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

Rhea-AI Summary

Avidbank Holdings, Inc. (OTC Pink:AVBH) reported net income of $5.4 million for Q3 2023, compared to $4.7 million in Q2 2023 and $7.0 million in Q3 2022. Loans increased by $19.6 million (5% annualized) and average deposits increased by $53.4 million (13% annualized). Return on average assets improved to 0.99%. Uninsured deposits represented 35% of total deposits. Nonperforming assets to total assets remained unchanged at 0.70%. The yield on loans increased to 7.04%. The cost of deposits increased to 2.52%. The provision for credit losses decreased to $120,000. Total assets were $2.20 billion. Period end loans were $1.67 billion. The allowance for credit losses on loans was $17.8 million.

Positive

• Avidbank Holdings, Inc. reported increased net income for Q3 2023 compared to the previous quarters. Loans and average deposits also saw positive growth. Return on average assets improved. Nonperforming assets remained stable. The yield on loans increased. The provision for credit losses decreased. Total assets and period end loans increased.

Negative

• The cost of deposits increased. The allowance for credit losses on loans remained stable.

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

Third Quarter 2023 Highlights

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

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

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

Income Statement

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

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

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

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

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

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

Balance Sheet

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

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

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

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

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

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

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

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

About Avidbank

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

Forward-Looking Statement:

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

Contact:

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

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

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

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

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

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

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

		Three Months Ended																				Year-to-Date
		Sept. 30,				June 30,				March 31,				Dec. 31,				Sept. 30,
		2023				2023				2023				2022				2022				2023				2022
Interest and fees on loans		$	29,125			$	26,713			$	25,577			$	23,160			$	18,853			$	81,416			$	48,653
Interest on investment securities			2,009				2,058				2,612				2,751				2,794				6,679				7,126
Other interest income			662				1,196				628				526				307				2,486				816
Total interest income			31,796				29,967				28,817				26,437				21,954				90,581				56,595
Deposit interest expense			10,704				7,989				6,030				4,269				1,948				24,722				3,244
Interest on short-term borrowings			3,480				4,189				2,673				114				126				10,342				125
Interest on long-term debt			300				300				300				300				300				901				901
Total interest expense			14,484				12,478				9,003				4,683				2,374				35,965				4,270
Net interest income			17,312				17,489				19,814				21,754				19,580				54,616				52,325
Provision for credit losses			120				1,471				185				993				925				1,776				2,517
Net interest income after
provision for credit losses			17,192				16,018				19,629				20,761				18,655				52,840				49,808
Service charges and bank fees			613				611				573				660				725				1,798				2,211
Federal Home Loan Bank dividends			171				185				163				118				91				519				250
Income from bank owned life insurance			238				230				225				224				219				693				647
Gain/(loss) on sale of securities			-				-				(815	)			(404	)			-				(815	)			-
Warrant and success fee income			8				-				-				119				12				8				162
Other investment income			142				37				(6	)			521				(1	)			173				84
Other income			62				24				28				17				30				112				61
Total noninterest income			1,234				1,087				168				1,255				1,076				2,488				3,415
Salaries and benefit expenses			7,460				7,021				7,954				7,592				7,069				22,435				21,510
Occupancy and equipment expenses			1,002				1,005				961				911				946				2,967				2,741
Data processing			538				477				528				456				447				1,542				1,281
Regulatory assessments			478				555				226				221				421				1,260				1,595
Legal and professional fees			483				394				431				364				269				1,308				604
Other operating expenses			935				960				933				906				761				2,829				2,609
Total noninterest expense			10,896				10,412				11,033				10,450				9,913				32,341				30,340
Income before income taxes			7,530				6,693				8,764				11,566				9,818				22,987				22,883
Provision for income taxes			2,122				1,967				2,400				3,151				2,772				6,489				6,275
Net income		$	5,408			$	4,726			$	6,364			$	8,415			$	7,046			$	16,498			$	16,608
Basic earnings per common share		$	0.74			$	0.65			$	0.87			$	1.16			$	0.97			$	2.26			$	2.48
Diluted earnings per common share			0.72				0.63				0.85				1.13				0.95				2.21				2.42
Weighted average shares - basic			7,327,197				7,321,246				7,299,006				7,281,343				7,274,617				7,315,920				6,639,567
Weighted average shares - diluted			7,511,373				7,457,906				7,452,254				7,432,670				7,410,062				7,472,158				6,790,554

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

		Three Months Ended
		September 30, 2023												June 30, 2023
						Interest				Yields								Interest				Yields
		Average				Income/				or				Average				Income/				or
		Balance				Expense				Rates				Balance				Expense				Rates
Assets
Interest earning assets:
Loans (1)		$	1,641,475			$	29,125				7.04	%		$	1,590,758			$	26,713				6.74	%
Fed funds sold/interest bearing deposits			48,350				662				5.36	%			93,001				1,196				5.09	%
Taxable Investment securities			365,244				2,009				2.18	%			382,860				2,058				2.16	%
Total interest-earning assets			2,055,069				31,796				6.14	%			2,066,619				29,967				5.82	%
Noninterest-earning assets:
Cash and due from banks			22,556												23,515
All other assets (2)			90,818												81,425
Total assets		$	2,168,443											$	2,171,559
Liabilities and Shareholders' Equity
Interest-bearing liabilities:
Deposits
Demand		$	748,016			$	7,306				3.88	%		$	486,367			$	4,100				3.38	%
Money market and savings			296,865				2,193				2.93	%			389,036				2,659				2.74	%
Time			41,455				264				2.53	%			48,650				198				1.63	%
Brokered			75,420				941				4.95	%			83,319				1,032				4.97	%
Total interest-bearing deposits			1,161,756				10,704				3.66	%			1,007,372				7,989				3.18	%
Short-term borrowings			285,326				3,480				4.84	%			343,341				4,189				4.89	%
Subordinated debt			21,867				300				5.44	%			21,842				300				5.51	%
Total interest-bearing liabilities			1,468,949				14,484				3.91	%			1,372,555				12,478				3.65	%
Noninterest-bearing liabilities:
Demand deposits			520,573												621,603
Accrued expenses and other liabilities			25,822												23,524
Shareholders' equity			153,099												153,877
Total liabilities and
shareholders' equity		$	2,168,443											$	2,171,559
Net interest spread											2.23	%											2.17	%
Net interest income and margin (3)						$	17,312				3.34	%						$	17,489				3.39	%
Non-taxable equivalent net interest margin											3.34	%											3.39	%
Cost of deposits		$	1,682,329			$	10,704				2.52	%		$	1,628,975			$	7,989				1.97	%

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

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

		Three months ended
		September 30, 2023												September 30, 2022
						Interest				Yields								Interest				Yields
		Average				Income/				or				Average				Income/				or
		Balance				Expense				Rates				Balance				Expense				Rates
Assets
Interest earning assets:
Loans (1)		$	1,641,475			$	29,125				7.04	%		$	1,358,934			$	18,852				5.50	%
Fed funds sold/interest bearing deposits			48,350				662				5.36	%			52,626				307				2.31	%
Investment securities
Taxable investment securities			365,244				2,009				2.18	%			475,086				2,530				2.11	%
Non-taxable investment securities (2)			-				-				0.00	%			30,763				334				4.31	%
Total investment securities			365,244				2,009				2.18	%			505,849				2,864				2.25	%
Total interest-earning assets			2,055,069				31,796				6.14	%			1,917,409				22,023				4.56	%
Noninterest-earning assets:
Cash and due from banks			22,556												34,984
All other assets (3)			90,818												75,927
Total assets		$	2,168,443											$	2,028,320
Liabilities and Shareholders' Equity
Interest-bearing liabilities:
Deposits
Demand		$	748,016			$	7,306				3.88	%		$	46,145			$	38				0.33	%
Money market and savings			296,865				2,193				2.93	%			867,113				1,768				0.81	%
Time			41,455				264				2.53	%			85,703				142				0.66	%
Brokered			75,420				941				4.95	%			-				-				-
Total interest-bearing deposits			1,161,756				10,704				3.66	%			998,961				1,948				0.77	%
Short-term borrowings			285,326				3,480				4.84	%			22,011				126				2.27	%
Subordinated debt			21,867				300				5.44	%			21,766				300				5.47	%
Total interest-bearing liabilities			1,468,949				14,484				3.91	%			1,042,738				2,374				0.90	%
Noninterest-bearing liabilities:
Demand deposits			520,573												820,047
Accrued expenses and other liabilities			25,822												21,133
Shareholders' equity			153,099												144,402
Total liabilities and
shareholders' equity		$	2,168,443											$	2,028,320
Net interest spread											2.23	%											3.66	%
Net interest income and margin (4)						$	17,312				3.34	%						$	19,649				4.07	%
Non-taxable equivalent net interest margin											3.34	%											4.05	%
Cost of deposits		$	1,682,329			$	10,704				2.52	%		$	1,819,008			$	1,948				0.42	%

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

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

		Nine months ended
		September 30, 2023												September 30, 2022
						Interest				Yields								Interest				Yields
		Average				Income/				or				Average				Income/				or
		Balance				Expense				Rates				Balance				Expense				Rates
Assets
Interest earning assets:
Loans (1)		$	1,596,660			$	81,416				6.82	%		$	1,279,579			$	48,653				5.08	%
Fed funds sold/interest bearing deposits			65,855				2,486				4.98	%			205,199				816				0.53	%
Investment securities
Taxable investment securities			387,315				6,415				2.21	%			462,326				6,749				1.95	%
Non-taxable investment securities (2)			9,722				334				4.59	%			14,532				473				4.69	%
Total investment securities			397,037				6,749				2.27	%			476,858				7,222				2.03	%
Total interest-earning assets			2,059,552				90,651				5.88	%			1,961,636				56,691				3.86	%
Noninterest-earning assets:
Cash and due from banks			23,019												41,173
All other assets (3)			85,591												70,214
Total assets		$	2,168,162											$	2,073,023
Liabilities and Shareholders' Equity
Interest-bearing liabilities:
Deposits
Demand		$	442,948			$	11,899				3.59	%		$	47,184			$	69				0.20	%
Money market and savings			513,961				10,008				2.60	%			838,354				2,630				0.42	%
Time			51,889				684				1.76	%			92,410				486				0.70	%
Brokered			57,534				2,131				4.95	%			16,965				59				0.46	%
Total interest-bearing deposits			1,066,332				24,722				3.10	%			994,913				3,244				0.44	%
Short-term borrowings			282,980				10,342				4.89	%			7,418				125				2.25	%
Subordinated debt			21,842				901				5.52	%			21,666				901				5.56	%
Total interest-bearing liabilities			1,371,154				35,965				3.51	%			1,023,997				4,270				0.56	%
Noninterest-bearing liabilities:
Demand deposits			621,608												889,521
Accrued expenses and other liabilities			24,909												22,049
Shareholders' equity			150,491												137,456
Total liabilities and
shareholders' equity		$	2,168,162											$	2,073,023
Net interest spread											2.38	%											3.30	%
Net interest income and margin (4)						$	54,686				3.55	%						$	52,421				3.57	%
Non-taxable equivalent net interest margin											3.55	%											3.57	%
Cost of deposits		$	1,687,940			$	24,722				1.96	%		$	1,884,434			$	3,244				0.23	%

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

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

		Sept. 30,				June 30,				March 31,				Dec. 31,				Sept. 30,				Current Quarter				Year over Year
		2023				2023				2023				2022				2022				Change				Change
Commercial loans		$	731,206			$	716,355			$	642,826			$	700,022			$	566,105			$	14,851			$	165,101
Commercial real estate
Multi-family			184,147				193,014				188,411				169,048				159,384				(8,867	)			24,763
Owner Occupied			135,950				132,078				137,118				128,790				120,951				3,872				14,999
Non-Owner Occupied			386,629				376,467				350,730				314,284				299,176				10,162				87,453
Construction and land			214,474				215,865				233,162				227,869				234,157				(1,391	)			(19,683	)
Residential			17,311				16,220				11,969				13,394				11,991				1,091				5,320
Total real estate loans			938,511				933,644				921,390				853,385				825,659				4,867				112,852
Other loans			197				266				285				815				782				(69	)			(585	)
Total loans		$	1,669,914			$	1,650,265			$	1,564,501			$	1,554,222			$	1,392,546			$	19,649			$	277,368
Allowance for Loan Losses
Balance, beginning of quarter		$	17,636			$	16,389			$	16,481			$	15,488			$	14,646
Adoption of ASU 2016-13			-				-				(249	)			-				-
Provision for loan losses			164				1,347				157				993				925
Charge-offs			-				(100	)			-				-				(83	)
Recoveries			-				-				-				-				-
Balance, end of quarter		$	17,800			$	17,636			$	16,389			$	16,481			$	15,488
Allowance for Credit Losses
on Unfunded Commitments
Balance, beginning of quarter		$	2,169			$	2,045			$	449			$	422			$	422
Adoption of ASU 2016-13			-				-				1,568				-				-
Provision for unfunded commitments			(44	)			124				28				27				-
Balance, end of quarter		$	2,125			$	2,169			$	2,045			$	449			$	422
Total allowance for credit losses -
loans and unfunded commitments		$	19,925			$	19,805			$	18,434			$	16,930			$	15,910
Provision for credit losses under CECL
Provision for loan losses		$	164			$	1,347			$	157			$	993			$	925
Provision for unfunded commitments (1)			(44	)			124				28				-				-
Total provision for credit losses		$	120			$	1,471			$	185			$	993			$	925
Nonperforming Assets
Loans accounted for on a non-accrual basis		$	1,385			$	15,485			$	14,240			$	14,245			$	154
Loans past due 90 days or more and still accruing			-				-				-				-				-
Nonperforming loans			1,385				15,485				14,240				14,245				154
Other real estate owned			14,095				-				-				-				-
Nonperforming assets		$	15,480			$	15,485			$	14,240			$	14,245			$	154
Nonperforming Loans by Type:
Commercial		$	1,385			$	1,390			$	145			$	150			$	154
Commercial real estate loans			-				-				-				-				-
Construction and land			-				14,095				14,095				14,095				-
Total Nonperforming loans		$	1,385			$	15,485			$	14,240			$	14,245			$	154
Asset Quality Ratios
Allowance for loan losses to total loans			1.07	%			1.07	%			1.05	%			1.06	%			1.11	%
Allowance for credit losses to total loans			1.19	%			1.20	%			1.18	%			1.09	%			1.14	%
Allowance for loan losses to nonperforming loans			1285.20	%			113.89	%			115.09	%			115.70	%			10057.14	%
Nonperforming assets to total assets			0.70	%			0.70	%			0.66	%			0.67	%			0.01	%
Nonperforming loans to total loans			0.08	%			0.94	%			0.91	%			0.92	%			0.01	%
Net quarterly charge-offs to average loans (2)			0.00	%			0.03	%			0.00	%			0.00	%			0.02	%

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

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

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

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

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

																						For the nine months ended
		2023												2022								September 30,
		Third				Second				First				Fourth				Third
Operating net income reconciliation		Quarter				Quarter				Quarter				Quarter				Quarter				2023				2022
Net income - GAAP		$	5,408			$	4,726			$	6,364			$	8,415			$	7,046			$	16,498			$	16,608
Loss on sale of securities, net of income tax			-				-				595				295				-				595				-
Operating net income		$	5,408			$	4,726			$	6,959			$	8,710			$	7,046			$	17,093			$	16,608
Operating diluted earnings
per share reconciliation
Diluted earnings per share - GAAP		$	0.72			$	0.63			$	0.85			$	1.13			$	0.95			$	2.21			$	2.42
Loss on sale of securities, net of income tax			-				-				0.08				0.04				-				0.08				-
Diluted earnings per share - operating		$	0.72			$	0.63			$	0.93			$	1.17			$	0.95			$	2.29			$	2.42
Venture lending deposits reconciliation
Total deposits		$	1,708,200			$	1,748,713			$	1,618,068			$	1,823,235			$	1,814,372			$	1,708,200			$	1,814,372
Venture lending deposits			608,331				606,022				557,479				754,997				800,930				608,331				800,930
Total deposits excluding venture lending		$	1,099,869			$	1,142,691			$	1,060,589			$	1,068,238			$	1,013,442			$	1,099,869			$	1,013,442
Taxable equivalent net
interest income reconciliation
Net interest income - GAAP		$	17,312			$	17,489			$	19,814			$	21,754			$	19,580			$	54,616			$	52,325
Taxable equivalent adjustment			-				-				70				75				69				70				96
Net interest income - taxable equivalent		$	17,312			$	17,489			$	19,884			$	21,829			$	19,649			$	54,686			$	52,421
Taxable equivalent net
interest margin reconciliation
Net interest margin - GAAP			3.34	%			3.39	%			3.91	%			4.40	%			4.05	%			3.55	%			3.57	%
Impact of taxable equivalent adjustment			-				-				0.01				0.01				0.02				-				-
Net interest margin - taxable equivalent			3.34	%			3.39	%			3.92	%			4.41	%			4.07	%			3.55	%			3.57	%

SOURCE: Avidbank Holdings, Inc.

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FAQ

What was the net income for Avidbank Holdings, Inc. in Q3 2023?

Avidbank Holdings, Inc. reported net income of $5.4 million in Q3 2023.

What was the growth rate of loans and average deposits?

Loans increased by $19.6 million (5% annualized) and average deposits increased by $53.4 million (13% annualized).

What was the return on average assets?

The return on average assets improved to 0.99%.

What percentage of total deposits were uninsured?

Uninsured deposits represented 35% of total deposits.

What was the yield on loans?

The yield on loans increased to 7.04%.

What was the cost of deposits?

The cost of deposits increased to 2.52%.

What was the provision for credit losses?

The provision for credit losses decreased to $120,000.

What were the total assets and period end loans?

Total assets were $2.20 billion and period end loans were $1.67 billion.

What was the allowance for credit losses on loans?

The allowance for credit losses on loans was $17.8 million.