Press Release

Avidbank Holdings, Inc. Announces Net Income of $646,000 for the Third Quarter of 2014

Company Release - 10/30/2014 9:53 AM ET

PALO ALTO, Calif.--(BUSINESS WIRE)-- Avidbank Holdings, Inc. ("the Company") (OTCBB: AVBH), a bank holding company and the parent company of Avidbank ("the Bank"), an independent full-service commercial bank serving businesses and consumers in Northern California, announced unaudited consolidated net income of $646,000 for the third quarter of 2014 compared to $436,000 for the same period in 2013.

Year-to-Date and Third Quarter 2014 Financial Highlights

  • Net income was $1,749,000 for the first nine months of 2014, compared to $1,875,000 for the first nine months of 2013. Results for the 2013 period included $748,000 in gains from the sale of investment securities compared to $22,000 in the 2014 period.
  • Diluted earnings per common share were $0.40 for the first nine months of 2014, compared to $0.51 for the first nine months of 2013.
  • Net income was $646,000 for the third quarter of 2014, compared to $436,000 for the third quarter of 2013. Results for the 2013 period included $67,000 in gains from the sale of investment securities compared to $22,000 in the 2014 period.
  • Diluted earnings per common share were $0.15 for the third quarter of 2014, compared to $0.09 for the third quarter of 2013.
  • Total assets grew by 0.3% during the past three months, ending the third quarter at $484 million.
  • Total loans outstanding grew by 15% during the first nine months of 2014, ending the third quarter at $295 million.
  • Total deposits grew by 0.3% over the past three months, ending the third quarter at $428 million.
  • The Bank continues to be well capitalized with a Tier 1 Leverage Ratio of 10.2% and a Total Risk Based Capital Ratio of 12.8%.

Mark D. Mordell, Chairman and Chief Executive Officer, stated, "The Bank's efforts to grow the loan portfolio by increasing loan production staff and facilities continued to yield positive results in the third quarter of 2014. Loans outstanding increased more than $17 million in the quarter, a 25% annualized rate of growth. These results confirm our progress as we focus on our plan of sustained and prudent growth in our loan portfolio. Net income for the third quarter of 2014 grew by 48% over the third quarter of 2013 primarily due to higher loans outstanding and the absence of a loan loss provision. We will continue with our plan to grow our loan portfolio and leverage the investments in personnel and infrastructure we have made. Our Real Estate Lending division, which includes construction lending, has demonstrated substantial growth in commitments in 2014."

"The Bank's total deposits increased by $1.2 million in the third quarter, as the runoff of a large transactional account was replaced by relationship deposits. In addition, core deposits make up over 94% of total deposits and our non-interest bearing deposits have grown to 39% of total deposits since the beginning of the year," noted Mr. Mordell. "We are making progress toward deploying our considerable level of liquid funds into loans. Our high level of capital and the high quality of our loan portfolio provide us with ample capacity for growth."

Results for the nine months ended September 30, 2014

Net interest income before provision for loan losses was $11.9 million in 2014, an increase of $387,000 or 3.4% over the prior year. Higher outstanding loan balances and reductions in the rates paid on deposits were partially offset by lower loan yields. Average earning assets were $441 million in the first nine months of 2014, an 8% increase over the prior year. Net interest margin was 3.66% for 2014 year to date compared to 3.79% for 2013. The decline in net interest margin was primarily caused by a decline in loan yields due to the current interest rate environment offset by growth in average loans and a decrease in Fed funds sold. No loan loss provision was recorded in the first nine months of 2014 and a $245,000 provision was taken in the first nine months of 2013. We have experienced recoveries net of charge-offs of $38,000 in 2014 compared to net recoveries of $29,000 in 2013.

Non-interest income, excluding gains on sales of securities, was $943,000 in the first nine months of 2014, an increase of $485,000 or 106% over 2013. The increase in non-interest income was due to an increase in service charges and other fee generation activities as well as an increase in earnings on bank owned life insurance. There were $22,000 of gains on sales of securities in the first nine months of 2014 and $748,000 of gains on securities sales in 2013.

Non-interest expense grew by $633,000 or 7% in the first nine months of 2014 to $9.9 million compared to $9.3 million in 2013. This growth was due to investments in loan production personnel and facilities as we continue to expand our footprint and grow our loan portfolio.

Results for the quarter ended September 30, 2014

For the three months ended September 30, 2014, net interest income before provision for loan losses was $4.1 million, an increase of $282,000 or 7% compared to the third quarter of 2013. The increase was primarily the result of higher loans outstanding. Average earning assets were $442 million in the third quarter of 2014, a 3% increase over the third quarter of the prior year. Earning assets increased due to loan growth partially offset by lower Fed funds sold. Net interest margin was 3.73% for the third quarter of 2014, compared to 3.60% for the third quarter of 2013. Net interest margin increased due to growth in loans for the quarter. No loan loss provision was taken in the third quarter of 2014 and a $245,000 provision was taken in the third quarter of 2013.

Non-interest income, excluding gains on sales of securities, was $334,000 in the third quarter of 2014, an increase of $160,000 or 92% over the third quarter of 2013. The increase was due to increases in service charges and other fee generation activities as well as an increase in earnings on bank owned life insurance. There were $22,000 of gains on sales of securities in the third quarter of 2014 and $67,000 of gains on securities sales in the third quarter of 2013.

Non-interest expense grew by $257,000 in the third quarter of 2014 to $3.3 million compared to $3.1 million for the third quarter of 2013. This growth was due to the investments in loan production personnel mentioned previously. The Company’s full-time equivalent employees at September 30, 2014 and 2013 were 59 and 50, respectively.

Balance Sheet

Total assets grew to $484 million as of September 30, 2014, compared to $483 million at June 30, 2014 and $483 million on the same date one year ago. The increase in total assets of $1.7 million, or 0.3%, from June 30, 2014 consisted of increases in the loan and investment securities portfolios offset by a decrease in Fed funds.

The Company reported total gross loans outstanding at September 30, 2014 of $295 million, which represented an increase of $17.6 million, or 6%, over $278 million at June 30, 2014, and an increase of $50.9 million, or 21%, over $245 million at September 30, 2013. The increase in total gross loans from June 30, 2014 was primarily attributable to growth in commercial real estate and construction loans. The increase in loans from September 30, 2013 was primarily attributable to growth in commercial real estate and asset based loans. Non-accrual loans totaled $6.4 million or 2.2% of total loans on September 30, 2014 compared to $2.0 million or 0.8% of total loans for the previous year-end. "Our high credit standards have resulted in an absence of net charge-offs for both the 2014 and 2013 periods. Our increase in nonaccrual loans was isolated to one client," observed Mr. Mordell.

The Company’s total deposits were $428 million as of September 30, 2014, which represented an increase of $1.2 million, or 0.3%, compared to $427 million at June 30, 2014 and a decrease of $5.8 million, or 1%, compared to $434 million at September 30, 2013. The increase in deposits from June 30, 2014 was primarily attributable to an increase in money market and interest checking accounts partially offset by a decrease in demand deposit accounts, while the decrease from September 30, 2013 was primarily attributable to a decrease in certificates of deposit over $100,000.

Demand deposits represented 43.7% of total deposits at September 30, 2014, compared to 44.3% at June 30, 2014 and 40.8% for the same period one year ago. Core deposits represented 94.6% of total deposits at September 30, 2014, compared to 93.9% at June 30, 2014 and 91.0% at September 30, 2013.

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. These statements are based on current expectations, estimates and projections about Avidbank's business based, in part, on assumptions made by management. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements due to numerous factors, including those described above and the following: Avidbank's timely implementation of new products and services, technological changes, changes in consumer spending and savings habits and other risks discussed from time to time in Avidbank's reports and filings with banking regulatory agencies. In addition, such statements could be affected by general industry and market conditions and growth rates, and general domestic and international economic conditions. Such forward-looking statements speak only as of the date on which they are made, and Avidbank does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this release.

           

Avidbank Holdings, Inc.

Consolidated Balance Sheets

($000, except share, per share amounts and ratios) (Unaudited)

 

Assets

9/30/2014

6/30/2014

3/31/2014

12/31/2013

9/30/2013

Cash and due from banks $ 20,499 $ 18,049 $ 15,427 $ 16,905 $ 22,113
Fed funds sold   68,675       100,445       127,785       151,940       134,965  
Total cash and cash equivalents 89,174 118,494 143,212 168,845 157,078
 
Investment securities - available for sale 78,710 65,282 58,397 58,983 66,147
 
Loans, net of deferred loan fees 295,410 277,822 254,375 257,434 244,501
Allowance for loan losses   (4,826 )     (4,809 )     (4,795 )     (4,788 )     (4,754 )
Loans, net of allowance for loan losses 290,584 273,013 249,580 252,646 239,747
 
Bank owned life insurance 11,857 11,783 11,694 11,607 11,517
Premises and equipment, net 1,108 1,210 1,287 1,175 1,171
Accrued interest receivable & other assets   13,006       12,983       8,950       7,420       7,574  
Total assets $ 484,439     $ 482,765     $ 473,120     $ 500,676     $ 483,234  
 

Liabilities

Non-interest-bearing demand deposits

 

$

 

166,733

 

$

 

173,394

 

$

 

151,538

 

$

 

158,364

 

$

 

161,517

Interest bearing transaction accounts 20,415 15,523 18,041 18,991 15,226
Money market and savings accounts 201,189 194,892 205,237 222,324 198,731
Time deposits   39,453       42,777       47,250       50,625       58,081  
Total deposits 427,790 426,586 422,066 450,304 433,555
 
Other liabilities   6,273       6,262       2,209       2,340       2,312  
Total liabilities 434,063 432,848 424,275 452,644 435,867
 

Shareholders' equity

Preferred stock

 

-

 

-

 

-

 

-

 

-

Common stock/additional paid-in capital 45,080 44,985 44,774 44,531 44,417
Retained earnings 5,189 4,574 3,877 3,469 2,834
Accumulated other comprehensive income   107       358       194       32       116  
Total shareholders' equity 50,376 49,917 48,845 48,032 47,367
Total liabilities and shareholders' equity $ 484,439     $ 482,765     $ 473,120     $ 500,676     $ 483,234  
 

Bank Capital ratios

Tier 1 leverage ratio

 

10.17

 

%

 

10.36

 

%

 

9.72

 

%

 

9.66

 

%

 

10.22

 

%

Tier 1 risk-based capital ratio 11.60 % 11.89 % 12.89 % 12.44 % 12.76 %
Total risk-based capital ratio 12.82 % 13.14 % 14.14 % 13.69 % 14.01 %
 
Book value per common share $ 11.61 $ 11.51 $ 11.34 $ 11.21 $ 11.06
Total common shares outstanding 4,338,161 4,336,292 4,308,756 4,283,494 4,281,482
 

Other Ratios

Non-interest bearing/total deposits

 

39.0

 

%

 

40.6

 

%

 

35.9

 

%

 

35.2

 

%

 

37.3

 

%

Loan to deposit ratio 69.1 % 65.1 % 60.3 % 57.2 % 56.4 %
Allowance for loan losses/total loans 1.63 % 1.73 % 1.89 % 1.86 % 1.94 %
       
Avidbank Holdings, Inc.
Condensed Consolidated Statements of Income
($000, except share, per share amounts and ratios) (Unaudited)
 
Quarter Ended Year to Date

9/30/2014

6/30/2014

9/30/2013

9/30/2014

9/30/2013

Interest and fees on loans and leases $ 3,786 $ 3,878 $ 3,630 $ 11,076 $ 11,014
Interest on investment securities 430 437 393 1,242 1,196
Other interest income   56       60       72       204       184  
Total interest income 4,272 4,375 4,095 12,522 12,394
Interest expense   175       209       280       628       887  
Net interest income 4,097 4,166 3,815 11,894 11,507
 
Provision for loan losses   -       -       245       -       245  
Net interest income after provision for
loan losses 4,097 4,166 3,570 11,894 11,262
 
Service charges, fees and other income 260 241 128 693 361
Income from bank owned life insurance 74 89 46 250 97
Gain on sale of investment securities   22       -       67       22       748  
Total non-interest income 356 330 241 965 1,206
 
Compensation and benefit expenses 2,072 2,024 1,885 6,148 5,525
Occupancy and equipment expenses 568 620 537 1,757 1,688
Other operating expenses   705       669       666       1,984       2,043  
Total non-interest expense 3,345 3,313 3,088 9,889 9,256
 
Income before income taxes 1,108 1,183 723 2,970 3,212
Provision for income taxes   462       487       287       1,221       1,337  
Net income $ 646     $ 696     $ 436     $ 1,749     $ 1,875  
 
Preferred dividends & warrant amortization   -       -       38       -       206  
Net income applicable to common
shareholders $ 646     $ 696     $ 398     $ 1,749     $ 1,669  
 
 
 
Basic earnings per common share $ 0.15 $ 0.16 $ 0.09 $ 0.41 $ 0.52
Diluted earnings per common share $ 0.15 $ 0.16 $ 0.09 $ 0.40 $ 0.51
 
Average common shares outstanding 4,336,761 4,319,447 4,274,420 4,317,122 3,214,230
Average common fully diluted shares 4,419,603 4,397,544 4,315,848 4,395,979 3,257,599
 
Annualized returns:
Return on average assets 0.54 % 0.60 % 0.38 % 0.49 % 0.58 %
Return on average common equity 5.16 % 5.62 % 4.13 % 4.71 % 6.57 %
 
Net interest margin 3.73 % 3.98 % 3.60 % 3.66 % 3.79 %
Cost of funds 0.16 % 0.20 % 0.28 % 0.20 % 0.31 %
Efficiency ratio 75.1 % 73.7 % 76.1 % 76.9 % 72.8 %
               
Avidbank
Interim Credit Trends
($000, except ratios) (Unaudited)
 

Allowance for Loan Losses

9/30/2014 6/30/2014 3/31/2014 12/31/2013 9/30/2013
Balance, beginning of quarter $ 4,809 $ 4,795 $ 4,788 $ 4,754 $ 4,764
Provision for loan losses, quarterly - - - - 245
Charge-offs, quarterly - - - - (311)
Recoveries, quarterly 17     14     7     34     56
Balance, end of quarter $ 4,826     $ 4,809     $ 4,795     $ 4,788     $ 4,754
 
 

Nonperforming Assets

 
Loans accounted for on a non-accrual basis $ 6,412 $ 2,283 $ 3,099 $ 2,015 $ 686
Loans with principal or interest contractually
past due 90 days or more and still accruing
interest -     -     -     -     -
Nonperforming loans 6,412 2,283 3,099 2,015 686
Other real estate owned -     -     -     -     -
Nonperforming assets $ 6,412     $ 2,283     $ 3,099     $ 2,015     $ 686
Loans restructured and in compliance with
modified terms -     -     -     -     -
Nonperforming assets & restructured loans $ 6,412     $ 2,283     $ 3,099     $ 2,015     $ 686
 
 
Nonperforming Loans by Asset Type:
Commercial $ 5,917 $ 1,779 $ 2,585 $ 1,492 $ -
Construction
Land
Other real estate 495 504 514 523 686
Factoring and asset-based lending
Other                          
Nonperforming loans $ 6,412     $ 2,283     $ 3,099     $ 2,015     $ 686
 
 

Asset Quality Ratios

Allowance for loan losses / gross loans 1.63% 1.73% 1.89% 1.86% 1.94%
Allowance for loan losses / nonperforming loans 75.27% 210.64% 154.73% 237.62% 693.00%
Nonperforming assets / total assets 1.32% 0.47% 0.66% 0.40% 0.14%
Nonperforming loans / gross loans 2.17% 0.82% 1.22% 0.78% 0.28%
Net quarterly charge-offs / gross loans -0.01% -0.01% 0.00% -0.01% 0.10%

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

Source: Avidbank Holdings, Inc.