TRIAD BUSINESS BANK 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 | |||||||||||
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 | Qtr Ended | Qtr Ended | ||||||||||
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
