Avidbank Holdings, Inc. Announces Net Income of $3.6 Million for the Third Quarter of 2021

Rhea-AI Summary

Avidbank Holdings, Inc. (OTC PINK:AVBH) reported a net income of $3.6 million for Q3 2021, up from $2.4 million in Q3 2020. Year-to-date net income reached $9.7 million, compared to $6.9 million in the prior year. Net interest income for the first nine months grew 10.7% to $36.7 million. Total assets surged by 27.8% to $1.83 billion. Deposits rose by 31.4% year-over-year, totaling $1.65 billion. The efficiency ratio improved to 61.9%, reflecting cost controls and increased earnings.

Positive

• Net income for Q3 2021 increased to $3.6 million, a 50% rise from $2.4 million in Q3 2020.
• Year-to-date net income was $9.7 million, up 40.6% from $6.9 million in the first nine months of 2020.
• Net interest income for the first nine months grew 10.7% to $36.7 million.
• Total assets grew by 27.8% in Q1 2021, reaching $1.83 billion.
• Total deposits increased by 31.4%, totaling $1.65 billion.
• Efficiency ratio improved to 61.9% in Q3 2021 from 72.6% in Q3 2020.

Negative

• Net interest margin dropped to 2.98% in Q3 2021 from 3.28% in Q2 2021.
• Loan loss provision in Q3 2021 was $217,000, up from $303,000 in Q3 2020.

SAN JOSE, CA / ACCESSWIRE / October 18, 2021 / 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 $3.6 million for the third quarter of 2021 compared to $2.4 million for the same period in 2020.

Year-to-Date and Third Quarter 2021 Financial Highlights

• Net income was $9.7 million in the first nine months of 2021 compared to $6.9 million in the first nine months of 2020. Net income in the first nine months of 2021 benefited from a $735,000 gain on the sale of investment securities. Net income in the prior year period was reduced by a $1.6 million loan loss provision while a $293,000 loan loss provision was taken in 2021. Net interest income was $36.7 million in the first nine months of 2021, an increase of $3.5 million or 10.7% compared to the figure recorded in the first nine months of 2020.
• Diluted earnings per common share were $1.61 in the first nine months of 2021, compared to $1.15 in the first nine months of 2020. Weighted average common fully diluted shares outstanding were 6,048,748 and 5,957,949 in the first nine months of 2021 and 2020, respectively.
• Total interest income was $13.6 million for the third quarter of 2021, an increase of $1.2 million over the $12.4 million we recorded in the third quarter of 2020. The 9.9% increase over the prior year quarter reflects year over year loan growth and increased investment securities income offset, in part, by declining loan yields.
• Net income was $3.6 million for the third quarter of 2021, compared to $2.4 million for the third quarter of 2020. Results for the third quarter of 2021 were affected by a $217,000 loan loss provision while a $303,000 loan loss provision was taken in the third quarter of 2020.
• Diluted earnings per common share were $0.59 for the third quarter of 2021, compared to $0.39 for the third quarter of 2020.
• Total assets grew by 27.8% in the first nine months of 2021, ending the third quarter at $1.83 billion.
• Total loans net of deferred fees grew by 8.0% in the first nine months of 2021, ending the third quarter at $1.07 billion.
• Total deposits grew by 31.4% in the first nine months of 2021, ending the third quarter at $1.65 billion.
• The Company continues to be well capitalized for regulatory purposes with a Tier 1 Leverage Ratio of 7.81%, a Tier 1 Risk Based Capital and Common Equity Tier 1 Risk Based Capital Ratio of 9.94%, and a Total Risk Based Capital Ratio of 12.44%.

Mark D. Mordell, Chairman and Chief Executive Officer, stated, "Net interest income increased to $12.7 million in the third quarter of 2021, a 15.4% increase over the third quarter of 2020, primarily due to a drop in deposit interest expense and an increase in investment securities income. Loans outstanding increased in the third quarter of 2021 due to increased CRE, Multi-Family, and Venture Lending loans, partially offset by several Construction loan payoffs. Our lending activity picked up in the third quarter even with the surplus liquidity in the economy from government programs. We increased our investment portfolio $68.2 million in the third quarter of 2021 with additional purchases of mortgage-backed securities."

Mr. Mordell continued, "Non-interest expense decreased by $120,000 to $8.5 million in the third quarter of 2021, down from $8.6 million in the second quarter of 2021, as we have reduced the pace of our hiring and restructured the staffing in our Specialty Finance Division to generate an estimated annual savings of over $1.2 million. Our efficiency ratio decreased to 61.9% in the third quarter of 2021, down from 72.6% in the third quarter of 2020, as a result of increased net interest income, higher service charges and controlling costs. We closed our Palo Alto branch at the end of the third quarter as the pandemic accelerated our plans to shutter the underutilized and high cost location. Beginning in 2022 the closure will generate an annual savings estimated to be over $600,000 in facilities and other costs. Total deposits increased by $220.4 million in the third quarter of 2021 compared to the second quarter of 2021 and increased by $379.2 million from the third quarter of 2020. The increase in deposits from June 30, 2021 was due to higher money market and demand deposit accounts. The increase in deposits over the third quarter of 2020 was also due to an increase in demand deposits and money market accounts partially offset by lower brokered deposits and CDs over $250,000. Our net interest margin dropped to 2.98% in the third quarter of 2021, compared to 3.28% in the second quarter of 2021, primarily due to a large surplus in overnight funds and a drop in loan and investment yields. Return on assets was 0.80% in the third quarter of 2021 compared to 0.94% in the second quarter of 2021 and 0.66% in the third quarter of 2020."

Mr. Mordell concluded, "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 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 nine months ended September 30, 2021

Net interest income before provision for loan losses was $36.7 million in the first nine months of 2021, an increase of $3.5 million or 10.7% over the same period of the prior year. Reduced interest expense and higher investment income were the primary reasons for the increase. Average loans net of deferred fees were $1.02 billion in the first nine months of 2021 compared to $976.7 million in the first nine months of 2020. Average earning assets were $1.53 billion in the first nine months of 2021, a 24.4% increase over the prior year figure of $1.23 billion. Net interest margin was 3.22% in the first nine months of 2021 compared to 3.61% for the same period in 2020. The decrease in net interest margin was primarily caused by a decline in loan and investment yields and an increase in overnight funds. A $293,000 loan loss provision was taken in the first nine months of 2021 compared to a $1.6 million loan loss provision recorded in the first nine months of 2020. We had $75,000 of charge-offs and no recoveries in the first nine months of 2021 compared to $411,000 of charge-offs and no recoveries for the same period in 2020.

Non-interest income was $3.2 million in the first nine months of 2021, an increase of $1.3 million or 68.8% compared to $1.9 million in the first nine months of 2020, reflecting a $735,000 gain on the sale of investments and increased service charge and investment fund income.

Non-interest expense increased by $1.5 million to $26.1 million in the first nine months of 2021 compared to $24.6 million for the same period in 2020 due primarily to increased investments in personnel across the entire Bank.

The effective tax rate was 28.5% in the first nine months of 2021 compared to 23.2% 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 September 30, 2021

For the three months ended September 30, 2021, interest and fees on loans were $12.5 million, an increase of $344,000 or 2.8% compared to the third 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 September 30, 2021 were $1.03 billion, compared to $1.01 billion for the same quarter in 2020, an increase of 2.0%. Average earning assets were $1.69 billion in the third quarter of 2021, a 24.3% increase over the third quarter of the prior year. Loans made up 61% of average earning assets at the end of the third quarter of 2021 compared to 74% at the end of the third quarter of 2020. Net interest margin was 2.98% for the third quarter of 2021, compared to 3.22% for the third quarter of 2020. A $217,000 loan loss provision was taken in the third quarter of 2021 compared with a $303,000 loan loss provision taken in the third quarter of 2020.

Non-interest income was $1.0 million in the third quarter of 2021, an increase of $434,000 or 77.1% compared to the third quarter of 2020. The increase resulted primarily from increased service charge and investment fund income.

Non-interest expense increased by $89,000 or 1.1% in the third quarter of 2021 to $8.5 million compared to $8.4 million for the third quarter of 2020. This increase was primarily due to inflationary increases in compensation and benefit costs. The Company's full-time equivalent employees at September 30, 2021 and 2020 were 126 for both periods. The Company's efficiency ratio decreased from 72.6% in the third quarter of 2020 to 61.9% in the third quarter of 2021 primarily due to controlled expenses, increased investment and loan interest income, and reduced interest expense.

Balance Sheet

Total assets were $1.83 billion as of September 30, 2021, compared to $1.60 billion at June 30, 2021 and $1.44 billion at September 30, 2020. The increase in total assets of $223.7 million, or 13.9%, from June 30, 2021 was primarily due to increased deposits causing an increase in overnight funds with the Federal Reserve. Investments increased $68.2 million due to the purchase of mortgage-backed securities with excess funds. The Company reported loans net of deferred fees at September 30, 2021 of $1.073 billion, which represented an increase of $58.4 million, or 5.8%, from $1.01475 billion at June 30, 2021, and an increase of $62.0 million, or 6.1%, over $1.011 billion at September 30, 2020. The increase in loans from June 30, 2021 was primarily the result of an increase in CRE, Multi-Family and Venture Lending loans, partially offset by a decrease in Construction loans. The increase in loans from September 30, 2020 was due to higher CRE, Multi-Family and Venture Lending loans, partially offset by lower Asset-Based loans.

"We had $3.3 million in three non-accrual loans on September 30, 2021, unchanged from a balance of $3.3 million at the end of the prior quarter. 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 $1.65 billion as of September 30, 2021, which represented an increase of $220.4 million, or 15.4%, compared to $1.43 billion at June 30, 2021 and an increase of $379.2 million, or 29.9%, compared to $1.27 billion at September 30, 2020. The increase in deposits from June 30, 2021 was due to higher demand deposit and money market accounts. The increase from September 30, 2020 was also due to an increase in money market accounts and demand deposits, partially offset by lower brokered deposits and CDs over $250,000. The Company had no FHLB advances outstanding as of September 30, 2021, June 30, 2021 or September 30, 2020.

Demand and interest bearing transaction deposits represented 56% of total deposits at September 30, 2021, compared to 53% at June 30, 2021 and 55% at September 30, 2020. Core deposits, which include transaction deposits, money market accounts and CDs below $250,000, represented 94% of total deposits at September 30, 2021, compared to 92% at June 30, 2021 and 87% at September 30, 2020. The Company's loan to deposit ratio was 65% at September 30, 2021 compared to 71% at June 30, 2021 and 80% at September 30, 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		9/30/21				6/30/21				3/31/21				12/31/20				9/30/20
Cash and due from banks		$	34,864			$	27,977			$	21,870			$	14,327			$	20,857
Due from Federal Reserve Bank			378,380				308,596				258,921				215,705				327,795
Total cash and cash equivalents			413,244				336,573				280,791				230,032				348,652
Investment securities - available for sale			276,670				208,482				184,504				163,631				40,316
Loans, net of deferred loan fees			1,073,132				1,014,750				1,027,336				993,483				1,011,137
Allowance for loan losses			(12,775	)			(12,558	)			(12,558	)			(12,558	)			(12,443	)
Loans, net of allowance for loan losses			1,060,357				1,002,192				1,014,778				980,925				998,694
Bank owned life insurance			31,663				11,559				11,491				11,425				11,355
Premises and equipment, net			4,913				5,138				5,375				5,565				5,432
Other real estate owned			-				-				-				-				-
Accrued interest receivable & other assets			41,174				40,329				38,744				39,048				39,321
Total assets		$	1,828,021			$	1,604,273			$	1,535,683			$	1,430,626			$	1,443,770
Liabilities
Non-interest-bearing demand deposits		$	872,972			$	728,522			$	702,785			$	665,096			$	671,663
Interest bearing transaction accounts			49,722				30,538				27,863				25,390				24,808
Money market and savings accounts			614,992				541,145				499,507				419,038				382,394
Time deposits			109,927				126,972				133,314				144,230				189,529
Total deposits			1,647,613				1,427,177				1,363,469				1,253,754				1,268,394
Subordinated debt, net			21,671				21,636				21,601				21,565				21,571
Other liabilities			23,940				23,229				23,294				27,383				28,409
Total liabilities			1,693,224				1,472,042				1,408,364				1,302,702				1,318,374
Shareholders' equity
Common stock/additional paid-in capital			72,124				71,542				71,152				70,721				70,595
Retained earnings			66,267				62,693				59,044				56,537				53,773
Accumulated other comprehensive (loss) income			(3,594	)			(2,004	)			(2,877	)			666				1,028
Total shareholders' equity			134,797				132,231				127,319				127,924				125,396
Total liabilities and shareholders' equity		$	1,828,021			$	1,604,273			$	1,535,683			$	1,430,626			$	1,443,770
Capital ratios
Tier 1 leverage ratio			7.81	%			8.64	%			8.87	%			8.67	%			8.79	%
Common equity tier 1 capital ratio			9.94	%			10.57	%			10.38	%			10.35	%			10.33	%
Tier 1 risk-based capital ratio			9.94	%			10.57	%			10.38	%			10.35	%			10.33	%
Total risk-based capital ratio			12.44	%			13.30	%			13.14	%			13.15	%			13.19	%
Book value per common share		$	21.55			$	21.26			$	20.42			$	20.74			$	20.37
Total common shares outstanding			6,255,752				6,220,872				6,236,392				6,168,313				6,155,265
Other Ratios
Non-interest bearing deposits to total deposits			53.0	%			51.0	%			51.5	%			53.0	%			53.0	%
Core deposits to total deposits			94.0	%			91.9	%			91.3	%			90.0	%			86.7	%
Loan to deposit ratio			65.1	%			71.1	%			75.3	%			79.2	%			79.7	%
Allowance for loan losses to total loans			1.19	%			1.24	%			1.22	%			1.26	%			1.23	%
Quarterly Average Balances ($000s)
Loans, net of deferred loan fees		$	1,026,812			$	1,022,364			$	1,008,379			$	997,442			$	1,006,167
Earning assets			1,685,193				1,485,107				1,404,752				1,407,390				1,355,862
Total assets			1,771,292				1,554,049				1,468,597				1,467,588				1,414,571
Total deposits			1,589,384				1,376,736				1,291,767				1,290,320				1,244,890
Total shareholders' equity			135,721				131,300				128,844				126,840				123,726

Avidbank Holdings, Inc.
Condensed Consolidated Statements of Income
($000, except share and per share amounts) (Unaudited)
		Quarter Ended												Year-to-Date
		9/30/21				6/30/21				9/30/20				9/30/21				9/30/20
Interest and fees on loans		$	12,533			$	12,246			$	12,189			$	36,896			$	36,785
Interest on investment securities			946				808				157				2,453				710
Other interest income			156				59				65				263				404
Total interest income			13,635				13,113				12,411				39,612				37,899
Deposit interest expense			671				651				1,144				1,963				3,789
Other interest expense			310				310				306				931				933
Total interest expense			981				961				1,450				2,894				4,722
Net interest income			12,654				12,152				10,961				36,718				33,177
Provision for loan losses			217				-				303				293				1587
Net interest income after provision for loan losses			12,437				12,152				10,658				36,425				31,590
Service charges, fees and other income			894				736				495				2,253				1,724
Income from bank owned life insurance			103				68				68				238				200
Gain on sale of assets			-				735				-				756				-
Total non-interest income			997				1,539				563				3,247				1,924
Compensation and benefit expenses			5,860				6,001				5,746				18,336				17,261
Occupancy and equipment expenses			1,066				1,017				1,070				3,154				2,984
Other operating expenses			1,526				1,554				1,547				4,576				4,327
Total non-interest expense			8,452				8,572				8,363				26,066				24,572
Income before income taxes			4,982				5,119				2,858				13,606				8,942
Provision for income taxes			1,408				1,470				499				3,876				2,078
Net income		$	3,574			$	3,649			$	2,359			$	9,730			$	6,864
Basic earnings per common share		$	0.60			$	0.62			$	0.40			$	1.65			$	1.17
Diluted earnings per common share		$	0.59			$	0.60			$	0.39			$	1.61			$	1.15
Average common shares outstanding			5,898,208				5,892,713				5,864,952				5,885,421				5,854,487
Average common fully diluted shares			6,072,085				6,051,243				5,974,216				6,048,748				5,957,949
Annualized returns:
Return on average assets			0.80	%			0.94	%			0.66	%			0.81	%			0.71	%
Return on average common equity			10.45	%			11.15	%			7.59	%			9.86	%			7.57	%
Net interest margin			2.98	%			3.28	%			3.22	%			3.22	%			3.61	%
Cost of funds			0.24	%			0.28	%			0.46	%			0.27	%			0.55	%
Efficiency ratio			61.91	%			62.61	%			72.57	%			65.22	%			70.00	%

Avidbank Holdings, Inc.
Credit Trends
($000) (Unaudited)
		9/30/21				6/30/21				3/31/21				12/31/20				9/30/20
Allowance for Loan Losses
Balance, beginning of quarter		$	12,558			$	12,558			$	12,558			$	12,443			$	12,521
Provision for loan losses, quarterly			217				-				75				115				303
Charge-offs, quarterly			-				-				(75	)			-				(380	)
Recoveries, quarterly			-				-				-				-				-
Balance, end of quarter		$	12,775			$	12,558			$	12,558			$	12,558			$	12,443
Nonperforming Assets
Loans accounted for on a non-accrual basis		$	3,285			$	3,326			$	3,367			$	3,547			$	331
Loans with principal or interest contractually past due 90 days or
more and still accruing interest			-				-				-				-				-
Nonperforming loans			3,285				3,326				3,367				3,547				331
Other real estate owned			-				-				-				-				-
Nonperforming assets		$	3,285			$	3,326			$	3,367			$	3,547			$	331
Loans restructured and in compliance with modified terms			-				-				-				-				-
Nonperforming assets & restructured loans		$	3,285			$	3,326			$	3,367			$	3,547			$	331
Nonperforming Loans by Type:
Commercial		$	456			$	463			$	470			$	618			$	331
Commercial Real Estate Loans			2,829				2,863				2,897				2,929				-
Total Nonperforming loans		$	3,285			$	3,326			$	3,367			$	3,547			$	331
Asset Quality Ratios
Allowance for loan losses (ALLL) to total loans			1.19	%			1.24	%			1.22	%			1.26	%			1.23	%
ALLL to nonperforming loans			388.88	%			377.59	%			373.03	%			354.00	%			3759.27	%
Nonperforming assets to total assets			0.18	%			0.21	%			0.22	%			0.25	%			0.02	%
Nonperforming loans to total loans			0.31	%			0.33	%			0.33	%			0.36	%			0.03	%
Net quarterly charge-offs to total loans			0.00	%			0.00	%			0.01	%			0.00	%			0.04	%

SOURCE: Avidbank Holdings, Inc.

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https://www.accesswire.com/668452/Avidbank-Holdings-Inc-Announces-Net-Income-of-36-Million-for-the-Third-Quarter-of-2021

FAQ

What were Avidbank's earnings for Q3 2021?

Avidbank reported a net income of $3.6 million for Q3 2021.

How much did Avidbank earn in the first nine months of 2021?

Avidbank earned $9.7 million in net income for the first nine months of 2021.

What is Avidbank's current total assets as of Q3 2021?

As of Q3 2021, Avidbank's total assets were $1.83 billion.

How much did Avidbank's deposits grow in 2021?

Avidbank's deposits grew by 31.4%, totaling $1.65 billion.

What was Avidbank's efficiency ratio for Q3 2021?

Avidbank's efficiency ratio improved to 61.9% for Q3 2021.