Avidbank Holdings, Inc. Announces Net Income of $12.3 Million for the Year Ended December 31, 2021

Rhea-AI Summary

Avidbank Holdings reported a 28% increase in net income for 2021, reaching $12.3 million versus $9.6 million in 2020. Key financial highlights include a 13.5% rise in net interest income to $51.0 million and total assets growing by 51.2% to $2.16 billion. However, loan loss provisions increased to $3.6 million in 2021 from $1.7 million in 2020. Fourth-quarter net income slightly decreased to $2.5 million, impacted by a $3.3 million loan loss provision. Total deposits surged by 57.9% to $1.98 billion year-over-year.

Positive

• Net income rose to $12.3 million in 2021, a 28% increase from 2020.
• Net interest income increased by 13.5% to $51.0 million.
• Total assets grew by 51.2% to $2.16 billion.
• Total deposits increased by 57.9% to $1.98 billion.

Negative

• Loan loss provision increased to $3.6 million in 2021 from $1.7 million in 2020.
• Fourth-quarter net income decreased to $2.5 million from $2.8 million in 2020.

SAN JOSE, CA / ACCESSWIRE / January 31, 2022 / Avidbank Holdings, Inc. ("the Company") (OTC PINK:AVBH), a bank holding company and the parent company of Avidbank ("the Bank"), an independent full-service commercial bank serving businesses and individuals primarily in Northern California, announced unaudited consolidated net income of $12.3 million for the year ended December 31, 2021 compared to $9.6 million, or a 28% increase for the year ended December 31, 2020.

Full Year and Fourth Quarter 2021 Financial Highlights

• Net income was $12.3 million in 2021 compared to $9.6 million in 2020. Net income in 2021 benefited from a $735,000 gain on the sale of investment securities and $711,000 of income from an investment fund. Net income in 2021 was reduced by a $3.6 million loan loss provision while a $1.7 million loan loss provision was recorded in 2020. Net interest income was $51.0 million in 2021, an increase of $6.1 million or 13.5% compared to the figure recorded in 2020.
• Diluted earnings per common share were $2.02 in 2021, compared to $1.61 in 2020. Weighted average common fully diluted shares outstanding were 6,062,482 and 5,967,780 in 2021 and 2020, respectively.
• Total interest income was $15.3 million for the fourth quarter of 2021, an increase of $2.3 million over the $13.0 million we recorded in the fourth quarter of 2020. The 17.5% increase over the prior year quarter reflects year over year loan growth and increased investment securities income.
• Net income was $2.5 million for the fourth quarter of 2021, compared to $2.8 million for the fourth quarter of 2020. Results for the fourth quarter of 2021 were affected by a $3.3 million loan loss provision while a $115,000 loan loss provision was taken in the fourth quarter of 2020.
• Diluted earnings per common share were $0.42 for the fourth quarter of 2021, compared to $0.46 for the fourth quarter of 2020.
• Total assets grew by 51.2% in 2021, ending the fourth quarter at $2.16 billion.
• Total loans net of deferred fees and any SBA PPP funding grew by 25.1% in 2021, ending the fourth quarter at $1.22 billion.
• Total deposits grew by 57.9% in 2021, ending the fourth quarter at $1.98 billion.
• The Company continues to be well capitalized for regulatory purposes with a Tier 1 Leverage Ratio of 6.89%, a Tier 1 Risk-Based Capital and Common Equity Tier 1 Risk-Based Capital Ratio of 8.90%, and a Total Risk-Based Capital Ratio of 11.11%.

Mark D. Mordell, Chairman and Chief Executive Officer, stated, "The investments we have made in personnel and infrastructure over the past several years have generated the returns we had planned for in 2021 as Avidbank achieved record levels of loans, deposits and total assets. These results were made possible by the outstanding teamwork and energy of our dedicated staff coming together to overcome the disruptions caused by the pandemic. Net interest income increased to $14.3 million in the fourth quarter of 2021, a 21.6% increase over the fourth quarter of 2020, primarily due to increases in loan interest income and investment securities income. Loans outstanding increased in the fourth quarter of 2021 due to new business generated by all of our lending divisions. Additionally, we increased our investment portfolio $103.5 million in the fourth quarter of 2021 with additional purchases of mortgage-backed securities."

Mr. Mordell continued, "Non-interest expense increased by $1.1 million to $9.5 million in the fourth quarter of 2021, up from $8.5 million in the third quarter of 2021, as a result of higher compensation and benefits costs. Our efficiency ratio decreased to 58.3% in the fourth quarter of 2021, down from 68.9% in the fourth quarter of 2020, as a result of increased net interest income, higher non-interest income and controlling costs. Total deposits increased by $331.8 million in the fourth quarter of 2021 compared to the third quarter of 2021 and increased by $725.7 million from the fourth quarter of 2020. The increase in deposits from September 30, 2021, was due to higher money market and demand deposit accounts, as was the increase in deposits over the fourth quarter of 2020. Our net interest margin dropped to 2.90% in the fourth quarter of 2021, compared to 2.98% in the third quarter of 2021, primarily due to a large surplus in overnight funds and a drop in loan and investment yields. Annualized return on assets was affected by a $3.0 million charge-off taken on a single commercial loan in the fourth quarter of 2021. Return on assets was 0.49% in the fourth quarter of 2021 compared to 0.80% in the third quarter of 2021 and 0.75% in the fourth quarter of 2020."

Mr. Mordell concluded, "We are very pleased with the progress we have made in 2021 as our team has been continuing to adapt to the "Covid" environment. We continue to maintain a hybrid work environment in our offices with the majority of staff splitting their time between the office and remote work at home, and have had a growing number working full-time in the office. Our focus will continue to be employee health and safety along with our fiduciary responsibility to our clients and shareholders. For those reasons, we continue to be cautious in our plans for returning employees to the workplace."

Results for the twelve months ended December 31, 2021

Net interest income before provision for loan losses was $51.0 million in 2021, an increase of $6.1 million or 13.5% over the previous year. Reduced interest expense and higher investment income were the primary reasons for the increase. Average loans net of deferred fees were $1.05 billion in 2021 compared to $981.9 million in 2020. Average earning assets were $1.63 billion in 2021, a 28.3% increase over the prior year figure of $1.27 billion. Net interest margin was 3.12% in 2021 compared to 3.53% for 2020. The decrease in net interest margin was primarily caused by an increase in overnight funds and a decline in loan and investment yields. A $3.6 million loan loss provision was taken in 2021 compared to a $1.7 million loan loss provision recorded in 2020. We had $3.1 million of charge-offs and no recoveries in 2021 compared to $411,000 of charge-offs and no recoveries for 2020.

Non-interest income was $5.3 million in 2021, an increase of $2.7 million or 102% compared to $2.6 million in 2020, reflecting a $735,000 gain on the sale of investments, income of $711,000 from an investment fund and increased service charge income.

Non-interest expense increased by $2.4 million to $35.6 million in 2021 compared to $33.2 million in 2020 due primarily to increased investments in personnel across the entire Bank.

The effective tax rate was 28.5% in 2021 compared to 24.2% for the same period in 2020. The effective tax rate in 2020 reflected the favorable impact of affordable housing tax credit investments and the re-allocation of income taxes to states outside of California.

Results for the quarter ended December 31, 2021

For the three months ended December 31, 2021, interest and fees on loans were $13.9 million, an increase of $1.2 million or 9.4% compared to the fourth quarter of 2020. The increase was primarily the result of higher loan balances partially offset by lower loan yields. Average loans net of deferred fees for the quarter ended December 31, 2021 were $1.15 billion, compared to $1.00 billion for the same quarter in 2020, an increase of 15.6%. Average earning assets were $1.96 billion in the fourth quarter of 2021, a 39.1% increase over the fourth quarter of the prior year. Loans made up 59% of average earning assets at the end of the fourth quarter of 2021 compared to 71% at the end of the fourth quarter of 2020. Net interest margin was 2.90% for the fourth quarter of 2021, compared to 3.33% for the fourth quarter of 2020. A $3.3 million loan loss provision was taken in the fourth quarter of 2021 compared with a $115,000 loan loss provision taken in the fourth quarter of 2020.

Non-interest income was $2.1 million in the fourth quarter of 2021, an increase of $1.4 million or 192.1% compared to the fourth quarter of 2020. The increase resulted from increased income from an investment fund of $711,000, proceeds from a warrant sale of $456,000 and increased BOLI income.

Non-interest expense increased by $953,000 or 11.1% in the fourth quarter of 2021 to $9.5 million compared to $8.6 million for the fourth quarter of 2020. This increase was primarily due to increases in compensation and benefit costs. The Company's full-time equivalent employees at December 31, 2021 and 2020 were 126 for both periods. The Company's efficiency ratio decreased from 68.9% in the fourth quarter of 2020 to 58.3% in the fourth quarter of 2021 primarily due to increased loan and investment interest income, higher non-interest income and controlled expenses.

Balance Sheet

Total assets were $2.16 billion as of December 31, 2021, compared to $1.83 billion at September 30, 2021 and $1.43 billion at December 31, 2020. The increase in total assets of $334.5 million, or 18.3%, from September 30, 2021 was primarily due to increased deposits funding increases in loans, investments and overnight funds with the Federal Reserve. Investments increased by $103.5 million due to the purchase of mortgage-backed securities with excess funds. The Company reported loans net of deferred fees at December 31, 2021 of $1.22 billion, which represented an increase of $150.2 million, or 14%, from $1.07 billion at September 30, 2021, and an increase of $229.9 million, or 23.1%, over $0.99 billion at December 31, 2020. The increase in loans from September 30, 2021 was primarily the result of an increase in Specialty Finance, CRE and Venture Lending loans. The increase in loans from December 31, 2020 was due to higher CRE, Specialty Finance and Multi-Family loans.

"We had $3.2 million in three non-accrual loans on December 31, 2021, down from a balance of $3.5 million at the end of 2020. Two of the non-accrual loans totaling $3.1 million are secured by commercial real estate with a very low loan to value," observed Mr. Mordell.

The Company's total deposits were $1.98 billion as of December 31, 2021, which represented an increase of $331.8 million, or 20.1%, compared to $1.65 billion at September 30, 2021 and an increase of $725.7 million, or 57.9%, compared to $1.25 billion at December 31, 2020. The increase in deposits from September 30, 2021 was due to higher money market and demand deposit accounts. The increase in deposits from December 31, 2020 was also due to an increase in money market and demand deposit accounts. The Company had no FHLB advances outstanding as of December 31, 2021, September 30, 2021 or December 31, 2020.

Demand and interest bearing transaction deposits represented 53% of total deposits at December 31, 2021, compared to 56% at September 30, 2021 and 55% at December 31, 2020. Core deposits, which include transaction deposits, money market accounts and CDs below $250,000, represented 96% of total deposits at December 31, 2021, compared to 94% at September 30, 2021 and 90% at December 31, 2020. The Company's loan to deposit ratio was 62% at December 31, 2021 compared to 65% at September 30, 2021 and 79% at December 31, 2020.

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, 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 non-performing 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 effects of the Tax Cuts and Jobs Act; 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:
Steve Leen
Executive Vice President and Chief Financial Officer
408-831-5653
sleen@avidbank.com

Avidbank Holdings, Inc. Consolidated Balance Sheets ($000, except share and per share amounts) (Unaudited)
Assets		12/31/21				9/30/21				6/30/21				3/31/21				12/31/20
Cash and due from banks		$	29,616			$	34,864			$	27,977			$	21,870			$	14,327
Due from Federal Reserve Bank			463,727				378,380				308,596				258,921				215,705
Total cash and cash equivalents			493,343				413,244				336,573				280,791				230,032
Investment securities - available for sale			380,170				276,670				208,482				184,504				163,631
Loans, net of deferred loan fees			1,223,344				1,073,132				1,014,750				1,027,336				993,483
Allowance for loan losses			(13,054	)			(12,775	)			(12,558	)			(12,558	)			(12,558	)
Loans, net of allowance for loan losses			1,210,290				1,060,357				1,002,192				1,014,778				980,925
Bank owned life insurance			31,875				31,663				11,559				11,491				11,425
Premises and equipment, net			4,565				4,913				5,138				5,375				5,565
Other real estate owned			-				-				-				-				-
Accrued interest receivable & other assets			42,235				41,174				40,329				38,744				39,048
Total assets		$	2,162,478			$	1,828,021			$	1,604,273			$	1,535,683			$	1,430,626
Liabilities
Non-interest-bearing demand deposits		$	993,156			$	872,972			$	728,522			$	702,785			$	665,096
Interest bearing transaction accounts			50,674				49,722				30,538				27,863				25,390
Money market and savings accounts			845,718				614,992				541,145				499,507				419,038
Time deposits			89,862				109,927				126,972				133,314				144,230
Total deposits			1,979,410				1,647,613				1,427,177				1,363,469				1,253,754
Subordinated debt, net			21,703				21,671				21,636				21,601				21,565
Other liabilities			24,265				23,940				23,229				23,294				27,383
Total liabilities			2,025,378				1,693,224				1,472,042				1,408,364				1,302,702
Shareholders' equity
Common stock/additional paid-in capital			72,799				72,124				71,542				71,152				70,721
Retained earnings			68,801				66,267				62,693				59,044				56,537
Accumulated other comprehensive (loss) income			(4,500	)			(3,594	)			(2,004	)			(2,877	)			666
Total shareholders' equity			137,100				134,797				132,231				127,319				127,924
Total liabilities and shareholders' equity		$	2,162,478			$	1,828,021			$	1,604,273			$	1,535,683			$	1,430,626
Capital ratios
Tier 1 leverage ratio			6.89	%			7.81	%			8.64	%			8.87	%			8.67	%
Common equity tier 1 capital ratio			8.90	%			9.94	%			10.57	%			10.38	%			10.35	%
Tier 1 risk-based capital ratio			8.90	%			9.94	%			10.57	%			10.38	%			10.35	%
Total risk-based capital ratio			11.11	%			12.44	%			13.30	%			13.14	%			13.15	%
Book value per common share		$	21.91			$	21.55			$	21.26			$	20.42			$	20.74
Total common shares outstanding			6,256,682				6,255,752				6,220,872				6,236,392				6,168,313
Other Ratios
Non-interest bearing deposits to total deposits			50.2	%			53.0	%			51.0	%			51.5	%			53.0	%
Core deposits to total deposits			96.0	%			94.0	%			91.9	%			91.3	%			90.0	%
Loan to deposit ratio			61.8	%			65.1	%			71.1	%			75.3	%			79.2	%
Allowance for loan losses to total loans			1.07	%			1.19	%			1.24	%			1.22	%			1.26	%
Quarterly Average Balances ($000s)
Loans, net of deferred loan fees		$	1,152,641			$	1,026,812			$	1,022,364			$	1,008,379			$	997,442
Earning assets			1,957,599				1,685,193				1,485,107				1,404,752				1,407,390
Total assets			2,054,545				1,771,292				1,554,049				1,468,597				1,467,588
Total deposits			1,866,704				1,589,384				1,376,736				1,291,767				1,290,320
Total shareholders' equity			138,589				135,721				131,300				128,844				126,840

Avidbank Holdings, Inc. Condensed Consolidated Statements of Income ($000, except share and per share amounts) (Unaudited)
		Quarter Ended												Year-to-Date
		12/31/21				9/30/21				12/31/20				12/31/21				12/31/20
Interest and fees on loans		$	13,927			$	12,533			$	12,732			$	50,823			$	49,517
Interest on investment securities			1,154				946				191				3,606				901
Other interest income			193				156				77				456				482
Total interest income			15,274				13,635				13,000				54,885				50,900
Deposit interest expense			655				671				922				2,618				4,712
Other interest expense			307				310				309				1,238				1,243
Total interest expense			962				981				1,231				3,856				5,955
Net interest income			14,312				12,654				11,769				51,029				44,945
Provision for loan losses			3,279				217				115				3,572				1,702
Net interest income after
provision for loan losses			11,033				12,437				11,654				47,457				43,243
Service charges, fees and other income			1,509				894				638				3,763				2,362
Income from bank owned life insurance			213				103				69				451				269
Gain on sale of assets			343				-				-				1,099				-
Total non-interest income			2,065				997				707				5,313				2,631
Compensation and benefit expenses			6,920				5,860				5,972				25,256				23,233
Occupancy and equipment expenses			924				1,066				1,139				4,078				4,123
Other operating expenses			1,705				1,526				1,485				6,282				5,811
Total non-interest expense			9,549				8,452				8,596				35,616				33,167
Income before income taxes			3,549				4,982				3,765				17,154				12,707
Provision for income taxes			1,015				1,408				1,001				4,890				3,080
Net income		$	2,534			$	3,574			$	2,764			$	12,264			$	9,627
Basic earnings per common share		$	0.43			$	0.60			$	0.47			$	2.08			$	1.64
Diluted earnings per common share		$	0.42			$	0.59			$	0.46			$	2.02			$	1.61
Average common shares outstanding			5,904,446				5,898,208				5,874,617				5,890,216				5,859,547
Average common fully diluted shares			6,101,778				6,072,085				6,000,688				6,062,482				5,967,780
Annualized returns:
Return on average assets			0.49	%			0.80	%			0.75	%			0.72	%			0.72	%
Return on average common equity			7.25	%			10.45	%			8.67	%			9.18	%			7.86	%
Net interest margin			2.90	%			2.98	%			3.33	%			3.12	%			3.53	%
Cost of funds			0.20	%			0.24	%			0.37	%			0.25	%			0.50	%
Efficiency ratio			58.31	%			61.91	%			68.90	%			63.21	%			69.71	%

Avidbank Holdings, Inc. Credit Trends ($000) (Unaudited)
		12/31/21				9/30/21				6/30/21				3/31/21				12/31/20
Allowance for Loan Losses
Balance, beginning of quarter		$	12,775			$	12,558			$	12,558			$	12,558			$	12,443
Provision for loan losses, quarterly			3,279				217				-				75				115
Charge-offs, quarterly			(3,000	)			-				-				(75	)			-
Recoveries, quarterly			-				-				-				-				-
Balance, end of quarter		$	13,054			$	12,775			$	12,558			$	12,558			$	12,558
Nonperforming Assets
Loans accounted for on a non-accrual basis		$	3,244			$	3,285			$	3,326			$	3,367			$	3,547
Loans with principal or interest contractually past due 90 days or more and still accruing interest			-				-				-				-				-
Nonperforming loans			3,244				3,285				3,326				3,367				3,547
Other real estate owned			-				-				-				-				-
Nonperforming assets		$	3,244			$	3,285			$	3,326			$	3,367			$	3,547
Loans restructured and in
compliance with modified terms			-				-				-				-				-
Nonperforming assets & restructured loans		$	3,244			$	3,285			$	3,326			$	3,367			$	3,547
Nonperforming Loans by Type:
Commercial		$	448			$	456			$	463			$	470			$	618
Commercial Real Estate Loans			2,796				2,829				2,863				2,897				2,929
Total Nonperforming loans		$	3,244			$	3,285			$	3,326			$	3,367			$	3,547
Asset Quality Ratios
Allowance for loan losses (ALLL) to total loans			1.07	%			1.19	%			1.24	%			1.22	%			1.26	%
ALLL to nonperforming loans			402.40	%			388.89	%			377.59	%			373.03	%			354.00	%
Nonperforming assets to total assets			0.15	%			0.18	%			0.21	%			0.22	%			0.25	%
Nonperforming loans to total loans			0.27	%			0.31	%			0.33	%			0.33	%			0.36	%
Net quarterly charge-offs to total loans			0.25	%			0.00	%			0.00	%			0.01	%			0.00	%

SOURCE: Avidbank Holdings, Inc.

View source version on accesswire.com:
https://www.accesswire.com/686228/Avidbank-Holdings-Inc-Announces-Net-Income-of-123-Million-for-the-Year-Ended-December-31-2021

FAQ

What was Avidbank's net income for 2021?

Avidbank reported a net income of $12.3 million for 2021.

How much did Avidbank's total assets increase in 2021?

Total assets increased by 51.2% to $2.16 billion in 2021.

What was the change in Avidbank's loan loss provision in 2021?

The loan loss provision increased to $3.6 million in 2021, up from $1.7 million in 2020.

What were Avidbank's total deposits at the end of 2021?

Total deposits reached $1.98 billion as of December 31, 2021.

How did Avidbank's net interest income change in 2021?

Net interest income grew by 13.5% to $51.0 million in 2021.