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Avidbank Holdings, Inc. Announces Net Income of $5.4 Million for the Third Quarter of 2023

SAN JOSE, CA / ACCESSWIRE / October 24, 2023 / Avidbank Holdings, Inc. (OTC Pink:AVBH) announced net income for the third quarter of 2023 of $5.4 million, or $0.72 per diluted share, compared to $4.7 million, or $0.63 per diluted share, for the second quarter of 2023 and $7.0 million, or $0.95 per diluted share, for the third quarter of 2022.

Third Quarter 2023 Highlights

  • Loans increased $19.6 million, or 5% annualized, from June 30, 2023, and $115.7 million, or 7%, from December 31, 2022.
  • Average deposits increased $53.4 million, or 13% annualized, from the second quarter of 2023.
  • Return on average assets improved to 0.99% from 0.87% in the second quarter of 2023.
  • Uninsured deposits represented 35% of total deposits on September 30, 2023, compared to 40% on June 30, 2023, and 85% at December 31, 2022. Net available borrowing capacity totaled approximately $1.4 billion as of September 30, 2023.
  • Annualized net charge-offs to average loans totaled 0.0% for the third quarter of 2023, compared to 0.03% for the second quarter of 2023.
  • Nonperforming assets to total assets was unchanged at 0.70% on September 30, 2023 compared to June 30, 2023.

"Despite the continued challenges in today's banking environment, we are pleased with our performance and outlook as we look toward 2024. Loan demand has moderated compared to historical average growth, but there remain excellent opportunities to add quality relationships. We continue to add new deposit accounts regularly after losing a very limited number of relationships since March of this year. Based on our commercial banking focus, it is not uncommon to have sizeable daily and seasonal fluctuations in our deposit balances, so we prefer to focus on growth in average balances. For the third quarter, average deposit balances increased $53.4 million compared to the second quarter. Our deposit pipeline remains robust in our venture lending and corporate banking divisions," said Mark Mordell, Chairman and Chief Executive Officer.

"Credit quality remains solid, including the potential resolution of the $14.1 million nonperforming construction loan. We foreclosed on the loan during the third quarter and are currently in contract to sell. We expect to close on the sale of the property in the fourth quarter," added Mr. Mordell.

Income Statement

Taxable equivalent net interest income(1) totaled $17.3 million for the third quarter of 2023, a decrease of $177,000, or 1%, from the second quarter of 2023, and a decrease of $2.3 million, or 12%, from the third quarter of 2022. The taxable equivalent net interest margin was 3.34% in the third quarter of 2023, a decrease of 5 basis points compared to the second quarter of 2023, and a decrease of 73 basis points compared to the third quarter of 2022. The decrease in taxable equivalent net interest income and net interest margin compared to the prior quarter was primarily driven by an overall increase in deposit costs. The decrease in taxable equivalent net interest margin compared to the same period one year ago was primarily driven by an increase in high-cost short-term borrowings replacing lower-cost deposits, interest bearing deposits replacing no-cost demand deposits, and an overall increase in deposit costs, partially offset by an increase in loan yields and average loan balances.

The yield on loans in the third quarter of 2023 was 7.04 %, an increase of 30 basis points from the second quarter of 2023 and an increase of 154 basis points from the third quarter of 2022. The overall increase in loan yields compared to prior periods was primarily due to increases in the Prime rate.

The cost of deposits in the third quarter of 2023 was 2.52%, an increase of 55 basis points from the second quarter of 2023 and an increase of 210 basis points from the third quarter of 2022. The cost of interest-bearing deposits in the third quarter of 2023 was 3.66% compared to 3.18% in the second quarter of 2023 and 0.77% in the third quarter of 2022.

The provision for credit losses was $120,000 in the third quarter of 2023, compared to $1.5 million in the second quarter of 2023 and $925,000 in the third quarter of 2022. The provision decreased in the current quarter primarily due to lower loan growth of $19.6 million in the third quarter of 2023, compared to $85.8 million in the second quarter of 2023. The provision for credit losses in the third quarter of 2023 included a $164,000 provision for loan losses offset by a $(44,000) provision for unfunded commitments.

Noninterest income was $1.2 million in the third quarter of 2023 compared to $1.1 million in the second quarter of 2023 and $1.1 million in the third quarter of 2022. The third quarter of 2023 included a $105,000 increase in other investment income.

Noninterest expense totaled $10.9 million for the third quarter of 2023, an increase of $484,000 compared to the second quarter of 2023. Salaries and benefits expense for the third quarter of 2023 included an increase from the hiring of the treasury management team on August 3rd. Salaries and benefits expense for the previous quarter included a reduction in incentive compensation expense. There were 147 full-time equivalent employees on September 30, 2023, compared to 145 on June 30, 2023.

Balance Sheet

Total assets were $2.20 billion as of September 30, 2023, compared to $2.21 billion on June 30, 2023, and $1.98 billion at September 30, 2022. Cash and cash equivalents were $80.0 million on September 30, 2023, compared to $104.2 million on June 30, 2023, and $37.2 million on September 30, 2022.

Period end loans on September 30, 2023, totaled $1.67 billion, which represented an increase of $19.6 million, or 5% annualized, from June 30, 2023, and an increase of $277.4 million, or 20%, from September 30, 2022. The growth in loans during the third quarter of 2023 included an increase of $14.9 million in commercial loans and $5.2 million in commercial real estate loans, partially offset by a decrease of $1.4 million in construction loans. Quarterly average loans for the third quarter of 2023 increased $50.7 million, or 3%, from the second quarter of 2023 and $283.0 million, or 21%, from the third quarter of 2022.

The allowance for credit losses on loans was $17.8 million on September 30, 2023, representing an increase of $164,000 from June 30, 2023. The allowance for credit losses on loans to total loans was 1.07% on September 30, 2023, compared to 1.07% on June 30, 2023. Nonperforming loans to total loans was 0.08% on September 30, 2023, compared to 0.94% on June 30, 2023. The decrease was due to the foreclosure of one nonperforming loan totaling $14.1 million.

Investment securities were $345.6 million as of September 30, 2023, compared to $371.8 million on June 30, 2023, and $468.2 million at September 30, 2022. In the first quarter of 2023, we sold $57 million of securities for a loss of $815,000. This included the sale of $25 million in available for sale mortgage-backed securities and the sale of all $32 million in held to maturity municipal securities.

Period end deposits were $1.70 billion on September 30, 2023, a decrease of $40.5 million, or 2%, from June 30, 2023. This included a $2.3 million, or 2% annualized, increase in Venture Lending deposits. Deposits in our Venture Lending division totaled $608.3 million at September 30, 2023, and included $396.9 million in reciprocal deposits.

Short-term borrowings on September 30, 2023, totaled $300.0 million, an increase of $36.0 million, or 14%, compared to June 30, 2023. The short-term borrowings on September 30, 2023 included $35.0 million in FHLB borrowings and $224.0 million in borrowings from the Bank Term Funding Program (BTFP). The average rate on the BTFP on September 30, 2023 was 4.64%.

Book value per share was $18.83 on September 30, 2023, a decrease of $0.72 compared to $19.55 on June 30, 2023. Total shareholders' equity totaled $145.6 million on September 30, 2023, a decrease of $5.2 million compared to June 30, 2023. This included an increase in retained earnings of $5.4 million offset by an increase in accumulated other comprehensive loss of $11.2 million.

(1) A Non-GAAP performance measure. We provide detailed reconciliations in the "Non-GAAP Performance and Financial Measures Reconciliation" table.

About Avidbank

Avidbank Holdings, Inc. (OTC Pink: AVBH), headquartered in San Jose, California, offers innovative financial solutions and services. We specialize in commercial & industrial lending, venture lending, structured finance, asset-based lending, sponsor finance, fund finance, and real estate construction and commercial real estate lending. Avidbank provides a different approach to banking. We do what we say.

Forward-Looking Statement:

This news release contains statements that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts, and generally include the words "believes," "plans," "intends," "expects," "opportunity," "anticipates," "targeted," "continue," "remain," "will," "should," "may," or words of similar meaning. While we believe that our forward-looking statements and the assumptions underlying them are reasonably based, such statements and assumptions, are, by their nature subject to risks and uncertainties, and thus could later prove to be inaccurate or incorrect. Accordingly, actual results could materially differ from forward-looking statements for a variety of reasons, including, but not limited to local, regional, national and international economic conditions and events and the impact they may have on us and our customers, and in particular in our market areas; ability to attract deposits and other sources of liquidity; oversupply of property inventory and deterioration in values of California real estate, both residential and commercial; a prolonged slowdown or decline in construction activity; changes in the financial performance and/or condition of our borrowers; changes in the level of nonperforming assets and charge-offs; the cost or effect of acquisitions we may make; the effect of changes in laws and regulations (including laws, regulations and judicial decisions concerning financial reform, capital requirements, taxes, banking, securities, employment, executive compensation, insurance, and information security) with which we and our subsidiaries must comply; changes in estimates of future reserve requirements and minimum capital requirements based upon the periodic review thereof under relevant regulatory and accounting requirements; ability to adequately underwrite for our asset based and corporate finance lending business lines; our ability to raise capital; inflation, interest rate, securities market and monetary fluctuations; cyber-security threats including loss of system functionality or theft or loss of data; political instability; acts of war or terrorism, or natural disasters, such as earthquakes, or the effects of a pandemic; destabilization in international economies resulting from the European sovereign debt crisis; the timely development and acceptance of new banking products and services and perceived overall value of these products and services by users; changes in consumer spending, borrowing and savings habits; technological changes; the ability to increase market share, retain customers and control expenses; ability to retain and attract key management and personnel; changes in the competitive environment among financial and bank holding companies and other financial service providers; continued volatility in the credit and equity markets and its effect on the general economy; the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board and other accounting standard setters; changes in our organization, management, compensation and benefit plans, and our ability to retain or expand our management team; the costs and effects of legal and regulatory developments including the resolution of legal proceedings or regulatory or other governmental inquiries and the results of regulatory examinations or reviews; our success at managing the risks involved in the foregoing items. We do not undertake, and specifically disclaim any obligation to update any forward-looking statements to reflect occurrences or unanticipated events or circumstances after the date of such statements except as required by law.

Contact:

Patrick Oakes
Executive Vice President and Chief Financial Officer
408-200-7390
IR@avidbank.com

AVIDBANK HOLDINGS, INC.
Selected Financial Data (Unaudited)
(in thousands, except share and per share amounts)

For the nine months ended
2023 2022 September 30,
Third Second First Fourth Third
Quarter Quarter Quarter Quarter Quarter 2023 2022
INCOME HIGHLIGHTS
Net income
$ 5,408 $ 4,726 $ 6,364 $ 8,415 $ 7,046 $ 16,498 $ 16,608
Loss on sale of securities, net of tax
- - 595 295 - 595 -
Operating net income (1)
$ 5,408 $ 4,726 $ 6,959 $ 8,710 $ 7,046 $ 17,093 $ 16,608
PER SHARE DATA
Basic earnings per share
$ 0.74 $ 0.65 $ 0.87 $ 1.16 $ 0.97 $ 2.26 $ 2.48
Diluted earnings per share
0.72 0.63 0.85 1.13 0.95 2.21 2.42
Diluted earnings per share - operating (1)
0.72 0.63 0.93 1.17 0.95 2.29 2.42
Book value per share
18.83 19.55 19.57 17.99 16.58 18.83 16.58
PERFORMANCE MEASURES
Return on average assets
0.99 % 0.87 % 1.19 % 1.61 % 1.38 % 1.02 % 1.07 %
Return on average equity
14.01 % 12.32 % 17.87 % 25.48 % 19.36 % 14.66 % 16.15 %
Taxable equivalent net interest margin
3.34 % 3.39 % 3.92 % 4.41 % 4.07 % 3.55 % 3.57 %
Efficiency ratio
58.75 % 56.05 % 55.21 % 45.42 % 48.00 % 56.64 % 54.43 %
Average loans to average deposits
97.49 % 97.57 % 88.70 % 76.98 % 74.61 % 94.51 % 67.81 %
CAPITAL
Tier 1 leverage ratio
9.84 % 9.55 % 9.33 % 9.46 % 9.22 % 9.84 % 9.22 %
Common equity tier 1 capital ratio
9.95 % 9.88 % 10.14 % 9.82 % 10.24 % 9.95 % 10.24 %
Tier 1 risk-based capital ratio
9.95 % 9.88 % 10.14 % 9.82 % 10.24 % 9.95 % 10.24 %
Total risk-based capital ratio
11.89 % 11.87 % 12.16 % 11.76 % 12.31 % 11.89 % 12.31 %
Tangible common equity ratio
6.61 % 6.83 % 6.95 % 6.45 % 6.38 % 6.61 % 6.38 %
SHARES OUTSTANDING
Number of common shares outstanding
7,731,404 7,712,278 7,703,748 7,645,428 7,629,767 7,731,404 7,629,767
Average common shares outstanding - basic
7,327,197 7,321,246 7,299,006 7,281,343 7,274,617 7,315,920 6,639,567
Average common shares outstanding - diluted
7,511,373 7,457,906 7,452,254 7,432,670 7,410,062 7,472,158 6,790,554
ASSET QUALITY
Allowance for credit losses to total loans
1.19 % 1.20 % 1.18 % 1.09 % 1.14 % 1.19 % 1.14 %
Nonperforming assets to total assets
0.70 % 0.70 % 0.66 % 0.67 % 0.01 % 0.70 % 0.01 %
Nonperforming loans to total loans
0.08 % 0.94 % 0.91 % 0.92 % 0.01 % 0.08 % 0.01 %
Net charge-offs to average loans (2)
0.00 % 0.03 % 0.00 % 0.00 % 0.02 % 0.01 % 0.01 %
AVERAGE BALANCES
Loans, net of deferred loan fees
$ 1,640,080 $ 1,589,372 $ 1,555,207 $ 1,450,014 $ 1,357,090 $ 1,595,197 $ 1,277,760
Investment securities
365,244 382,860 443,870 459,057 505,849 397,037 476,858
Total assets
2,168,443 2,171,559 2,164,441 2,072,887 2,028,320 2,168,162 2,073,023
Deposits
1,682,329 1,628,975 1,753,295 1,883,640 1,819,008 1,687,940 1,884,434
Shareholders' equity
153,099 153,877 144,402 131,046 144,402 150,491 137,456

(1) A Non-GAAP performance measure. We provide detailed reconciliations in the "Non-GAAP Performance and Financial Measures Reconciliation" table.
(2) Annualized

AVIDBANK HOLDINGS, INC.
Consolidated Balance Sheets (Unaudited)
(in thousands)

September 30, June 30, March 31, December 31, September 30,
Assets
2023 2023 2023 2022 2022
Cash and due from banks
$ 21,157 $ 33,849 $ 19,452 $ 17,435 $ 23,766
Due from Federal Reserve Bank and fed funds sold
58,885 70,364 114,615 29,853 13,476
Total cash and cash equivalents
80,042 104,213 134,067 47,288 37,242
Investment securities - available for sale
345,547 371,753 386,947 412,993 436,535
Investment securities - held to maturity
- - - 31,671 31,704
Total investment securities
345,547 371,753 386,947 444,664 468,239
Loans, net of deferred loan fees
1,669,914 1,650,265 1,564,501 1,554,222 1,392,546
Allowance for loan losses
(17,800 ) (17,636 ) (16,389 ) (16,481 ) (15,488 )
Loans, net of allowance for loan losses
1,652,114 1,632,629 1,548,112 1,537,741 1,377,058
Bank owned life insurance
33,440 33,202 32,972 32,747 32,522
Premises and equipment, net
3,558 3,774 4,037 4,163 4,318
Other real estate owned
14,095 - - - -
Accrued interest receivable and other assets
73,104 62,234 63,916 66,665 64,443
Total assets
$ 2,201,900 $ 2,207,805 $ 2,170,051 $ 2,133,268 $ 1,983,822
Liabilities and Shareholders' Equity
Deposits:
Non-interest-bearing demand
$ 490,289 $ 593,246 $ 605,093 $ 765,079 $ 804,383
Interest-bearing checking
784,757 717,116 335,410 41,701 46,852
Money market and savings
322,983 316,991 563,097 948,731 890,836
Time
30,880 46,794 61,645 67,724 72,301
Brokered
79,291 74,566 52,823 - -
Total deposits
1,708,200 1,748,713 1,618,068 1,823,235 1,814,372
Subordinated debt, net
21,881 21,855 21,830 21,805 21,779
Short-term borrowings
300,000 264,000 359,000 130,000 -
Accrued interest payable and other liabilities
26,250 22,432 20,414 20,690 21,188
Total liabilities
2,056,331 2,057,000 2,019,312 1,995,730 1,857,339
Shareholders' Equity
Common stock
104,018 103,420 102,718 102,359 101,679
Retained earnings
109,386 103,979 99,252 93,824 85,409
Accumulated other comprehensive (loss)
(67,835 ) (56,594 ) (51,231 ) (58,645 ) (60,605 )
Total shareholders' equity
145,569 150,805 150,739 137,538 126,483
Total liabilities and shareholders' equity
$ 2,201,900 $ 2,207,805 $ 2,170,051 $ 2,133,268 $ 1,983,822

AVIDBANK HOLDINGS, INC.
Consolidated Statements of Income (Unaudited)
(in thousands, except share and per share amounts)


Three Months Ended Year-to-Date

Sept. 30, June 30, March 31, Dec. 31, Sept. 30,


2023 2023 2023 2022 2022 2023 2022
Interest and fees on loans
$ 29,125 $ 26,713 $ 25,577 $ 23,160 $ 18,853 $ 81,416 $ 48,653
Interest on investment securities
2,009 2,058 2,612 2,751 2,794 6,679 7,126
Other interest income
662 1,196 628 526 307 2,486 816
Total interest income
31,796 29,967 28,817 26,437 21,954 90,581 56,595

Deposit interest expense
10,704 7,989 6,030 4,269 1,948 24,722 3,244
Interest on short-term borrowings
3,480 4,189 2,673 114 126 10,342 125
Interest on long-term debt
300 300 300 300 300 901 901
Total interest expense
14,484 12,478 9,003 4,683 2,374 35,965 4,270
Net interest income
17,312 17,489 19,814 21,754 19,580 54,616 52,325

Provision for credit losses
120 1,471 185 993 925 1,776 2,517
Net interest income after
provision for credit losses
17,192 16,018 19,629 20,761 18,655 52,840 49,808

Service charges and bank fees
613 611 573 660 725 1,798 2,211
Federal Home Loan Bank dividends
171 185 163 118 91 519 250
Income from bank owned life insurance
238 230 225 224 219 693 647
Gain/(loss) on sale of securities
- - (815 ) (404 ) - (815 ) -
Warrant and success fee income
8 - - 119 12 8 162
Other investment income
142 37 (6 ) 521 (1 ) 173 84
Other income
62 24 28 17 30 112 61
Total noninterest income
1,234 1,087 168 1,255 1,076 2,488 3,415

Salaries and benefit expenses
7,460 7,021 7,954 7,592 7,069 22,435 21,510
Occupancy and equipment expenses
1,002 1,005 961 911 946 2,967 2,741
Data processing
538 477 528 456 447 1,542 1,281
Regulatory assessments
478 555 226 221 421 1,260 1,595
Legal and professional fees
483 394 431 364 269 1,308 604
Other operating expenses
935 960 933 906 761 2,829 2,609
Total noninterest expense
10,896 10,412 11,033 10,450 9,913 32,341 30,340

Income before income taxes
7,530 6,693 8,764 11,566 9,818 22,987 22,883
Provision for income taxes
2,122 1,967 2,400 3,151 2,772 6,489 6,275
Net income
$ 5,408 $ 4,726 $ 6,364 $ 8,415 $ 7,046 $ 16,498 $ 16,608

Basic earnings per common share
$ 0.74 $ 0.65 $ 0.87 $ 1.16 $ 0.97 $ 2.26 $ 2.48
Diluted earnings per common share
0.72 0.63 0.85 1.13 0.95 2.21 2.42

Weighted average shares - basic
7,327,197 7,321,246 7,299,006 7,281,343 7,274,617 7,315,920 6,639,567
Weighted average shares - diluted
7,511,373 7,457,906 7,452,254 7,432,670 7,410,062 7,472,158 6,790,554

AVIDBANK HOLDINGS, INC.
Average Balance Sheets and Net Interest Margin Analysis (Unaudited)
(dollars in thousands; taxable equivalent)

Three Months Ended

September 30, 2023 June 30, 2023
Interest Yields Interest Yields
Average Income/ or Average Income/ or
Balance Expense Rates Balance Expense Rates
Assets
Interest earning assets:
Loans (1)
$ 1,641,475 $ 29,125 7.04 % $ 1,590,758 $ 26,713 6.74 %
Fed funds sold/interest bearing deposits
48,350 662 5.36 % 93,001 1,196 5.09 %
Taxable Investment securities
365,244 2,009 2.18 % 382,860 2,058 2.16 %

Total interest-earning assets
2,055,069 31,796 6.14 % 2,066,619 29,967 5.82 %

Noninterest-earning assets:
Cash and due from banks
22,556 23,515
All other assets (2)
90,818 81,425

Total assets
$ 2,168,443 $ 2,171,559

Liabilities and Shareholders' Equity
Interest-bearing liabilities:
Deposits
Demand
$ 748,016 $ 7,306 3.88 % $ 486,367 $ 4,100 3.38 %
Money market and savings
296,865 2,193 2.93 % 389,036 2,659 2.74 %
Time
41,455 264 2.53 % 48,650 198 1.63 %
Brokered
75,420 941 4.95 % 83,319 1,032 4.97 %
Total interest-bearing deposits
1,161,756 10,704 3.66 % 1,007,372 7,989 3.18 %

Short-term borrowings
285,326 3,480 4.84 % 343,341 4,189 4.89 %
Subordinated debt
21,867 300 5.44 % 21,842 300 5.51 %
Total interest-bearing liabilities
1,468,949 14,484 3.91 % 1,372,555 12,478 3.65 %


Noninterest-bearing liabilities:
Demand deposits
520,573 621,603
Accrued expenses and other liabilities
25,822 23,524
Shareholders' equity
153,099 153,877

Total liabilities and
shareholders' equity
$ 2,168,443 $ 2,171,559

Net interest spread
2.23 % 2.17 %
Net interest income and margin (3)
$ 17,312 3.34 % $ 17,489 3.39 %

Non-taxable equivalent net interest margin
3.34 % 3.39 %

Cost of deposits
$ 1,682,329 $ 10,704 2.52 % $ 1,628,975 $ 7,989 1.97 %

(1) Nonperforming loans are included in average loan balances. No adjustment has been made for these loans in the calculation of yields. Interest income on loans includes net amortization of deferred loan fees / (costs) of $441 thousand and $347 thousand, respectively.
(2) Average allowance for loan losses of $17.6 million and $16.8 million, respectively, is included as a contra asset.
(3) Net interest margin is net interest income divided by total interest-earning assets.

AVIDBANK HOLDINGS, INC.
Average Balance Sheets and Net Interest Margin Analysis (Unaudited)
(dollars in thousands; taxable equivalent)


Three months ended

September 30, 2023 September 30, 2022


Interest Yields
Interest Yields

Average Income/ or Average Income/ or

Balance Expense Rates Balance Expense Rates
Assets
Interest earning assets:
Loans (1)
$ 1,641,475 $ 29,125 7.04 % $ 1,358,934 $ 18,852 5.50 %
Fed funds sold/interest bearing deposits
48,350 662 5.36 % 52,626 307 2.31 %
Investment securities
Taxable investment securities
365,244 2,009 2.18 % 475,086 2,530 2.11 %
Non-taxable investment securities (2)
- - 0.00 % 30,763 334 4.31 %
Total investment securities
365,244 2,009 2.18 % 505,849 2,864 2.25 %

Total interest-earning assets
2,055,069 31,796 6.14 % 1,917,409 22,023 4.56 %

Noninterest-earning assets:
Cash and due from banks
22,556 34,984
All other assets (3)
90,818 75,927

Total assets
$ 2,168,443 $ 2,028,320

Liabilities and Shareholders' Equity
Interest-bearing liabilities:
Deposits
Demand
$ 748,016 $ 7,306 3.88 % $ 46,145 $ 38 0.33 %
Money market and savings
296,865 2,193 2.93 % 867,113 1,768 0.81 %
Time
41,455 264 2.53 % 85,703 142 0.66 %
Brokered
75,420 941 4.95 % - - -
Total interest-bearing deposits
1,161,756 10,704 3.66 % 998,961 1,948 0.77 %

Short-term borrowings
285,326 3,480 4.84 % 22,011 126 2.27 %
Subordinated debt
21,867 300 5.44 % 21,766 300 5.47 %
Total interest-bearing liabilities
1,468,949 14,484 3.91 % 1,042,738 2,374 0.90 %


Noninterest-bearing liabilities:
Demand deposits
520,573 820,047
Accrued expenses and other liabilities
25,822 21,133
Shareholders' equity
153,099 144,402

Total liabilities and
shareholders' equity
$ 2,168,443 $ 2,028,320

Net interest spread
2.23 % 3.66 %
Net interest income and margin (4)
$ 17,312 3.34 % $ 19,649 4.07 %

Non-taxable equivalent net interest margin
3.34 % 4.05 %

Cost of deposits
$ 1,682,329 $ 10,704 2.52 % $ 1,819,008 $ 1,948 0.42 %

(1) Nonperforming loans are included in average loan balances. No adjustment has been made for these loans in the calculation of yields. Interest income on loans includes net amortization of deferred loan fees / (costs) of $441 thousand and $513 thousand, respectively.
(2) Interest income on tax-exempt securities has been increased to reflect comparable interest on taxable securities. The rate used was 21%, reflecting the statutory federal income tax rate.
(3) Average allowance for loan losses of $17.6 million and $14.7 million, respectively, is included as a contra asset.
(4) Net interest margin is net interest income divided by total interest-earning assets.

AVIDBANK HOLDINGS, INC.
Average Balance Sheets and Net Interest Margin Analysis (Unaudited)
(dollars in thousands; taxable equivalent)

Nine months ended
September 30, 2023 September 30, 2022

Interest Yields
Interest Yields
Average Income/ or Average Income/ or
Balance Expense Rates Balance Expense Rates
Assets
Interest earning assets:
Loans (1)
$ 1,596,660 $ 81,416 6.82 % $ 1,279,579 $ 48,653 5.08 %
Fed funds sold/interest bearing deposits
65,855 2,486 4.98 % 205,199 816 0.53 %
Investment securities
Taxable investment securities
387,315 6,415 2.21 % 462,326 6,749 1.95 %
Non-taxable investment securities (2)
9,722 334 4.59 % 14,532 473 4.69 %
Total investment securities
397,037 6,749 2.27 % 476,858 7,222 2.03 %

Total interest-earning assets
2,059,552 90,651 5.88 % 1,961,636 56,691 3.86 %

Noninterest-earning assets:
Cash and due from banks
23,019 41,173
All other assets (3)
85,591 70,214

Total assets
$ 2,168,162 $ 2,073,023

Liabilities and Shareholders' Equity
Interest-bearing liabilities:
Deposits
Demand
$ 442,948 $ 11,899 3.59 % $ 47,184 $ 69 0.20 %
Money market and savings
513,961 10,008 2.60 % 838,354 2,630 0.42 %
Time
51,889 684 1.76 % 92,410 486 0.70 %
Brokered
57,534 2,131 4.95 % 16,965 59 0.46 %
Total interest-bearing deposits
1,066,332 24,722 3.10 % 994,913 3,244 0.44 %

Short-term borrowings
282,980 10,342 4.89 % 7,418 125 2.25 %
Subordinated debt
21,842 901 5.52 % 21,666 901 5.56 %
Total interest-bearing liabilities
1,371,154 35,965 3.51 % 1,023,997 4,270 0.56 %


Noninterest-bearing liabilities:
Demand deposits
621,608 889,521
Accrued expenses and other liabilities
24,909 22,049
Shareholders' equity
150,491 137,456

Total liabilities and
shareholders' equity
$ 2,168,162 $ 2,073,023

Net interest spread
2.38 % 3.30 %
Net interest income and margin (4)
$ 54,686 3.55 % $ 52,421 3.57 %

Non-taxable equivalent net interest margin
3.55 % 3.57 %

Cost of deposits
$ 1,687,940 $ 24,722 1.96 % $ 1,884,434 $ 3,244 0.23 %

(1) Nonperforming loans are included in average loan balances. No adjustment has been made for these loans in the calculation of yields. Interest income on loans includes amortization of deferred loan fees / (costs) of $1.3 million and $1.6 million, respectively.
(2) Interest income on tax-exempt securities has been increased to reflect comparable interest on taxable securities. The rate used was 21%, reflecting the statutory federal income tax rate.
(3) Average allowance for loan losses of $16.9 million and $13.7 million, respectively, is included as a contra asset.
(4) Tax equivalent net interest income divided by total interest-earning assets.

AVIDBANK HOLDINGS, INC.
Loans and Credit Data (Unaudited)
(dollars in thousands)


Sept. 30, June 30, March 31, Dec. 31, Sept. 30, Current Quarter Year over Year

2023 2023 2023 2022 2022 Change Change








Commercial loans
$ 731,206 $ 716,355 $ 642,826 $ 700,022 $ 566,105 $ 14,851 $ 165,101
Commercial real estate
Multi-family
184,147 193,014 188,411 169,048 159,384 (8,867 ) 24,763
Owner Occupied
135,950 132,078 137,118 128,790 120,951 3,872 14,999
Non-Owner Occupied
386,629 376,467 350,730 314,284 299,176 10,162 87,453
Construction and land
214,474 215,865 233,162 227,869 234,157 (1,391 ) (19,683 )
Residential
17,311 16,220 11,969 13,394 11,991 1,091 5,320
Total real estate loans
938,511 933,644 921,390 853,385 825,659 4,867 112,852

Other loans
197 266 285 815 782 (69 ) (585 )

Total loans
$ 1,669,914 $ 1,650,265 $ 1,564,501 $ 1,554,222 $ 1,392,546 $ 19,649 $ 277,368

Allowance for Loan Losses
Balance, beginning of quarter
$ 17,636 $ 16,389 $ 16,481 $ 15,488 $ 14,646
Adoption of ASU 2016-13
- - (249 ) - -
Provision for loan losses
164 1,347 157 993 925
Charge-offs
- (100 ) - - (83 )
Recoveries
- - - - -
Balance, end of quarter
$ 17,800 $ 17,636 $ 16,389 $ 16,481 $ 15,488

Allowance for Credit Losses
on Unfunded Commitments
Balance, beginning of quarter
$ 2,169 $ 2,045 $ 449 $ 422 $ 422
Adoption of ASU 2016-13
- - 1,568 - -
Provision for unfunded commitments
(44 ) 124 28 27 -
Balance, end of quarter
$ 2,125 $ 2,169 $ 2,045 $ 449 $ 422

Total allowance for credit losses -
loans and unfunded commitments
$ 19,925 $ 19,805 $ 18,434 $ 16,930 $ 15,910

Provision for credit losses under CECL
Provision for loan losses
$ 164 $ 1,347 $ 157 $ 993 $ 925
Provision for unfunded commitments (1)
(44 ) 124 28 - -
Total provision for credit losses
$ 120 $ 1,471 $ 185 $ 993 $ 925

Nonperforming Assets
Loans accounted for on a non-accrual basis
$ 1,385 $ 15,485 $ 14,240 $ 14,245 $ 154
Loans past due 90 days or more and still accruing
- - - - -
Nonperforming loans
1,385 15,485 14,240 14,245 154
Other real estate owned
14,095 - - - -
Nonperforming assets
$ 15,480 $ 15,485 $ 14,240 $ 14,245 $ 154

Nonperforming Loans by Type:
Commercial
$ 1,385 $ 1,390 $ 145 $ 150 $ 154
Commercial real estate loans
- - - - -
Construction and land
- 14,095 14,095 14,095 -
Total Nonperforming loans
$ 1,385 $ 15,485 $ 14,240 $ 14,245 $ 154

Asset Quality Ratios
Allowance for loan losses to total loans
1.07 % 1.07 % 1.05 % 1.06 % 1.11 %
Allowance for credit losses to total loans
1.19 % 1.20 % 1.18 % 1.09 % 1.14 %
Allowance for loan losses to nonperforming loans
1285.20 % 113.89 % 115.09 % 115.70 % 10057.14 %
Nonperforming assets to total assets
0.70 % 0.70 % 0.66 % 0.67 % 0.01 %
Nonperforming loans to total loans
0.08 % 0.94 % 0.91 % 0.92 % 0.01 %
Net quarterly charge-offs to average loans (2)
0.00 % 0.03 % 0.00 % 0.00 % 0.02 %

(1) Prior to the adoption of ASU 2016-13, the provision for unfunded commitments was included in other expense and totaled $27 thousand and $0 for the fourth and third quarters of 2022, respectively
(2) Annualized

AVIDBANK HOLDINGS, INC.
Deposits (Unaudited)
(dollars in thousands)


Sept. 30, June 30, March 31, Dec. 31, Sept. 30, Current Quarter Year over Year
Period End Deposits
2023 2023 2023 2022 2022 Change Change
Non-interest-bearing demand
$ 490,289 $ 593,246 $ 605,093 $ 765,079 $ 804,383 $ (102,957 ) $ (314,094 )
Interest-bearing checking
784,757 717,116 335,410 41,701 46,852 67,641 737,905
Money market and savings
322,983 316,991 563,097 948,731 890,836 5,992 (567,853 )
Time
30,880 46,794 61,645 67,724 72,301 (15,914 ) (41,421 )
Brokered
79,291 74,566 52,823 - - 4,725 79,291
Total deposits
$ 1,708,200 $ 1,748,713 $ 1,618,068 $ 1,823,235 $ 1,814,372 $ (40,513 ) $ (106,172 )

Sept. 30, June 30, March 31, Dec. 31, Sept. 30, Current Quarter Year over Year
Average Deposits
2023 2023 2023 2022 2022 Change Change
Non-interest-bearing demand
$ 520,573 $ 621,603 $ 724,894 $ 815,222 $ 820,047 $ (101,030 ) $ (299,474 )
Interest-bearing checking
748,016 486,367 87,198 44,344 46,145 261,649 701,871
Money market and savings
296,865 389,036 862,195 953,665 867,113 (92,171 ) (570,248 )
Time
41,455 48,650 65,830 70,409 85,703 (7,195 ) (44,248 )
Brokered
75,420 83,319 13,178 - - (7,899 ) 75,420
Total deposits
$ 1,682,329 $ 1,628,975 $ 1,753,295 $ 1,883,640 $ 1,819,008 $ 53,354 $ (136,679 )

AVIDBANK HOLDINGS, INC.
Non-GAAP performance and Financial Measures Reconciliation (Unaudited)
(in thousands, except share and per share amounts)







For the nine months ended

2023 2022 September 30,

Third Second First Fourth Third

Operating net income reconciliation
Quarter Quarter Quarter Quarter Quarter 2023 2022
Net income - GAAP
$ 5,408 $ 4,726 $ 6,364 $ 8,415 $ 7,046 $ 16,498 $ 16,608
Loss on sale of securities, net of income tax
- - 595 295 - 595 -
Operating net income
$ 5,408 $ 4,726 $ 6,959 $ 8,710 $ 7,046 $ 17,093 $ 16,608

Operating diluted earnings
per share reconciliation
Diluted earnings per share - GAAP
$ 0.72 $ 0.63 $ 0.85 $ 1.13 $ 0.95 $ 2.21 $ 2.42
Loss on sale of securities, net of income tax
- - 0.08 0.04 - 0.08 -
Diluted earnings per share - operating
$ 0.72 $ 0.63 $ 0.93 $ 1.17 $ 0.95 $ 2.29 $ 2.42

Venture lending deposits reconciliation
Total deposits
$ 1,708,200 $ 1,748,713 $ 1,618,068 $ 1,823,235 $ 1,814,372 $ 1,708,200 $ 1,814,372
Venture lending deposits
608,331 606,022 557,479 754,997 800,930 608,331 800,930
Total deposits excluding venture lending
$ 1,099,869 $ 1,142,691 $ 1,060,589 $ 1,068,238 $ 1,013,442 $ 1,099,869 $ 1,013,442

Taxable equivalent net
interest income reconciliation
Net interest income - GAAP
$ 17,312 $ 17,489 $ 19,814 $ 21,754 $ 19,580 $ 54,616 $ 52,325
Taxable equivalent adjustment
- - 70 75 69 70 96
Net interest income - taxable equivalent
$ 17,312 $ 17,489 $ 19,884 $ 21,829 $ 19,649 $ 54,686 $ 52,421

Taxable equivalent net
interest margin reconciliation
Net interest margin - GAAP
3.34 % 3.39 % 3.91 % 4.40 % 4.05 % 3.55 % 3.57 %
Impact of taxable equivalent adjustment
- - 0.01 0.01 0.02 - -
Net interest margin - taxable equivalent
3.34 % 3.39 % 3.92 % 4.41 % 4.07 % 3.55 % 3.57 %

SOURCE: Avidbank Holdings, Inc.



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