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

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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 100th 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          
                                     
                                     

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