Le Lézard
Classified in: Business
Subjects: ERN, ERP

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


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:
Income Statement Highlights:
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 %









































































 

 

SOURCE Triad Business Bank


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