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Section 1: 10-Q (10-Q)

tbk-10q_20180930.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 September 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 every Interactive Data File required to be submitted 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 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

 

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, 26,279,761 shares, as of October 17, 2018.

 

 

 

 

 


 

TRIUMPH BANCORP, INC.

FORM 10-Q

September 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

44

 

    Item 3.

 

Quantitative and Qualitative Disclosures About Market Risks

83

 

    Item 4.

 

Controls and Procedures

84

 

 

PART II — OTHER INFORMATION

 

 

    Item 1.

 

Legal Proceedings

84

 

    Item 1A.

 

Risk Factors

84

 

    Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

84

 

    Item 3.

 

Defaults Upon Senior Securities

85

 

    Item 4.

 

Mine Safety Disclosures

85

 

    Item 5.

 

Other Information

85

 

    Item 6.

 

Exhibits

85

 

 

 

 

i


 

PART I – FINANCIAL INFORMATION

ITEM 1

FINANCIAL STATEMENTS

 

 

 

 

1


 

TRIUMPH BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

September 30, 2018 and December 31, 2017

(Dollar amounts in thousands, except per share amounts)

 

 

 

September 30,

 

 

December 31,

 

 

 

2018

 

 

2017

 

 

 

(Unaudited)

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

74,737

 

 

$

59,114

 

Interest bearing deposits with other banks

 

 

207,672

 

 

 

75,015

 

Total cash and cash equivalents

 

 

282,409

 

 

 

134,129

 

Securities - available for sale

 

 

355,981

 

 

 

250,603

 

Securities - equity investments

 

 

4,981

 

 

 

5,006

 

Securities - held to maturity, fair value of $8,094 and $7,527, respectively

 

 

8,403

 

 

 

8,557

 

Loans held for sale

 

 

683

 

 

 

 

Loans, net of allowance for loan and lease losses of $27,256 and $18,748, respectively

 

 

3,484,887

 

 

 

2,792,108

 

Assets held for sale

 

 

 

 

 

71,362

 

Federal Home Loan Bank stock, at cost

 

 

23,109

 

 

 

16,006

 

Premises and equipment, net

 

 

82,935

 

 

 

62,861

 

Other real estate owned, net

 

 

2,442

 

 

 

9,191

 

Goodwill

 

 

158,728

 

 

 

44,126

 

Intangible assets, net

 

 

43,114

 

 

 

19,652

 

Bank-owned life insurance

 

 

40,339

 

 

 

44,364

 

Deferred tax assets, net

 

 

8,137

 

 

 

8,959

 

Other assets

 

 

40,954

 

 

 

32,109

 

Total assets

 

$

4,537,102

 

 

$

3,499,033

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

Noninterest bearing

 

$

697,903

 

 

$

564,225

 

Interest bearing

 

 

2,741,146

 

 

 

2,057,123

 

Total deposits

 

 

3,439,049

 

 

 

2,621,348

 

Customer repurchase agreements

 

 

13,248

 

 

 

11,488

 

Federal Home Loan Bank advances

 

 

330,000

 

 

 

365,000

 

Subordinated notes

 

 

48,903

 

 

 

48,828

 

Junior subordinated debentures

 

 

38,966

 

 

 

38,623

 

Other liabilities

 

 

50,295

 

 

 

22,048

 

Total liabilities

 

 

3,920,461

 

 

 

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

 

 

458,920

 

 

 

264,855

 

Treasury stock, at cost

 

 

(2,285

)

 

 

(1,784

)

Retained earnings

 

 

152,401

 

 

 

119,356

 

Accumulated other comprehensive income (loss)

 

 

(2,317

)

 

 

(596

)

Total stockholders’ equity

 

 

616,641

 

 

 

391,698

 

Total liabilities and stockholders' equity

 

$

4,537,102

 

 

$

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 Nine Months Ended September 30, 2018 and 2017

(Dollar amounts in thousands, except per share amounts)

(Unaudited)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Interest and dividend income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans, including fees

 

$

41,257

 

 

$

30,863

 

 

$

116,288

 

 

$

86,711

 

Factored receivables, including fees

 

 

27,939

 

 

 

12,198

 

 

 

64,033

 

 

 

32,177

 

Securities

 

 

1,551

 

 

 

1,655

 

 

 

4,040

 

 

 

5,004

 

FHLB stock

 

 

147

 

 

 

51

 

 

 

353

 

 

 

129

 

Cash deposits

 

 

865

 

 

 

370

 

 

 

2,412

 

 

 

986

 

Total interest income

 

 

71,759

 

 

 

45,137

 

 

 

187,126

 

 

 

125,007

 

Interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

6,219

 

 

 

3,272

 

 

 

15,127

 

 

 

9,198

 

Subordinated notes

 

 

837

 

 

 

837

 

 

 

2,512

 

 

 

2,508

 

Junior subordinated debentures

 

 

714

 

 

 

495

 

 

 

2,024

 

 

 

1,435

 

Other borrowings

 

 

2,207

 

 

 

1,021

 

 

 

5,294

 

 

 

1,978

 

Total interest expense

 

 

9,977

 

 

 

5,625

 

 

 

24,957

 

 

 

15,119

 

Net interest income

 

 

61,782

 

 

 

39,512

 

 

 

162,169

 

 

 

109,888

 

Provision for loan losses

 

 

6,803

 

 

 

572

 

 

 

14,257

 

 

 

9,697

 

Net interest income after provision for loan losses

 

 

54,979

 

 

 

38,940

 

 

 

147,912

 

 

 

100,191

 

Noninterest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service charges on deposits

 

 

1,412

 

 

 

1,046

 

 

 

3,767

 

 

 

3,003

 

Card income

 

 

1,877

 

 

 

956

 

 

 

4,515

 

 

 

2,700

 

Net OREO gains (losses) and valuation adjustments

 

 

65

 

 

 

15

 

 

 

(551

)

 

 

(86

)

Net gains (losses) on sale of securities

 

 

 

 

 

35

 

 

 

(272

)

 

 

35

 

Fee income

 

 

1,593

 

 

 

625

 

 

 

3,514

 

 

 

1,845

 

Insurance commissions

 

 

1,113

 

 

 

826

 

 

 

2,646

 

 

 

2,125

 

Asset management fees

 

 

 

 

 

 

 

 

 

 

 

1,717

 

Gain on sale of subsidiary or division

 

 

 

 

 

 

 

 

1,071

 

 

 

20,860

 

Other

 

 

(1

)

 

 

668

 

 

 

1,486

 

 

 

4,459

 

Total noninterest income

 

 

6,059

 

 

 

4,171

 

 

 

16,176

 

 

 

36,658

 

Noninterest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

24,695

 

 

 

16,717

 

 

 

64,626

 

 

 

54,687

 

Occupancy, furniture and equipment

 

 

3,553

 

 

 

2,398

 

 

 

9,621

 

 

 

7,105

 

FDIC insurance and other regulatory assessments

 

 

363

 

 

 

294

 

 

 

945

 

 

 

790

 

Professional fees

 

 

3,384

 

 

 

1,465

 

 

 

7,102

 

 

 

4,671

 

Amortization of intangible assets

 

 

2,064

 

 

 

870

 

 

 

4,542

 

 

 

2,892

 

Advertising and promotion

 

 

1,609

 

 

 

804

 

 

 

3,938

 

 

 

2,653

 

Communications and technology

 

 

7,252

 

 

 

2,145

 

 

 

13,882

 

 

 

6,552

 

Other

 

 

6,026

 

 

 

3,532

 

 

 

15,735

 

 

 

11,033

 

Total noninterest expense

 

 

48,946

 

 

 

28,225

 

 

 

120,391

 

 

 

90,383

 

Net income before income tax

 

 

12,092

 

 

 

14,886

 

 

 

43,697

 

 

 

46,466

 

Income tax expense

 

 

2,922

 

 

 

5,104

 

 

 

10,074

 

 

 

16,551

 

Net income

 

 

9,170

 

 

 

9,782

 

 

 

33,623

 

 

 

29,915

 

Dividends on preferred stock

 

 

(195

)

 

 

(195

)

 

 

(578

)

 

 

(580

)

Net income available to common stockholders

 

$

8,975

 

 

$

9,587

 

 

$

33,045

 

 

$

29,335

 

Earnings per common share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.34

 

 

$

0.48

 

 

$

1.37

 

 

$

1.58

 

Diluted

 

$

0.34

 

 

$

0.47

 

 

$

1.35

 

 

$

1.53

 

See accompanying condensed notes to consolidated financial statements.

 

 

 

3


 

TRIUMPH BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the Three and Nine Months Ended September 30, 2018 and 2017

(Dollar amounts in thousands, except per share amounts)

(Unaudited)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Net income

 

$

9,170

 

 

$

9,782

 

 

$

33,623

 

 

$

29,915

 

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gains (losses) on securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized holding gains (losses) arising during the period

 

 

(605

)

 

 

124

 

 

 

(2,494

)

 

 

815

 

Reclassification of amount realized through sale of securities

 

 

 

 

 

(35

)

 

 

272

 

 

 

(35

)

Tax effect

 

 

137

 

 

 

(33

)

 

 

501

 

 

 

(290

)

Total other comprehensive income (loss)

 

 

(468

)

 

 

56

 

 

 

(1,721

)

 

 

490

 

Comprehensive income

 

$

8,702

 

 

$

9,838

 

 

$

31,902

 

 

$

30,405

 

See accompanying condensed notes to consolidated financial statements.

 

 

 

 

4


 

TRIUMPH BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

For the Nine Months Ended September 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 common stock, net of expenses

 

 

 

 

 

2,530,000

 

 

 

25

 

 

 

65,503

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

65,528

 

Issuance of restricted stock awards

 

 

 

 

 

45,732

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock based compensation

 

 

 

 

 

 

 

 

 

 

 

1,484

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,484

 

Forfeiture of restricted stock awards

 

 

 

 

 

(853

)

 

 

 

 

 

20

 

 

 

853

 

 

 

(20

)

 

 

 

 

 

 

 

 

 

Stock option exercises, net

 

 

 

 

 

22,731

 

 

 

 

 

 

281

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

281

 

Warrant exercises, net

 

 

 

 

 

153,134

 

 

 

2

 

 

 

(2

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchase of treasury stock

 

 

 

 

 

(14,197

)

 

 

 

 

 

 

 

 

14,197

 

 

 

(366

)

 

 

 

 

 

 

 

 

(366

)

Preferred stock converted to common stock

 

 

(88

)

 

 

6,106

 

 

 

 

 

 

88

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Series A preferred dividends

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(273

)

 

 

 

 

 

(273

)

Series B preferred dividends

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(307

)

 

 

 

 

 

(307

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

29,915

 

 

 

 

 

 

29,915

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

490

 

 

 

490

 

Balance, September 30, 2017

 

$

9,658

 

 

 

20,820,900

 

 

$

209

 

 

$

264,531

 

 

 

91,168

 

 

$

(1,760

)

 

$

113,245

 

 

$

214

 

 

$

386,097

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

65,001

 

 

 

1

 

 

 

(1

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock based compensation

 

 

 

 

 

 

 

 

 

 

 

1,966

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,966

 

Forfeiture of restricted stock awards

 

 

 

 

 

(2,422

)

 

 

 

 

 

105

 

 

 

2,422

 

 

 

(105

)

 

 

 

 

 

 

 

 

 

Stock option exercises, net

 

 

 

 

 

1,366

 

 

 

 

 

 

(4

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4

)

Purchase of treasury stock

 

 

 

 

 

(9,629

)

 

 

 

 

 

 

 

 

9,629

 

 

 

(396

)

 

 

 

 

 

 

 

 

(396

)

Series A preferred dividends

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(273

)

 

 

 

 

 

(273

)

Series B preferred dividends

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(305

)

 

 

 

 

 

(305

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

33,623

 

 

 

 

 

 

33,623

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,721

)

 

 

(1,721

)

Balance, September 30, 2018

 

$

9,658

 

 

 

26,279,761

 

 

$

264

 

 

$

458,920

 

 

 

104,002

 

 

$

(2,285

)

 

$

152,401

 

 

$

(2,317

)

 

$

616,641

 

See accompanying condensed notes to consolidated financial statements.

 

 

 

 

5


 

TRIUMPH BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Nine Months Ended September 30, 2018 and 2017

(Dollar amounts in thousands, except per share amounts)

(Unaudited)

  

 

Nine Months Ended September 30,

 

 

 

2018

 

 

2017

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net income

 

$

33,623

 

 

$

29,915

 

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

 

 

 

 

 

 

 

 

Depreciation

 

 

3,880

 

 

 

2,892

 

Net accretion on loans