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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 1st, 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 30th 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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