Borrower fraud to take bite out of Triumph's 3Q profit

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Triumph Bancorp in Dallas will absorb a blow to its quarterly earnings after discovering "fraudulent conduct" tied to an asset-based loan.

The $3.8 billion-asset company disclosed in a regulatory filing late Thursday that it will charge off a $4 million loan and add $2.7 million to its loan-loss allowance. Triumph said it had previously set aside $700,000 to buffer against a potential chargeoff.

Triumph, which earned $12.2 million, or 47 cents a share, for the second quarter, said the incident would reduce third-quarter profit by about 17 cents a share.

The company said in its filing that the unnamed borrower submitted falsified borrowing base certificates that led the bank to advance a cash amount that exceeded available collateral. The borrower has been served with a notice of default and the loan is in the process of liquidation.

Triumph said it reviewed the circumstances tied to the incident; the company also examined the rest of its asset-based portfolio. The company said it believes the incident was an isolated occurrence and not a sign of wider credit deterioration.

A spokeswoman for Triumph declined to provide additional comment about the matter.

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