NEW YORK--(BUSINESS WIRE)--Kroll Bond Rating Agency (KBRA) releases comment on Triumph Bancorp, Inc.’s recent acquisition activity. Dallas, Texas based Triumph Bancorp, Inc. (NASDAQ: TBK or (“Triumph”) announced definitive agreements to acquire First Bancorp of Durango, Inc. and Southern Colorado Corp., with the subsidiaries of the to be acquired institutions expected to merge into Triumph’s subsidiary bank, TBK Bank, SSB, and operate under the TBK Bank brand name. Additionally, Triumph announced an asset purchase agreement by Advance Business Capital d/b/a Triumph Business Capital to acquire the transportation factoring assets of Interstate Capital Corporation (ICC). The estimated transaction value of the three acquisitions is $199.4 million, with all three transactions expected to be 100% cash consideration. In a corresponding move, Triumph announced and completed a public offering of shares of its common stock with a gross transaction size of $176 million.
The proposed acquisition of the two community bank holding companies would add approximately $734 million in total assets, including $307 million in loans and $654 million in deposits, providing in excess of $300 million in liquidity to be redeployed into commercial finance loan growth over time. The proposed acquisition of Interstate Capital Corporation has an estimated transaction value of $51.9 million and is expected to close during the second quarter of 2018. ICC is a factoring business based in El Paso, Texas. Triumph would acquire an estimated $112 million in loans, and nearly 1,500 factoring clients, as well as the operating center for ICC. The net impact of the announced transactions towards Triumph’s capital position is expected to be moderate. KBRA views the aformentioned acquisitions as credit neutral in the near term, though with potential for a positive credit impact over the medium term, resulting from an improved core deposit base and access to low cost funding sources.
In July of 2017, KBRA affirmed the ratings, including senior unsecured and subordinated debt ratings of BBB and BBB-, respectively, for Triumph Bancorp, Inc., as well as a senior unsecured debt rating of BBB+ for TBK Bank, SSB. The Outlook on all long-term ratings was changed to Negative from Stable. The Negative Outlook for the long-term ratings reflected the recent deterioration of Triumph’s asset quality and its potential impact on the earnings and capital of the Bank. Though KBRA does not currently rate First Bancorp of Durango, Inc. or Southern Colorado Corp. on a long-term basis, the companies appear to have sound financial metrics as evidenced by KBRA’s Subscription Rating Service’s financial strength rating of B-, B+, and B-, for each of the bank subsidiaries, respectively.
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