			659			1,733			1,337
Tax exempt securities		6			16			13			28
Cash deposits		197			110			405			251
Total interest income		28,354			26,597			53,247			48,176
Interest expense:
Deposits		2,020			1,667			4,013			3,237
Junior subordinated debentures		312			278			614			550
Other borrowings		115			7			224			19
Total interest expense		2,447			1,952			4,851			3,806
Net interest income		25,907			24,645			48,396			44,370
Provision for loan losses		1,939			2,541			1,428			3,186
Net interest income after provision for loan losses		23,968			22,104			46,968			41,184
Noninterest income:
Service charges on deposits		695			666			1,354			1,278
Card income		577			578			1,123			1,101
Net OREO gains (losses) and valuation adjustments		(1,204	)		52			(1,215	)		78
Net gains on sale of securities		—			242			5			242
Net gains on sale of loans		4			491			16			1,033
Fee income		504			502			1,038			924
Bargain purchase gain		—			—			—			12,509
Asset management fees		1,605			1,274			3,234			2,232
Other		1,487			964			3,094			2,031
Total noninterest income		3,668			4,769			8,649			21,428
Noninterest expense:
Salaries and employee benefits		12,229			12,042			24,481			25,311
Occupancy, furniture and equipment		1,534			1,555			3,027			3,127
FDIC insurance and other regulatory assessments		281			271			505			534
Professional fees		1,101			852			2,174			2,179
Amortization of intangible assets		717			895			1,694			1,659
Advertising and promotion		628			526			1,147			1,069
Communications and technology		1,263			927			2,695			1,813
Other		2,578			2,567			4,686			4,726
Total noninterest expense		20,331			19,635			40,409			40,418
Net income before income tax		7,305			7,238			15,208			22,194
Income tax expense		2,679			2,586			5,576			3,498
Net income		4,626			4,652			9,632			18,696
Dividends on preferred stock		(195	)		(195	)		(389	)		(387	)
Net income available to common stockholders	$	4,431		$	4,457		$	9,243		$	18,309
Earnings per common share
Basic	$	0.25		$	0.25		$	0.52		$	1.03
Diluted	$	0.25		$	0.25		$	0.51		$	1.01

See accompanying condensed notes to consolidated financial statements.

TRIUMPH BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the Three and Six Months Ended June 30, 2016 and 2015

(Dollar amounts in thousands, except per share amounts)

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
Net income	$	4,626		$	4,652		$	9,632		$	18,696
Other comprehensive income:
Unrealized gains (losses) on securities:
Unrealized holding gains (losses) arising during the period		536			(557	)		1,993			431
Reclassification of amount realized through sale of securities		—			(242	)		(5	)		(242	)
Tax effect		(199	)		292			(740	)		(76	)
Total other comprehensive income (loss)		337			(507	)		1,248			113
Comprehensive income	$	4,963		$	4,145		$	10,880		$	18,809

See accompanying condensed notes to consolidated financial statements.

TRIUMPH BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

For the Six Months Ended June 30, 2016 and 2015

(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
	Shares		Preference		Shares		Preference		Shares			Par		Paid-in-			Shares					Retained			Comprehensive		Total
	Outstanding		Amount		Outstanding		Amount		Outstanding			Amount		Capital			Outstanding		Cost			Earnings			Income		Equity
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		—		—		—		—		(667	)		—		9			667		(9	)		—			—		—
Stock based compensation		—		—		—		—		—			—		1,548			—		—			—			—		1,548
Series A Preferred dividends		—		—		—		—		—			—		—			—		—			(181	)		—		(181	)
Series B Preferred dividends		—		—		—		—		—			—		—			—		—			(206	)		—		(206	)
Net income		—		—		—		—		—			—		—			—		—			18,696			—		18,696
Other comprehensive income		—		—		—		—		—			—		—			—		—			—			113		113
Balance, June 30, 2015		45,500	$	4,550		51,956	$	5,196		18,041,072		$	181	$	192,605			11,651	$	(170	)	$	54,053		$	1,064	$	257,479

Balance, January 1, 2016		45,500	$	4,550		51,956	$	5,196		18,018,200		$	181	$	194,297			34,523	$	(560	)	$	64,097		$	277	$	268,038
Issuance of restricted stock awards		—		—		—		—		101,105			1		(1	)		—		—			—			—		—
Forfeiture of restricted stock awards		—		—		—		—		(6,759	)		—		101			6,759		(101	)		—			—		—
Excess tax benefit on restricted stock vested		—		—		—		—		—			—		35			—		—			—			—		35
Stock based compensation		—		—		—		—		—			—		1,279			—		—			—			—		1,279
Purchase of treasury stock		—		—		—		—		(5,053	)		—		—			5,053		(80	)		—			—		(80	)
Series A Preferred dividends		—		—		—		—		—			—		—			—		—			(182	)		—		(182	)
Series B Preferred dividends		—		—		—		—		—			—		—			—		—			(207	)		—		(207	)
Net income		—		—		—		—		—			—		—			—		—			9,632			—		9,632
Other comprehensive income		—		—		—		—		—			—		—			—		—			—			1,248		1,248
Balance, June 30, 2016		45,500	$	4,550		51,956	$	5,196		18,107,493		$	182	$	195,711			46,335	$	(741	)	$	73,340		$	1,525	$	279,763

See accompanying condensed notes to consolidated financial statements.

TRIUMPH BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Six Months Ended June 30, 2016 and 2015

(Dollar amounts in thousands, except per share amounts)

(Unaudited)

	Six Months Ended June 30,
	2016		2015
Cash flows from operating activities:
Net income	$	9,632	$	18,696