Triad Business Bank (OTC Pink - "TBBC") Announces Unaudited Second Quarter Results

Rhea-AI Summary

Triad Business Bank reported significant growth in the second quarter of 2022, achieving a core operating income of $146,000, up 140% from the previous quarter. Total assets increased 10% to $429.9 million, with core loans and deposits rising 9% and 15% respectively. The net interest margin improved to 2.77%, benefiting from a rising interest rate environment. Although the Bank posted a net loss of $101,000 for the quarter, the outlook remains positive as management anticipates continued growth and profitability.

Positive

• Core operating income increased $85,000 to $146,000, a 140% rise.
• Total assets rose 10% to $429.9 million.
• Core loans increased 9% to $236.6 million.
• Net interest margin improved to 2.77% from 2.50%.

Negative

• The Bank reported a net loss of $101,000 in Q2, though less severe than the previous quarter's loss of $569,000.
• Shareholders' equity declined $6.4 million to $43.1 million.

GREENSBORO, N.C., Aug. 4, 2022 /PRNewswire/ -- Triad Business Bank ("the Bank") was formed in March of 2020 to help small to midsize businesses succeed.  The Bank's business plan is to provide lending, treasury and deposit services to the Triad communities it serves.  The Bank has achieved substantial growth in loans and deposits and has been able to reinvest these deposits back into those communities.  

CEO Ramsey K. Hamadi commented, "The quarter ending June 30, 2022, was the Bank's ninth quarter since inception and the Bank's second quarter of profitable core operations (net income before provision for loan losses and taxes).  For the June quarter the Bank had core operating income of $146,000 compared to $61,000 in the previous quarter. The trends in the Bank's quarterly performance reveal consistently increasing assets and profitability improvement.  Total assets rose 10% in the June quarter, or $37.7 million, to $429.9 million, driven by ongoing growth in loan and deposit balances.  Core loans increased $18.9 million, or 9%, and deposits increased $51.4 million, or 15%."  CEO Hamadi continued, "As mentioned in previous reports, the Bank is well positioned for the rising interest rate environment.  Because the Bank's assets are repricing faster than its liabilities, the Bank's net interest margin rose 27 basis points to 2.77% in the June quarter from 2.50% in the March quarter.  In addition to the benefits of the rising rate environment, the Bank's margins should also improve as cash and investments are converted into higher yielding loans."

Second Quarter 2022 Compared to First Quarter 2022:

Balance Sheet Highlights:

• Core loans increased $18.9 million to $236.6 million, or 9%
• Total assets increased $37.7 million to $429.9 million, or 10%
• Deposits increased $51.4 million to $384.4 million, or 15%
• Allowance for loan losses increased $230,000 to $3.0 million, or 1.25% of core loans
• No classified, nonperforming or past due assets reported
• New loan pipeline remains robust at approximately $143 million
• Regulatory total risk-based capital increased $325,000 to $60.7 million

Income Statement Highlights:

• Core operating earnings (net income before provision for loan losses and taxes) increased $85,000 to $146,000 compared to $61,000 in the previous quarter, an increase of 140%
• Net interest income increased 19% to $2.8 million
• Interest income on core loans increased $426,000, or 25%
• Noninterest income increased $17,000, or 13%
• Noninterest expense increased $344,000, or 14%

Second Quarter Results

The Bank reported a net loss of $101,000, or $0.02 per share, in the second quarter of 2022 compared to a net loss of $569,000, or $0.09 per share, for the first quarter of 2022.  However, when excluding the provision for loan losses and taxes, the second quarter resulted in net core operating income of $146,000 compared to $61,000 for the first quarter. 

The Bank's primary source of income is the spread between the interest it earns on loans and investments and the interest it pays on deposits.  Total interest income increased $509,000 to $3.2 million in the second quarter of 2022 compared to $2.7 million in the first quarter of 2022.  The growth in interest income was due primarily to growth in core loans which increased 25% to $2.1 million.  Income on investment securities totaled $874,000 for the second quarter compared to $805,000 for the first quarter.  Interest expense increased $62,000 in the second quarter to $365,000 from $303,000 in the first quarter.  The Bank's net interest margin increased to 2.77% in the second quarter from 2.50% in the first quarter, due to the repricing of variable rate loans in a higher interest rate environment as well as growth of higher yielding core loans.  In the second quarter, the average balance of core loans increased to $227.4 million from $195.0 million in the first quarter.  The weighted average yield on core loans increased to 3.72% in the second quarter from 3.50% in the preceding quarter.  The weighted average rate on interest-bearing liabilities increased from 0.55% in the first quarter of 2022 to 0.59% during the second quarter due to higher deposit rates offered by the Bank. 

Total assets increased $37.7 million during the quarter to $429.9 million.  During the second quarter, cash balances increased $26.4 million as growth in deposits exceeded growth in loans and other assets.  Deposit balances increased $51.4 million in the second quarter.  Growth in deposits stemmed primarily from a significant increase in noninterest-bearing demand deposit accounts (DDA accounts).  DDA accounts increased $45.1 million to $146.6 million.

Shareholders' equity declined $6.4 million during the quarter to $43.1 million.  This decline was primarily driven by changes in the market value of the Bank's investment portfolio which resulted in a $6.4 million increase in accumulated other comprehensive loss.    

Regulatory Capital

The Bank's regulatory capital, which is the primary factor that allows for bank growth, increased during the second quarter, with total risk-based capital increasing by $325,000 to $60.7 million.  Total risk-based capital consists of tier 1 capital and tier 2 capital.  The Bank's tier 1 capital is largely a measure of the Bank's equity as calculated under generally accepted accounting principles ("GAAP") but eliminates certain volatile elements such as accumulated other comprehensive income (loss).  The Bank's tier 1 capital increased from operations for the first time in the Bank's short history.  Tier 1 capital increased $76,000 to $57.8 million at June 30, 2022.  The Bank's tier 2 capital increased by $249,000.  Tier 1 and tier 2 capital ratios are measured against total assets and risk-weighted assets.  For the Bank to be able to grow, it must maintain capital ratios that meet "well-capitalized" standards under regulatory guidelines.  The Bank is increasing the leverage of its "well-capitalized" position as it grows.  The following is a summary presentation of the Bank's total capital to risk-weighted assets, tier 1 capital to risk-weighted assets and tier 1 capital to average assets in comparison with the regulatory guidelines at June 30, 2022:

Capital and Capital Ratios
					Quarter Ended
					6/30/2022
					Amount		Ratio
Actual
(dollars in thousands)
Total Capital (to risk-weighted assets)					$  60,713		16.87 %
Tier 1 Capital (to risk-weighted assets)					$  57,781		16.05 %
Tier 1 Capital (to average assets)					$  57,781		13.67 %
Minimum To Be Well Capitalized Under
Prompt Corrective Action Provisions
(dollars in thousands)
Total Capital (to risk-weighted assets)					$  36,000		10.00 %
Tier 1 Capital (to risk-weighted assets)					$  29,000		8.00 %
Tier 1 Capital (to average assets)					$  21,000		5.00 %

 

Loans

The Bank's core loans increased $18.9 million, or 9%, during the second quarter to $236.6 million.  While not included in loans outstanding, the Bank also had unfunded loan commitments of $89.8 million, bringing total core loans outstanding and unfunded commitments to $326.4 million at quarter end.  For internal monitoring purposes, the Bank considers owner occupied real estate loans to be part of commercial and industrial ("C&I") loans.  At June 30, 2022, approximately 47% of the Bank's outstanding core loan portfolio was composed of C&I loans:

 

Loan Diversification
Loan Category	6/30/2022	Composition
Other Construction & Land Development	$              45,545,846
Non-owner Occupied Commercial Real Estate	80,369,383
Total Commercial Real Estate	125,915,229	53 %
Owner Occupied Real Estate	43,434,586
C&I	66,899,844
Total C&I	110,334,430	47 %
Other Revolving Loans	334,358	0 %
Total	$            236,584,017

 

Noninterest Expense

Noninterest expense increased $344,000, or 14%, in the second quarter to $2.7 million from $2.4 million in the first quarter of 2022.  Salaries and benefits expense totaled $1.9 million for the second quarter, which was an increase of $242,000, or 15%.  The growth in salaries expense was due to staff additions in commercial underwriting, private banking and network administration, as well as salary adjustments, increased long-term incentive expense and lower deferred salary expense on loan production.  Other noninterest expense increased in the second quarter, most notably from higher expenses associated with the Bank's business development efforts.

Credit Risk

The Bank had no past due loans or nonperforming assets and reported no criticized or substandard assets at June 30, 2022.  The Bank's loan portfolio has been underwritten conservatively with a focus on cash flows of prospective borrowers.   

Deferred Tax Asset and AOCI (Non-GAAP Measures)

The Bank's GAAP tangible book value declined from $7.49 at March 31, 2022 to $6.52 at June 30, 2022.  On a non-GAAP basis, excluding the Bank's accumulated other comprehensive loss and the impairment on its deferred tax asset (two reductions in capital the Bank anticipates it will recover over time), adjusted tangible book value was $8.99 at June 30, 2022 compared to $8.98 at March 31, 2022.

The organization and startup costs incurred during the Bank's organizational period and net operating losses the first nine quarters of operations have created a deferred tax asset of $1.6 million.  This asset is currently fully impaired and will be carried at $0 until sufficient, verifiable evidence exists (generally, sustained profitability) to demonstrate that the deferred tax asset will more likely than not be realized.  At that time, the valuation allowance will be reversed.

The change in value of the Bank's investment securities that are available for sale is recorded in accumulated other comprehensive income (loss) as an unrealized component of equity.  The Bank currently has an accumulated other comprehensive loss.  Assuming the underlying investment securities are held to maturity and there is no credit loss, the value of the securities will return to the face value at maturity.  Therefore, as a non-GAAP measure, the Bank eliminates the accumulated other comprehensive loss to reflect an adjusted tangible book value.  At June 30, 2022, the accumulated other comprehensive loss was $14.7 million. 

Outlook

Management expects the balance of 2022 to continue the trends of strong loan and deposit growth, higher margins and improved profitability.  With a focus on controlling costs, we anticipate the Bank will soon be delivering consistent profitability.

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, 2022		March 31, 2022		December 31, 2021		September 30, 2021		June 30, 2021
	Assets
	Cash & Due from Banks					$   46,737,951		$       20,310,759		$             38,743,278		$               73,134,972		$   48,089,006
	Securities					139,131,597		141,254,967		149,560,211		132,753,497		65,049,332
	Federal Funds Sold					-		-		-		-		-
	PPP Loans					2,273,307		7,592,431		11,605,363		22,675,019		40,276,095
	Core Loans					236,584,017		217,654,388		167,657,470		132,115,788		108,315,230
	Allowance for Loan Loss					(2,956,667)		(2,727,138)		(2,101,115)		(1,651,905)		(1,354,915)
	Loans, Net					235,900,657		222,519,681		177,161,718		153,138,902		147,236,410
	Other Assets					8,116,313		8,133,919		7,516,522		6,622,029		6,102,655
	Total Assets					$  429,886,518		$     392,219,326		$           372,981,729		$             365,649,400		$  266,477,403
	Liabilities
	Demand Deposits					$  146,584,560		$     101,451,870		$           100,963,064		$               90,450,329		$   57,493,414
	Interest-bearing NOW					32,071,869		41,499,830		42,820,018		23,921,946		21,626,263
	Interest-bearing Savings & MMA					165,238,615		149,857,953		155,805,422		165,103,780		122,161,899
	Time Deposits					40,461,260		40,098,022		5,731,398		8,040,235		8,027,714
	Total Deposits					384,356,304		332,907,675		305,319,902		287,516,290		209,309,289
	Other Borrowings					-		7,232,282		8,033,689		17,318,266		10,756,485
	Federal Funds Purchased					-		-		-		-		-
	Other Liabilities					2,473,355		2,648,360		2,651,588		2,493,999		2,204,446
	Total Liabilities					386,829,659		342,788,317		316,005,179		307,328,555		222,270,220
	Shareholders' Equity
	Common Stock					65,421,510		65,244,746		65,112,537		64,980,329		49,881,777
	Accumulated Deficit					(7,640,872)		(7,539,404)		(6,970,816)		(6,434,054)		(6,114,560)
	Accumulated Other Comprehensive Income (Loss)					(14,723,779)		(8,274,333)		(1,165,171)		(225,430)		439,965
	Total Shareholders' Equity					43,056,859		49,431,009		56,976,550		58,320,845		44,207,183
	Total Liabilities & Shareholders' Equity					$  429,886,518		$     392,219,326		$           372,981,729		$             365,649,400		$  266,477,403
	Shares Outstanding					6,602,984		6,602,984		6,602,984		6,602,984		5,102,984
	Tangible Book Value per Share					$             6.52		$                7.49		$                       8.63		$                        8.83		$             8.66

 

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
							June 30, 2022		March 31, 2022		December 31, 2021		September 30, 2021		June 30, 2021
	Interest Income
	Interest & Fees on PPP Loans						$                                     111,590		$                                     143,170		$                                     367,328		$                                     348,946		$                                     819,102
	Interest & Fees on Core Loans						2,107,818		1,682,226		1,366,047		1,218,791		948,447
	Interest & Dividend Income on Securities						873,881		804,501		751,493		548,462		419,317
	Interest Income on Balances Due from Banks						61,152		10,672		19,281		18,364		8,017
	Other Interest Income						5,877		10,717		11,068		11,094		10,404
	Total Interest Income						3,160,318		2,651,286		2,515,217		2,145,657		2,205,287
	Interest Expense
	Interest on NOW Deposits						48,086		57,028		49,219		42,289		43,225
	Interest on Savings & MMA Deposits						223,635		203,850		285,101		222,766		197,613
	Interest on Time Deposits						76,666		20,459		10,930		13,692		13,692
	Interest on Federal Funds Purchased						717		918		-		-		422
	Interest on Borrowings						12,928		11,739		12,565		16,434		24,320
	Other Interest Expense						2,750		8,940		10,036		10,082		9,917
	Total Interest Expense						364,782		302,934		367,851		305,263		289,189
	Net Interest Income						2,795,536		2,348,352		2,147,366		1,840,394		1,916,098
		Provision for Loan Losses					229,529		626,024		449,210		296,990		164,565
	Net Interest Income After Provision for LL						2,566,007		1,722,328		1,698,156		1,543,404		1,751,533
	Total Noninterest Income						146,953		129,855		114,725		32,104		36,882
	Total Gain (Loss) on Securities						(46,893)		(11,907)		20,684		370,750		70,525
	Noninterest Expense
	Salaries & Benefits						1,901,183		1,658,862		1,573,671		1,517,840		1,475,650
	Premises & Equipment						126,979		122,069		119,100		120,048		118,819
	Total Other Noninterest Expense						721,227		624,372		677,557		627,865		577,084
	Total Noninterest Expense						2,749,389		2,405,303		2,370,328		2,265,753		2,171,553
		Loss Before Income Tax					(83,322)		(565,027)		(536,763)		(319,495)		(312,613)
		Income Tax					18,146		3,561		-		-		-
		Net Loss					$                          (101,468)		$                          (568,588)		$                          (536,763)		$                          (319,495)		$                          (312,613)
	Net Loss per Share
		Basic & Diluted					$                               (0.02)		$                               (0.09)		$                               (0.08)		$                               (0.05)		$                               (0.06)
	Weighted Average Shares Outstanding
		Basic & Diluted					6,602,984		6,602,984		6,602,984		6,064,941		5,102,984
	Pre-provision, Pre-tax Income (Loss)						$                           146,207		$                             60,997		$                            (87,553)		$                            (22,505)		$                          (148,048)

 

Triad Business Bank
Non-GAAP Measures (Unaudited)
Tangible Book Value
								Actual     6/30/2022		Non-GAAP 6/30/2022
Total Shareholders' Equity								$       43,056,859		$       43,056,859
Eliminate Deferred Tax Asset Valuation Allowance								-		1,604,931
Eliminate Accumulated Other Comprehensive Loss								-		14,723,779
Adjusted Shareholders' Equity								$       43,056,859		$       59,385,569
Shares Outstanding								6,602,984		6,602,984
Tangible Book Value per Share								$                  6.52		$                  8.99
Effect of Non-GAAP Measures on Tangible Book Value										$                  2.47
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 (generally, sustained profitability) demonstrating that the deferred tax asset will more likely than not be realized, the valuation
allowance will be eliminated.  This Non-GAAP measure is shown to disclose the effect on tangible book value per share at June 30, 2022 had there
been no valuation allowance at that date.
Changes in the market value of available-for-sale securities are reflected in accumulated other comprehensive income.  Since the securities value
will return to face value at maturity, assuming the underlying securities are held to maturity and there is no credit loss, accumulated other
comprehensive income has been eliminated in this Non-GAAP measure.
Pre-provision Loss
								Qtr Ended 6/30/2022		Qtr Ended 3/31/2022		Qtr Ended 12/31/2021
Loss Before Income Tax								$             (83,322)		$           (565,027)		$           (536,763)
Provision for Loan Losses								229,529		626,024		449,210
Pre-provision Income (Loss) Before Income Tax (Non-GAAP)								$            146,207		$              60,997		$             (87,553)
The pre-provision loss is a measure of operating performance exclusive of potential losses from lending.

 

Triad Business Bank
Key Ratios & Other Information (Unaudited)
							Quarter Ended						Quarter Ended						Quarter Ended
							6/30/2022						3/31/2022						12/31/2021
							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					$        3,314,501		$            111,590		13.504 %		$     10,481,083		$            143,170		5.540 %		$         16,324,782		$             367,328		8.927 %
Average Core Loans					227,417,815		2,107,818		3.718 %		194,987,088		1,682,226		3.499 %		152,532,487		1,366,047		3.553 %
Yield on Average Investment Securities					$  142,754,858		$        873,881		2.455 %		$ 145,816,868		$         804,501		2.238 %		$    140,528,403		$         751,493		2.122 %
Cost of Average Interest-bearing Liabilities					$  246,148,158		$        364,782		0.594 %		$ 221,981,810		$         302,934		0.553 %		$    216,709,743		$         367,851		0.673 %
Net Interest Margin
Interest Income							$     3,160,318						$      2,651,286						$       2,515,217
Interest Expense							364,782						302,934						367,851
Average Earnings Assets					$  404,352,657						$ 380,351,577						$    360,372,664
Net Interest Income & Net Interest Margin							2,795,536		2.773 %				2,348,352		2.504 %				2,147,366		2.364 %
Loan to Asset Ratio
Loan Balance					$   238,857,324						$  225,246,819						$      179,262,833
Total Assets					429,886,518				55.563 %		392,219,326				57.429 %		372,981,729				48.062 %
Leverage Ratio
Tier 1 Capital					$     57,780,638						$     57,705,342						$         58,141,721
Average Total Assets					425,001,436						393,553,369						369,837,690
Average FRB Borrowings					2,332,853				13.670 %		7,659,018				14.954 %		12,049,791				16.250 %
Unfunded Commitments to Extend Credit					$     89,833,906						$  100,350,230						$         86,746,649
Standby Letters of Credit					27,240						-						-

 

Triad Business Bank
Capital and Capital Ratios (Unaudited)
					Quarter Ended				Quarter Ended				Quarter Ended				Quarter Ended				Quarter Ended
					6/30/2022				3/31/2022				12/31/2021				9/30/2021				6/30/2021
					Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio
Actual
(dollars in thousands)
Total Capital (to risk-weighted assets)					$ 60,713		16.87 %		$ 60,388		17.87 %		$ 60,243		21.40 %		$ 60,198		24.99 %		$ 45,122		24.68 %
Tier 1 Capital (to risk-weighted assets)					$ 57,781		16.05 %		$ 57,705		17.08 %		$ 58,142		20.65 %		$ 58,546		24.30 %		$ 43,767		23.94 %
Tier 1 Capital (to average assets)					$ 57,781		13.67 %		$ 57,705		14.95 %		$ 58,142		16.25 %		$ 58,546		20.69 %		$ 43,767		18.02 %
Minimum To Be Well Capitalized Under
Prompt Corrective Action Provisions
(dollars in thousands)
Total Capital (to risk-weighted assets)					$ 36,000		10.00 %		$ 34,000		10.00 %		$ 28,000		10.00 %		$ 24,000		10.00 %		$ 18,000		10.00 %
Tier 1 Capital (to risk-weighted assets)					$ 29,000		8.00 %		$ 27,000		8.00 %		$ 23,000		8.00 %		$ 19,000		8.00 %		$ 15,000		8.00 %
Tier 1 Capital (to average assets)					$ 21,000		5.00 %		$ 19,000		5.00 %		$ 18,000		5.00 %		$ 14,000		5.00 %		$ 12,000		5.00 %

 

 

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SOURCE Triad Business Bank

FAQ

What were the core operating earnings for TBBC in Q2 2022?

TBBC reported core operating earnings of $146,000 in the second quarter of 2022.

How did TBBC's total assets change in Q2 2022?

Total assets increased by 10% to $429.9 million in Q2 2022.

What is the net interest margin for TBBC as of June 2022?

The net interest margin improved to 2.77% in Q2 2022.

What was the net loss reported by TBBC for Q2 2022?

TBBC reported a net loss of $101,000 for the second quarter of 2022.

How much did core loans increase for TBBC in Q2 2022?

Core loans increased by 9% to $236.6 million in Q2 2022.