Triad Business Bank Celebrates One Year Anniversary and Provides March Quarter Results

GREENSBORO, N.C., April 29, 2021 (GLOBE NEWSWIRE) -- Triad Business Bank (OTC Pink – “TBBC”) was founded a year ago on a vision that it would be “Pivotal to the Economic Success of the Triad’s Business Community”. In the last twelve months, TBBC has delivered on its vision.

Within days of opening, the CARES Act was passed, and TBBC engaged in the Paycheck Protection Program (“PPP”) to provide over $100 million of loans to businesses in need, potentially saving more than 12,000 jobs. In the months that followed, TBBC shifted its focus to building core commercial relationships. On March 16, 2021 Triad Business Bank celebrated our one-year anniversary, and we have much to celebrate. As of March 31, 2021, TBBC had $178 million in gross loans outstanding (including PPP loans) after originating $326 million of core and PPP loans to businesses in the last twelve months. Total deposits have grown to $188 million and over 100 local businesses are using the Bank’s treasury management systems for their cash management needs. The PPP program helped the Bank to develop hundreds of business relationships. Together with these businesses, shareholders, board members and management, TBBC is building a powerful foundation in the Triad. We believe our customers and shareholders will prosper for many years to come,” commented Ramsey K. Hamadi, Chief Executive Officer.

We are pleased to provide our shareholders with the Bank’s March 31, 2021 quarterly results, including linked quarter comparisons and comparisons to the first-twelve months projections provided in the Fall 2019 Investor Presentation:

Linked Quarter Income Statement Highlights:

• Pre-provision operating loss (prior to provision for loan loss and tax expense) declined to $117,000 from $446,000
• $1.8 million of PPP fees ($1.4 million net of loan costs) remain unrealized
• Non-PPP revenue increased 56%
• Net interest margin expanded 10 basis points to 2.51% from 2.41%
• Total revenue increased 18% to $1.9 million
  

Linked Quarter Balance Sheet Highlights:

• Total assets reached $265 million, a 20% increase
• Noninterest bearing demand deposit accounts grew 104% to $56 million
• Net core loans increased 30% to $95 million while net PPP loans increased to $83 million
• Total deposits increased $39 million to $188 million
• Core deposits increased $34 million to $179 million
• Treasury Services exceeded 100 customers
• Allowance for loan loss increased to $1.2 million, equal to 1.25% of core loans
• No classified, non-performing or past due assets reported
• New loan pipeline remained robust at $150 million
• Small Business Administration repaid $22.5 million of PPP loans in both the March 2021 quarter and the December 2020 quarter
• Originated $27.6 million of PPP loans in the March 2021 quarter
  

Select March 31, 2021 financial data compared to management projections provided in the Fall 2019 Investor Presentation (the “Plan”):

• Total assets reached $265 million, compared to the Plan projection of $186 million
• Bank employees total 38 compared to 23 projected in the Plan
• Loans outstanding totaled $178 million compared to our Plan of $114 million
• Deposits were $188 million compared to our Plan of $142 million
• Noninterest bearing deposits totaled $56 million compared to $22 million projected in the Plan
• Treasury customers exceeded 100 businesses with $39 million of noninterest bearing balances compared to our Plan projection of 40 businesses with $20 million in deposits
• Tangible book value per share of $8.66 compared to our Plan of $8.66; however, adjusting for impairment of the deferred tax asset, the non-GAAP tangible book value per share at March 31, 2021 was $8.90
• Pre-provision loss for the March quarter was $117,000 compared to $308,000 projected in the Plan

A PDF accompanying this announcement is available at http://ml.globenewswire.com/Resource/Download/372ca78d-fdd0-4eee-aca6-755a2622d887

March Quarter Results

The Bank had a net loss of $397,000 or $0.08 per share, for the March 2021 quarter compared to a net loss of $728,000 or $0.14 per share, in the December quarter. However, when considering results before the provision for loan losses, the linked-quarter operating loss declined 74% to $117,000 in March from $446,000 in December, following net operating losses for the quarters ended September 30, 2020 and June 30, 2020 of $758,000 and $1.0 million, respectively.

The Bank’s primary source of income is the spread it earns between its interest earning assets, which are primarily loans and investments, and the cost it pays for its funding sources, which are primarily deposits. Net interest income increased $184,000 to $1.5 million in the March quarter compared to the December quarter. The Bank’s net interest margin continued to rise to 2.51% in the March quarter from 2.41% in the December 2020 quarter, 1.76% in the September 2020 quarter and 1.45% in the June 2020 quarter. Hamadi commented, “As the Bank continues to build the core loan portfolio, the net interest margin should continue to rise”. In the March quarter, the average balance of core loans increased to $84.2 million from $60.6 million in the December quarter. The weighted average yield on these loans declined to 3.50% in the March quarter from 3.79% in the December quarter. The Bank applies a disciplined pricing model that it believes will yield consistent results over time. In the March quarter, the yield curve steepened which is expected to help the Bank’s margins in future periods.

PPP Update

In the March quarter, the Bank originated 96 new PPP loans totaling $27.6 million. The SBA made $22.5 million of principal forgiveness payments on the Bank’s PPP loan portfolio, which resulted in a $5.1 million net increase in PPP loans to a total of $84.9 million on March 31, 2021. During the March quarter, the Bank realized $746,000 of interest and fee income on the PPP portfolio, a decrease of $135,000 from the prior quarter. On March 31, 2021, the Bank had $1.8 million remaining in unrealized PPP fees ($1.4 million net of unrealized costs). Since inception, the Bank has originated 447 PPP loans for over $134 million. PPP revenue as a percentage of total revenue declined from 54% in the December quarter to 39% in the March quarter. The growth in core earnings of the Bank reduced the reliance on PPP revenue. Core interest income and noninterest income (total revenue less PPP revenue) increased 56% in the March quarter compared to the December quarter.

Treasury Services Update

In March, the Bank added its 100^th treasury customer. These customers are businesses that use the Bank’s treasury systems to manage their primary operating accounts. On March 31, 2021, these businesses had $39 million of noninterest bearing deposits, $16 million of other deposits and almost half of core loans outstanding. Treasury fees are an important source of fee income and is expected to grow over time commensurate with activity.   Robin Hager, President and Chief Operating Officer commented, “When we formed the Bank, we chose to invest in what we believe is the best suite of Treasury Management systems on the market. The ease and quality of our systems are bringing us more business relationships than anticipated.”

Loans and Deposits

The Bank’s net loans increased $26.6 million to $177.0 million during the first quarter of 2021, which included a $22.1 million increase in core loans, $4.8 million net increase in PPP loans offset by a $280,000 increase in the Allowance for Loan Losses (“ALLL”).   On March 31, 2021, core loans totaled $95.1 million and surpassed PPP loans which totaled $83.0 million. The ALLL totaled $1.2 million, or 1.25% of core loans on March 31, 2021.

For the March quarter, the Bank originated $65.5 million of new loans which included unfunded commitments. New PPP loans in the amount of $28 million and $23 million of core loans were originated during the first quarter of 2021. Unfunded loans (lines of credit and construction lines) increased from $46.0 million to $52.5 million. For the last twelve months, the Bank originated $326.1 million of loans with $178.2 million in gross loans outstanding on March 31, 2021. Unfunded loans totaled $52.5 million. Loans sold through participations totaled $30.8 million. PPP payoffs and forgiveness payments totaled $51.2 million and other changes totaled $13.4 million.

On March 31, 2021, the Bank had 112 core loans in its portfolio totaling $95.1 million in outstanding balances and $147.6 million of gross core loans including unfunded commitments. The average size of new core loans originated was $1.3 million. On March 31, 2021, 56% of the Bank’s outstanding core loan portfolio was Commercial and Industrial (“C&I”) in nature:

Loan Diversification
Loan Category	3/31/2021		Composition
Other Construction & Land Development	$	12,518,620
Non‐Owner Occupied CRE	$	29,651,385
Total CRE	$	42,170,006	44%
Owner Occupied RE	$	23,649,014
C&I	$	29,322,816
Total C&I	$	52,971,829	56%
Other Revolving Loans	$	1,287	0%
Total	$	95,143,122

Total deposits increased $39.1 million during the quarter and totaled $187.8 million on March 31, 2021, while core deposits increased $34.1 million to $179.0 million. Growth in core deposits was due primarily to growth in noninterest bearing demand balances which increased $28.6 million to $56.0 million. Treasury Services business customers demand balances totaled $39 million of the $56 million of total noninterest bearing balances. Money market, NOW and time deposit balances increased $11 million to $132 million. For the March quarter, the Bank acquired 81 new deposit relationships, bringing the total number of deposit accounts to 581 on March 31, 2021. The average balance of each deposit relationship was $323,000.  

Noninterest Expense

Noninterest expense increased $32,000 to $1.8 million in the March quarter compared to the prior quarter. The increase in expense was due primarily to increased compensation expense.

Due to increased activity, the Bank has a total of 38 employees compared to our Plan projection of 23 employees. The added personnel are in sales, underwriting, treasury management, loan and deposit operations, and customer service management. Hamadi commented, “We could not have planned for the extraordinary events of this last year. Although the PPP revenue in particular is nonrecurring, the unique opportunity of the PPP afforded the Bank the ability to stay ahead of our original operating plan while building a broader and deeper organization capable of growing well beyond the forecast.”

Credit Risk

The Bank had no nonperforming assets and reported no criticized or substandard assets on March 31, 2021. The Bank’s emerging loan portfolio has been underwritten with an eye on the impact COVID-19 is having on cashflows of prospective businesses. Many of these businesses are prospering in the current environment and have either stable or expanding revenues. By building a loan portfolio as the quarantines began, the Bank has been able to assess credit risk with a high level of clarity.

Deferred Tax Asset, Non-GAAP Measure

The Bank’s tangible book value per share on March 31, 2021 was $8.66. Organization and startup costs during the organization period and net operating losses during the first twelve-months of operations created a deferred tax asset of $1.2 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. On March 31, 2021, the valuation allowance lowered tangible book value per share by $0.24 from $8.90 (a non-GAAP measurement). On a non-GAAP basis, tangible book value per share fell from $9.02 on December 31, 2020 to $8.90 at March 31, 2021 when adding back the impairment of the deferred tax asset.

Outlook

“As we celebrate our one-year anniversary, we are pleased to see that the opportunity for TBBC in the Triad is greater than our original forecast. TBBC’s assets are 42% greater than Plan; loans are 56% higher and core demand deposit accounts are over 100% greater than Plan. The extraordinary growth over the first year has allowed the Bank to invest more 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. On March 31, 2021, the Bank had 38 employees versus our Plan of 23. On April 28, 2021 we announced the hiring of a commercial real estate team, led by Robert Gray, President of Commercial Real Estate, and Chad Davis, Senior Commercial Real Estate Lender. We believe the addition of this real estate-based lending team will complement the Bank’s strong C&I focus and is expected to help balance loans with the robust deposit growth. To date, the Bank’s core deposits have increased faster that core loans. At quarter end, the Bank had $1.8 million of deferred PPP revenue ($1.4 million net of deferred costs) that has yet to be recognized. This deferred revenue, should continue to bolster the Bank’s total revenue through late in 2021 at which time we anticipate core operations will be profitable. We are pleased with the Bank’s results on our first anniversary, and as we look forward, we believe TBBC 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)			March 31, 2021				December 31, 2020				September 30, 2020				June 30, 2020
	Assets
	Noninterest-bearing cash		$	4,899,326			$	1,398,613			$	736,435			$	246,655
	Interest-bearing due from banks			17,259,583				39,763,399				70,015,162				24,851,368
	Securities			59,398,336				26,065,622				18,032,330				17,978,181
	Federal funds sold			-				-				-				-
	PPP Loans			83,016,045				78,173,460				100,057,189				99,731,136
	Core Loans			95,143,122				73,083,871				49,840,339				13,847,114
	Allowance for loan loss			(1,190,350	)			(910,079	)			(628,371	)			(173,808	)
	Loans net			176,968,817				150,347,252				149,269,157				113,404,442
	Other assets			6,055,184				3,528,292				3,220,127				2,817,054
	Total assets		$	264,581,247			$	221,103,178			$	241,273,211			$	159,297,700
	Liabilities
	Demand deposits		$	55,978,388			$	27,409,213			$	18,681,865			$	32,596,234
	Interest-bearing NOW			21,956,030				19,067,897				4,737,561				2,670,394
	Interest-bearing savings & MMA			101,058,331				98,446,048				70,005,273				33,845,514
	Time deposits			8,818,530				3,806,611				501,000				500,000
	Total Deposits			187,811,279				148,729,769				93,925,699				69,612,142
	Other borrowings			20,685,620				24,946,988				99,713,260				41,228,228
	Fed Funds Purchased			9,346,000				-				-				-
	Other liabilities			2,523,648				2,569,615				2,238,944				1,963,004
	Total Liabilities			220,366,548				176,246,372				195,877,903				112,803,374
	Shareholders' Equity
	Common Stock			49,822,062				49,730,750				49,639,875				49,549,875
	Accumulated Deficit			(5,801,946	)			(5,404,682	)			(4,676,843	)			(3,464,641	)
	AOCI			194,583				530,738				432,276				409,092
	Total Shareholders' Equity			44,214,699				44,856,806				45,395,308				46,494,326
	Total Liabilities & Shareholders' Equity		$	264,581,247			$	221,103,178			$	241,273,211			$	159,297,700
	Shares outstanding			5,102,984				5,102,984				5,102,984				5,102,984
	Tangible book value per share		$	8.66			$	8.79			$	8.90			$	9.11

 

Triad Business Bank
Income Statement (unaudited)				For three months ended				For three months ended				For three months ended				For three months ended
				March 31, 2021				December 31, 2020				September 30, 2020				June 30, 2020
	Interest Income
	Interest & Fees on PPP Loans			$	745,907			$	881,063			$	514,893			$	378,879
	Interest & Fees on Core Loans				727,116				577,864				341,619				33,624
	Interest & Dividend Income on Securities				254,383				155,893				132,261				96,280
	Interest Income on balances Due from Banks				8,354				9,428				6,623				12,160
	Other Interest Income				4,548				440				364				-
	Total Interest Income				1,740,308				1,624,688				995,760				520,943
	Interest Expense
	Interest on NOW Deposits				53,207				20,350				11,221				4,749
	Interest on Savings & MMA Deposits				183,260				272,626				147,500				61,929
	Interest on Time Deposits				12,369				5,373				1,011				219
	Interest on Borrowings				18,525				41,947				54,271				11,320
	Other Interest Expense				4,139				-				-				-
	Total Interest Expense				271,500				340,296				214,003				78,217
	Net Interest Income				1,468,808				1,284,392				781,757				442,726
		Provision for Loan Losses			280,271				281,708				454,563				173,808
	Net Interest Income After Provision for LL				1,188,537				1,002,684				327,194				268,918
	Total Noninterest Income				87,062				19,290				40,230				1,211
	Total Gain(Loss) on Securities				108,488				-				-				-
	Noninterest Expense
	Salaries & Benefits				1,152,497				1,087,939				924,103				927,050
	Premises & Equipment				114,060				139,222				114,659				83,024
	Total Other Noninterest Expense				514,794				522,652				540,864				453,611
	Total Noninterest Expense				1,781,351				1,749,813				1,579,626				1,463,685
		Loss before Income Tax			(397,264	)			(727,839	)			(1,212,202	)			(1,193,556	)
		Income Tax			-				-				-				-
		Net Loss		$	(397,264	)		$	(727,839	)		$	(1,212,202	)		$	(1,193,556	)
	Net Loss per Share
		Basic & Diluted		$	(0.08	)		$	(0.14	)		$	(0.24	)		$	(0.24	)
	Weighted Average Shares Outstanding
		Basic & Diluted			5,102,984				5,102,984				5,102,984				5,066,972
	Pre-Provision, Pre-Tax Loss			$	(116,993	)		$	(446,131	)		$	(757,639	)		$	(1,019,748	)

 

Non-GAAP Measures
Tangible Book Value
		Actual 3/31/2021				Non-GAAP 3/31/2021
Total Shareholders' Equity		$	44,214,699			$	45,424,999
Shares Outstanding			5,102,984				5,102,984
Tangible Book Value Per Share		$	8.66			$	8.90
Deferred Tax Asset		$	1,210,300			$	1,210,300
Valuation Allowance		$	(1,210,300	)		$	-
Recorded Deferred Tax Asset			-				1,210,300
Effect of Non-GAAP Measure on Tangible Book Value		$	0.24
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 3/31/2021 had there been no
valuation allowance at that date.
Pre-Provision Income
		Qtr Ended 3/31/2021				Qtr Ended 12/31/2020				Qtr Ended 9/30/2020
Loss Before Income Tax		$	(397,264	)		$	(727,839	)		$	(1,212,202	)
Provision For Loan Losses		$	280,271			$	281,708			$	454,563
Pre-Provision Income Before Income Tax (Non-GAAP)		$	(116,993	)		$	(446,131	)		$	(757,639	)

 

Triad Business Bank
Key Ratios & Other Information
						Quarter Ended										Quarter Ended										Quarter Ended
						3/31/2021										12/31/2020										9/30/2020
						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		$	82,415,770			$	745,907		3.670	%		$	91,896,995			$	881,063		3.810	%		$	99,977,261			$	514,893		2.070	%
Average Core Loans			84,170,458				727,116		3.500	%			60,607,443				577,864		3.790	%			32,727,499				341,619		4.200	%
Yield on Average Investment Securities		$	34,984,755			$	254,383		2.950	%		$	22,384,551			$	155,893		2.770	%		$	18,175,828			$	132,261		2.930	%
Net Interest Margin
Interest Income						$	1,740,308									$	1,624,688									$	995,760
Interest Expense							271,500										340,296										214,003
Average Earnings Assets		$	237,416,584									$	211,891,706									$	178,851,143
Net Interest Income & Net Interest Margin							1,468,808		2.509	%							1,284,392		2.411	%							781,757		1.758	%
Loan to Asset Ratio
Loan Balance		$	178,159,167									$	151,257,331									$	149,897,528
Total Assets			264,581,247						67.336	%			221,103,178						68.410	%			241,273,211						62.128	%
Leverage Ratio
Tier 1 Capital		$	44,020,116									$	44,326,068									$	44,963,032
Avg Total Assets			242,160,119										214,998,592										181,804,169
Avg FRB Borrowings			22,689,965						20.057	%			47,422,123						26.451	%			60,676,003						37.120	%
Loans
Originated Loans		$	326,056,490									$	260,599,521									$	198,775,990
Unfunded Commitments			(52,535,598	)									(45,933,914	)									(25,713,158	)
Participations Sold			(30,768,439	)									(30,048,976	)									(13,453,409	)
PPP Payoffs			(51,227,098	)									(28,154,553	)									(5,630,997	)
Net Unamortized Fees & Costs			(1,465,746	)									(1,121,949	)									(1,799,218	)
Other Changes			(11,900,441	)									(4,082,797	)									(2,281,680	)
Total Gross Loans			178,159,167										151,257,331										149,897,528

Contact: Donnie Turlington
Phone: 336-991-7711
Email: dturlington@bouvierkelly.com