Overview
GREENSBORO, N.C.–(BUSINESS WIRE)–In the first quarter of 2025, Triad Business Bank (the “Bank”) reported net income of $199,000 compared to a loss of $101,000 for the same period a year ago. Net income totaled $0.02 per share in the first quarter of 2025 compared to a loss of $0.02 per share in the first quarter of 2024.
Ramsey Hamadi, Chief Executive Officer, commented, “The Bank’s core earnings improved $469,000 over the prior year period due primarily to an increase in the Bank’s net interest margin and lower operating expenses. The Bank’s net interest margin increased 17 basis points over the prior year period from 2.10% in the first quarter of 2024 to 2.27% in the first quarter of 2025 due primarily to the proceeds of maturing below-market rate loans and investments being reinvested into higher yielding loans. Net interest income increased $247,000 to $2.9 million in the first quarter of 2025 compared to the same period a year ago. The Bank’s noninterest expense in the first quarter of the current year was $285,000 less than the prior year period. The decline in noninterest expense was due to implementation of an expense reduction plan executed in 2024, which targeted a 15% reduction in personnel expense. In the first quarter of 2025, salaries and benefits expense was 13% less than the prior year period. Looking forward, the Bank intends to maintain disciplined expense control practices while the Bank’s net interest margin is expected to further improve throughout 2025 and 2026. As low yielding loans and investments originated in 2020 through 2022 continue to mature at an accelerating pace, we anticipate reinvesting the proceeds in higher yielding loans.”
Income Statement Comparison
The Bank’s net income totaled $199,000 for the quarter ended March 31, 2025 compared to a net loss of $101,000 for the quarter ended March 31, 2024. Core operating results, a non-GAAP measurement which excludes the provision for credit losses and taxes, reflected earnings of $34,000 for the first quarter of 2025 compared to a loss of $435,000 for the same quarter in the prior year.
Net interest income increased $247,000 to $2.9 million for the first quarter of 2025 from $2.6 million for the first quarter of 2024. The Bank’s net interest margin for the first quarter increased 17 basis points to 2.27% compared to the prior year quarter.
Interest income increased $49,000, or 1%, to $6.8 million in the first quarter of 2025 compared to $6.7 million in the same quarter of 2024. The growth in interest income year over year was due primarily to the growth in average loans partially offset by declines in average investment securities and interest-earning cash balances. Average loans increased $29.1 million to $378.1 million at March 31, 2025. The weighted average yield on average loans decreased five basis points to 6.01% in the first quarter of 2025 compared to 6.06% in the first quarter of 2024. The weighted average rate on interest-bearing liabilities decreased 17 basis points to 4.17% in the first quarter of 2025 compared to 4.34% in the same quarter of 2024.
Noninterest income decreased 21% to $242,000 in the first quarter of 2025 compared to $304,000 in the first quarter of 2024. The prior year quarter included a $59,000 gain on sale of loans, with no gain on sale of loans in the current quarter.
Noninterest expense decreased $285,000 in the first quarter of 2025 compared to the prior year quarter resulting predominantly from the operating expense reduction plan implemented in the second quarter of 2024. Salaries and benefits expense decreased $289,000, or 13%, in the first quarter of 2025 compared to the first quarter of 2024 due to a reduction in personnel. The Bank had 55 employees at the end of March 2025 compared to 61 employees at the end of March 2024. Other noninterest expenses increased $5,000 for the first quarter of 2025 over the same period in 2024. Increases in FDIC insurance assessment expense and repossessed property expense were largely offset by decreases in director compensation expense.
Balance Sheet Comparison
Total assets decreased $5.9 million to $521.2 million at March 31, 2025 from $527.1 million at March 31, 2024. Loans increased $15.2 million while cash decreased $10.3 million and securities decreased $9.7 million over the same period. Deposits decreased $23.9 million year over year, including a $20.8 million decline in brokered CDs. Other borrowings increased $10.0 million to $19.0 million at March 31, 2025 from $9.0 million at March 31, 2024.
Shareholders’ equity increased $8.2 million year over year to $45.2 million at March 31, 2025. The Bank completed a $6.0 million common stock offering in June 2024. In the fourth quarter of 2024, the establishment of a $2.6 million reserve on a corporate bond negatively impacted shareholders’ equity. Accumulated other comprehensive income/loss (“AOCI”) improved by $5.9 million year over year to a loss of $12.2 million from a loss of $18.1 million at March 31, 2024. The AOCI loss is expected to reverse as the bond portfolio shortens in life and is assumed to mature at par value.
Regulatory Capital
Total risk-based capital consists of tier 1 capital and tier 2 capital. The Bank’s tier 1 capital is largely a measure of shareholders’ equity as calculated under GAAP but eliminates certain volatile elements such as AOCI loss. Tier 2 capital is primarily the allowance for credit losses on funded and unfunded loan commitments. Tier 1 and tier 2 capital ratios are measured against total assets and risk-weighted assets.
The following is a summary presentation of the Bank’s total regulatory 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 March 31, 2025:
Capital and Capital Ratios
| Quarter Ended | ||||||
| 3/31/2025 | ||||||
| Amount | Ratio | |||||
| Actual | ||||||
| (dollars in thousands) | ||||||
| Total Capital (to risk-weighted assets) |
$ |
61,647 |
12.34 |
% |
||
| Tier 1 Capital (to risk-weighted assets) |
$ |
57,382 |
11.49 |
% |
||
| Tier 1 Capital (to average assets) |
$ |
57,382 |
10.67 |
% |
||
| Minimum To Be Well-Capitalized Under | ||||||
| Prompt Corrective Action Provisions | ||||||
| (dollars in thousands) | ||||||
| Total Capital (to risk-weighted assets) |
$ |
50,000 |
10.00 |
% |
||
| Tier 1 Capital (to risk-weighted assets) |
$ |
40,000 |
8.00 |
% |
||
| Tier 1 Capital (to average assets) |
$ |
27,000 |
5.00 |
% |
||
The Bank continues to be “well-capitalized” for regulatory purposes.
Loans
The Bank’s outstanding loans increased $15.2 million, or 4%, to $374.4 million at March 31, 2025 compared to $359.2 million at March 31, 2024. While not included in loans outstanding, the Bank also had unfunded loan commitments of $143.0 million, bringing total loans outstanding and unfunded commitments to $517.4 million at March 31, 2025. For internal monitoring purposes, the Bank considers owner-occupied real estate loans to be part of commercial and industrial (“C&I”) loans. As of March 31, 2025, approximately 48% of the Bank’s outstanding loan portfolio was composed of C&I loans:
Loan Diversification
| Quarter Ended | Percentage of | |||||
| Loan Category | 3/31/2025 | Loan Portfolio | ||||
| Other Construction & Land Development |
$ |
62,686,765 |
||||
| Nonowner-occupied Commercial Real Estate |
|
128,874,292 |
||||
| Total Commercial Real Estate |
|
191,561,057 |
51 |
% |
||
| Owner-occupied Real Estate |
|
97,460,265 |
||||
| C&I |
|
82,725,289 |
||||
| Total C&I |
|
180,185,554 |
48 |
% |
||
| Other Revolving Loans |
|
2,654,666 |
1 |
% |
||
| Total |
$ |
374,401,277 |
||||
Credit Risk and Allowance for Credit Losses
The Bank had no nonaccrual loans at March 31, 2025 or March 31, 2024. During the first quarter of 2025, there was a reversal of provision for credit losses of $165,000 compared to a reversal of $334,000 during the quarter ended March 31, 2024.
The allowance for credit losses on loans was $3.8 million at March 31, 2025 compared to $3.7 million at March 31, 2024, or 1.02% and 1.03% of outstanding loans, respectively. The allowance for credit losses on unfunded loan commitments, recorded as a liability on the balance sheet, was $429,000, or 0.30% of unfunded commitments at March 31, 2025 compared to $392,000, or 0.31%, at March 31, 2024.
Deferred Tax Asset and AOCI (Non-GAAP Measures)
The Bank’s GAAP tangible book value per share was $5.65 at March 31, 2025. On a non-GAAP basis, excluding the AOCI loss and the impairment on the Bank’s deferred tax asset (two reductions in capital the Bank anticipates it will recover over time), adjusted tangible book value per share was $7.60 at March 31, 2025.
The organization and startup costs incurred during the Bank’s organizational period and net operating losses from the beginning of operations created a deferred tax asset of $3.3 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 AOCI as a gain or loss, based on current circumstances, and constitutes an unrealized component of equity. At March 31, 2025, the Bank had an aggregate AOCI loss of $12.2 million. Assuming the underlying investment securities are held to maturity and there are no credit losses, the value of the securities will return to their face values at maturity. As a non-GAAP measure, the Bank eliminates its current AOCI loss to reflect an adjusted tangible book value.
Outlook
We expect the Bank’s net interest margin to steadily rise over the next two years as lower yielding loans and investments mature and are replaced by those with higher yields although there could be some compression in the margin in the near term if the Federal Reserve makes additional reductions in the federal funds target rate.
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.
Non-GAAP Financial Measures
This release contains financial information determined by methods other than in accordance with generally accepted accounting principles in the United States (“GAAP”). The management of Triad Business Bank uses these non-GAAP financial measures in its analysis of the Bank’s performance. These measures typically adjust GAAP performance measures to exclude the effects of the provision for credit losses, income tax, deferred tax asset, and AOCI. Management believes presentations of these non-GAAP financial measures provide useful supplemental information that is essential to a proper understanding of the operating results of the Bank. These non-GAAP disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.
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.
Contacts
Ramsey Hamadi
[email protected]
