Triumph in Texas discloses issue with recent asset purchase

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Triumph Bancorp in Dallas said a recent acquisition has hit a snag.

The $5.4 billion-asset company bought $103.3 million of net accounts receivable and related transportation factoring assets from a unit of Covenant Logistics Group in early July for $13.9 million

Triumph disclosed in its quarterly filing that it has concerns about $66 million of the acquired assets. The company said it “is in the process of collecting additional information ... and has not yet determined the amount of any specific reserves or charge-offs, if any, or the impact of such assets on the accounting for the transaction."

Triumph said it "believes it has various claims" against the Covenant unit that sold the assets. Triumph said the parties “are engaged in discussions to determine whether such claims can be amicably resolved” and it “is also evaluating all other options" if a solution cannot be reached.

Brady Gailey, an analyst at Keefe, Bruyette & Woods, said in a client note that the assets were advances against future payments made to three large clients and are not considered receivables.

Triumph "is currently in negotiations with Covenant about these ... assets where it could get some of the premium paid back [or] get these assets back stopped," Gailey added. "This development could reduce the EPS accretion associated with the deal."

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