Avidbank Holdings, Inc. Announces Net Income of $2,507,000 for the First Quarter of 2021

SAN JOSE, CA / ACCESSWIRE / April 29, 2021 / Avidbank Holdings, Inc. ("the Company") (OTC Pink:AVBH), a bank holding company and the parent company of Avidbank ("the Bank"), an independent full-service commercial bank serving businesses and individuals primarily in Northern California, announced unaudited consolidated net income of $2,507,000 for the first quarter of 2021 compared to $2,435,000 for the same period in 2020.

First Quarter 2021 Financial Highlights

• Total interest income was $12,863,000 for the first quarter of 2021, an increase of $87,000 over the $12,776,000 we recorded in the first quarter of 2020. The 0.7% increase over the prior year quarter reflects year over year loan growth offset by declining loan yields, but augmented by increased investment securities income.
• Net income was $2,507,000 for the first quarter of 2021, compared to $2,435,000 for the first quarter of 2020. Results for the first quarter of 2021 were affected by the full impact of the 150 basis point Federal Reserve rate cut in March 2020 which caused average loan yields to drop 9% from 5.34% to 4.87%.
• Diluted earnings per common share were $0.42 for the first quarter of 2021, compared to $0.41 for the first quarter of 2020.
• Total assets grew by 7% in the first three months of 2021, ending the first quarter at $1.5 billion.
• Total loans net of deferred fees grew by 3% in the first three months of 2021, ending the first quarter at $1.0 billion.
• Total deposits grew by 9% in the first three months of 2021, ending the first quarter at $1.4 billion.
• The Company continues to be well capitalized for regulatory purposes with a Tier 1 Leverage Ratio of 8.87%, a Tier 1 Risk Based Capital and Common Equity Tier 1 Risk Based Capital Ratio of 10.38%, and a Total Risk Based Capital Ratio of 13.14%.

Mark D. Mordell, Chairman and Chief Executive Officer, stated, "Net interest income increased to $11.9 million in the first quarter of 2021, an 8% increase over the first quarter of 2020 due to a drop in deposit interest expense and an increase in investment securities income. Our loan growth for the last 12 months was offset by declining loan yields. Loans grew $34 million in the first quarter, primarily as a result of our participation in the latest round of the Small Business Administration (SBA) Paycheck Protection Program (PPP). The large amount of liquidity released into the economy from government stimulus programs has slowed the pace of lending in some of our divisions. We have maintained our credit quality and reduced our level of criticized and classified loans since the beginning of the pandemic. We currently have no outstanding COVID-19 related loan modifications. We have selectively added key staff positions to build our infrastructure and accommodate our growth. During certain phases of our growth strategy, our efficiency and returns have temporarily dropped, but we strongly believe it is in the long-term interest of the Company to stay the course and work on improving our metrics. Our focus will continue to be employee health and safety along with our fiduciary responsibility to our clients and shareholders. For those reasons, we continue to be cautious in our plans for returning employees to the workplace."

Mr. Mordell continued, "Non-interest expense increased by $809,000 to $9,043,000 in the first quarter of 2021, up from $8,234,000 in the first quarter of 2020, primarily due to increased investments in personnel across the entire Bank. Our efficiency ratio increased to 71.6% in the first quarter of 2021, up from 69.3% in the first quarter of 2020, as a result of increased staffing costs and a small drop in loan interest income from the decline in loan yields. Total deposits increased by $109 million in the first quarter of 2021 compared to the fourth quarter of 2020 and increased by $369 million from the first quarter of 2020. The increase in deposits from December 31, 2020 was due to higher money market and demand deposit accounts. The increase in deposits over the first quarter of 2020 was due to an increase in demand deposits and money market accounts, partially offset by lower brokered deposits. Our net interest margin dropped to 3.44% in the first quarter of 2021, compared to 4.21% in the first quarter of 2020 primarily due to a drop in loan and investment yields and an increase in overnight funds. Return on assets was 0.69% in the first quarter of 2021 compared to 0.75% in the fourth quarter of 2020 and 0.88% in the first quarter of 2020."

Results for the quarter ended March 31, 2021

For the three months ended March 31, 2021, interest and fees on loans were $12.1 million, a decrease of $59,000 or 0.5% compared to the first quarter of 2020. The decrease was primarily the result of higher average loans outstanding offset by lower loan yields. Average total loans outstanding for the quarter ended March 31, 2021 were $1.0 billion, compared to $917 million for the same quarter in 2020, an increase of 10%. Average earning assets were $1.4 billion in the first quarter of 2021, a 33% increase over the first quarter of the prior year. Loans made up 72% of average earning assets at the end of the first quarter of 2021 compared to 87% at the end of the first quarter of 2020. Net interest margin was 3.44% for the first quarter of 2021, compared to 4.21% for the first quarter of 2020. A loan loss provision of $75,000 was taken in the first quarter of 2021 compared with a $273,000 loan loss provision taken in the first quarter of 2020.

Non-interest income was $711,000 in the first quarter of 2021, a decrease of $98,000 or 12% compared to the first quarter of 2020. Investment fund income was $50,000 in the first three months of 2021 compared to $214,000 in the first three months of 2020. Offsetting this decline, income from service charges on deposit accounts increased by $52,000 in the first three months of 2021.

Non-interest expense increased by $809,000 in the first quarter of 2021 to $9,043,000 compared to $8,234,000 for the first quarter of 2020. This increase was primarily due to higher compensation costs related to increased staffing. The Company's full-time equivalent employees at March 31, 2021 and 2020 were 126 and 116, respectively. The Company's efficiency ratio increased from 69.3% in the first quarter of 2020 to 71.6% in the first quarter of 2021 due to increased expenses from the growth in staff and a small drop in loan interest income from the decline in loan yields.

Balance Sheet

Total assets were $1.536 billion as of March 31, 2021, compared to $1.431 billion at December 31, 2020 and $1.205 billion at March 31, 2020. The increase in total assets of $105 million, or 7%, from December 31, 2020 was primarily due to increased deposits causing an increase in overnight funds with the Federal Reserve. Investments also increased $21 million due to the purchase of mortgage-backed securities with excess funds. The Company reported loans net of deferred fees at March 31, 2021 of $1.027 billion, which represented an increase of $34 million, or 3%, from $0.993 billion at December 31, 2020, and an increase of $61 million, or 6%, over $0.966 billion at March 31, 2020. The increase in total loans from December 31, 2020 was primarily a result of an increase in Commercial loans through the SBA PPP and increased Multi-Family loans, partially offset by a decrease in Specialty Finance loans. The increase in loans from March 31, 2020 was due to higher Construction, Commercial, CRE and Venture Lending loans, partially offset by lower Specialty Finance loans.

"We had $3.4 million in three non-accrual loans on March 31, 2021, compared to a balance of $3.5 million at the end of the prior quarter. Two of the non-accrual loans totaling $3.2 million are secured by commercial real estate with a very low loan to value," observed Mr. Mordell.

The Company's total deposits were $1.363 billion as of March 31, 2021, which represented an increase of $109 million, or 9%, compared to $1.254 billion at December 31, 2020 and an increase of $369 million, or 37%, compared to $994 million at March 31, 2020. The increase in deposits from December 31, 2020 was due to higher money market and demand deposit accounts. The increase from March 31, 2020 was due to an increase in demand deposits and money market accounts, partially offset by lower brokered deposits. The Company had no FHLB advances outstanding as of March 31, 2021 and December 31, 2020 and $50 million outstanding as of March 31, 2020.

Demand and interest bearing transaction deposits represented 54% of total deposits at March 31, 2021, compared to 55% at December 31, 2020 and 51% at March 31, 2020. Core deposits, which include transaction deposits, money market accounts and CDs below $250,000, represented 91% of total deposits at March 31, 2021, compared to 90% at December 31, 2020 and 82% at March 31, 2020. The Company's loan to deposit ratio was 75% at March 31, 2021 compared to 79% at December 31, 2020 and 97% at March 31, 2020.

About Avidbank

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

Forward-Looking Statement:

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

Contact:

Steve Leen
Executive Vice President and Chief Financial Officer
408-831-5653
sleen@avidbank.com

Avidbank Holdings, Inc.
Consolidated Balance Sheets
($000, except share and per share amounts) (Unaudited)

Assets		3/31/21				12/31/20				9/30/20				6/30/20				3/31/20
Cash and due from banks		$	21,870			$	14,327			$	20,857			$	16,797			$	17,042
Due from Federal Reserve Bank			258,921				215,705				327,795				315,110				141,405
Total cash and cash equivalents			280,791				230,032				348,652				331,907				158,447
Investment securities - available for sale			184,504				163,631				40,316				43,601				44,983
Loans, net of deferred loan fees			1,027,336				993,483				1,011,137				1,002,029				965,684
Allowance for loan losses			(12,558)				(12,558)				(12,443)				(12,521)				(11,540)
Loans, net of allowance for loan losses			1,014,778				980,925				998,694				989,508				954,144
Bank owned life insurance			11,491				11,425				11,355				11,288				11,222
Premises and equipment, net			5,375				5,565				5,432				5,435				5,522
Other real estate owned			-				-				-				-				-
Accrued interest receivable & other assets			38,744				39,048				39,321				31,729				30,812
Total assets		$	1,535,683			$	1,430,626			$	1,443,770			$	1,413,468			$	1,205,130
Liabilities
Non-interest-bearing demand deposits		$	702,785			$	665,096			$	671,663			$	621,777			$	477,404
Interest bearing transaction accounts			27,863				25,390				24,808				26,837				25,104
Money market and savings accounts			499,507				419,038				382,394				382,776				292,051
Time deposits			133,314				144,230				189,529				218,634				199,841
Total deposits			1,363,469				1,253,754				1,268,394				1,250,024				994,400
FHLB advances			-				-				-				-				50,000
Subordinated debt, net			21,601				21,565				21,571				21,540				21,509
Other liabilities			23,294				27,383				28,409				19,475				19,806
Total liabilities			1,408,364				1,302,702				1,318,374				1,291,039				1,085,715
Shareholders' equity
Common stock/additional paid-in capital			71,152				70,721				70,595				70,012				69,444
Retained earnings			59,044				56,537				53,773				51,414				49,345
Accumulated other comprehensive income (loss)			(2,877)				666				1,028				1,003				626
Total shareholders' equity			127,319				127,924				125,396				122,429				119,415
Total liabilities and shareholders' equity		$	1,535,683			$	1,430,626			$	1,443,770			$	1,413,468			$	1,205,130
Capital ratios
Tier 1 leverage ratio			8.87	%			8.67	%			8.79	%			9.16	%			10.64	%
Common equity tier 1 capital ratio			10.38	%			10.35	%			10.33	%			10.28	%			10.33	%
Tier 1 risk-based capital ratio			10.38	%			10.35	%			10.33	%			10.28	%			10.33	%
Total risk-based capital ratio			13.14	%			13.15	%			13.19	%			13.19	%			13.24	%
Book value per common share		$	20.42			$	20.74			$	20.37			$	19.92			$	19.46
Total common shares outstanding			6,236,392				6,168,313				6,155,265				6,144,578				6,136,189
Other Ratios
Non-interest bearing deposits to total deposits			51.5	%			53.0	%			53.0	%			49.7	%			48.0	%
Core deposits to total deposits			91.3	%			90.0	%			86.7	%			84.3	%			82.2	%
Loan to deposit ratio			75.3	%			79.2	%			79.7	%			80.2	%			97.1	%
Allowance for loan losses to total loans			1.22	%			1.26	%			1.23	%			1.25	%			1.20	%

Avidbank Holdings, Inc.
Condensed Consolidated Statements of Income
($000, except share and per share amounts) (Unaudited)

		Quarter Ended
		3/31/21				12/31/20				3/31/20
Interest and fees on loans and leases		$	12,116			$	12,732			$	12,175
Interest on investment securities			699				191				306
Other interest income			48				77				295
Total interest income			12,863				13,000				12,776
Deposit interest expense			642				922				1,385
Other interest expense			310				309				311
Total interest expense			952				1,231				1,696
Net interest income			11,911				11,769				11,080
Provision for loan losses			75				115				273
Net interest income after provision for loan losses			11,836				11,654				10,807
Service charges, fees and other income			622				638				743
Income from bank owned life insurance			67				69				66
Gain on sale of assets			22				-				0
Total non-interest income			711				707				809
Compensation and benefit expenses			6,476				5,972				5,876
Occupancy and equipment expenses			1,071				1,139				942
Other operating expenses			1,496				1,485				1,416
Total non-interest expense			9,043				8,596				8,234
Income before income taxes			3,504				3,765				3,382
Provision for income taxes			997				1,001				947
Net income		$	2,507			$	2,764			$	2,435
Basic earnings per common share		$	0.43			$	0.47			$	0.42
Diluted earnings per common share		$	0.42			$	0.46			$	0.41
Average common shares outstanding			5,864,976				5,874,617				5,836,045
Average common fully diluted shares			6,020,336				6,000,688				5,953,208
Annualized returns:
Return on average assets			0.69	%			0.75	%			0.88	%
Return on average common equity			7.89	%			8.67	%			8.27	%
Net interest margin			3.44	%			3.33	%			4.21	%
Cost of funds			0.29	%			0.37	%			0.70	%
Efficiency ratio			71.64	%			68.90	%			69.26	%

Avidbank Holdings, Inc.
Credit Trends
($000) (Unaudited)

		3/31/21				12/31/20				9/30/20				6/30/20				3/31/20
Allowance for Loan Losses
Balance, beginning of quarter		$	12,558			$	12,443			$	12,521			$	11,540			$	11,267
Provision for loan losses, quarterly			75				115				303				1,011				273
Charge-offs, quarterly			(75	)			-				(380	)			(31	)			-
Recoveries, quarterly			-				-				-				-				-
Balance, end of quarter		$	12,558			$	12,558			$	12,443			$	12,521			$	11,540
Nonperforming Assets
Loans accounted for on a non-accrual basis		$	3,367			$	3,547			$	331			$	1,080			$	3,902
Loans with principal or interest contractually past
due 90 days or more and still accruing interest			-				-				-				-				-
Nonperforming loans			3,367				3,547				331				1,080				3,902
Other real estate owned			-				-				-				-				-
Nonperforming assets		$	3,367			$	3,547			$	331			$	1,080			$	3,902
Loans restructured and in compliance with
modified terms			-				-				-				-				-
Nonperforming assets & restructured loans		$	3,367			$	3,547			$	331			$	1,080			$	3,902
Nonperforming Loans by Type:
Commercial		$	470			$	618			$	331			$	1,080			$	1,665
Commercial Real Estate Loans			2,897				2,929				-				-				2,237
Residential Real Estate Loans			-				-				-				-				-
Construction Loans			-				-				-				-				-
Consumer Loans			-				-				-				-				-
Total Nonperforming loans		$	3,367			$	3,547			$	331			$	1,080			$	3,902
Asset Quality Ratios
Allowance for loan losses (ALLL) to total loans			1.22	%			1.26	%			1.23	%			1.25	%			1.20	%
ALLL to nonperforming loans			373.03	%			354.00	%			3759.27	%			1159.33	%			295.78	%
Nonperforming assets to total assets			0.22	%			0.25	%			0.02	%			0.08	%			0.32	%
Nonperforming loans to total loans			0.33	%			0.36	%			0.03	%			0.11	%			0.40	%
Net quarterly charge-offs to total loans			0.01	%			0.00	%			0.04	%			0.00	%			0.00	%

SOURCE: Avidbank Holdings, Inc.

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