Avidbank Holdings, Inc. Announces Net Income for the Fourth Quarter of 2023

Rhea-AI Summary

Avidbank Holdings, Inc. (AVBH) announced a decrease in net income for the fourth quarter of 2023, compared to the previous quarters. The company reported an adjusted net income of $4.9 million, or $0.65 per diluted share for Q4 2023. The highlights include an increase in book value per share, loans, and average deposits, as well as a decrease in nonperforming assets. The company also implemented profitability improvement initiatives, such as selling securities and foreclosed property, reducing staff, and surrendering BOLI policies. The income statement showed an increase in taxable equivalent net interest income, but a decrease in noninterest income. The balance sheet reflected growth in total assets, loans, and shareholders' equity, as well as a decrease in deposits. The company also disclosed a decrease in investment securities and an increase in short-term borrowings.

Positive

• Increase in book value per share, loans, and average deposits
• Decrease in nonperforming assets
• Growth in total assets, loans, and shareholders' equity
• Decrease in investment securities and an increase in short-term borrowings

Negative

• Decrease in net income for Q4 2023 compared to previous quarters
• Loss on sale of securities and foreclosed property
• Increase in cost of deposits and noninterest expense

SAN JOSE, CA / ACCESSWIRE / January 22, 2024 / Avidbank Holdings, Inc. (OTC Pink:AVBH) announced net income for the fourth quarter of 2023 of $303,000, or $0.04 per diluted share, compared to $5.4 million, or $0.72 per diluted share, for the third quarter of 2023 and $8.4 million, or $1.13 per diluted share, for the fourth quarter of 2022. Adjusted net income⁽¹⁾ totaled $4.9 million, or $0.65 per diluted share for the fourth quarter of 2023.

Fourth Quarter 2023 Highlights

• Book value per share was $21.27, an increase of $2.44, or 13%, from September 30, 2023 and an increase of $3.28, or 18%, from December 31, 2022.
• Loans increased $70.7 million, or 17% annualized, from September 30, 2023, and $186.4 million, or 12%, from December 31, 2022.
• Average deposits increased $26.5 million, or 6% annualized, from the third quarter of 2023.
• Taxable equivalent net interest margin ⁽¹⁾ was 3.47% in the fourth quarter of 2023, compared to 3.34% in the third quarter of 2023.
• Annualized net charge-offs to average loans totaled 0.0% for the fourth and third quarters of 2023 and 0.01% for the full year 2023.
• Nonperforming assets to total assets was 0.06% as of December 31, 2023, compared to 0.70% on September 30, 2023, following the fourth quarter sale of the $14.1 million foreclosed real estate property.

Profitability Improvement Initiatives

• Sold $35.8 million in available-for-sale securities for a loss of $5.4 million. The securities had a book yield of 1.74% and an estimated average life of 5.5 years. The expected recovery of this loss is approximately 4.1 years.
• Initiated the surrender of $21.2 million in bank-owned life insurance ("BOLI") policies, resulting in tax expense of $478,000. Proceeds from the surrender of BOLI are expected to be received in the first half of 2024. The pre-tax yield on this BOLI was 3.25%.
• Completed the sale of the $14.1 million foreclosed real estate property in the fourth quarter of 2023 for a loss of $165,000.
• Completed a reduction in staff of seven employees resulting in annual cost savings of approximately $1.2 million and fourth quarter 2023 severance expense of $324,000.
• The proceeds from the foreclosed property sale, securities sale, and BOLI surrender will reduce Avidbank's reliance on wholesale funding by approximately $71 million.

"We are pleased with the diversified loan growth, improved net interest margin, and continued strong asset quality in the fourth quarter. Although deposit levels ended the year lower than expected, our deposit pipeline remains robust. We are optimistic that our growth in deposits will be strong as we move into 2024," said Mark Mordell, Chairman and Chief Executive Officer.

"We took several important steps in the fourth quarter of 2023 to improve our profitability in 2024. This included the resolution of our foreclosed real estate property, selling approximately 10 percent of our investment portfolio, initiating the surrender of a portion of our BOLI portfolio, and the difficult decision of reducing the size of our work force. These steps impacted fourth quarter net income by approximately $5 million but will improve profitability in 2024. Most importantly, these actions will reduce our reliance on wholesale funding, which is imperative as we execute our strategic plan for 2024 to strengthen our balance sheet and improve our performance metrics," added Mr. Mordell.

Income Statement

Taxable equivalent net interest income⁽¹⁾ totaled $18.3 million for the fourth quarter of 2023, an increase of $942,000, or 5%, from the third quarter of 2023, and a decrease of $3.6 million, or 16%, from the fourth quarter of 2022. The taxable equivalent net interest margin was 3.47% in the fourth quarter of 2023, an increase of 13 basis points compared to the third quarter of 2023, and a decrease of 94 basis points compared to the fourth quarter of 2022. The increase in taxable equivalent net interest income and net interest margin compared to the prior quarter was primarily driven by an overall increase in loan yields and balances. 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 fourth quarter of 2023 was 7.25%, an increase of 21 basis points from the third quarter of 2023 and an increase of 92 basis points from the fourth quarter of 2022. The overall increase in loan yields compared to prior periods was primarily due to increases in interest rates, primarily the Prime rate.

The cost of deposits in the fourth quarter of 2023 was 2.71%, an increase of 19 basis points from the third quarter of 2023 and an increase of 181 basis points from the fourth quarter of 2022. The cost of interest-bearing deposits in the fourth quarter of 2023 was 3.80% compared to 3.66% in the third quarter of 2023 and 1.59% in the fourth quarter of 2022.

The provision for credit losses was $1.27 million in the fourth quarter of 2023, compared to $120,000 in the third quarter of 2023 and $993,000 in the fourth quarter of 2022. The provision increased in the current quarter primarily due to loan growth of $70.7 million in the fourth quarter of 2023, compared to $19.6 million in the third quarter of 2023. The provision for credit losses in the fourth quarter of 2023 included a $1.33 million provision for loan losses offset by a $(65,000) provision for unfunded commitments.

Noninterest income was $(4.45) million in the fourth quarter of 2023 compared to $1.2 million in the third quarter of 2023 and $1.3 million in the fourth quarter of 2022. The fourth quarter of 2023 included a $5.40 million loss on sale of securities, a $165,000 loss on the sale of a foreclosed property, and a loss of $116,000 from changes in the fair value of fund investments.

Noninterest expense totaled $11.6 million for the fourth quarter of 2023, an increase of $654,000 compared to the third quarter of 2023. Salaries and benefits expense for the fourth quarter of 2023 included severance charges of $324,000. There were 143 full-time equivalent employees on December 31, 2023, compared to 147 on September 30, 2023.

Balance Sheet

Total assets were $2.23 billion as of December 31, 2023 compared to $2.20 billion at September 30, 2023, and $2.13 billion at December 31, 2022. Cash and cash equivalents were $81.4 million on December 31, 2023, compared to $80.0 million on September 30, 2023, and $47.3 million on December 31, 2022.

Period end loans on December 31, 2023, totaled $1.74 billion, an increase of $70.7 million, or 17% annualized, from September 30, 2023, and an increase of $186.4 million, or 12%, from December 31, 2022. The growth in loans during the fourth quarter of 2023 included an increase of $27.3 million in commercial loans and $22.7 million in construction loans, and $10.8 million in multi-family commercial real estate loans. Quarterly average loans for the fourth quarter of 2023 increased $58.6 million, or 4%, from the third quarter of 2023 and $248.7 million, or 17%, from the fourth quarter of 2022.

The allowance for credit losses on loans was $19.1 million on December 31, 2023, representing an increase of $1.3 million from September 30, 2023. The allowance for credit losses on loans to total loans was 1.10% on December 31, 2023, compared to 1.07% on September 30, 2023. Nonperforming loans to total loans was 0.08% on December 31, 2023, unchanged from September 30, 2023.

Investment securities were $325.3 million as of December 31, 2023, compared to $345.6 million on September 30, 2023, and $444.7 million at December 31, 2022. In the fourth quarter of 2023, we sold $35.8 million of securities for a loss of $5.4 million. During the first quarter of 2023, we sold $25 million in available for sale mortgage-backed securities and all $32 million in held to maturity municipal securities.

Period end deposits were $1.65 billion on December 31, 2023, a decrease of $53.9 million, or 3%, from September 30, 2023. The change in deposits during the fourth quarter of 2023 included a $17.8 million decrease in non-interest bearing deposits. Quarterly average deposits for the fourth quarter of 2023 were $1.71 billion, an increase of $26.5 million from the third quarter of 2023 and a decrease of $174 million from the fourth quarter of 2022.

Short-term borrowings on December 31, 2023, totaled $360.0 million, an increase of $60.0 million, or 20%, compared to September 30, 2023. The short-term borrowings on December 31, 2023 included $224.0 million in borrowings from the Bank Term Funding Program (BTFP).

Book value per share was $21.27 on December 31, 2023, an increase of $2.44 compared to $18.83 on September 30, 2023. Total shareholders' equity totaled $165.3 million on December 31, 2023, an increase of $19.7 million compared to September 30, 2023. This included a decrease in accumulated other comprehensive loss of $19.0 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.

Non-GAAP Financial Measures

This news release contains certain non-GAAP (Generally Accepted Accounting Principles) financial measures in addition to results presented in accordance with GAAP. Management has presented these non-GAAP financial measures in this earnings release because it believes that they provide useful and comparative information to assess trends in the Company's current quarter and year-to-date results and facilitate comparison of our performance with the performance of our peers. Where applicable, the Company has also presented comparable earnings information using GAAP financial measures. These non-GAAP measures have inherent limitations, are not required to be uniformly applied and are not audited. They should not be considered in isolation or as a substitute for operating results determined in accordance with GAAP. These non-GAAP measures may not be comparable to similarly titled measures reported by other companies.

Forward-Looking Statements

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 twelve months ended
		2023												2022			December 31,
		Fourth			Third			Second			First			Fourth
		Quarter			Quarter			Quarter			Quarter			Quarter			2023			2022
INCOME HIGHLIGHTS
Net income		$	303		$	5,408		$	4,726		$	6,364		$	8,415		$	16,801		$	25,023
Loss on sale of securities, net of tax			3,888			-			-			595			295			4,483			295
Severance, net of income tax			233			-			-			-			-			233			-
BOLI surrender tax expense			478			-			-			-			-			478			-
Adjusted net income (1)		$	4,902		$	5,408		$	4,726		$	6,959		$	8,710		$	21,995		$	25,318
PER SHARE DATA
Basic earnings per share		$	0.04		$	0.74		$	0.65		$	0.87		$	1.16		$	2.29		$	3.68
Diluted earnings per share			0.04			0.72			0.63			0.85			1.13			2.24			3.60
Diluted earnings per share - adjusted (1)			0.65			0.72			0.63			0.93			1.17			2.94			3.64
Book value per share			21.27			18.83			19.55			19.57			17.99			21.27			17.99
PERFORMANCE MEASURES
Return on average assets			0.05	%		0.99	%		0.87	%		1.19	%		1.61	%		0.77	%		1.21	%
Return on average assets - adjusted			0.89	%		0.99	%		0.87	%		1.30	%		1.67	%		1.01	%		1.22	%
Return on average equity			0.81	%		14.01	%		12.32	%		17.87	%		25.48	%		11.20	%		18.42	%
Taxable equivalent net interest margin			3.47	%		3.34	%		3.39	%		3.92	%		4.41	%		3.53	%		3.78	%
Efficiency ratio			83.68	%		58.75	%		56.05	%		55.21	%		45.42	%		61.90	%		51.80	%
Average loans to average deposits			99.41	%		97.49	%		97.57	%		88.70	%		76.98	%		95.75	%		70.12	%
CAPITAL
Tier 1 leverage ratio			9.77	%		9.84	%		9.55	%		9.33	%		9.46	%		9.77	%		9.46	%
Common equity tier 1 capital ratio			9.88	%		9.95	%		9.88	%		10.14	%		9.82	%		9.88	%		9.82	%
Tier 1 risk-based capital ratio			9.88	%		9.95	%		9.88	%		10.14	%		9.82	%		9.88	%		9.82	%
Total risk-based capital ratio			11.86	%		11.89	%		11.87	%		12.16	%		11.76	%		11.86	%		11.76	%
Tangible common equity ratio			7.41	%		6.61	%		6.83	%		6.95	%		6.45	%		7.41	%		6.45	%
SHARES OUTSTANDING
Number of common shares outstanding			7,770,439			7,731,404			7,712,278			7,703,748			7,645,428			7,770,439			7,645,428
Average common shares outstanding - basic			7,344,693			7,327,197			7,321,246			7,299,006			7,281,343			7,323,172			6,801,330
Average common shares outstanding - diluted			7,543,616			7,511,373			7,457,906			7,452,254			7,432,670			7,490,779			6,952,758
ASSET QUALITY
Allowance for credit losses to total loans			1.22	%		1.19	%		1.20	%		1.18	%		1.09	%		1.22	%		1.09	%
Nonperforming assets to total assets			0.06	%		0.70	%		0.70	%		0.66	%		0.67	%		0.06	%		0.67	%
Nonperforming loans to total loans			0.08	%		0.08	%		0.94	%		0.91	%		0.92	%		0.08	%		0.92	%
Net charge-offs to average loans (2)			0.00	%		0.00	%		0.03	%		0.00	%		0.00	%		0.01	%		0.01	%
AVERAGE BALANCES
Loans, net of deferred loan fees		$	1,698,690		$	1,640,080		$	1,589,372		$	1,555,207		$	1,450,014		$	1,621,283		$	1,321,177
Investment securities			337,808			365,244			382,860			443,870			459,057			382,108			472,371
Total assets			2,191,198			2,168,443			2,171,559			2,164,441			2,072,887			2,173,969			2,072,989
Deposits			1,708,789			1,682,329			1,628,975			1,753,295			1,883,640			1,693,195			1,884,233
Shareholders' equity			148,723			153,099			153,877			144,402			131,046			150,045			135,841

(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)

		Dec. 31,			Sept. 30,			June 30,			March 31,			Dec. 31,
Assets		2023			2023			2023			2023			2022
Cash and due from banks		$	9,754.00		$	21,157		$	33,849			19,452		$	17,435
Due from Federal Reserve Bank and
interest-bearing deposits in banks			71,642			58,885			70,364			114,615			29,853
Total cash and cash equivalents			81,396			80,042			104,213			134,067			47,288
Investment securities - available for sale			325,320			345,547			371,753			386,947			412,993
Investment securities - held to maturity			-			-			-			-			31,671
Total investment securities			325,320			345,547			371,753			386,947			444,664
Loans, net of deferred loan fees			1,740,647			1,669,914			1,650,265			1,564,501			1,554,222
Allowance for loan losses			(19,131	)		(17,800	)		(17,636	)		(16,389	)		(16,481	)
Loans, net of allowance for loan losses			1,721,516			1,652,114			1,632,629			1,548,112			1,537,741
Bank owned life insurance			12,315			33,440			33,202			32,972			32,747
Premises and equipment, net			3,297			3,558			3,774			4,037			4,163
Other real estate owned			-			14,095			-			-			-
Accrued interest receivable and other assets			86,992			73,104			62,234			63,916			66,665
Total assets		$	2,230,836		$	2,201,900		$	2,207,805		$	2,170,051			2,133,268
Liabilities and Shareholders' Equity
Deposits:
Non-interest-bearing demand		$	472,517		$	490,289		$	593,246		$	605,093		$	765,079
Interest-bearing checking			740,902			784,757			717,116			335,410			41,701
Money market and savings			298,117			322,983			316,991			563,097			948,731
Time			46,676			30,880			46,794			61,645			67,724
Brokered			96,117			79,291			74,566			52,823			-
Total deposits			1,654,329			1,708,200			1,748,713			1,618,068			1,823,235
Subordinated debt, net			21,906			21,881			21,855			21,830			21,805
Short-term borrowings			360,000			300,000			264,000			359,000			130,000
Accrued interest payable and other liabilities			29,289			26,250			22,432			20,414			20,690
Total liabilities			2,065,524			2,056,331			2,057,000			2,019,312			1,995,730
Shareholders' Equity
Common stock			104,499			104,018			103,420			102,718			102,359
Retained earnings			109,688			109,386			103,979			99,252			93,824
Accumulated other comprehensive (loss)			(48,875	)		(67,835	)		(56,594	)		(51,231	)		(58,645	)
Total shareholders' equity			165,312			145,569			150,805			150,739			137,538
Total liabilities and shareholders' equity		$	2,230,836		$	2,201,900		$	2,207,805		$	2,170,051		$	2,133,268

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

		Three Months Ended															Year-to-Date
		Dec. 31,			Sept. 30,			June 30,			March 31,			Dec. 31,
		2033			2023			2023			2023			2022			2023			2022
Interest and fees on loans		$	31,078		$	29,125		$	26,713		$	25,577		$	23,160		$	112,494		$	71,813
Interest on investment securities			1,979			2,009			2,058			2,612			2,751			8,658			9,877
Other interest income			654			662			1,196			628			526			3,140			1,342
Total interest income			33,711			31,796			29,967			28,817			26,437			124,292			83,032
Deposit interest expense			11,692			10,704			7,989			6,030			4,269			36,414			7,513
Interest on short-term borrowings			3,467			3,480			4,189			2,673			114			13,808			239
Interest on long-term debt			300			300			300			300			300			1,201			1,201
Total interest expense			15,459			14,484			12,478			9,003			4,683			51,423			8,953
Net interest income			18,252			17,312			17,489			19,814			21,754			72,869			74,079
Provision for credit losses			1,266			120			1,471			185			993			3,042			3,510
Net interest income after
provision for credit losses			16,986			17,192			16,018			19,629			20,761			69,827			70,569
Service charges and bank fees			613			560			545			490			599			2,209			2,617
Foreign exchange income			210			53			66			83			61			411			254
Federal Home Loan Bank dividends			172			171			185			163			118			690			367
Income from bank owned life insurance			201			238			230			225			224			894			871
Gain/(loss) on sale of securities			(5,399	)		-			-			(815	)		(404	)		(6,214	)		(404	)
Warrant and success fee income			15			8			-			-			119			23			281
Other investment income			(116	)		142			37			(6	)		521			56			605
Loss on sale of ORE			(165	)		-			-			-			-			(165	)		-
Other income			19			62			24			28			17			134			79
Total noninterest income			(4,450	)		1,234			1,087			168			1,255			(1,962	)		4,670
Salaries and benefit expenses			8,137			7,460			7,021			7,954			7,592			30,572			29,102
Occupancy and equipment expenses			986			1,002			1,005			961			911			3,954			3,652
Data processing			499			538			477			528			456			2,041			1,737
Regulatory assessments			403			478			555			226			221			1,663			1,816
Legal and professional fees			531			483			394			431			364			1,839			1,290
Other operating expenses			994			935			960			933			906			3,824			3,193
Total noninterest expense			11,550			10,896			10,412			11,033			10,450			43,893			40,790
Income before income taxes			986			7,530			6,693			8,764			11,566			23,972			34,449
Provision for income taxes			683			2,122			1,967			2,400			3,151			7,171			9,426
Net income		$	303		$	5,408		$	4,726		$	6,364		$	8,415		$	16,801		$	25,023
Basic earnings per common share		$	0.04		$	0.74		$	0.65		$	0.87		$	1.16		$	2.29		$	3.68
Diluted earnings per common share			0.04			0.72			0.63			0.85			1.13			2.24			3.60
Weighted average shares - basic			7,344,693			7,327,197			7,321,246			7,299,006			7,281,343			7,323,172			6,801,330
Weighted average shares - diluted			7,543,616			7,511,373			7,457,906			7,452,254			7,432,670			7,490,779			6,952,758

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

	Three months ended
	December 31, 2023									September 30, 2023
				Interest			Yields						Interest			Yields
	Average			Income/			or			Average			Income/			or
	Balance			Expense			Rates			Balance			Expense			Rates
Assets
Interest earning assets:
Loans (1)	$	1,700,094		$	31,078		7.25	%		$	1,641,475		$	29,125		7.04	%
Fed funds sold/interest bearing deposits		47,906			654		5.34	%			48,350			662		5.36	%
Investment securities
Taxable investment securities		337,021			1,971		2.32	%			365,244			2,009		2.18	%
Non-taxable investment securities (2)		787			10		5.04	%			-			-		0.00	%
Total investment securities		337,808			1,981		2.33	%			365,244			2,009		2.18	%
Total interest-earning assets		2,085,808			33,713		6.41	%			2,055,069			31,796		6.14	%
Noninterest-earning assets:
Cash and due from banks		12,528									22,556
All other assets (3)		92,862									90,818
Total assets	$	2,191,198								$	2,168,443
Liabilities and Shareholders' Equity
Interest-bearing liabilities:
Deposits
Demand	$	766,856		$	7,650		3.96	%		$	748,016		$	7,306		3.88	%
Money market and savings		305,240			2,218		2.88	%			296,865			2,193		2.93	%
Time		29,787			252		3.36	%			41,455			264		2.53	%
Brokered		119,605			1,572		5.21	%			75,420			941		4.95	%
Total interest-bearing deposits		1,221,488			11,692		3.80	%			1,161,756			10,704		3.66	%
Short-term borrowings		281,457			3,467		4.89	%			285,326			3,480		4.84	%
Subordinated debt		21,893			300		5.44	%			21,867			300		5.44	%
Total interest-bearing liabilities		1,524,838			15,459		4.02	%			1,468,949			14,484		3.91	%
Noninterest-bearing liabilities:
Demand deposits		487,301									520,573
Accrued expenses and other liabilities		30,336									25,822
Shareholders' equity		148,723									153,099
Total liabilities and
shareholders' equity	$	2,191,198								$	2,168,443
Net interest spread							2.39	%								2.23	%
Net interest income and margin (4)				$	18,254		3.47	%					$	17,312		3.34	%
Non-taxable equivalent net interest margin							3.47	%								3.34	%
Cost of deposits	$	1,708,789		$	11,692		2.71	%		$	1,682,329		$	10,704		2.52	%

(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 $449 thousand and $441 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 $17.8 million and $17.6 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)

	Three months ended
	December 31, 2023									December 31, 2022
				Interest			Yields						Interest			Yields
	Average			Income/			or			Average			Income/			or
	Balance			Expense			Rates			Balance			Expense			Rates
Assets
Interest earning assets:
Loans (1)	$	1,700,094		$	31,078		7.25	%		$	1,451,724		$	23,160		6.33	%
Fed funds sold/interest bearing deposits		47,906			654		5.34	%			52,321			526		3.99	%
Investment securities
Taxable investment securities		337,021			1,971		2.32	%			428,520			2,481		2.30	%
Non-taxable investment securities (2)		787			10		5.04	%			30,537			345		4.48	%
Total investment securities		337,808			1,981		2.32	%			459,057			2,826		2.44	%
Total interest-earning assets		2,085,808			33,713		6.41	%			1,963,102			26,512		5.36	%
Noninterest-earning assets:
Cash and due from banks		12,528									25,494
All other assets (3)		92,862									84,291
Total assets	$	2,191,198								$	2,072,887
Liabilities and Shareholders' Equity
Interest-bearing liabilities:
Deposits
Demand	$	766,856		$	7,650		3.96	%		$	44,344		$	60		0.54	%
Money market and savings		305,240			2,218		2.88	%			953,665			4,027		1.68	%
Time		29,787			252		3.36	%			70,409			182		1.03	%
Brokered		119,605			1,572		5.21	%			-			-		-
Total interest-bearing deposits		1,221,488			11,692		3.80	%			1,068,418			4,269		1.59	%
Short-term borrowings		281,457			3,467		4.89	%			11,772			114		3.84	%
Subordinated debt		21,893			300		5.44	%			21,792			300		5.46	%
Total interest-bearing liabilities		1,524,838			15,459		4.02	%			1,101,982			4,683		1.69	%
Noninterest-bearing liabilities:
Demand deposits		487,301									815,222
Accrued expenses and other liabilities		30,336									24,637
Shareholders' equity		148,723									131,046
Total liabilities and
shareholders' equity	$	2,191,198								$	2,072,887
Net interest spread							2.39	%								3.67	%
Net interest income and margin (4)				$	18,254		3.47	%					$	21,829		4.41	%
Non-taxable equivalent net interest margin							3.47	%								4.40	%
Cost of deposits	$	1,708,789		$	11,692		2.71	%		$	1,883,640		$	4,269		0.90	%

(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 $449 thousand and $556 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 $15.6 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)

	Twelve months ended
	December 31, 2023									December 31, 2022
				Interest			Yields						Interest			Yields
	Average			Income/			or			Average			Income/			or
	Balance			Expense			Rates			Balance			Expense			Rates
Assets
Interest earning assets:
Loans (1)	$	1,622,731		$	112,494		6.93	%		$	1,322,969		$	71,813		5.43	%
Fed funds sold/interest bearing deposits		61,331			3,140		5.12	%			166,665			1,342		0.81	%
Investment securities
Taxable investment securities		374,638			8,387		2.24	%			453,805			9,230		2.03	%
Non-taxable investment securities (2)		7,470			343		4.59	%			18,566			820		4.42	%
Total investment securities		382,108			8,730		2.28	%			472,371			10,050		2.13	%
Total interest-earning assets		2,066,170			124,364		6.02	%			1,962,005			83,205		4.24	%
Noninterest-earning assets:
Cash and due from banks		20,375									37,221
All other assets (3)		87,424									73,763
Total assets	$	2,173,969								$	2,072,989
Liabilities and Shareholders' Equity
Interest-bearing liabilities:
Deposits
Demand	$	524,591		$	19,548		3.73	%		$	46,468		$	129		0.28	%
Money market and savings		461,352			12,226		2.65	%			867,419			6,656		0.77	%
Time		46,318			937		2.02	%			86,865			669		0.77	%
Brokered		73,179			3,703		5.06	%			12,688			59		0.47	%
Total interest-bearing deposits		1,105,440			36,414		3.29	%			1,013,440			7,513		0.74	%
Short-term borrowings		282,596			13,808		4.89	%			8,515			239		2.81	%
Subordinated debt		21,855			1,201		5.50	%			21,698			1,201		5.54	%
Total interest-bearing liabilities		1,409,891			51,423		3.65	%			1,043,653			8,953		0.86	%
Noninterest-bearing liabilities:
Demand deposits		587,755									870,793
Accrued expenses and other liabilities		26,278									22,702
Shareholders' equity		150,045									135,841
Total liabilities and
shareholders' equity	$	2,173,969								$	2,072,989
Net interest spread							2.37	%								3.38	%
Net interest income and margin (4)				$	72,941		3.53	%					$	74,252		3.78	%
Non-taxable equivalent net interest margin							3.53	%								3.78	%
Cost of deposits	$	1,693,195		$	36,414		2.15	%		$	1,884,233		$	7,513		0.40	%

(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 $1.9 million and $2.2 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 $17.2 million and $14.2 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)

		Dec. 31,			Sept. 30,			June 30,			March 31,			Dec. 31,			Current Quarter			Year over Year
		2023			2023			2023			2023			2022			Change			Change
Commercial loans		$	758,552		$	731,206		$	716,355		$	642,826		$	700,022		$	27,346		$	58,530
Commercial real estate
Multi-family			194,981			184,147			193,014			188,411			169,048			10,834			25,933
Owner Occupied			139,059			135,950			132,078			137,118			128,790			3,109			10,269
Non-Owner Occupied			393,809			386,629			376,467			350,730			314,284			7,180			79,525
Construction and land			237,124			214,474			215,865			233,162			227,869			22,650			9,255
Residential			16,816			17,311			16,220			11,969			13,394			(495	)		3,422
Total real estate loans			981,789			938,511			933,644			921,390			853,385			43,278			128,404
Other loans			306			197			266			285			815			109			(509	)
Total loans		$	1,740,647		$	1,669,914		$	1,650,265		$	1,564,501		$	1,554,222		$	70,733		$	186,425
Allowance for Credit Losses on Loans
Balance, beginning of quarter		$	17,800		$	17,636		$	16,389		$	16,481		$	15,488
Adoption of ASU 2016-13			-			-			-			(249	)		-
Provision for loan losses			1,331			164			1,347			157			993
Charge-offs			-			-			(100	)		-			-
Recoveries			-			-			-			-			-
Balance, end of quarter		$	19,131		$	17,800		$	17,636		$	16,389		$	16,481
Allowance for Credit Losses
on Unfunded Commitments
Balance, beginning of quarter		$	2,125		$	2,169		$	2,045		$	449		$	422
Adoption of ASU 2016-13			-			-			-			1,568			-
Provision for unfunded commitments			(65	)		(44	)		124			28			27
Balance, end of quarter		$	2,060		$	2,125		$	2,169		$	2,045		$	449
Total allowance for credit losses -
loans and unfunded commitments		$	21,191		$	19,925		$	19,805		$	18,434		$	16,930
Provision for credit losses under CECL
Provision for loan losses		$	1,331		$	164		$	1,347		$	157		$	993
Provision for unfunded commitments (1)			(65	)		(44	)		124			28			-
Total provision for credit losses		$	1,266		$	120		$	1,471		$	185		$	993
Nonperforming Assets
Loans accounted for on a non-accrual basis		$	1,378		$	1,385		$	15,485		$	14,240		$	14,245
Loans past due 90 days or more and still accruing			-			-			-			-			-
Nonperforming loans			1,378			1,385			15,485			14,240			14,245
Other real estate owned			-			14,095			-			-			-
Nonperforming assets		$	1,378		$	15,480		$	15,485		$	14,240		$	14,245
Nonperforming Loans by Type:
Commercial		$	1,378		$	1,385		$	1,390		$	145		$	150
Commercial real estate loans			-			-			-			-			-
Construction and land			-			-			14,095			14,095			14,095
Total Nonperforming loans		$	1,378		$	1,385		$	15,485		$	14,240		$	14,245
Asset Quality Ratios
Allowance for loan losses to total loans			1.10	%		1.07	%		1.07	%		1.05	%		1.06	%
Allowance for credit losses to total loans			1.22	%		1.19	%		1.20	%		1.18	%		1.09	%
Allowance for loan losses to nonperforming loans			1388.32	%		1285.20	%		113.89	%		115.09	%		115.70	%
Nonperforming assets to total assets			0.06	%		0.70	%		0.70	%		0.66	%		0.67	%
Nonperforming loans to total loans			0.08	%		0.08	%		0.94	%		0.91	%		0.92	%
Net quarterly charge-offs to average loans (2)			0.00	%		0.00	%		0.03	%		0.00	%		0.00	%

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

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

		Dec. 31,			Sept. 30,			June 30,			March 31,			Dec. 31,			Current Quarter			Year over Year
Period End Deposits		2023			2023			2023			2023			2022			Change			Change
Non-interest-bearing demand		$	472,517		$	490,289		$	593,246		$	605,093		$	765,079		$	(17,772	)	$	(292,562	)
Interest-bearing checking			740,902			784,757			717,116			335,410			41,701			(43,855	)		699,201
Money market and savings			298,117			322,983			316,991			563,097			948,731			(24,866	)		(650,614	)
Time			46,676			30,880			46,794			61,645			67,724			15,796			(21,048	)
Brokered			96,117			79,291			74,566			52,823			-			16,826			96,117
Total deposits		$	1,654,329		$	1,708,200		$	1,748,713		$	1,618,068		$	1,823,235		$	(53,871	)	$	(168,906	)

		Dec. 31,			Sept. 30,			June 30,			March 31,			Dec. 31,			Current Quarter			Year over Year
Average Deposits		2023			2023			2023			2023			2022			Change			Change
Non-interest-bearing demand		$	487,301		$	520,573		$	621,603		$	724,894		$	815,222		$	(33,272	)	$	(327,921	)
Interest-bearing checking			766,856			748,016			486,367			87,198			44,344			18,840			722,512
Money market and savings			305,240			296,865			389,036			862,195			953,665			8,375			(648,425	)
Time			29,787			41,455			48,650			65,830			70,409			(11,668	)		(40,622	)
Brokered			119,605			75,420			83,319			13,178			-			44,185			119,605
Total deposits		$	1,708,789		$	1,682,328		$	1,628,975		$	1,753,295		$	1,883,640		$	26,461		$	(174,851	)

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

																For the twelve months ended
	2023												2022			December 31,
	Fourth			Third			Second			First			Fourth
Non-GAAP adjusted net income reconciliation	Quarter			Quarter			Quarter			Quarter			Quarter			2023			2022
Net income - GAAP	$	303		$	5,408		$	4,726		$	6,364		$	8,415		$	16,801		$	25,023
Loss on sale of securities, net of income tax		3,888			-			-			595			295			4,483			295
Severance, net of income tax		233			-			-			-			-			233			-
BOLI surrender tax expense		478			-			-			-			-			478			-
Adjusted net income (non-GAAP)	$	4,902		$	5,408		$	4,726		$	6,959		$	8,710		$	21,995		$	25,318
Non-GAAP adjusted net income reconciliation
Net income - GAAP	$	303		$	5,408		$	4,726		$	6,364		$	8,415		$	16,801		$	25,023
Loss on sale of securities		5,399			-			-			815			404			6,214			404
Tax impact of loss on sale of securities		(1,511)			-			-			(220)			(109)			(1,731)			(109)
Severance		324			-			-			-			-			324			-
Tax impact of severance		(91)			-			-			-			-			(91)			-
BOLI surrender tax expense		478			-			-			-			-			478			-
Adjusted net income (non-GAAP)	$	4,902		$	5,408		$	4,726		$	6,959		$	8,710		$	21,995		$	25,318
Non-GAAP adjusted diluted earnings
per share reconciliation
Diluted earnings per share - GAAP	$	0.04		$	0.72		$	0.63		$	0.85		$	1.13		$	2.24		$	3.60
Loss on sale of securities, net of income tax		0.52			-			-			0.08			0.04			0.60			0.04
Severance, net of income tax		0.03			-			-			-			-			0.03			-
BOLI surrender tax expense		0.06			-			-			-			-			0.06			-
Diluted earnings per share - adjusted (non-GAAP)	$	0.65		$	0.72		$	0.63		$	0.93		$	1.17		$	2.94		$	3.64
Non-GAAP adjusted return on average
assets reconciliation
Net income - GAAP	$	303		$	5,408		$	4,726		$	6,364		$	8,415		$	16,801		$	25,023
Average total assets		2,191,198			2,168,443			2,171,559			2,164,441			2,072,887			2,173,969			2,072,989
Return on average assets - GAAP		0.05%			0.99%			0.87%			1.19%			1.61%			0.77%			1.21%
Adjusted net income (non-GAAP)	$	4,902		$	5,408		$	4,726		$	6,959		$	8,710		$	21,995		$	25,318
Average total assets		2,191,198			2,168,443			2,171,559			2,164,441			2,072,887			2,173,969			2,072,989
Return on average assets - adjusted (non-GAAP)		0.89%			0.99%			0.87%			1.30%			1.67%			1.01%			1.22%
Non-GAAP taxable equivalent net interest
income reconciliation
Net interest income - GAAP	$	18,252		$	17,312		$	17,489		$	19,814		$	21,754		$	72,869		$	74,079
Taxable equivalent adjustment		2			-			-			70			75			72			173
Net interest income - taxable equivalent (non-GAAP)	$	18,254		$	17,312		$	17,489		$	19,884		$	21,829		$	72,941		$	74,252
Non-GAAP taxable equivalent net interest
margin reconciliation
Net interest margin - GAAP		3.47%			3.34%			3.39%			3.91%			4.40%			3.53%			3.78%
Impact of taxable equivalent adjustment		-			-			-			0.01			0.01			-			-
Net interest margin - taxable equivalent (non-GAAP)		3.47%			3.34%			3.39%			3.92%			4.41%			3.53%			3.78%

SOURCE: Avidbank Holdings, Inc.

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FAQ

What is the adjusted net income for Avidbank Holdings, Inc. in the fourth quarter of 2023?

The adjusted net income for Avidbank Holdings, Inc. in the fourth quarter of 2023 was $4.9 million, or $0.65 per diluted share.

What was the increase in book value per share for Avidbank Holdings, Inc. from December 31, 2022, to December 31, 2023?

The book value per share for Avidbank Holdings, Inc. was $21.27 on December 31, 2023, an increase of $3.28, or 18%, from December 31, 2022.

What were the profitability improvement initiatives implemented by Avidbank Holdings, Inc. in the fourth quarter of 2023?

Avidbank Holdings, Inc. implemented several profitability improvement initiatives, including selling securities and foreclosed property, surrendering BOLI policies, and reducing staff.

What were the changes in taxable equivalent net interest income for Avidbank Holdings, Inc. in the fourth quarter of 2023 compared to the third quarter of 2023 and the fourth quarter of 2022?

The taxable equivalent net interest income for Avidbank Holdings, Inc. in the fourth quarter of 2023 was $18.3 million, an increase of $942,000, or 5%, from the third quarter of 2023, and a decrease of $3.6 million, or 16%, from the fourth quarter of 2022.

What was the total assets for Avidbank Holdings, Inc. as of December 31, 2023?

The total assets for Avidbank Holdings, Inc. were $2.23 billion as of December 31, 2023.

What was the change in deposits for Avidbank Holdings, Inc. during the fourth quarter of 2023?

The change in deposits during the fourth quarter of 2023 included a $53.9 million decrease in total deposits.

What were the short-term borrowings for Avidbank Holdings, Inc. on December 31, 2023?

The short-term borrowings for Avidbank Holdings, Inc. on December 31, 2023, totaled $360.0 million, an increase of $60.0 million, or 20%, compared to September 30, 2023.