Triad Business Bank Announces Completion of $15 Million Capital Raise and Provides June Quarter Results

Rhea-AI Summary

On August 3, 2021, Triad Business Bank (OTC Pink: TBBC) completed the sale of 1,500,000 shares at $10.00 each, generating gross proceeds of $15 million. After costs, net proceeds were $14.94 million, raising total equity to $59.15 million. This sale increased tangible book value by $0.30 per share to $8.96. For the quarter ending June 30, 2021, net interest income rose 30% to $1.9 million, and the net loss decreased to $313,000. Total deposits increased by 11% to $209.3 million, and core loans grew by 14% to $108.3 million, reflecting a positive growth outlook for the bank.

Positive

• Completed an oversubscribed capital raise of $15 million.
• Increased tangible book value per share from $8.66 to $8.96.
• Net interest income rose 30% to $1.9 million in Q2 2021.
• Core loans grew by 14% to $108.3 million.
• Total deposits increased by 11% to $209.3 million.
• CEO indicated strong growth prospects with a target of $800 million in assets by 2024.

Negative

• Net loss of $313,000 for the June quarter, despite improvement.
• Operating loss increased to $148,000 due to higher personnel expenses.
• Personnel expense rose by 28% to support growth initiatives, impacting profitability.

GREENSBORO, N.C., Aug. 10, 2021 /PRNewswire/ -- Triad Business Bank (OTC Pink: TBBC) announced that on August 3, 2021, it completed the sale of 1,500,000 shares of common stock at a price of $10.00 per share, or $15.0 million in gross proceeds.  The offering was oversubscribed.  After estimated costs of $60,000, net proceeds totaled $14.94 million, which supplements last year's $51 million initial equity raise conducted as part of its formation.  The offering was approximately $0.30 accretive to shareholders' tangible book value, increasing it from $8.66 at June 30, 2021 to a pro-forma tangible book value of $8.96 on that date.  The non-GAAP pro-forma tangible book value was $9.15 at June 30, 2021.  Total shares outstanding following the offering were 6,602,984, and pro-forma equity at June 30, 2021, adjusted for the capital raise, was $59.15 million. 

"Triad Business Bank was formed with a vision to be a source of strength to the Triad's business community," CEO Ramsey K. Hamadi commented.  "After two successful capital offerings totaling $66 million, supported principally by private investors residing in the Triad, the Bank is well positioned to deliver on this vision.  One-third of our most recent offering, or approximately 500,000 shares, were purchased by our directors and executive officers.  Following the close of the offering, the Bank's board members and executive team beneficially owned 23.5% of our outstanding common shares.  This capital raise will support revised growth plans, including our vision of growing assets to more than $800 million by the end of the year 2024." 

Hamadi continued, "We are also pleased to report improved operating results for the three-month period ending June 30, 2021.  Net interest income rose 30%, or $447,000, to $1.9 million for the quarter compared to $1.5 million for the first quarter.  Excluding revenue from Paycheck Protection Program (PPP) loans, core interest income rose 39% from the previous quarter.  Net loss declined to $313,000 for the June 30, 2021 quarter compared to a net loss of $397,000 for the prior quarter.  Our operating loss (net loss less the provision for loan losses) increased modestly from $117,000 for the March 2021 quarter to $148,000 due to increased personnel expense, including severance costs associated with a departing employee." 

We are pleased to provide our shareholders with the Bank's June 30, 2021 quarterly results, including linked quarter comparisons to results from the quarter ended March 31, 2021:

Linked Quarter Income Statement Highlights:

• Net interest income increased to $1.9 million from $1.5 million
• Net interest margin expanded 39 basis points to 2.90% from 2.51%
• Core interest income (non-PPP interest income) increased 39%
• Interest income on our investment portfolio increased $165,000 to $419,000
• Excluding severance costs, operating loss declined to $73,000 from $117,000
• Personnel expense increased $323,000, or 28%, due principally to personnel additions in commercial banking, underwriting, treasury management and loan and deposit operations to support projected growth

Linked Quarter Balance Sheet Highlights:

• Core loans increased 14% to $108.3 million
• Total deposits increased 11% to $209.3 million
• Allowance for loan losses increased to $1.4 million, or 1.25% of core loans
• No classified, non-performing or past due assets reported
• New loan pipeline increased to record $161 million
• Tangible book value was unchanged at $8.66 per share
• Small Business Administration (SBA) repaid $47.2 million of PPP loans in the June 2021 quarter

June Quarter Results

The Bank reported a net loss of $313,000, or $0.06 per share, in the June quarter compared to $397,000, or $0.08 per share, for the March quarter.  However, when considering results before the provision for loan losses, the linked-quarter operating loss increased to $148,000 from $117,000 due to added personnel expenses, including severance costs.

The Bank's primary source of income is the spread between the interest it earns on its interest-earning assets, which are primarily loans and investments, and the expense it incurs from its funding sources, which are primarily deposits.  Net interest income was $1.9 million in the June quarter, an increase of $447,000 from the March quarter.  The Bank's net interest margin continued to rise to 2.90% in the June quarter from 2.51% in the March 2021 quarter.  The net interest margin rose due to higher PPP revenue and increased core loan revenue.  In the June quarter, the average balance of core loans increased to $98.3 million from $84.2 million in the March quarter.  The weighted average yield on these loans increased to 3.87% in the June quarter from 3.50% in the March quarter.  The Bank applies a disciplined pricing model that it believes will yield consistent results over time. 

Total assets increased slightly to $266.5 million at June 30, 2021 from $264.6 million at March 31, 2021.  Core loans, investment securities and other assets increased $44.8 million, offset by a $42.7 million net decline in PPP Loans. 

Loans, Investment Securities and Deposits

The Bank's core loans increased 14% during the second quarter to $108.3 million compared to $95.1 million at March 31, 2021.  The Bank originated $44.9 million of core loans during the quarter, which included a $13.8 million increase in unfunded loan commitments.  At June 30, 2021 the Bank had $66.4 million in unfunded loan commitments.  The Bank also had $6.9 million of core loan balances repaid during the June 2021 quarter.  The repaid loans resulted in recognition of deferred fees, which boosted loan yields from 3.50% in the March quarter to 3.87% in the June quarter.  Core interest income (Interest income less PPP revenue) increased 39% in the June quarter compared to the March quarter. 

The average balance of investment securities increased $25.9 million in the June quarter to $60.9 million.  Interest income on investment securities was $419,000 in the June quarter, a $165,000 increase from the March quarter.  The yield on the portfolio declined from 2.95% for the March quarter to 2.76% for the June quarter.  Total investment securities were $65.0 million at June 30, 2021, an increase of $5.7 million from March 31, 2021.  The increase in interest income for the June quarter was due primarily to new investments that were acquired late in the March 2021 quarter.

Total deposits increased 11% to $209.3 million at June 30, 2021 from $187.8 million at March 31, 2021.  Noninterest-bearing demand deposit accounts increased 3% to $57.5 million in the June quarter.   Growth in deposits in the June quarter was due primarily to growth in interest-bearing checking, savings and money market account balances, which increased $20.8 million to $143.8 million at June 30, 2021.  Time deposits totaled $8.0 million at June 30, 2021.

PPP Update

In the June quarter, the SBA made $47.2 million of principal forgiveness payments on the Bank's PPP loan portfolio.  At June 30, 2021, PPP loans totaled $40.3 million.  During the June quarter, the Bank realized $819,000 of interest and fee income on the PPP portfolio, an increase of $73,000 from the prior quarter.  At June 30, 2021, the Bank had $1.1 million remaining in unrealized PPP fees ($0.9 million net of unrealized costs).  Since inception, the Bank has originated 458 PPP loans for over $139 million.  PPP revenue as a percentage of total revenue declined from 39% in the March quarter to 35% in the June quarter.  The growth in core earnings of the Bank continues to reduce the Bank's reliance on PPP revenue. 

 At June 30, 2021, the Bank had 131 core loans in its portfolio totaling $108.3 million in outstanding balances and $174.7 million of gross core loans including unfunded commitments.  The average size of new core loans originated during the second quarter was $1.3 million.  At June 30, 2021, 47% of the Bank's outstanding core loan portfolio was Commercial and Industrial ("C&I") in nature:

Loan Diversification

Loan Category	6/30/2021	Composition
Other Construction & Land Development	$              16,516,446
Non-Owner Occupied CRE	39,988,431
Total CRE	$              56,504,877	52%
Owner Occupied RE	$              21,956,493
C&I	29,317,445
Total C&I	$              51,273,938	47%
Other Revolving Loans	$                    536,415	1%
Total	$            108,315,230

Noninterest Expense

Noninterest expense was $2.2 million in the June quarter, an increase of $390,000 from the prior quarter.  The increase in expense was due primarily to increased compensation expense related to personnel additions in commercial banking, treasury management, underwriting and loan and deposit operations, as well as severance costs associated with a departing employee.  The total number of employees increased 11% during the year to 40 at June 30, 2021.  The growth in personnel costs is in line with the Bank's increased capital and the opportunity to grow the Bank's total assets beyond the earlier forecasts.

Credit Risk

The Bank had no nonperforming assets and reported no criticized or substandard assets at June 30, 2021.  The Bank's emerging loan portfolio has been underwritten with an eye on the impact COVID-19 is having on cash flows of prospective businesses.  Many of these businesses are prospering in the current environment and have either stable or expanding revenues. 

Deferred Tax Asset, Non-GAAP Measure

The Bank's tangible book value per share on June 30, 2021 was $8.66.  Organization and startup costs during the Bank's organizational period and net operating losses during the first fifteen months of operations created a deferred tax asset of $1.3 million.  This asset is currently fully impaired and will be carried at $0 until sufficient, verifiable evidence exists to demonstrate that the deferred tax asset will more likely than not be realized.  At that time, the valuation allowance will be reversed.  At June 30, 2021, the valuation allowance lowered tangible book value per share by $0.26 from $8.92 to $8.66 (a non-GAAP measurement).  On a non-GAAP basis, tangible book value per share increased from $8.90 on March 31, 2021 to $8.92 at June 30, 2021 when adding back the impairment of the deferred tax asset.

Outlook

"As we celebrate our fifteen-month anniversary, we are pleased to see that the opportunity for our Bank in the Triad is greater than our original forecast.  The Bank's assets are 21% greater and total deposits are 18% greater than we projected for this stage of development, with core demand deposit accounts over 100% greater than our projections at the time of organization.  The growth over the first fifteen months has allowed the Bank to invest more in personnel than we expected while not compromising efforts to achieve profitability.  We are pleased to have built a larger than projected sales and service team with more bankers, treasury officers and support staff.  At June 30, 2021, the Bank had 40 employees versus our projection of 25.  To date, the Bank's core deposits have increased faster than core loans.  At quarter end, the Bank had $1.1 million of deferred PPP revenue ($0.9 million net of deferred costs) that has yet to be recognized.  This deferred revenue should continue to bolster the Bank's total revenue through the end of 2021 at which time we anticipate core operations will be profitable.  We are pleased with the Bank's results to date, and as we look forward, we believe the Bank will continue to exceed expectations."  Hamadi commented.

About Triad Business Bank

With three co-equal offices located in Winston-Salem, High Point and Greensboro, Triad Business Bank focuses on meeting the needs of small to midsize businesses and their owners by providing loans, treasury management and private banking, all with a high level of personal attention and best-in-class technology. For more information, visit www.triadbusinessbank.com  

Forward Looking Language

This release contains certain forward-looking statements with respect to the financial condition, results of operations and business of Triad Business Bank.  These forward-looking statements involve risks and uncertainties and are based on the beliefs and assumptions of management of Triad Business Bank and on the information available to management at the time that these disclosures were prepared.  These statements can be identified by the use of words like "expect," "anticipate," "estimate" and "believe," variations of these words and other similar expressions.  Readers should not place undue reliance on forward-looking statements as a number of important factors could cause actual results to differ materially from those in the forward-looking statements.  Triad Business Bank undertakes no obligation to update any forward-looking statements.

 

Triad Business Bank
Balance Sheet (Unaudited)						June 30, 2021		March 31, 2021		December 31, 2020		September 30, 2020
	Assets
	Noninterest-bearing cash					$               1,315,611		$               4,899,326		$               1,398,613		$                  736,435
	Interest-bearing due from banks					46,773,395		17,259,583		39,763,399		70,015,162
	Securities					65,049,332		59,398,336		26,065,622		18,032,330
	Federal funds sold					-		-		-		-
	PPP Loans					40,276,095		83,016,045		78,173,460		100,057,189
	Core Loans					108,315,230		95,143,122		73,083,871		49,840,339
	Allowance for loan loss					(1,354,915)		(1,190,350)		(910,079)		(628,371)
	Loans net					147,236,410		176,968,817		150,347,252		149,269,157
	Other assets					6,102,655		6,055,184		3,528,292		3,220,127
	Total assets					$            266,477,403		$            264,581,247		$            221,103,178		$            241,273,211
	Liabilities
	Demand deposits					$              57,493,414		$              55,978,388		$              27,409,213		$              18,681,865
	Interest-bearing NOW					21,626,263		21,956,030		19,067,897		4,737,561
	Interest-bearing savings & MMA					122,161,899		101,058,331		98,446,048		70,005,273
	Time deposits					8,027,714		8,818,530		3,806,611		501,000
	Total Deposits					209,309,289		187,811,279		148,729,769		93,925,699
	Other borrowings					10,756,485		20,685,620		24,946,988		99,713,260
	Fed Funds Purchased					-		9,346,000		-		-
	Other liabilities					2,204,446		2,523,648		2,569,615		2,238,944
	Total Liabilities					222,270,220		220,366,548		176,246,372		195,877,903
	Shareholders' Equity
	Common Stock					49,881,777		49,822,062		49,730,750		49,639,875
	Accumulated Deficit					(6,114,560)		(5,801,946)		(5,404,682)		(4,676,843)
	AOCI					439,965		194,583		530,738		432,276
	Total Shareholders' Equity					44,207,183		44,214,699		44,856,806		45,395,308
	Total Liabilities & Shareholders' Equity					$            266,477,403		$            264,581,247		$            221,103,178		$            241,273,211
	Shares outstanding					5,102,984		5,102,984		5,102,984		5,102,984
	Tangible book value per share					$                       8.66		$                       8.66		$                       8.79		$                       8.90

 

Triad Business Bank
Income Statement (unaudited)							For three months ended		For three months ended		For three months ended		For three months ended
							June 30, 2021		March 31, 2021		December 31, 2020		September 30, 2020
	Interest Income
	Interest & Fees on PPP Loans						$                               819,102		$                               745,907		$                               881,063		$                               514,893
	Interest & Fees on Core Loans						948,447		727,116		577,864		341,619
	Interest & Dividend Income on Securities						419,317		254,383		155,893		132,261
	Interest Income on balances Due from Banks						8,017		8,354		9,428		6,623
	Other Interest Income						10,404		4,548		440		364
	Total Interest Income						2,205,287		1,740,308		1,624,688		995,760
	Interest Expense
	Interest on NOW Deposits						43,225		53,207		20,350		11,221
	Interest on Savings & MMA Deposits						197,613		183,260		272,626		147,500
	Interest on Time Deposits						13,692		12,369		5,373		1,011
	Interest on Fed Funds Purchased						422		-		-		-
	Interest on Borrowings						24,320		18,525		41,947		54,271
	Other Interest Expense						9,917		4,139		-		-
	Total Interest Expense						289,189		271,500		340,296		214,003
	Net Interest Income						1,916,098		1,468,808		1,284,392		781,757
		Provision for Loan Losses					164,565		280,271		281,708		454,563
	Net Interest Income After Provision for LL						1,751,533		1,188,537		1,002,684		327,194
	Total Noninterest Income						36,882		87,062		19,290		40,230
	Total Gain(Loss) on Securities						70,525		108,488		-		-
	Noninterest Expense
	Salaries & Benefits						1,475,650		1,152,497		1,087,939		924,103
	Premises & Equipment						118,819		114,060		139,222		114,659
	Total Other Noninterest Expense						577,084		514,794		522,652		540,864
	Total Noninterest Expense						2,171,553		1,781,351		1,749,813		1,579,626
		Loss before Income Tax					(312,613)		(397,264)		(727,839)		(1,212,202)
		Income Tax					-		-		-		-
		Net Loss					$                      (312,613)		$                      (397,264)		$                      (727,839)		$                   (1,212,202)
	Net Loss per Share
		Basic & Diluted					$                           (0.06)		$                           (0.08)		$                           (0.14)		$                           (0.24)
	Weighted Average Shares Outstanding
		Basic & Diluted					5,102,984		5,102,984		5,102,984		5,102,984
	Pre-Provision, Pre-Tax Loss						$                      (148,048)		$                      (116,993)		$                      (446,131)		$                      (757,639)

 

Non-GAAP Measures
Tangible Book Value
				Actual 6/30/2021		Non-GAAP 6/30/2021		Pro-forma* 6/30/2021		Non-GAAP Pro-forma* 6/30/2021
Total Shareholders' Equity				$  44,207,183		$    45,495,527		$  59,147,183		$     60,435,527
Shares Outstanding				5,102,984		5,102,984		6,602,984		6,602,984
Tangible Book Value Per Share				$             8.66		$               8.92		$             8.96		$                9.15
Deferred Tax Asset				$    1,288,344		$      1,288,344		$    1,288,344		$       1,288,344
Valuation Allowance				$   (1,288,344)		$                   -		$   (1,288,344)		$                    -
Recorded Deferred Tax Asset				$                 -		$      1,288,344		$                 -		$       1,288,344
Effect of Non-GAAP Measure on Tangible Book Value						$               0.26				$                   0.19
*Reflects the effects of the capital raise on 8/3/21 as though it had occurred on 6/30/21.
During the start-up phase of the Bank, a valuation allowance was created which fully
impairs the Deferred Tax Asset.  When sufficient, verifiable evidence exists
demonstrating that the Deferred Tax Asset will more likely than not be realized, the
valuation allowance will be eliminated.  The Non-GAAP measure is shown to
disclose the effect on tangible book value per share at 6/30/2021 had there been no
valuation allowance at that date.
Pre-Provision Income
						Qtr Ended 6/30/2021		Qtr Ended 3/31/2021		Qtr Ended 12/31/2020
Loss Before Income Tax						$        (312,613)		$      (397,264)		$         (727,839)
Provision For Loan Losses						$         164,565		$       280,271		$          281,708
Pre-Provision Loss Before Income Tax (Non-GAAP)						$        (148,048)		$      (116,993)		$         (446,131)

 

Triad Business Bank
Key Ratios & Other Information
							Quarter Ended						Quarter Ended						Quarter Ended
							6/30/2021						3/31/2021						12/31/2020
							Interest						Interest						Interest
							Income/		Yield/				Income/		Yield/				Income/		Yield/
					Balance		Expense		Rate		Balance		Expense		Rate		Balance		Expense		Rate
Yield On Average Loans
Average PPP Loans					$     71,843,132		$            819,102		4.570%		$     82,415,770		$            745,907		3.670%		$         91,896,995		$             881,063		3.810%
Average Core Loans					98,314,011		948,447		3.870%		84,170,458		727,116		3.500%		60,607,443		577,864		3.790%
Yield on Average Investment Securities					$   60,854,121		$        419,317		2.760%		$   34,984,755		$         254,383		2.950%		$      22,384,551		$         155,893		2.770%
Cost of Average Interest-bearing Liabilities					$  166,381,245		$        289,189		0.700%		$ 150,852,228		$         271,500		0.730%		$    145,310,959		$         340,296		0.930%
Net Interest Margin
Interest Income							$     2,205,287						$      1,740,308						$       1,624,688
Interest Expense							289,189						271,500						340,296
Average Earnings Assets					$  265,280,242						$ 237,416,584						$    211,891,706
Net Interest Income & Net Interest Margin							1,916,098		2.897%				1,468,808		2.509%				1,284,392		2.411%
Loan to Asset Ratio
Loan Balance					$   148,591,325						$  178,159,167						$      151,257,331
Total Assets					266,477,403				55.761%		264,581,247				67.336%		221,103,178				68.410%
Leverage Ratio
Tier 1 Capital					$     43,767,218						$     44,020,116						$         44,326,068
Avg Total Assets					270,740,371						242,160,119						214,998,592
Avg FRB Borrowings					27,872,010				18.021%		22,689,965				20.057%		47,422,123				26.451%
Unfunded Commitments					66,350,046						52,535,598						45,933,914

 

 

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SOURCE Triad Business Bank

FAQ

What is Triad Business Bank's recent stock offering news?

Triad Business Bank completed an oversubscribed offering of 1,500,000 shares at $10.00 each, raising $15 million.

How did the capital raise affect Triad Business Bank's tangible book value?

The capital raise increased the tangible book value per share from $8.66 to $8.96.

What were Triad Business Bank's Q2 2021 financial results?

The bank reported a net interest income of $1.9 million, a net loss of $313,000, and core loans increased by 14% to $108.3 million.

How much did Triad Business Bank's total deposits increase in Q2 2021?

Total deposits increased by 11% to $209.3 million in the June quarter.

What is Triad Business Bank's growth target for assets?

The bank aims to grow its assets to more than $800 million by the end of 2024.