Avidbank Holdings, Inc. Announces Net Income of $4.7 Million for the Second Quarter of 2023

SAN JOSE, CA / ACCESSWIRE / July 20, 2023 / Avidbank Holdings, Inc. (OTC PINK:AVBH) announced net income for the second quarter of 2023 of $4.7 million, or $0.63 per diluted share, compared to $6.4 million, or $0.85 per diluted share, for the first quarter of 2023 and $5.2 million, or $0.76 per diluted share, for the second quarter of 2022.

Second Quarter 2023 Highlights

• Total deposits were $1.75 billion on June 30, 2023, an increase of $131 million, or 8%, compared to March 31, 2023. Venture lending accounted for $49 million of this quarter's deposit growth with the balance from our other four divisions.
• Uninsured deposits represented 40% of total deposits on June 30, 2023, compared to 59% on March 31, 2023, and 85% at December 31, 2022. This decrease in uninsured deposits included a total of $692 million in ICS reciprocal deposits, an increase of $384 million since March 31, 2023.
• Loans increased $86 million, or 6% from March 31, 2023, and $313 million, or 23% from June 30, 2022.
• Borrowings decreased by $95 million to $264 million as of June 30, 2023. Net available borrowing capacity totaled approximately $1.3 billion as of June 30, 2023.
• In June 2023, we unwound $125 million in receive-fixed interest rate swaps used to hedge our Prime loan portfolio with an average fixed swap rate of 7.01%. These contracts had an impact to interest income of ($353,000) and ($209,000) in the second quarter and first quarter of 2023, respectively.
• Annualized net charge-offs to average loans totaled 0.03% for the second quarter of 2023, compared to 0.00% for the first quarter of 2023.

"We are pleased with the growth in deposits and improved liquidity position this quarter. Since May 1^st, deposits have increased $195 million generated from all five of our banking divisions. In the second quarter, we also decreased uninsured deposits to 40% of total deposits, reduced borrowings by $95 million, and lowered our loan-to-deposit ratio to 94%. These accomplishments are due to the efforts of our Avidbank team capitalizing on their exceptional relationships doing what is necessary in the midst of this challenging banking environment," said Mark Mordell, Chairman and Chief Executive Officer.

"Credit quality remains solid with stable trends in the loan portfolio. Nonperforming loans total $15.5 million and include the $14.1 million construction loan that was downgraded in December 2022. The borrower filed for bankruptcy in March, and we are working towards a positive outcome in the third or fourth quarter," added Mr. Mordell.

Income Statement
Taxable equivalent net interest income⁽¹⁾ totaled $17.5 million for the second quarter of 2023, a decrease of $2.4 million, or 12%, from the first quarter of 2023, and remained flat from the second quarter of 2022. The taxable equivalent net interest margin was 3.39% in the second quarter of 2023, a decrease of 53 basis points compared to the first quarter of 2023, and a decrease of 23 basis points compared to the second quarter of 2022. The decrease in taxable equivalent net interest income and net interest margin compared to the prior quarter was primarily driven by an overall increase in deposit costs. The decrease in taxable equivalent net interest margin compared to the same period one year ago was primarily driven by an increase in high-cost short-term borrowings replacing lower-cost deposits, interest bearing deposits replacing no-cost demand deposits, and an overall increase in deposit costs, partially offset by an increase in loan yields and average loan balances.

The yield on loans in the second quarter of 2023 was 6.74%, an increase of 7 basis points from the first quarter of 2023 and an increase of 177 basis points from the second quarter of 2022. The overall increase in loan yields compared to prior periods was primarily due to increases in the Prime rate.

The cost of deposits in the second quarter of 2023 was 1.97%, an increase of 58 basis points from the first quarter of 2023 and an increase of 183 basis points from the second quarter of 2022. The cost of interest-bearing deposits in the second quarter of 2023 was 3.18% compared to 2.38% in the first quarter of 2023 and 0.26% in the second quarter of 2022.

The provision for credit losses was $1.5 million in the second quarter of 2023, compared to $185,000 in the first quarter of 2023 and $1.6 million in the second quarter of 2022. The provision increased in the current quarter primarily due to loan growth of $85.8 million in the second quarter of 2023, compared to $10.3 million in the first quarter of 2023. The provision for credit losses in the second quarter of 2023 included a $1.3 million provision for loan losses and a $124,000 provision for unfunded commitments.

Non-interest income was $1.1 million in the second quarter of 2023 compared to $168,000 in the first quarter of 2023 and $1.2 million in the second quarter of 2022. The first quarter of 2023 included a loss on sale of securities of $815,000 related to the sale of $57 million in investment securities. The second quarter of 2022 included $65,000 in warrant and success fee income.

Non-interest expense totaled $10.4 million in the second quarter of 2023, a decrease of $621,000 compared to the first quarter of 2023. This linked quarter decrease included a $933,000 decrease in salaries and benefits expense, primarily due to a reduction in incentive compensation expense. There were 145 full-time equivalent employees on June 30, 2023, compared to 142 on March 31, 2023.

Balance Sheet
Total assets were $2.21 billion as of June 30, 2023, compared to $2.17 billion on March 31, 2023, and $2.01 billion at June 30, 2022. Cash and cash equivalents were $104 million on June 30, 2023, compared to $134 million on March 31, 2023, and $87 million on June 30, 2022.

Period end loans on June 30, 2023, totaled $1.65 billion, which represented an increase of $86 million from March 31, 2023, and an increase of $313 million, or 23%, from $1.34 billion at June 30, 2022. The growth in loans during the second quarter of 2023 included an increase of $74 million in commercial loans and $25 million in commercial real estate loans, partially offset by a decrease of $17 million in construction loans. Quarterly average loans for the second quarter of 2023 increased $34 million, or 2%, from the first quarter of 2023 and $328 million, or 26%, from the second quarter of 2022.

Our non-owner occupied commercial real estate portfolio is broadly diversified by property type with office loans totaling 9% of the total loan portfolio and an average loan size of $2.9 million as of June 30, 2023. Our office loans are all located in the San Francisco Bay Area with ten loans in the City of San Francisco totaling $26.3 million.

The allowance for credit losses on loans was $17.6 million on June 30, 2023, representing an increase of $1.2 million from March 31, 2023. The allowance for credit losses on loans to total loans was 1.07% on June 30, 2023, compared to 1.05% on March 31, 2023. Nonperforming loans to total loans was 0.94% on June 30, 2023, compared to 0.91% on March 31, 2023.

Investment securities were $371.8 million as of June 30, 2023, compared to $386.9 million on March 31, 2023, and $507.8 million at June 30, 2022. In the first quarter of 2023, we sold $57 million of securities for a loss of $815,000. This included the sale of $25 million in available for sale mortgage-backed securities and the sale of all $32 million in held to maturity municipal securities.

Period end deposits were $1.75 billion on June 30, 2023, an increase of $131 million, or 8%, from March 31, 2023. This included a $49 million increase, or 9%, in Venture Lending deposits. Deposits in our Venture Lending division totaled $606 million at June 30, 2023 and included $419 million in reciprocal deposits.

Short-term borrowings on June 30, 2023 totaled $264 million, a decrease of $95 million compared to March 31, 2023. The short-term borrowings on June 30^th included $35 million in FHLB borrowings and $224 million in borrowings from the Bank Term Funding Program (BTFP). The average rate on the BTFP on June 30, 2023 was 4.64%.

Book value per share was $19.55 on June 30, 2023, a decrease of $0.02 compared to $19.57 on March 31, 2023. Total shareholders' equity totaled $150.8 million on June 30, 2023, an increase of $66,000 compared to March 31, 2023. This included an increase in retained earnings of $4.7 million and an increase in accumulated other comprehensive loss of $5.4 million.

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

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

Forward-Looking Statement:
This news release contains statements that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts, and generally include the words "believes," "plans," "intends," "expects," "opportunity," "anticipates," "targeted," "continue," "remain," "will," "should," "may," or words of similar meaning. While we believe that our forward-looking statements and the assumptions underlying them are reasonably based, such statements and assumptions, are, by their nature subject to risks and uncertainties, and thus could later prove to be inaccurate or incorrect. Accordingly, actual results could materially differ from forward-looking statements for a variety of reasons, including, but not limited to local, regional, national and international economic conditions and events and the impact they may have on us and our customers, and in particular in our market areas; ability to attract deposits and other sources of liquidity; oversupply of property inventory and deterioration in values of California real estate, both residential and commercial; a prolonged slowdown or decline in construction activity; changes in the financial performance and/or condition of our borrowers; changes in the level of nonperforming assets and charge-offs; the cost or effect of acquisitions we may make; the effect of changes in laws and regulations (including laws, regulations and judicial decisions concerning financial reform, capital requirements, taxes, banking, securities, employment, executive compensation, insurance, and information security) with which we and our subsidiaries must comply; changes in estimates of future reserve requirements and minimum capital requirements based upon the periodic review thereof under relevant regulatory and accounting requirements; ability to adequately underwrite for our asset based and corporate finance lending business lines; our ability to raise capital; inflation, interest rate, securities market and monetary fluctuations; cyber-security threats including loss of system functionality or theft or loss of data; political instability; acts of war or terrorism, or natural disasters, such as earthquakes, or the effects of a pandemic; destabilization in international economies resulting from the European sovereign debt crisis; the 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: 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 six months ended
	2023						2022									June 30,
	Second			First			Fourth			Third			Second
	Quarter			Quarter			Quarter			Quarter			Quarter			2023			2022
INCOME HIGHLIGHTS
Net income	$	4,726		$	6,364		$	8,415		$	7,046		$	5,214		$	11,090		$	9,563
Loss on sale of securities, net of tax		-			595			295			-			-			595			-
Operating net income (1)	$	4,726		$	6,959		$	8,710		$	7,046		$	5,214		$	11,685		$	9,563
PER SHARE DATA
Basic earnings per share	$	0.65		$	0.87		$	1.16		$	0.97		$	0.78		$	1.52		$	1.51
Diluted earnings per share		0.63			0.85			1.13			0.95			0.76			1.49			1.47
Diluted earnings per share - operating (1)		0.63			0.93			1.17			0.95			0.76			1.57			1.47
Book value per share		19.55			19.57			17.99			16.58			18.27			19.55			18.27
PERFORMANCE MEASURES
Return on average assets		0.87%			1.19%			1.61%			1.38%			1.02%			1.03%			0.92%
Return on average equity		12.32%			17.87%			25.48%			19.36%			16.18%			14.99%			14.40%
Taxable equivalent net interest margin		3.39%			3.92%			4.41%			4.07%			3.62%			3.66%			3.33%
Efficiency ratio		56.05%			55.21%			45.42%			48.00%			53.43%			55.62%			58.22%
Average loans to average deposits		97.57%			88.70%			76.98%			74.61%			66.88%			93.00%			64.62%
CAPITAL
Tier 1 leverage ratio		9.55%			9.33%			9.46%			9.22%			8.72%			9.55%			8.72%
Common equity tier 1 capital ratio		9.88%			10.14%			9.82%			10.24%			10.17%			9.88%			10.17%
Tier 1 risk-based capital ratio		9.88%			10.14%			9.82%			10.24%			10.17%			9.88%			10.17%
Total risk-based capital ratio		11.87%			12.16%			11.76%			12.31%			12.25%			11.87%			12.25%
Tangible common equity ratio		6.83%			6.95%			6.45%			6.38%			6.90%			6.83%			6.90%
SHARES OUTSTANDING
Number of common shares outstanding		7,712,278			7,703,748			7,645,428			7,629,767			7,585,924			7,712,278			7,585,924
Average common shares
outstanding - basic		7,321,246			7,299,006			7,281,343			7,274,617			6,687,448			7,310,188			6,316,780
Average common shares
outstanding - diluted		7,457,906			7,452,254			7,432,670			7,410,062			6,821,245			7,454,643			6,474,959
ASSET QUALITY
Allowance for credit losses to total loans		1.20%			1.18%			1.09%			1.14%			1.13%			1.20%			1.13%
Nonperforming assets to total assets		0.70%			0.66%			0.67%			0.01%			0.01%			0.70%			0.01%
Nonperforming loans to total loans		0.94%			0.91%			0.92%			0.01%			0.01%			0.94%			0.01%
Net charge-offs to average loans (2)		0.03%			0.00%			0.00%			0.01%			0.00%			0.01%			0.00%
AVERAGE BALANCES
Loans, net of deferred loan fees	$	1,589,372		$	1,555,207		$	1,450,014		$	1,357,090		$	1,261,255		$	1,572,384		$	1,237,437
Investment securities		382,860			443,870			459,057			505,849			487,535			413,197			462,122
Total assets		2,171,559			2,164,441			2,072,887			2,028,320			2,060,297			2,168,020			2,095,245
Deposits		1,628,975			1,753,295			1,883,640			1,819,008			1,888,494			1,690,792			1,917,687
Shareholders' equity		153,877			144,402			131,046			144,402			129,235			149,166			133,925
(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)
	June 30,			March 31,			December 31,			September 30,			June 30,
Assets	2023			2022			2022			2022			2022
Cash and due from banks	$	33,849		$	19,452		$	17,435		$	23,766		$	50,907
Due from Federal Reserve Bank and fed funds sold		70,364			114,615			29,853			13,476			35,913
Total cash and cash equivalents		104,213			134,067			47,288			37,242			86,820
Investment securities - available for sale		371,753			386,947			412,993			436,535			477,646
Investment securities - held to maturity		-			-			31,671			31,704			30,180
Total investment securities		371,753			386,947			444,664			468,239			507,826
Loans, net of deferred loan fees		1,650,265			1,564,501			1,554,222			1,392,546			1,336,786
Allowance for loan losses		(17,636)			(16,389)			(16,481)			(15,488)			(14,646)
Loans, net of allowance for loan losses		1,632,629			1,548,112			1,537,741			1,377,058			1,322,140
Bank owned life insurance		33,202			32,972			32,747			32,522			32,303
Premises and equipment, net		3,774			4,037			4,163			4,318			4,314
Accrued interest receivable and other assets		62,234			63,916			66,665			64,443			56,853
Total assets	$	2,207,805		$	2,170,051		$	2,133,268		$	1,983,822		$	2,010,256
Liabilities and Shareholders' Equity
Deposits:
Non-interest-bearing demand	$	593,246		$	605,093		$	765,079		$	804,383		$	838,666
Interest bearing checking		25,391			27,150			41,701			46,852			45,179
Money market and savings		1,008,716			871,357			948,731			890,836			848,748
Time		46,794			61,645			67,724			72,301			96,159
Brokered		74,566			52,823			-			-			-
Total deposits		1,748,713			1,618,068			1,823,235			1,814,372			1,828,752
Subordinated debt, net		21,855			21,830			21,805			21,779			21,754
FHLB, FRB and other short-term borrowings		264,000			359,000			130,000			-			-
Accrued interest payable and other liabilities		22,432			20,414			20,690			21,188			21,139
Total liabilities		2,057,000			2,019,312			1,995,730			1,857,339			1,871,645
Shareholders' Equity
Common stock		103,420			102,718			102,359			101,679			101,244
Retained earnings		103,979			99,252			93,824			85,409			78,364
Accumulated other comprehensive (loss)		(56,594)			(51,231)			(58,645)			(60,605)			(40,997)
Total shareholders' equity		150,805			150,739			137,538			126,483			138,611
Total liabilities and shareholders' equity	$	2,207,805		$	2,170,051		$	2,133,268		$	1,983,822		$	2,010,256

AVIDBANK HOLDINGS, INC. Consolidated Statements of Income (Unaudited) (in thousands, except share and per share amounts)
	Three Months Ended															Year-to-Date
	June 30,			March 31,			Dec. 31,			Sept. 30,			June 30,
	2023			2023			2022			2022			2022			2023			2022
Interest and fees on loans	$	26,713		$	25,577		$	23,160		$	18,853		$	15,639		$	52,290		$	29,802
Interest on investment securities		2,058			2,612			2,751			2,794			2,477			4,670			4,332
Other interest income		1,196			628			526			307			356			1,824			509
Total interest income		29,967			28,817			26,437			21,954			18,472			58,784			34,643
Deposit interest expense		7,989			6,030			4,269			1,948			657			14,019			1,297
Interest on short-term borrowings		4,189			2,673			114			126			-			6,862			-
Interest on long-term debt		300			300			300			300			300			600			600
Total interest expense		12,478			9,003			4,683			2,374			957			21,481			1,897
Net interest income		17,489			19,814			21,754			19,580			17,515			37,303			32,746
Provision for credit losses		1,471			185			993			925			1,592			1,656			1,592
Net interest income after
provision for credit losses		16,018			19,629			20,761			18,655			15,923			35,647			31,154
Service charges and bank fees		611			573			660			725			761			1,185			1,486
Federal Home Loan Bank dividends		185			163			118			91			81			348			159
Income from bank owned life insurance		230			225			224			219			215			455			427
Gain/(loss) on sale of securities		-			(815)			(404)			-			-			(815)			-
Warrant and success fee income		-			-			119			12			65			-			150
Other investment income		37			(6)			521			(1)			90			30			84
Other income		24			28			17			30			15			51			34
Total non-interest income		1,087			168			1,255			1,076			1,227			1,254			2,340
Salaries and benefit expenses		7,021			7,954			7,592			7,069			7,129			14,975			14,441
Occupancy and equipment expenses		1,005			961			911			946			901			1,965			1,795
Data processing		477			528			456			447			423			1,004			834
Regulatory assessments		555			226			221			421			509			781			1,173
Legal and professional fees		394			431			364			269			192			825			387
Other operating expenses		960			933			906			761			859			1,894			1,798
Total non-interest expense		10,412			11,033			10,450			9,913			10,013			21,444			20,428
Income before income taxes		6,693			8,764			11,566			9,818			7,137			15,457			13,066
Provision for income taxes		1,967			2,400			3,151			2,772			1,923			4,367			3,503
Net income	$	4,726		$	6,364		$	8,415		$	7,046		$	5,214		$	11,090		$	9,563
Basic earnings per common share	$	0.65		$	0.87		$	1.16		$	0.97		$	0.78		$	1.52		$	1.51
Diluted earnings per common share		0.63			0.85			1.13			0.95			0.76			1.49			1.47
Weighted average shares - basic		7,321,246			7,299,006			7,281,343			7,274,617			6,687,448			7,310,188			6,316,780
Weighted average shares - diluted		7,457,906			7,452,254			7,432,670			7,410,062			6,821,245			7,454,643			6,474,959

AVIDBANK HOLDINGS, INC. Average Balance Sheets and Net Interest Margin Analysis (Unaudited) (dollars in thousands; taxable equivalent)
	Three months ended
	June 30, 2023								March 31, 2023
				Interest			Yields					Interest			Yields
	Average			Income/			or		Average			Income/			or
	Balance			Expense			Rates		Balance			Expense			Rates
Assets
Interest earning assets:
Loans (1)	$	1,590,758		$	26,713		6.74%		$	1,555,207		$	25,577		6.67%
Fed funds sold/interest bearing deposits		93,001			1,196		5.09%			56,303			628		4.52%
Investment securities
Taxable investment securities		382,860			2,058		2.16%			414,380			2,348		2.30%
Non-taxable investment securities (2)		-			-		0.00%			29,490			334		4.59%
Total investment securities		382,860			2,058		2.16%			443,870			2,682		2.45%
Total interest-earning assets		2,066,619			29,967		5.82%			2,055,380			28,887		5.70%
Noninterest-earning assets:
Cash and due from banks		23,515								22,992
All other assets (3)		81,425								86,069
Total assets	$	2,171,559							$	2,164,441
Liabilities and Shareholders' Equity
Interest-bearing liabilities:
Deposits
Demand	$	25,854		$	60		0.93%		$	30,101		$	56		0.75%
Money market and savings		849,549			6,699		3.16%			919,292			5,593		2.47%
Time		48,650			198		1.63%			65,830			223		1.37%
Brokered		83,319			1,032		4.97%			13,178			158		4.86%
Total interest-bearing deposits		1,007,372			7,989		3.18%			1,028,401			6,030		2.38%
Short-term borrowings		343,341			4,189		4.89%			219,550			2,673		4.94%
Subordinated debt		21,842			300		5.51%			21,816			300		5.58%
Total interest-bearing liabilities		1,372,555			12,478		3.65%			1,269,767			9,003		2.88%
Noninterest-bearing liabilities:
Demand deposits		621,603								724,894
Accrued expenses and other liabilities		23,524								25,378
Shareholders' equity		153,877								144,402
Total liabilities and
shareholders' equity	$	2,171,559							$	2,164,441
Net interest spread							2.17%								2.82%
Net interest income and margin (4)				$	17,489		3.39%					$	19,884		3.92%
Non-taxable equivalent net interest margin							3.39%								3.91%
Cost of deposits	$	1,628,975		$	7,989		1.97%		$	1,753,295		$	6,030		1.39%
(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 $347 thousand and $530 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 $16.8 million and $16.2 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 Selected Financial Information (Unaudited) (dollars in thousands; taxable equivalent)
	Three months ended
	June 30, 2023								June 30, 2022
				Interest			Yields					Interest			Yields
	Average			Income/			or		Average			Income/			or
	Balance			Expense			Rates		Balance			Expense			Rates
Assets
Interest earning assets:
Loans (1)	$	1,590,758		$	26,713		6.74%		$	1,263,071		$	15,638		4.97%
Fed funds sold/interest bearing deposits		93,001			1,196		5.09%			191,861			353		0.74%
Investment securities
Taxable investment securities		382,860			2,058		2.16%			475,039			2,364		2.00%
Non-taxable investment securities (2)		-			-		0.00%			12,496			143		4.59%
Total investment securities		382,860			2,058		2.16%			487,535			2,507		2.06%
Total interest-earning assets		2,066,619			29,967		5.82%			1,942,467			18,498		3.82%
Noninterest-earning assets:
Cash and due from banks		23,515								46,334
All other assets (3)		81,425								71,496
Total assets	$	2,171,559							$	2,060,297
Liabilities and Shareholders' Equity
Interest-bearing liabilities:
Deposits
Demand	$	25,854		$	60		0.93%		$	46,242		$	15		0.13%
Money market and savings		849,549			6,699		3.16%			835,058			440		0.21%
Time		48,650			198		1.63%			121,923			202		0.66%
Brokered		83,319			1,032		4.97%			-			-		-
Total interest-bearing deposits		1,007,372			7,989		3.18%			1,003,223			657		0.26%
Short-term borrowings		343,341			4,189		4.89%			-			-		0.00%
Subordinated debt		21,842			300		5.51%			21,518			300		5.59%
Total interest-bearing liabilities		1,372,555			12,478		3.65%			1,024,741			957		0.37%
Noninterest-bearing liabilities:
Demand deposits		621,603								885,271
Accrued expenses and other liabilities		23,524								21,050
Shareholders' equity		153,877								129,235
Total liabilities and
shareholders' equity	$	2,171,559							$	2,060,297
Net interest spread							2.17%								3.45%
Net interest income and margin (4)				$	17,489		3.39%					$	17,541		3.62%
Non-taxable equivalent net interest margin							3.39%								3.62%
Cost of deposits	$	1,628,975		$	7,989		1.97%		$	1,888,494		$	657		0.14%
(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 $347 thousand and $460 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 $16.8 million and $14.6 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)
	Six months ended
	June 30, 2023								June 30, 2022
				Interest			Yields					Interest			Yields
	Average			Income/			or		Average			Income/			or
	Balance			Expense			Rates		Balance			Expense			Rates
Assets
Interest earning assets:
Loans (1)	$	1,573,881		$	52,290		6.70%		$	1,239,245		$	29,802		4.85%
Fed funds sold/interest bearing deposits		74,753			1,824		4.85%			282,750			509		0.36%
Investment securities
Taxable investment securities		398,533			4,406		2.23%			455,839			4,219		1.87%
Non-taxable investment securities (2)		14,664			334		4.59%			6,283			143		4.59%
Total investment securities		413,197			4,740		2.31%			462,122			4,362		1.90%
Total interest-earning assets		2,061,831			58,854		5.76%			1,984,117			34,673		3.52%
Noninterest-earning assets:
Cash and due from banks		23,255								44,319
All other assets (3)		82,934								67,309
Total assets	$	2,168,020							$	2,095,745
Liabilities and Shareholders' Equity
Interest-bearing liabilities:
Deposits
Demand	$	27,966		$	116		0.84%		$	47,712		$	31		0.13%
Money market and savings		884,228			12,292		2.80%			823,736			862		0.21%
Time including brokered		57,193			421		1.48%			121,408			404		0.67%
Brokered		48,442			1,190		4.95%			-			-		0.00%
Total interest-bearing deposits		1,017,829			14,019		2.78%			992,856			1,297		0.26%
Short-term borrowings		281,787			6,862		4.91%			-			-		0.00%
Subordinated debt		21,829			600		5.54%			21,616			600		5.60%
Total interest-bearing liabilities		1,321,445			21,481		3.28%			1,014,472			1,897		0.38%
Noninterest-bearing liabilities:
Demand deposits		672,963								924,833
Accrued expenses and other liabilities		24,446								22,515
Shareholders' equity		149,166								133,925
Total liabilities and
shareholders' equity	$	2,168,020							$	2,095,745
Net interest spread							2.48%								3.14%
Net interest income and margin (4)				$	37,373		3.66%					$	32,776		3.33%
Non-taxable equivalent net interest margin							3.65%								3.33%
Cost of deposits	$	1,690,792		$	14,019		1.67%		$	1,917,689		$	1,297		0.14%
(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 $877 thousand and $1.1 million, respectively. (2) Interest income on tax-exempt securities has been increased to reflect comparable interest on taxable securities. The rate used was 21%, reflecting the statutory federal income tax rate. (3) Average allowance for loan losses of $16.5 million and $14.6 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)
	June 30,			March 31,			Dec. 31,			Sept. 30,			June 30,			Current Quarter			Year over Year
	2023			2023			2022			2022			2022			Change			Change
Commercial loans	$	716,355		$	642,826		$	700,022		$	566,105		$	558,908		$	73,529		$	157,447
Commercial real estate
Multi-family		193,014			188,411			169,048			159,384			165,818			4,603			27,196
Owner Occupied		132,078			137,118			128,790			120,951			97,275			(5,040)			34,803
Non-Owner Occupied		376,467			350,730			314,284			299,176			291,167			25,737			85,300
Construction and land		215,865			233,162			227,869			234,157			209,941			(17,297)			5,924
Residential		16,220			11,969			13,394			11,991			12,830			4,251			3,390
Total real estate loans		933,644			921,390			853,385			825,659			777,031			12,254			156,613
Other loans		266			285			815			782			847			(19)			(581)
Total loans	$	1,650,265		$	1,564,501		$	1,554,222		$	1,392,546		$	1,336,786		$	85,764		$	313,479
Allowance for Loan Losses
Balance, beginning of quarter	$	16,389		$	16,481		$	15,488		$	14,646		$	13,054
Adoption of ASU 2016-13		-			(249)			-			-			-
Provision for loan losses		1,347			157			993			925			1,592
Charge-offs		(100)			-			-			(83)			-
Recoveries		-			-			-			-			-
Balance, end of quarter	$	17,636		$	16,389		$	16,481		$	15,488		$	14,646
Allowance for Credit Losses
on Unfunded Commitments
Balance, beginning of quarter	$	2,045		$	449		$	422		$	422		$	392
Adoption of ASU 2016-13		-			1,568			-			-			-
Provision for unfunded commitments		124			28			27			-			30
Balance, end of quarter	$	2,169		$	2,045		$	449		$	422		$	422
Total allowance for credit losses -
loans and unfunded commitments	$	19,805		$	18,434		$	16,930		$	15,910		$	15,068
Provision for credit losses under CECL
Provision for loan losses	$	1,347		$	157		$	993		$	925		$	1,592
Provision for unfunded commitments (1)		124			28			-			-			-
Total provision for credit losses	$	1,471		$	185		$	993		$	925		$	1,592
Nonperforming Assets
Loans accounted for on a non-accrual basis	$	15,485		$	14,240		$	14,245		$	154		$	159
Loans past due 90 days or more and still accruing		-			-			-			-			-
Nonperforming loans		15,485			14,240			14,245			154			159
Other real estate owned		-			-			-			-			-
Nonperforming assets	$	15,485		$	14,240		$	14,245		$	154		$	159
Nonperforming Loans by Type:
Commercial	$	1,390		$	145		$	150		$	154		$	159
Commercial real estate loans		-			-			-			-			-
Construction and land		14,095			14,095			14,095			-			-
Total Nonperforming loans	$	15,485		$	14,240		$	14,245		$	154		$	159
Asset Quality Ratios
Allowance loan losses to total loans		1.07%			1.05%			1.06%			1.11%			1.09%
Allowance for credit losses to total loans		1.20%			1.18%			1.09%			1.14%			1.13%
Allowance for loan losses to nonperforming loans		113.89%			115.09%			115.70%			10057.14%			9211.32%
Nonperforming assets to total assets		0.70%			0.66%			0.67%			0.01%			0.01%
Nonperforming loans to total loans		0.94%			0.91%			0.92%			0.01%			0.01%
Net quarterly charge-offs to average loans (2)		0.03%			0.00%			0.00%			0.01%			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, $0, and $30 thousand for the fourth, third, and second quarters of 2022, respectively (2) Annualized

AVIDBANK HOLDINGS, INC. Deposits (Unaudited) (dollars in thousands)
		June 30,			March 31,			Dec. 31,			Sept. 30,			June 30,			Current Quarter			Year over Year
Period End Deposits		2023			2023			2022			2022			2022			Change			Change
Non-interest-bearing demand		$	593,246		$	605,093		$	765,079		$	804,383		$	838,666		$	(11,847)		$	(245,420)
Interest bearing checking			25,391			27,150			41,701			46,852			45,179			(1,759)			(19,788)
Money market and savings			1,008,716			871,357			948,731			890,836			848,748			137,359			159,968
Time			46,794			61,645			67,724			72,301			96,159			(14,851)			(49,365)
Brokered			74,566			52,823			-			-			-			21,743			74,566
Total deposits		$	1,748,713		$	1,618,068		$	1,823,235		$	1,814,372		$	1,828,752		$	130,645		$	(80,039)
		June 30,			March 31,			Dec. 31,			Sept. 30,			June 30,			Current Quarter			Year over Year
Average Deposits		2023			2023			2022			2022			2022			Change			Change
Non-interest-bearing demand		$	621,603		$	724,894		$	815,222		$	820,047		$	885,271		$	(103,291)		$	(263,668)
Interest bearing checking			25,854			30,101			44,344			46,145			46,242			(4,247)			(20,388)
Money market and savings			849,549			919,292			953,665			867,113			835,058			(69,743)			14,491
Time			48,650			65,830			70,409			85,703			121,923			(17,180)			(73,273)
Brokered			83,319			13,178			-			-			-			70,141			83,319
Total deposits		$	1,628,975		$	1,753,295		$	1,883,640		$	1,819,008		$	1,888,494		$	(124,320)		$	(259,519)

AVIDBANK HOLDINGS, INC. Non-GAAP performance and Financial Measures Reconciliation (Unaudited) (in thousands, except share and per share amounts)
																For the six months ended
	2023						2022									June 30,
	Second			First			Fourth			Third			Second
Operating net income reconciliation	Quarter			Quarter			Quarter			Quarter			Quarter			2023			2022
Net income - GAAP	$	4,726		$	6,364		$	8,415		$	7,046		$	5,214		$	11,090		$	9,563
Loss on sale of securities, net of income tax		-			595			295			-			-			595			-
Operating net income	$	4,726		$	6,959		$	8,710		$	7,046		$	5,214		$	11,685		$	9,563
Operating diluted earnings
per share reconciliation
Diluted earnings per share - GAAP	$	0.63		$	0.85		$	1.13		$	0.95		$	0.76		$	1.49		$	1.47
Loss on sale of securities, net of income tax		-			0.08			0.04			-			-			0.08			-
Diluted earnings per share - operating	$	0.63		$	0.93		$	1.17		$	0.95		$	0.76		$	1.57		$	1.47
Venture lending deposits reconciliation
Total deposits	$	1,748,713		$	1,618,068		$	1,823,235		$	1,814,372		$	1,828,752		$	1,748,713		$	1,828,752
Venture lending deposits		606,022			557,479			754,997			800,930			778,953			606,022			778,953
Total deposits excluding venture lending	$	1,142,691		$	1,060,589		$	1,068,238		$	1,013,442		$	1,049,799		$	1,142,691		$	1,049,799
Taxable equivalent net
interest income reconciliation
Net interest income - GAAP	$	17,489		$	19,814		$	21,754		$	19,580		$	17,515		$	37,303		$	32,746
Taxable equivalent adjustment		-			70			75			69			26			70			30
Net interest income - taxable equivalent	$	17,489		$	19,884		$	21,829		$	19,649		$	17,541		$	37,373		$	32,776
Taxable equivalent net
interest margin reconciliation
Net interest margin - GAAP		3.39%			3.91%			4.40%			4.05%			3.62%			3.65%			3.33%
Impact of taxable equivalent adjustment		-			0.01			0.01			0.02			-			0.01			-
Net interest margin - taxable equivalent		3.39%			3.92%			4.41%			4.07%			3.62%			3.66%			3.33%

SOURCE: Avidbank Holdings, Inc.

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