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Business Combinations and Divestitures | 12 Months Ended
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Dec. 31, 2014
Business Combinations [Abstract] |
Business Combinations and Divestitures | NOTE 2 – Business combinations AND DIVESTITURES Sale of Pewaukee Branch On July 11, 2014, TCB sold its operating branch in Pewaukee, Wisconsin, which constituted its sole branch in the state, to a third party for net cash proceeds of $57,409,000. Under the terms of the agreement, the acquirer assumed branch deposits of $36,326,000, purchased selected loans in the local market with a carrying amount of $78,071,000, and acquired the premises and equipment associated with the branch. The transaction resulted in the Company recording a pre-tax gain of $12,619,000, net of transaction costs. Doral Healthcare Acquisition On June 13, 2014, the Company, through its subsidiary TCB, 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, DHF has been rebranded Triumph Healthcare Finance. The Company acquired loans with a fair value of $45,334,000 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 $49,482,000 and recognized $1,921,000 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 for DHF, and the resulting goodwill is as follows:
(Dollars in thousands) |  |  |  |
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 DHF loan portfolio subject to purchased credit impaired (PCI) loan accounting guidance as of the acquisition date is as follows: PCI Loans:
(Dollars in thousands) |  | 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 $41,680,000. As of December 31, 2014, 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 benefits of the acquisition were 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 $9,014,000. 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 for NBI, and the resulting bargain purchase gain is as follows:
(Dollars in thousands) |  |  |  |
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 $11,858,000 senior secured note and (ii) retired all $3,640,000 of NBI’s senior convertible notes outstanding with cash. As of the date of acquisition, NBI had been in deferral on payments due for interest and dividends on its junior subordinated debentures and Senior Preferred Stock, Series T-1 and T-2. The total amounts due on these instruments for periods prior to acquisition were brought current by the Company on the first contractually available payment dates post-acquisition. The following presents information for non-purchase credit impaired loans acquired as part of the NBI acquisition.
|  |  |  |  |  |  |  |  |  | Estimated |
|  |  |  |  |  |  |  |  |  | Contractual |
|  |  |  |  |  |  |  |  |  | Cash Flows Not |
|  | Contractual |  |  |  |  |  |  | Expected to be |
(Dollars in thousands) |  | Balance |  |  | Fair Value |  |  | Collected |
Commercial real estate |  | $ | 223,477 |  |  | $ | 217,711 |  |  | $ | (6,567 | )
Construction, land development, land |  |  | 25,844 |  |  |  | 23,474 |  |  |  | (1,585 | )
1-4 family residential properties |  |  | 93,868 |  |  |  | 89,822 |  |  |  | (2,520 | )
Farmland |  |  | 35,502 |  |  |  | 35,634 |  |  |  | (74 | )
Commercial |  |  | 170,070 |  |  |  | 164,855 |  |  |  | (3,914 | )
Factored receivables |  |  | — |  |  |  | — |  |  |  | — |
Consumer |  |  | 13,897 |  |  |  | 13,750 |  |  |  | (638 | )
Mortgage warehouse |  |  | — |  |  |  | — |  |  |  | — |
|  | $ | 562,658 |  |  | $ | 545,246 |  |  | $ | (15,298 | )
The estimated contractual cash flows not expected to be collected on non-PCI loans indicated in the table above include contractual principal balances only. Contractual interest not expected to be collected on non-PCI loans was not material. Information about the acquired NBI loan portfolio subject to PCI accounting guidance as of the acquisition date is as follows:
(Dollars in thousands) |  | PCI |
Contractual balance at acquisition |  | $ | 29,970 |
Contractual cash flows not expected to be collected (nonaccretable discount) |  |  | (5,141 | )
Expected cash flows at acquisition |  |  | 24,829 |
Interest component of expected cash flows (accretable discount) |  |  | (1,717 | )
Fair value of acquired loans |  | $ | 23,112 |
The following table presents pro forma information as if the NBI acquisition had occurred at the beginning of 2012:
|  | Years Ended December 31, |
(Dollars in thousands) |  | 2013 |  |  | 2012 |
Net interest income |  | $ | 60,685 |  |  | $ | 60,831 |
Net income before tax |  |  | 12,719 |  |  |  | 17,398 |
Tax (expense) benefit |  |  | (4,244 | ) |  |  | 5,825 |
Net income |  |  | 8,475 |  |  |  | 23,223 |
Effect of noncontrolling interests |  |  | (3,506 | ) |  |  | (3,011 | )
Net income to common stockholders |  | $ | 4,969 |  |  | $ | 20,212 |
Basic earnings per share |  | $ | 0.51 |  |  | $ | 2.06 |
Diluted earnings per share |  | $ | 0.51 |  |  | $ | 2.00 |
Since the acquisition date through December 31, 2013, revenues and earnings recorded by the Company related to the acquired operations approximated $12,014,000 and $2,834,000, respectively. To determine pro forma information, the Company adjusted its 2013 and 2012 historical results to include the historical results for NBI for the period January 1, 2013 to October 14, 2013 and the year ended December 31, 2012. These amounts were $1,099,000 and $5,916,000, respectively. Pro forma adjustments include adjustments for interest income on loans and securities acquired, amortization of intangibles arising from the transaction, depreciation expense on property acquired, interest expense on deposits acquired, interest expense on junior subordinated debentures assumed, interest expense on senior secured notes paid off, the related income tax effects, and the impact of noncontrolling interest and preferred stock. Expenses and income related to the acquisition including professional fees and integration costs, as well as the bargain purchase gain, are also excluded from the above pro forma table. In 2013 and 2012, these expenses amounted to $2,500,000 and $52,000, respectively, and in 2013 the bargain purchase gain totaled $9,014,000. The year over year pro forma decline in net income to common shareholders was principally driven by $11,700,000 of tax benefits recognized in 2012 that were not duplicated in 2013. During 2012, TBI and NBI reversed certain valuation allowances on deferred taxes in the amounts of $7,400,000 and $4,300,000, respectively. The pro forma financial information is not necessarily indicative of the results of operations that would have occurred had the transactions been effected on the assumed dates.

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- Definition The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings. + References No definition available. + Details
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