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Section 1: 10-Q (10-Q)

tbk-10q_20180630.htm

  

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

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

For the quarterly period ended June 30, 2018

OR

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  

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      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

 (Do not check if a smaller reporting company)

Smaller reporting company

Emerging growth company

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act  

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

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, 26,265,983 shares, as of July 17, 2018.

 

 

 

 

 


 

TRIUMPH BANCORP, INC.

FORM 10-Q

June 30, 2018

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 Stockholders’ Equity

5

 

 

   Consolidated Statements of Cash Flows

6

 

 

   Condensed Notes to Consolidated Financial Statements

8

 

    Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

40

 

    Item 3.

 

Quantitative and Qualitative Disclosures About Market Risks

78

 

    Item 4.

 

Controls and Procedures

79

 

 

PART II — OTHER INFORMATION

 

 

    Item 1.

 

Legal Proceedings

80

 

    Item 1A.

 

Risk Factors

80

 

    Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

80

 

    Item 3.

 

Defaults Upon Senior Securities

80

 

    Item 4.

 

Mine Safety Disclosures

80

 

    Item 5.

 

Other Information

80

 

    Item 6.

 

Exhibits

81

 

 

 

 

i


 

PART I – FINANCIAL INFORMATION

ITEM 1

FINANCIAL STATEMENTS

 

 

 

 

1


 

TRIUMPH BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

June 30, 2018 and December 31, 2017

(Dollar amounts in thousands, except per share amounts)

 

 

 

June 30,

 

 

December 31,

 

 

 

2018

 

 

2017

 

 

 

(Unaudited)

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

56,029

 

 

$

59,114

 

Interest bearing deposits with other banks

 

 

77,336

 

 

 

75,015

 

Total cash and cash equivalents

 

 

133,365

 

 

 

134,129

 

Securities - available for sale

 

 

183,184

 

 

 

250,603

 

Securities - equity investments

 

 

5,025

 

 

 

5,006

 

Securities - held to maturity, fair value of $8,093 and $7,527, respectively

 

 

8,673

 

 

 

8,557

 

Loans, net of allowance for loan and lease losses of $24,547 and $18,748, respectively

 

 

3,171,915

 

 

 

2,792,108

 

Assets held for sale

 

 

 

 

 

71,362

 

Federal Home Loan Bank stock, at cost

 

 

19,223

 

 

 

16,006

 

Premises and equipment, net

 

 

68,313

 

 

 

62,861

 

Other real estate owned, net

 

 

2,528

 

 

 

9,191

 

Goodwill

 

 

86,668

 

 

 

44,126

 

Intangible assets, net

 

 

31,109

 

 

 

19,652

 

Bank-owned life insurance

 

 

40,168

 

 

 

44,364

 

Deferred tax assets, net

 

 

8,810

 

 

 

8,959

 

Other assets

 

 

35,650

 

 

 

32,109

 

Total assets

 

$

3,794,631

 

 

$

3,499,033

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

Noninterest bearing

 

$

561,033

 

 

$

564,225

 

Interest bearing

 

 

2,063,909

 

 

 

2,057,123

 

Total deposits

 

 

2,624,942

 

 

 

2,621,348

 

Customer repurchase agreements

 

 

10,509

 

 

 

11,488

 

Federal Home Loan Bank advances

 

 

420,000

 

 

 

365,000

 

Subordinated notes

 

 

48,878

 

 

 

48,828

 

Junior subordinated debentures

 

 

38,849

 

 

 

38,623

 

Other liabilities

 

 

44,228

 

 

 

22,048

 

Total liabilities

 

 

3,187,406

 

 

 

3,107,335

 

Commitments and contingencies - See Note 8 and Note 9

 

 

 

 

 

 

 

 

Stockholders' equity - See Note 12

 

 

 

 

 

 

 

 

Preferred Stock

 

 

9,658

 

 

 

9,658

 

Common stock

 

 

264

 

 

 

209

 

Additional paid-in-capital

 

 

457,980

 

 

 

264,855

 

Treasury stock, at cost

 

 

(2,254

)

 

 

(1,784

)

Retained earnings

 

 

143,426

 

 

 

119,356

 

Accumulated other comprehensive income (loss)

 

 

(1,849

)

 

 

(596

)

Total stockholders’ equity

 

 

607,225

 

 

 

391,698

 

Total liabilities and stockholders' equity

 

$

3,794,631

 

 

$

3,499,033

 

See accompanying condensed notes to consolidated financial statements.

 

 

 

 

2


 

TRIUMPH BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

For the Three and Six Months Ended June 30, 2018 and 2017

(Dollar amounts in thousands, except per share amounts)

(Unaudited)

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Interest and dividend income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans, including fees

 

$

38,148

 

 

$

30,663

 

 

$

75,031

 

 

$

55,848

 

Factored receivables, including fees

 

 

20,791

 

 

 

10,812

 

 

 

36,094

 

 

 

19,979

 

Securities

 

 

1,179

 

 

 

1,738

 

 

 

2,489

 

 

 

3,349

 

FHLB stock

 

 

101

 

 

 

36

 

 

 

206

 

 

 

78

 

Cash deposits

 

 

1,030

 

 

 

289

 

 

 

1,547

 

 

 

616

 

Total interest income

 

 

61,249

 

 

 

43,538

 

 

 

115,367

 

 

 

79,870

 

Interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

4,631

 

 

 

3,057

 

 

 

8,908

 

 

 

5,926

 

Subordinated notes

 

 

838

 

 

 

836

 

 

 

1,675

 

 

 

1,671

 

Junior subordinated debentures

 

 

713

 

 

 

475

 

 

 

1,310

 

 

 

940

 

Other borrowings

 

 

1,810

 

 

 

613

 

 

 

3,087

 

 

 

957

 

Total interest expense

 

 

7,992

 

 

 

4,981

 

 

 

14,980

 

 

 

9,494

 

Net interest income

 

 

53,257

 

 

 

38,557

 

 

 

100,387

 

 

 

70,376

 

Provision for loan losses

 

 

4,906

 

 

 

1,447

 

 

 

7,454

 

 

 

9,125

 

Net interest income after provision for loan losses

 

 

48,351

 

 

 

37,110

 

 

 

92,933

 

 

 

61,251

 

Noninterest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service charges on deposits

 

 

1,210

 

 

 

977

 

 

 

2,355

 

 

 

1,957

 

Card income

 

 

1,394

 

 

 

917

 

 

 

2,638

 

 

 

1,744

 

Net OREO gains (losses) and valuation adjustments

 

 

(528

)

 

 

(112

)

 

 

(616

)

 

 

(101

)

Net gains (losses) on sale of securities

 

 

 

 

 

 

 

 

(272

)

 

 

 

Fee income

 

 

1,121

 

 

 

637

 

 

 

1,921

 

 

 

1,220

 

Insurance commissions

 

 

819

 

 

 

708

 

 

 

1,533

 

 

 

1,299

 

Asset management fees

 

 

 

 

 

 

 

 

 

 

 

1,717

 

Gain on sale of subsidiary or division or division

 

 

 

 

 

 

 

 

1,071

 

 

 

20,860

 

Other

 

 

929

 

 

 

2,075

 

 

 

1,487

 

 

 

3,791

 

Total noninterest income

 

 

4,945

 

 

 

5,202

 

 

 

10,117

 

 

 

32,487

 

Noninterest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

20,527

 

 

 

16,012

 

 

 

39,931

 

 

 

37,970

 

Occupancy, furniture and equipment

 

 

3,014

 

 

 

2,348

 

 

 

6,068

 

 

 

4,707

 

FDIC insurance and other regulatory assessments

 

 

383

 

 

 

270

 

 

 

582

 

 

 

496

 

Professional fees

 

 

2,078

 

 

 

1,238

 

 

 

3,718

 

 

 

3,206

 

Amortization of intangible assets

 

 

1,361

 

 

 

911

 

 

 

2,478

 

 

 

2,022

 

Advertising and promotion

 

 

1,300

 

 

 

911

 

 

 

2,329

 

 

 

1,849

 

Communications and technology

 

 

3,271

 

 

 

2,233

 

 

 

6,630

 

 

 

4,407

 

Other

 

 

5,469

 

 

 

3,398

 

 

 

9,709

 

 

 

7,501

 

Total noninterest expense

 

 

37,403

 

 

 

27,321

 

 

 

71,445

 

 

 

62,158

 

Net income before income tax

 

 

15,893

 

 

 

14,991

 

 

 

31,605

 

 

 

31,580

 

Income tax expense

 

 

3,508

 

 

 

5,331

 

 

 

7,152

 

 

 

11,447

 

Net income

 

 

12,385

 

 

 

9,660

 

 

 

24,453

 

 

 

20,133

 

Dividends on preferred stock

 

 

(193

)

 

 

(193

)

 

 

(383

)

 

 

(385

)

Net income available to common stockholders

 

$

12,192

 

 

$

9,467

 

 

$

24,070

 

 

$

19,748

 

Earnings per common share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.48

 

 

$

0.53

 

 

$

1.04

 

 

$

1.10

 

Diluted

 

$

0.47

 

 

$

0.51

 

 

$

1.02

 

 

$

1.07

 

See accompanying condensed notes to consolidated financial statements.

 

 

 

3


 

TRIUMPH BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the Three and Six Months Ended June 30, 2018 and 2017

(Dollar amounts in thousands, except per share amounts)

(Unaudited)

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Net income

 

$

12,385

 

 

$

9,660

 

 

$

24,453

 

 

$

20,133

 

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gains (losses) on securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized holding gains (losses) arising during the period

 

 

(181

)

 

 

357

 

 

 

(1,889

)

 

 

691

 

Reclassification of amount realized through sale of securities

 

 

 

 

 

 

 

 

272

 

 

 

 

Tax effect

 

 

42

 

 

 

(133

)

 

 

364

 

 

 

(257

)

Total other comprehensive income (loss)

 

 

(139

)

 

 

224

 

 

 

(1,253

)

 

 

434

 

Comprehensive income

 

$

12,246

 

 

$

9,884

 

 

$

23,200

 

 

$

20,567

 

See accompanying condensed notes to consolidated financial statements.

 

 

 

 

4


 

TRIUMPH BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

For the Six Months Ended June 30, 2018 and 2017

(Dollar amounts in thousands, except per share amounts)

(Unaudited)

 

 

 

Preferred Stock

 

 

Common Stock

 

 

Treasury Stock

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

Liquidation

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

Preference

 

 

Shares

 

 

Par

 

 

Paid-in-

 

 

Shares

 

 

 

 

 

 

Retained

 

 

Comprehensive

 

 

Total

 

 

 

Amount

 

 

Outstanding

 

 

Amount

 

 

Capital

 

 

Outstanding

 

 

Cost

 

 

Earnings

 

 

Income (Loss)

 

 

Equity

 

Balance, January 1, 2017

 

$

9,746

 

 

 

18,078,247

 

 

$

182

 

 

$

197,157

 

 

 

76,118

 

 

$

(1,374

)

 

$

83,910

 

 

$

(276

)

 

$

289,345

 

Issuance of restricted stock awards

 

 

 

 

 

40,541

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock based compensation

 

 

 

 

 

 

 

 

 

 

 

1,025

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,025

 

Forfeiture of restricted stock awards

 

 

 

 

 

(843

)

 

 

 

 

 

19

 

 

 

843

 

 

 

(19

)

 

 

 

 

 

 

 

 

 

Stock option exercises, net

 

 

 

 

 

22,731

 

 

 

 

 

 

281

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

281

 

Purchase of treasury stock

 

 

 

 

 

(14,197

)

 

 

 

 

 

 

 

 

14,197

 

 

 

(366

)

 

 

 

 

 

 

 

 

(366

)

Preferred stock converted to common stock

 

 

(88

)

 

 

6,106

 

 

 

 

 

 

88

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Series A preferred dividends

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(181

)

 

 

 

 

 

(181

)

Series B preferred dividends

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(204

)

 

 

 

 

 

(204

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

20,133

 

 

 

 

 

 

20,133

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

434

 

 

 

434

 

Balance, June 30, 2017

 

$

9,658

 

 

 

18,132,585

 

 

$

182

 

 

$

198,570

 

 

 

91,158

 

 

$

(1,759

)

 

$

103,658

 

 

$

158

 

 

$

310,467

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, January 1, 2018

 

$

9,658

 

 

 

20,820,445

 

 

$

209

 

 

$

264,855

 

 

 

91,951

 

 

$

(1,784

)

 

$

119,356

 

 

$

(596

)

 

$

391,698

 

Issuance of common stock, net of expenses

 

 

 

 

 

5,405,000

 

 

 

54

 

 

 

191,999

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

192,053

 

Issuance of restricted stock awards

 

 

 

 

 

45,290

 

 

 

1

 

 

 

(1

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock based compensation

 

 

 

 

 

 

 

 

 

 

 

1,053

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,053

 

Forfeiture of restricted stock awards

 

 

 

 

 

(1,792

)

 

 

 

 

 

78

 

 

 

1,792

 

 

 

(78

)

 

 

 

 

 

 

 

 

 

Stock option exercises, net

 

 

 

 

 

1,366

 

 

 

 

 

 

(4

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4

)

Purchase of treasury stock

 

 

 

 

 

(9,524

)

 

 

 

 

 

 

 

 

9,524

 

 

 

(392

)

 

 

 

 

 

 

 

 

(392

)

Series A preferred dividends

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(181

)

 

 

 

 

 

(181

)

Series B preferred dividends

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(202

)

 

 

 

 

 

(202

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

24,453

 

 

 

 

 

 

24,453

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,253

)

 

 

(1,253

)

Balance, June 30, 2018

 

$

9,658

 

 

 

26,260,785

 

 

$

264

 

 

$

457,980

 

 

 

103,267

 

 

$

(2,254

)

 

$

143,426

 

 

$

(1,849

)

 

$

607,225

 

See accompanying condensed notes to consolidated financial statements.

 

 

 

 

5


 

TRIUMPH BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Six Months Ended June 30, 2018 and 2017

(Dollar amounts in thousands, except per share amounts)

(Unaudited)

  

 

Six Months Ended June 30,

 

 

 

2018

 

 

2017

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net income

 

$

24,453

 

 

$

20,133

 

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

 

 

 

 

 

 

 

 

Depreciation

 

 

2,435

 

 

 

1,925

 

Net accretion on loans and deposits

 

 

(5,614

)

 

 

(3,965

)

Amortization of subordinated notes issuance costs

 

 

50

 

 

 

46

 

Amortization of junior subordinated debentures

 

 

226

 

 

 

203

 

Net amortization on securities

 

 

477

 

 

 

837

 

Amortization of intangible assets

 

 

2,478

 

 

 

2,022

 

Deferred taxes

 

 

518

 

 

 

3,457

 

Provision for loan losses

 

 

7,454

 

 

 

9,125

 

Stock based compensation

 

 

1,053

 

 

 

1,025

 

Net (gains) losses on sale of securities

 

 

272

 

 

 

 

Net (gain) loss on loans transferred to loans held for sale