Press Release

Avidbank Holdings, Inc. Announces Pre-Tax Income of $4.8 Million for 2012, an Increase of 47% Over 2011

Company Release - 3/12/2013 10:59 AM ET

PALO ALTO, Calif.--(BUSINESS WIRE)-- Avidbank Holdings, Inc. ("the Company") (OTCBB: AVBH), the holding company for Avidbank ("the Bank"), an independent full-service commercial bank serving businesses and consumers in Northern California, announced its financial results for the year ended December 31, 2012.

Financial Highlights

  • Pre-tax income of $4.8 million for 2012, a 47% increase from 2011 pre-tax income of $3.3 million
  • Net income for 2012 was $2,745,000, a 28% decrease from 2011 net income of $3,837,000 which included a one-time benefit of $1,975,000 from the recognition of the deferred tax asset
  • Diluted earnings per common share were $0.91 for 2012, compared to $1.26 in 2011
  • Net income was $665,000 for the fourth quarter of 2012, a 53% decrease over the fourth quarter of 2011 due to recognition of the deferred tax asset in the prior year
  • Diluted earnings per common share were $0.22 for the fourth quarter, compared to $0.51 for the fourth quarter of 2011 which benefited from the recognition of the deferred tax asset
  • Total assets grew by 21% in 2012, ending the year at $416 million as compared to $342 million at the end of the prior year
  • Total loans outstanding grew by 19% in 2012, ending the year at $247 million as compared to $204 million at December 31, 2011
  • Total deposits grew by 22% in 2012, ending the year at $375 million as compared to $307 million at December 31, 2011
  • The Bank continues to be well capitalized with a leverage ratio of 8.9%, a Tier 1 capital ratio of 10.8%, and a total risk-based capital ratio of 12.0%

"We are pleased to announce that Avidbank Holdings, Inc. achieved record pre-tax earnings of $4.8 million in 2012,” stated Mark D. Mordell, Chairman and Chief Executive Officer. “We added key personnel to our team in 2012 and opened new loan production offices in San Jose and Redwood City. These additions along with our existing staff contributed to strong growth in both loans and deposits, which grew by 19% and 22%, respectively. Net interest income before the provision for loan losses also improved, as reflected in the 21% increase over the prior year. Excluding gains on the sale of securities, the Bank grew non-interest income by 30%. We are pleased with the progress we’ve made in our financial performance as well as our increased market visibility.”

Net interest income before provision for loan losses was $15.2 million in 2012, a $2.6 million increase over the prior year. The growth in net interest income was the result of both growth in earning assets and an increase in net interest margin. Earning assets grew by $42 million or 13% over 2011. Net interest margin increased from 4.09% in 2011 to 4.16% in 2012, as a result of both an increase in loans outstanding and a decrease in the Bank's cost of funds. The provision for loan loss was $480,000 in 2012, a $45,000 increase over 2011. Net loan charge-offs for 2012 totaled $376,000 compared to $480,000 in 2011. Non-accrual loans totaled $876,000 at December 31, 2012 compared to $975,000 for the end of the previous year.

"It is important to maintain strong underwriting standards as we grow and expand into other markets along the Peninsula and the South Bay," stated Mr. Mordell. "We finished 2012 with the lowest level of problem loans we have had since the beginning of the financial crisis."

Non-interest income, excluding gain on sale of securities was $467,000 in 2012, an increase of more than $108,000 or 30% over 2011. Gain on sale of securities was $337,000 in 2012, a 394% increase from the $68,000 in gains recorded in 2011.

Non-interest expense grew by $1.2 million over 2011 to $10.7 million for 2012. The majority of this growth was attributable to increased staff, benefits and occupancy expense as the Bank seeks to maintain high levels of customer service while continuing to grow and expand its market presence.

For the three months ended December 31, 2012, net interest income before provision for loan loss was $4.0 million, an increase of more than $725,000 or 22% compared to the fourth quarter of 2011. The growth in net interest income was the result of an increase in loans outstanding. Average earning assets were $391 million in the fourth quarter of 2012, a 23% increase over the prior year. Net interest margin was 4.03% for the fourth quarter, compared to 4.17% for the prior year. The decrease in net interest margin resulted from a decrease in loan yields and an increase in liquid funds. The provision for loan loss was $380,000 in the fourth quarter of 2012 compared to $386,000 in the fourth quarter of 2011.

Non-interest income, excluding gain on sale of securities of $337,000, was $122,000 in the fourth quarter of 2012, compared to $98,000 in the fourth quarter of 2011. There were no gains on sale of securities in the fourth quarter of 2011. Non-interest expense in the fourth quarter of 2012 grew by more than $408,000 or 17% over 2011, primarily due to an increase in staff and our expansion into two new locations.

About Avidbank

Avidbank Holdings, Inc., headquartered in Palo Alto, California offers innovative financial solutions and services. We specialize in the following markets: commercial & industrial, corporate finance, asset-based lending, real estate construction and commercial real estate lending, and real estate bridge financing. Avidbank advances the success of our clients by providing them with financial opportunities and serving them as we wish to be served – with mutual effort, ingenuity and trust – creating long-term banking relationships.

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”, “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 utilize all or part of any deferred tax asset; the impact of our participation in the United States Treasury’s Capital Purchase Program (TARP); 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 pandemic flu; 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.

Avidbank Holdings, Inc. Balance Sheet ($000)




  12/31/2012     9/30/2012     12/31/2011  
Cash and due from banks $ 21,493 $ 13,057 $ 12,377
Fed funds sold   85,510     97,250     33,660  
Total cash and cash equivalents 107,003 110,307 46,037
Investment securities - available for sale 55,343 63,487 82,178
Loans, net of deferred loan fees 247,269 233,352 207,966
Allowance for loan losses   (4,480 )   (4,290 )   (4,376 )
Loans, net of allowance for loan losses 242,789 229,062 203,590
Premises and equipment, net 1,291 1,108 696
Accrued interest receivable & other assets   9,295     11,495     9,704  
Total assets $415,721   $415,459   $342,205  






Non-interest-bearing demand deposits $ 105,518 $ 119,180 $ 73,277
Interest bearing transaction accounts 17,293 13,760 16,008
Money market and savings accounts 185,663 175,794 154,134
Time deposits   66,520     65,115     63,271  
Total deposits 374,994 373,849 306,690


Other liabilities   2,864     4,254     1,820  
Total liabilities 377,858 378,103 308,510

Shareholders' equity

Preferred stock 5,952 5,940 5,906
Common stock 29,556 29,502 29,246
Retained earnings (accumulated deficit)   1,171 592 (1,228 )
Accumulated other comprehensive income (loss)   1,184     1,322     (229 )
Total shareholders' equity 37,863 37,356 33,695
Total liabilities and shareholders' equity $415,721   $415,459   $342,205  
Tier 1 leverage ratio 8.88 % 8.86 % 10.37 %
Tier 1 risk-based capital ratio 10.78 % 10.75 % 11.51 %
Total risk-based capital ratio 12.03 % 12.00 % 12.84 %
Book value per share (excluding TARP) $ 12.19 $ 12.05 $ 10.59
Avidbank Holdings, Inc.
Statements of Operations ($000)



For the Years Ended


Three Months Ended







Interest and fees on loans $ 14,787 $ 12,850 $ 3,836 $ 3,210
Interest on investment securities 2,080 1,903 505 544
Other interest income   142     98     52     22  
Total interest income 17,009 14,851 4,393 3,776
Interest expense   1,840     2,279     389     495  
Net interest income 15,169 12,572 4,004 3,281
Provision for loan losses   480     435     380     385  

Net interest income after provision for loan losses

14,689 12,137 3,624 2,896
Service charges, fees and other income 467 358 122 98
Income from stock warrants 217
Gain on sale of investment securities   337     68     337     -  
Total non-interest income 804 643 459 98
Compensation and benefit expenses 6,289 5,274 1,656 1,312
Occupancy and equipment expenses 1,882 1,571 480 367
Other operating expenses   2,519     2,671     722     771  
Total non-interest expense 10,690 9,516 2,858 2,450
Income before income taxes 4,803 3,264 1,225 544
Provision for (benefit from) income taxes   2,058     (573 )   560     (872 )
Net income $2,745   $3,837   $665   $1,416  
Preferred dividends & warrant amortization   346     556     86     86  

Net income applicable to common shareholders

$2,399   $3,281   $579   $1,330  
Basic earnings per common share $ 0.92 $ 1.26 $ 0.22 $ 0.51
Diluted earnings per common share $ 0.91 $ 1.26 $ 0.22 $ 0.51
Average shares outstanding 2,610,998 2,602,276 2,614,318 2,602,276
Average fully diluted shares 2,630,084 2,605,586 2,633,404 2,605,586
Total shares outstanding at period end 2,614,655 2,602,276 2,614,655 2,602,276
Return on average assets 0.72 % 1.16 % 0.64 % 1.69 %
Return on average common equity 9.34 % 14.61 % 8.75 % 20.74 %
Net interest margin 4.16 % 4.09 % 4.03 % 4.17 %
Cost of funds 0.54 % 0.78 % 0.41 % 0.66 %
Efficiency ratio 67 % 72 % 64 % 73 %

Avidbank Holdings, Inc.
Steve Leen, 650-843-2204
Executive Vice President and Chief Financial Officer

Source: Avidbank Holdings, Inc.