Greensboro, N.C., Nov. 02, 2020 (GLOBE NEWSWIRE) -- Triad Business Bank (OTC Pink – TBBC) today reported financial results for its second quarter of operations ended September 30, 2020.
September Quarter 2020 Highlights:
- Total assets increased to $241 million at September 30, 2020
- Core loans increased $36 million to $50 million
- Committed loans increased $62 million
- Interest income expanded 91% to $996,000 compared to the prior quarter
- Pre-provision net loss declined 26%, an improvement of $262,000
- Core deposits increased 35% to $93 million
- Loan pipeline climbed to record level of $135 million
- Paycheck Protection Program (PPP) deferred fees of $2.4 million ($1.8 million net of deferred costs) to be realized in future quarters
- Allowance for loan loss increased to $628,000, or 1.26% of non-PPP loans
- Reported no classified or non-performing assets
“TBB remains one of the newest banks in the country,” said Ramsey K. Hamadi, Chief Executive Officer. “The Bank opened March 16th simultaneously with the Pandemic lockdown. In the two quarters that followed, the Bank grew from $51.2 million in assets at March 31, 2020 to $241.3 million in assets at September 30, 2020. During this six-month period, the Bank has been pivotal for Triad’s economic health. In its opening months, the Bank originated more than $100 million of Paycheck Protection Program loans to approximately 350 businesses. These loans protected over 12,000 jobs in the Triad business community. In the four months that followed this program, the Bank transitioned to focus on its core business that included originating nearly $86 million loans and funding those loans with $94 million of deposits from businesses and private bank customers.”
September Quarter Results
The Bank had a net loss of $1.2 million or $0.24 per share in each of the June and September quarters. However, when excluding the provision for loan losses, the quarter’s operating loss declined 26% to $758,000, an improvement of $262,000 from the June quarter’s loss of $1.0 million. The Bank’s net interest margin rose 29 basis points to 1.74% in the September quarter from 1.44% in the June quarter. Notably the average balance of core loans increased from $4.0 million to $32.7 million and the weighted average yield on these loans increased from 3.34% to 4.15% in the June and September quarters, respectively. Hamadi commented: “During the capital raise, our proforma financial statements anticipated the Bank’s operations would be breakeven at the end of the sixth quarter with the seventh quarter being profitable. Through two quarters, our results indicate we should meet or beat our projections. Our loan and deposit growth rates are exceeding expectations and the margins we projected also appear attainable. Further, our costs are directly in line with the results forecasted.”
Core Lending and Deposit Activity
The Bank grew core loans by $36.0 million to $49.9 million during the September quarter. The Bank also originated $72.2 million in core loans, which included $36.0 million in funded loan balances, $25.7 million in unfunded loan commitments and $10.5 million in loan participations sold to other financial institutions. For the six-month period, the Bank originated $195 million which included $108 million of PPP loans, $49.9 million of funded core loans, $25.7 million in unfunded loan commitments and $13.5 million in loan participations sold. The unfunded loan commitments consist primarily of operating lines of credit to commercial and industrial companies (“C & I”) and unfunded construction projects. At September 30, 2020, 70% of the Bank’s loan portfolio was C&I in nature:
Loan Diversification
| Loan Category | 9/30/20 | Composition |
| Other Construction & Land Development | $2,642,365 | |
| Non-owner Occupied CRE | $12,176,640 | |
| Total CRE | $14,819,005 | 30% |
| Owner-Occupied CRE | $15,443,089 | |
| C&I | $19,608,601 | |
| Total C&I | $35,051,690 | 70% |
| Total | $49,870,695 |
Core deposits increased $24.3 million and totaled $93.4 million at September 30, 2020. Money market accounts of businesses were the leading product. Total money market account balances increased $36.2 million to $70.0 million, but growth in money market balances was partially offset by a $13.9 million decline in demand deposit accounts. The decline in demand deposit accounts was primarily due to withdrawals of PPP loan proceeds. For the September quarter, the Bank opened 197 new deposit accounts, bringing the total number of accounts opened to more than 500 in the first six months. Of all deposits, business treasury relationships are the largest and most profitable. These deposit relationships have the most activity which generates fee income and are the Bank’s lowest cost deposit relationships. Total treasury relationships increased from 23 companies at June 30, 2020 to 60 companies at September 30, 2020. Twelve other businesses are in process of converting to Triad Business Bank’s treasury systems and numerous other businesses are evaluating our services. Robin Hager, President and Chief Operating Officer, commented, “We chose a Jack Henry Silverlake product for our core systems specifically because it offers what we believe is the best suite of Treasury Management products on the market. These systems are making a difference. Our customers are bringing us more business relationships than they planned because of the quality of our systems and products.”
PPP Program Update
At September 30, 2020, the Bank had $100.1 million of PPP loans outstanding to more than 340 local and regional businesses. In addition, the Bank had unamortized fees of $2.4 million ($1.8 million net of deferred costs) on these loans. Barring changes in the PPP loan forgiveness process, the Bank anticipates recognizing the balance of these fees in the December quarter 2020 and the March quarter of 2021. The Bank received the first of the forgiveness payments from the U.S. Treasury in October.
Noninterest Expense
Noninterest expense increased $116,000 to $1.6 million for the September quarter compared to the prior quarter. The increase in expenses was primarily due to the Bank converting from a cash basis to an accrual basis of accounting for certain items such as data processing and facility costs which resulted in the recognition of four months of expense instead of three months.
Credit Risk
The Bank had $0 of nonperforming assets and $0 of substandard assets at September 30, 2020. The Bank’s emerging loan portfolio is being underwritten with an eye on the impact COVID-19 is having on cashflows of borrowers. Many businesses are prospering in the current environment and have either stable or expanding revenues. By building a loan portfolio as the impact of the COVID pandemic unfolded, 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 at September 30, 2020 was $8.90. Net operating losses during the organization period and during the first six months of operations have created a deferred tax asset of $954,000. This asset is being carried at $0 until the Bank’s core operations become profitable. At that time, the valuation allowance will be reversed. At September 30, 2020, the valuation allowance lowered tangible book value by $0.19 from $9.09 (a non-GAAP measurement).
Outlook
“Triad Business Bank has had an exceptional beginning which should propel the Bank forward to our near-term goal, which is to become profitable within six quarters. The December and March quarters are expected to have high loan growth activity due to a continued strong loan pipeline. In addition, we believe the December and March quarters will benefit by realization of PPP loan fees as loan forgiveness payments are received. This rapid start has prompted an acceleration of our business plan. The loan and deposit pipelines are stronger than we had projected, and we anticipate a continued rise in revenues will follow. We expect that the net interest margin will continue to widen as core loans replace PPP loans and cash as the primary source of earning assets,” Hamadi commented.
About Triad Business Bank (OTC Pink: TBBC)
With three 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. The Bank’s common stock is quoted on the OTC Pink Market under the symbol “TBBC.” 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.
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Attachments
- Triad Business Bank Key Ratios
- Triad Business Bank Book Value
- Triad Business Bank Income Statement
- Triad Business Bank Balance Sheet