NOTE 2 – Business combinations AND DIVESTITURES

Sale of Pewaukee Branch

On July 11, 2014, Triumph Community Bank sold its operating branch in Pewaukee, Wisconsin, which constituted its sole branch in the state, to a third party for net cash proceeds of $57,409. Under the terms of the agreement, the acquirer assumed branch deposits of $36,326, purchased selected loans in the local market with a carrying amount of $78,071, and acquired the premises and equipment associated with the branch. The transaction resulted in the Company recording a pre-tax gain of $12,619, net of transaction costs.

Doral Healthcare Acquisition

On June 13, 2014, Triumph Bancorp, Inc., through its subsidiary, Triumph Community Bank, acquired the lending platform and certain assets of Doral Healthcare Finance (DHF), an asset based lender focused exclusively on the healthcare industry. DHF was a division of Doral Money, which is a subsidiary of Doral Bank. The purpose of the acquisition was to enhance the Company’s commercial finance offerings. In conjunction with the acquisition, Doral Healthcare Finance has been rebranded Triumph Healthcare Finance. The acquisition was not considered significant to the Company’s financial statements and therefore pro forma financial data and related disclosures are not included.

The Company acquired loans with a fair value of $45,334 at the acquisition date in addition to other assets and liabilities. Under the terms of the agreement, the Company paid cash in the amount of $49,482 and recognized $1,921 in goodwill that was allocated to the Company’s Banking segment. Goodwill represents the excess of the fair value of consideration transferred over the fair value of net assets acquired. Goodwill resulted from a combination of expected enhanced service offerings and cross-selling opportunities. Goodwill will be amortized for tax purposes, but not for financial reporting purposes.

DHF’s results of operations are included in the Company’s results since the acquisition date.

A summary of the fair values of assets acquired, liabilities assumed, consideration paid, and the resulting goodwill is as follows:

Assets acquired:
Loans	$	45,334
Customer relationship intangible		2,029
Premises and equipment		50
Other assets		276
	$	47,689
Liabilities assumed:
Customer deposits		128
Fair value of net assets acquired	$	47,561
Cash paid		49,482
Goodwill	$	1,921

Information about the acquired loan portfolio subject to purchased credit impaired (PCI) loan accounting guidance as of the acquisition date is as follows:

PCI Loans:

	PCI
Contractual balance at acquisition	$	5,009
Contractual cash flows not expected to be collected (nonaccretable difference)		(873	)
Expected cash flows at acquisition	$	4,136
Accretable yield		(482	)
Fair value of acquired PCI loans	$	3,654

Loans acquired and not otherwise classified as PCI are predominately short term in nature and had a gross contractual balance and fair value at acquisition of $41,680. Substantially all contractual cash flows have been collected on all non-PCI loans acquired.

NBI Acquisition

Effective October 15, 2013, TBI acquired 100% of NBI, and thereby acquired THE National Bank due to NBI’s 100% ownership of THE National Bank. During 2014, THE National Bank was renamed Triumph Community Bank. The primary expected benefits of the acquisition are to (i) provide the Company with increased access to low cost stable core deposit funding and (ii) create the opportunity to achieve improved operating efficiency through the scale provided by a larger consolidated balance sheet.

The Company recorded the assets acquired and the liabilities assumed in the acquisition of NBI at their respective fair values as of the acquisition date. In conjunction with the acquisition, the Company recognized a bargain purchase gain of $9,014 during the fourth quarter of 2013.

TCB’s results of operations are included in the Company’s results since the acquisition date.

A summary of the fair values of assets acquired, liabilities assumed, consideration paid and the resulting bargain purchase gain is as follows:

Assets acquired:
Cash and cash equivalents	$	89,990
Securities		160,450
Loans		568,358
FHLB and Federal Reserve Bank stock		4,507
Premises and equipment		19,358
Other real estate owned		11,285
Intangible assets		15,091
Bank-owned life insurance		28,435
Deferred income taxes		17,237
Other assets		22,023
		936,734
Liabilities assumed:
Deposits		793,256
Customer repurchase agreements		19,927
Senior secured note		11,858
Junior subordinated debentures		24,120
Federal Home Loan Bank advances		5,003
Accrued interest and dividends payable		7,282
Other liabilities		7,988
		869,434
Fair value of net assets acquired		67,300
Cash paid to NBI common and preferred shareholders		15,277
Common stock issued by TBI (1,029,045 shares)		11,916
TBI Preferred stock Series B Issued		5,196
Senior Preferred Stock, Series T-1 and T-2 assumed		25,897
Consideration paid		58,286
Bargain Purchase Gain	$	(9,014	)

The consideration paid was comprised of a combination of cash and TBI common and preferred stock to all NBI stockholders, and the assumption of NBI’s Senior Preferred Stock, Series T-1 and T-2, classified as noncontrolling interest in the consolidated statements of changes in equity.

In addition to the consideration paid TBI (i) retired the outstanding balance of NBI’s $11,858 senior secured note and (ii) retired all $3,640 of NBI’s senior convertible notes outstanding with cash.