Triad Business Bank (OTC Pink - "TBBC") Announces September Quarter Results Including Asset Growth of $100 Million and Core Revenue Growth of 30% Compared to the June Quarter

Rhea-AI Summary

Triad Business Bank, operational since March 2020, reported substantial growth in its September 2021 quarter. Total assets surged by nearly $100 million to $366 million, while deposits rose by $78 million. Shareholders' equity increased by $14.1 million following a recent capital raise. Core loans grew by 22% to $132.1 million. Although a net loss of $319,000 was reported, pre-provision losses narrowed significantly. The Bank anticipates continued growth with a robust loan pipeline of $147 million. CEO Ramsey K. Hamadi expressed optimism about the future.

Positive

• Total assets increased by $99.2 million, or 37%, to $365.6 million.
• Core loans rose by 22%, or $24 million, to $132.1 million.
• Deposits surged by $78.2 million to $287.5 million, a 37% increase.
• Pre-provision loss narrowed significantly to $23,000 from $148,000 quarter on quarter.
• Tangible book value per share increased to $8.83.

Negative

• Reported a net loss of $319,000, or $0.05 per share, compared to a loss of $313,000, or $0.06 per share, in the previous quarter.
• Net interest margin declined from 2.90% to 2.46% due to low-yielding cash balances and reduced revenue from PPP loans.
• PPP revenue declined sharply by $470,000 due to reduced forgiveness payments.

GREENSBORO, N.C., Nov. 3, 2021 /PRNewswire/ -- "Triad Business Bank began operations in March of 2020 with a vision to be a catalyst for growth to the Triad's business community.  In the September 2021 quarter, the sixth quarter since formation, the Bank made significant progress toward achieving this vision.  Total assets climbed nearly $100 million in the quarter to $366 million.  New and existing Triad-based customers increased their deposits by $78 million, and shareholders' equity, raised primarily from investors in the Triad, increased by $14.1 million due to the closing of the recent capital raise.  Core loans increased 22%, or $24 million, while cash and investment securities rose by $93 million.  The Bank is well positioned to continue future investment back into Triad community businesses," commented CEO Ramsey K. Hamadi.

Hamadi continued, "The expanded balance sheet resulted in further improvement in the Bank's operating trends.  The pre-provision loss narrowed to $23,000 in the September quarter from a pre-provision loss of $148,000 in the June quarter.  Core interest income, which is interest income excluding revenue from PPP loans, increased 30%, or $411,000, from the previous quarter.  Notably, revenue from PPP loans declined sharply by $470,000.  However, this decline was partially offset by a $300,000 increase in gains on securities."

Highlights of the Bank's September 2021 quarterly results including comparisons from the quarter ended June 30, 2021:

Linked Quarter Balance Sheet Highlights:

• Total assets increased $99.2 million, or 37%, to $365.6 million
• Core loans increased $23.8 million to $132.1 million
• Demand deposits increased $33.0 million to $90.5 million
• Total deposits increased $78.2 million to $287.5 million
• Allowance for loan losses increased to $1.7 million, or 1.25% of core loans
• No classified, non-performing or past due assets reported
• New loan pipeline remains robust at $147 million
• Tangible book value increased $0.17 per share to $8.83
• Equity increased $14.1 million to $58.3 million

Linked Quarter Income Statement Highlights:

• Pre-provision loss narrowed to $23,000
• Core interest income (non-PPP interest income) increased 30% while interest income declined 3%
• Net interest income declined only $76,000 despite a $470,000 decline in interest income from PPP loans
• Noninterest expense increased 4% from the previous quarter due primarily to increased personnel cost

September Quarter Results

The Bank reported a net loss of $319,000, or $0.05 per share, in the September quarter compared to $313,000, or $0.06 per share, for the June quarter.  However, when considering results before the provision for loan losses, the linked-quarter operating loss narrowed to $23,000 from $148,000 due to higher revenue.  Gains on securities totaled $371,000 for the September quarter compared to $71,000 in the June quarter.

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 $1.8 million in the September quarter compared to $1.9 million in the June quarter.  The Bank's net interest margin declined from 2.90% in the June quarter to 2.46% in the September quarter due to growth in low yielding cash balances and reduced revenue from PPP loans.  PPP revenue declined $470,000 from the June quarter during which the Bank received rapid forgiveness payments from the Small Business Administration.  This decline was partially offset by an increase in core interest income (interest income less PPP revenue), which increased $271,000, or 30%, in the September quarter compared to the June quarter.  In the September quarter, the average balance of core loans increased to $117.8 million from $98.3 million in the June quarter.  The weighted average yield on these loans increased to 4.10% in the September quarter from 3.87% in the June quarter.  The Bank applies a disciplined pricing model that it believes will yield consistent results over time, although the September quarter loan yields benefitted from higher-than-normal prepayment fees from loans that repaid earlier than agreed.

Total assets increased $99.2 million to $365.6 million at September 30, 2021 from $266.5 million at June 30, 2021.  Core loans increased by $23.8 million and securities, cash and other assets increased $93.3 million, which increases were partially offset by a $17.6 million net decline in PPP Loans.  Growth in assets was funded by a $78.2 million increase in deposits and a $14.1 million increase in shareholders' equity.

Loans, Investment Securities and Deposits

The Bank's core loans increased 22% during the third quarter to $132.1 million compared to $108.3 million at June 30, 2021.  The Bank increased core loans committed by $38.0 million during the quarter, which included a $7.2 million increase in unfunded loan commitments.  At September 30, 2021, the Bank had $73.5 million in unfunded loan commitments.  The Bank also had $8.0 million of core loan balances repaid during the September 2021 quarter.  The repaid loans resulted in recognition of deferred fees and prepayment fees, which boosted loan yields to 4.10% in the September quarter from 3.87% in the June quarter.

At September 30, 2021, the Bank had 153 core loans in its portfolio totaling $132.1 million in outstanding balances and $205.6 million of gross core loans including unfunded commitments.  The average size of new core loans originated during the third quarter was $1.4 million.  At September 30, 2021, 50% of the Bank's outstanding core loan portfolio was Commercial and Industrial ("C&I") in nature:

Loan Diversification
Loan Category	9/30/2021	Composition
Other Construction & Land Development	$              18,092,714
Non-Owner Occupied Commercial Real Estate	$              48,019,718
Total Commercial Real Estate	$              66,112,432	50%
Owner Occupied Real Estate	$              21,883,371
C&I	43,773,354
Total C&I	$              65,656,725	50%
Other Revolving Loans	$                    346,631	0%
Total	$            132,115,788

The average balance of investment securities increased $35.2 million in the September quarter to $96.0 million.  Interest income on investment securities was $548,000 in the September quarter, a $129,000 increase from the June quarter.  The yield on the portfolio declined from 2.76% for the June quarter to 2.27% for the September quarter.  Total investment securities were $132.8 million at September 30, 2021, an increase of $67.7 million from June 30, 2021.  The decline in yield on the investment portfolio was due primarily to the purchase of short duration mortgage-backed agency securities that were purchased to maintain strong liquidity levels while minimizing interest rate risk in a potential rising rate environment. 

Total deposits increased 37% to $287.5 million at September 30, 2021 from $209.3 million at June 30, 2021.  Noninterest-bearing demand deposit accounts increased 57% to $90.5 million in the September quarter.  The noninterest-bearing deposit balances are driven by business customers who manage their core operating accounts through the Bank's treasury systems.  During 2021, the Bank has added 50 new treasury customers and now has 126 treasury relationships.  The balance of core deposits includes interest-bearing checking, savings and money market account balances which increased $45.2 million to $189.0 million at September 30, 2021.  Time deposits were unchanged and totaled $8.0 million at September 30, 2021.

PPP Update

In the September quarter, the SBA made $17.8 million of principal forgiveness payments on the Bank's PPP loan portfolio compared to $47.2 million in the June quarter.  At September 30, 2021, PPP loans totaled $22.7 million.  During the September quarter, the Bank realized $349,000 of interest and fees on the PPP portfolio, a decrease of $470,000 from the prior quarter.  At September 30, 2021, the Bank had $715,000 remaining in unrealized PPP fees ($582,000 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 35% in the June quarter to 14% in the September quarter.  The growth in core earnings of the Bank continues to reduce the Bank's reliance on PPP revenue. 

Noninterest Expense

Noninterest expense was $2.3 million in the September quarter, an increase of $94,000 from the prior quarter.  The increase in expense was due primarily to increased compensation expense related to personnel additions.  During the quarter, the total number of employees increased 10% to 44 at September 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 September 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 September 30, 2021 was $8.83.  Organization and startup costs during the Bank's organizational period and net operating losses during the first eighteen months of operations created a deferred tax asset of $1.4 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 September 30, 2021, the valuation allowance lowered tangible book value per share by $0.21 from $9.04 (a non-GAAP measurement) to $8.83.  On a non-GAAP basis, tangible book value per share increased from $8.92 on June 30, 2021 to $9.04 at September 30, 2021 when adding back the impairment of the deferred tax asset.

Outlook

"As we celebrate our eighteen-month anniversary, we are pleased to see that the opportunity for our Bank in the Triad is greater than our original forecast for this point in our operations.  The Bank's assets are 47% greater, total deposits are 40% greater, and core demand deposit accounts are nearly 200% greater than our projections at the time of organization.  The growth over the first eighteen 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 of bankers, treasury officers and support staff.  At September 30, 2021, the Bank had 44 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 $715,000 of deferred PPP revenue ($582,000 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.  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)						September 30, 2021		June 30, 2021		March 31, 2021		December 31, 2020		September 30, 2020
	Assets
	Noninterest-bearing cash					$              19,216,300		$               1,315,611		$               4,899,326		$               1,398,613		$                  736,435
	Interest-bearing due from banks					53,918,672		46,773,395		17,259,583		39,763,399		70,015,162
	Securities					132,753,497		65,049,332		59,398,336		26,065,622		18,032,330
	Federal funds sold					-		-		-		-		-
	PPP Loans					22,675,019		40,276,095		83,016,045		78,173,460		100,057,189
	Core Loans					132,115,788		108,315,230		95,143,122		73,083,871		49,840,339
	Allowance for loan loss					(1,651,905)		(1,354,915)		(1,190,350)		(910,079)		(628,371)
	Loans net					153,138,902		147,236,410		176,968,817		150,347,252		149,269,157
	Other assets					6,622,029		6,102,655		6,055,184		3,528,292		3,220,127
	Total assets					$            365,649,400		$            266,477,403		$            264,581,247		$            221,103,178		$            241,273,211
	Liabilities
	Demand deposits					$              90,450,329		$              57,493,414		$              55,978,388		$              27,409,213		$              18,681,865
	Interest-bearing NOW					23,921,946		21,626,263		21,956,030		19,067,897		4,737,561
	Interest-bearing savings & MMA					165,103,780		122,161,899		101,058,331		98,446,048		70,005,273
	Time deposits					8,040,235		8,027,714		8,818,530		3,806,611		501,000
	Total Deposits					287,516,290		209,309,289		187,811,279		148,729,769		93,925,699
	Other borrowings					17,318,266		10,756,485		20,685,620		24,946,988		99,713,260
	Fed Funds Purchased					-		-		9,346,000		-		-
	Other liabilities					2,493,999		2,204,446		2,523,648		2,569,615		2,238,944
	Total Liabilities					307,328,555		222,270,220		220,366,548		176,246,372		195,877,903
	Shareholders' Equity
	Common Stock					64,980,329		49,881,777		49,822,062		49,730,750		49,639,875
	Accumulated Deficit					(6,434,054)		(6,114,560)		(5,801,946)		(5,404,682)		(4,676,843)
	AOCI					(225,430)		439,965		194,583		530,738		432,276
	Total Shareholders' Equity					58,320,845		44,207,183		44,214,699		44,856,806		45,395,308
	Total Liabilities & Shareholders' Equity					$            365,649,400		$            266,477,403		$            264,581,247		$            221,103,178		$            241,273,211
	Shares outstanding					6,602,984		5,102,984		5,102,984		5,102,984		5,102,984
	Tangible book value per share					$                       8.83		$                       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		For three months ended
							September 30, 2021		June 30, 2021		March 31, 2021		December 31, 2020		September 30, 2020
	Interest Income
	Interest & Fees on PPP Loans						$                               348,946		$                               819,102		$                               745,907		$                               881,063		$                                   514,893
	Interest & Fees on Core Loans						1,218,791		948,447		727,116		577,864		341,619
	Interest & Dividend Income on Securities						548,462		419,317		254,383		155,893		132,261
	Interest Income on balances Due from Banks						18,364		8,017		8,354		9,428		6,623
	Other Interest Income						11,094		10,404		4,548		440		364
	Total Interest Income						2,145,657		2,205,287		1,740,308		1,624,688		995,760
	Interest Expense
	Interest on NOW Deposits						42,289		43,225		53,207		20,350		11,221
	Interest on Savings & MMA Deposits						222,766		197,613		183,260		272,626		147,500
	Interest on Time Deposits						13,692		13,692		12,369		5,373		1,011
	Interest on Fed Funds Purchased						-		422		-		-		-
	Interest on Borrowings						16,434		24,320		18,525		41,947		54,271
	Other Interest Expense						10,082		9,917		4,139		-		-
	Total Interest Expense						305,263		289,189		271,500		340,296		214,003
	Net Interest Income						1,840,394		1,916,098		1,468,808		1,284,392		781,757
		Provision for Loan Losses					296,990		164,565		280,271		281,708		454,563
	Net Interest Income After Provision for LL						1,543,404		1,751,533		1,188,537		1,002,684		327,194
	Total Noninterest Income						32,104		36,882		87,062		19,290		40,230
	Total Gain(Loss) on Securities						370,750		70,525		108,488		-		-
	Noninterest Expense
	Salaries & Benefits						1,517,840		1,475,650		1,152,497		1,087,939		924,103
	Premises & Equipment						120,048		118,819		114,060		139,222		114,659
	Total Other Noninterest Expense						627,865		577,084		514,794		522,652		540,864
	Total Noninterest Expense						2,265,753		2,171,553		1,781,351		1,749,813		1,579,626
		Loss before Income Tax					(319,495)		(312,613)		(397,264)		(727,839)		(1,212,202)
		Income Tax					-		-		-		-		-
		Net Loss					$                      (319,495)		$                      (312,613)		$                      (397,264)		$                      (727,839)		$                      (1,212,202)
	Net Loss per Share
		Basic & Diluted					$                           (0.05)		$                           (0.06)		$                           (0.08)		$                           (0.14)		$                              (0.24)
	Weighted Average Shares Outstanding
		Basic & Diluted					6,064,941		5,102,984		5,102,984		5,102,984		5,102,984
	Pre-Provision, Pre-Tax Loss						$                        (22,505)		$                      (148,048)		$                      (116,993)		$                      (446,131)		$                         (757,639)

 

 

Non-GAAP Measures
Tangible Book Value
								Actual 9/30/2021		Non-GAAP 9/30/2021
Total Shareholders' Equity								$    58,320,845		$  59,709,624
Shares Outstanding								6,602,984		6,602,984
Tangible Book Value Per Share								$               8.83		$             9.04
Deferred Tax Asset								$      1,388,779		$    1,388,779
Valuation Allowance								$     (1,388,779)		$                 -
Recorded Deferred Tax Asset								$                   -		$    1,388,779
Effect of Non-GAAP Measure on Tangible Book Value								$               0.21
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 9/30/2021 had there been no
valuation allowance at that date.
Pre-Provision Income
								Qtr Ended 9/30/2021		Qtr Ended 6/30/2021		Qtr Ended 3/31/2021
Loss Before Income Tax								$        (319,495)		$      (312,613)		$         (397,264)
Provision For Loan Losses								$         296,990		$       164,565		$          280,271
Pre-Provision Income Before Income Tax (Non-GAAP)								$          (22,505)		$      (148,048)		$         (116,993)

 

 

Triad Business Bank
Key Ratios & Other Information
							Quarter Ended						Quarter Ended						Quarter Ended
							9/30/2021						6/30/2021						3/31/2021
							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					$     30,976,950		$            348,946		4.469%		$     71,843,132		$            819,102		4.570%		$         82,415,770		$             745,907		3.670%
Average Core Loans					117,826,020		1,218,791		4.104%		98,314,011		948,447		3.870%		84,170,458		727,116		3.500%
Yield on Average Investment Securities					$   96,025,414		$        548,462		2.266%		$   60,854,121		$         419,317		2.760%		$      34,984,755		$         254,383		2.950%
Cost of Average Interest-bearing Liabilities					$  179,677,948		$        305,263		0.674%		$ 166,381,245		$         289,189		0.700%		$    150,852,228		$         271,500		0.730%
Net Interest Margin
Interest Income							$     2,145,657						$      2,205,287						$       1,740,308
Interest Expense							305,263						289,189						271,500
Average Earnings Assets					$  296,562,554						$ 265,280,242						$    237,416,584
Net Interest Income & Net Interest Margin							1,840,394		2.462%				1,916,098		2.897%				1,468,808		2.509%
Loan to Asset Ratio
Loan Balance					$   154,790,807						$  148,591,325						$      178,159,167
Total Assets					365,649,400				42.333%		266,477,403				55.761%		264,581,247				67.336%
Leverage Ratio
Tier 1 Capital					$     58,546,275						$     43,767,218						$         44,020,116
Avg Total Assets					301,575,704						270,740,371						242,160,119
Avg FRB Borrowings					18,628,302				20.692%		27,872,010				18.021%		22,689,965				20.057%
Unfunded Commitments					73,508,450						66,350,046						50,899,646

 

 

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SOURCE Triad Business Bank

FAQ

What was the total asset growth for TBBC in September 2021?

Total assets for TBBC increased by $99.2 million, or 37%, reaching $365.6 million.

How much did core loans increase for TBBC in the September quarter?

Core loans for TBBC increased by 22%, totaling $132.1 million in the September quarter.

What was the net loss reported by TBBC for September 2021?

TBBC reported a net loss of $319,000, or $0.05 per share, for the September quarter.

How did TBBC's deposits change in the September quarter?

TBBC's deposits increased by $78.2 million, marking a 37% rise.

What is the current tangible book value per share for TBBC?

As of September 30, 2021, TBBC's tangible book value per share was $8.83.