Avidbank Holdings, Inc. Announces Net Income for the Fourth Quarter of 2024

About this update from Avidbank Holdings, Inc.

SAN JOSE, CA / ACCESS Newswire / January 27, 2025 / Avidbank Holdings, Inc. (OTC PINK:AVBH) announced net income for the fourth quarter of 2024 of $6.5 million , or $0.84 per diluted share, compared to $5.8 million , or $0.77 per diluted share, for the third quarter of 2024 and $303,000 , or $0.04 per diluted share, for the fourth quarter of 2023. Adjusted net income (Non-GAAP) (1) totaled $4.9 million , or $0.65 per diluted share for the fourth quarter of 2023. Fourth Quarter 2024 Highlights Return on average assets improved to 1.14% compared to 1.02% in the third quarter of 2024 and 0.05% in the fourth quarter of 2023 (or 0.89% adjusted return on average assets (Non-GAAP) (1) ). Loans increased $78.2 million , or 18% annualized, from September 30, 2024 , and $124.3 million , or 7%, from December 31, 2023 . Taxable equivalent net interest margin (1) expanded to 3.49% in the fourth quarter of 2024, compared to 3.35% in the third quarter of 2024. Average deposits increased $88.4 million , or 20% annualized, from the third quarter of 2024 and $185.5 million , or 11%, from the fourth quarter of 2023. Net charge-offs totaled $4.3 million due to the charge-off of a venture lending relationship. This relationship consisted of two loans, including a $2.3 million loan that was placed on nonaccrual with a specific reserve of $2.3 million in the second quarter of 2024. As of December 31, 2024 , nonperforming assets improved to 0.06% of total assets from September 30, 2024 , and classified loans improved to 0.22% of total loans, compared to the prior quarter end. "We are pleased with what our team accomplished in 2024. After the events of 2023, strengthening our balance sheet was our top priority for 2024 and we made great progress. Additionally, we finished the year with strong loan growth, an expanding net interest margin and a meaningful improvement in fee income. Although deposits decreased slightly during the fourth quarter, we grew core deposits $262 million in 2024 and have a robust pipeline as we enter 2025," said Mark D. Mordell , Chairman and Chief Executive Officer. "The $4.3 million charge-off was a venture lending relationship that had been classified for the past 36 months while the borrower worked to find a buyer. Although the company is still operating, the length of time spent as a classified loan and the lack of progress finding a buyer led to the decision to charge off the loan. We believe a recovery is not likely, but we will continue to work with the borrower to maximize any chance at a recovery. We remain committed to maintaining excellent credit quality. I am pleased with the overall quality of our loan portfolio at year end, with nonperforming assets only 0.06% of total assets and classified loans 0.22% of total loans," added Mr. Mordell . Income Statement Net income totaled $6.5 million for the fourth quarter of 2024, an increase of $611,000 from the third quarter of 2024, and an increase of $6.2 million from the fourth quarter of 2023. A $1.0 million decrease in noninterest expense was a primary contributor to the improvement in net income compared to the third quarter of 2024. This decrease in noninterest expense was primarily due to lower incentive expense and an increase in capitalized loan origination costs. Taxable equivalent net interest income (1) totaled $19.2 million for the fourth quarter of 2024, an increase of $587,000 , or 13% annualized, from the third quarter of 2024, and an increase of $780,000 , or 4%, from the fourth quarter of 2023. The taxable equivalent net interest margin was 3.49% in the fourth quarter of 2024, an increase of 14 basis points compared to the third quarter of 2024, and flat compared to the fourth quarter of 2023. The increase in taxable equivalent net interest margin compared to the prior quarter was primarily driven by a decrease in average short-term borrowings and a lower cost of deposits. The yield on loans in the fourth quarter of 2024 was 7.07%, a decrease of 31 basis points from the third quarter of 2024 and a decrease of 18 basis points from the fourth quarter of 2023. The overall decrease in loan yields compared to prior periods was driven by the reduction in the Prime rate. The cost of deposits in the fourth quarter of 2024 was 2.94%, a decrease of 28 basis points from the third quarter of 2024 and an increase of 23 basis points from the fourth quarter of 2023. The cost of interest-bearing deposits in the fourth quarter of 2024 was 3.79% compared to 4.16% in the third quarter of 2024 and 3.80% in the fourth quarter of 2023, a decrease of 37 basis points and one basis point, respectively. The provision for credit losses was $779,000 in the fourth quarter of 2024, compared to $0 in the third quarter of 2024 and $1.3 million in the fourth quarter of 2023. The provision was higher in the fourth quarter of 2024 compared to the third quarter primarily due to the $4.3 million charge-off of a venture lending relationship and loan growth, offset by improved economic forecasts. Noninterest income was $1.8 million in the fourth quarter of 2024 compared to $1.8 million in the third quarter of 2024 and $(4.6) million in the fourth quarter of 2023. The fourth quarter of 2024 included income of $637,000 from fund investments and $150,000 in final proceeds from the settlement related to a previously sold foreclosed property. The fourth quarter of 2023 included a $5.40 million loss on sale of securities, a $165,000 loss on the sale of a foreclosed property, and a loss of $116,000 from changes in the fair value of fund investments. Noninterest expense totaled $11.1 million for the fourth quarter of 2024, a decrease of $1.0 million compared to the third quarter of 2024, and a decrease of $498,000 from the fourth quarter of 2023. The decrease from the third quarter was primarily due to lower incentive expense and an increase in capitalized loan origination costs. There were 148 full-time equivalent employees on December 31, 2024 , compared to 146 on September 30, 2024 . Balance Sheet Total assets were $2.30 billion as of December 31, 2024 , compared to $2.30 billion as of September 30, 2024 , and $2.23 billion at December 31, 2023 . Cash and cash equivalents were $82.7 million on December 31, 2024 , compared to $136.5 million on September 30, 2024 , and $81.4 million on December 31, 2023 . Period end loans on December 31, 2024 , totaled $1.86 billion , an increase of $78.2 million , or 18% annualized, from September 30, 2024 , and an increase of $124.3 million , or 7%, from December 31, 2023 . The increase in loans during the fourth quarter of 2024 included an increase of $57.5 million in commercial loans and a $16.1 million increase in multi-family loans. Quarterly average loans for the fourth quarter of 2024 increased $11.7 million , or 1%, from the third quarter of 2024 and increased $117.2 million , or 7%, from the fourth quarter of 2023. The allowance for credit losses on loans was $18.7 million on December 31, 2024 , representing a decrease of $3.6 million from September 30, 2024 . The allowance for credit losses - loans and unfunded commitments to total loans was 1.12% on December 31, 2024 , compared to 1.37% on September 30, 2024 . Nonperforming loans to total loans was 0.07% on December 31, 3024 compared to 0.20% at September 30, 2024 . Investment securities were $296.6 million as of December 31, 2024 , compared to $316.7 million on September 30, 2024 , and $325.3 million as of December 31, 2023 . Period end deposits were $1.89 billion on December 31, 2024 , a decrease of $10.2 million , or 2% annualized, from September 30, 2024 . The change in deposits during the fourth quarter of 2024 included a $33.7 million decrease in interest-bearing checking, offset by a $12.9 million increase in brokered deposits. Quarterly average deposits for the fourth quarter of 2024 were $1.89 billion , an increase of $88.4 million from the third quarter of 2024, and an increase of $185.5 million from the fourth quarter of 2023. Short-term borrowings on December 31, 2024 , totaled $185.0 million , an increase of $25.0 million , or 16%, compared to September 30, 2024 . The Company paid back $70.0 million of remaining borrowings from the Bank Term Funding Program (BTFP) during the fourth quarter of 2024. Book value per share was $23.57 on December 31, 2024 , a decrease of $0.38 compared to $23.95 on September 30, 2024 . Total shareholders' equity was $186.4 million on December 31, 2024 , a decrease of $2.2 million compared to September 30, 2024 . This included an increase in retained earnings of $6.5 million offset by an increase in accumulated other comprehensive loss of $9.4 million compared to September 30, 2024 . (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. Non-GAAP Financial Measures This news release contains certain non-GAAP (Generally Accepted Accounting Principles) financial measures in addition to results presented in accordance with GAAP. Management has presented these non-GAAP financial measures in this earnings release because it believes that they provide useful and comparative information to assess trends in the Company's current quarter and year-to-date results and facilitate comparison of our performance with the performance of our peers. Where applicable, the Company has also presented comparable earnings information using GAAP financial measures. These non-GAAP measures have inherent limitations, are not required to be uniformly applied and are not audited. They should not be considered in isolation or as a substitute for operating results determined in accordance with GAAP. These non-GAAP measures may not be comparable to similarly titled measures reported by other companies. Forward-Looking Statements 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 Officer408-200-7390 [email protected] AVIDBANK HOLDINGS, INC. Selected Financial Data (Unaudited) (in thousands, except share and per share amounts) Twelve months ended 2024 2023 December 31 , Fourth Third Second First Fourth Quarter Quarter Quarter Quarter Quarter 2024 2023 INCOME HIGHLIGHTS Net income $ 6,457 $ 5,846 $ 3,466 $ 5,246 $ 303 $ 21,015 $ 16,801 Loss on sale of securities, net of tax - - - - 3,888 - 4,483 Severance, net of income tax - - - - 233 - 233 BOLI surrender tax expense - - - - 478 - 478 Adjusted net income(1) $ 6,457 $ 5,846 $ 3,466 $ 5,246 $ 4,902 $ 21,015 $ 21,995 PER SHARE DATA Basic earnings per share $ 0.87 $ 0.79 $ 0.47 $ 0.71 $ 0.04 $ 2.83 $ 2.29 Diluted earnings per share 0.84 0.77 0.46 0.69 0.04 2.76 2.24 Adjusted diluted earnings per share(1) 0.84 0.77 0.46 0.69 0.65 2.76 2.94 Book value per share 23.57 23.95 21.77 21.41 21.27 23.57 21.27 PERFORMANCE MEASURES Return on average assets(2) 1.14 % 1.02 % 0.62 % 0.95 % 0.05 % 0.93 % 0.77 % Adjusted return on average assets(1)(2) 1.14 % 1.02 % 0.62 % 0.95 % 0.89 % 0.93 % 1.01 % Return on average equity(2) 13.65 % 12.97 % 8.35 % 12.64 % 0.81 % 11.98 % 11.20 % Net interest margin 3.49 % 3.35 % 3.39 % 3.54 % 3.49 % 3.44 % 3.53 % Efficiency ratio 52.53 % 59.29 % 59.92 % 61.62 % 83.68 % 58.27 % 61.90 % Average loans to average deposits 95.86 % 99.90 % 103.19 % 101.85 % 99.41 % 100.10 % 95.75 % CAPITAL Tier 1 leverage ratio 10.35 % 9.93 % 9.64 % 9.88 % 9.77 % 10.35 % 9.77 % Common equity tier 1 capital ratio 10.59 % 10.75 % 10.08 % 10.03 % 9.88 % 10.59 % 9.88 % Tier 1 risk-based capital ratio 10.59 % 10.75 % 10.08 % 10.03 % 9.88 % 10.59 % 9.88 % Total risk-based capital ratio 12.30 % 12.92 % 12.17 % 12.01 % 11.86 % 12.30 % 11.86 % Tangible common equity ratio 8.09 % 8.21 % 7.50 % 7.40 % 7.41 % 8.09 % 7.41 % SHARES OUTSTANDING Number of common shares outstanding 7,906,761 7,871,818 7,876,082 7,803,900 7,770,439 7,906,761 7,770,439 Average common shares outstanding - basic 7,455,650 7,434,726 7,426,949 7,386,639 7,344,693 7,426,096 7,323,172 Average common shares outstanding - diluted 7,661,711 7,622,428 7,578,613 7,551,406 7,543,616 7,604,442 7,490,779 ASSET QUALITY Allowance for credit losses to total loans 1.12 % 1.37 % 1.36 % 1.21 % 1.22 % 1.12 % 1.22 % Nonperforming assets to total assets 0.06 % 0.16 % 0.16 % 0.06 % 0.06 % 0.06 % 0.06 % Nonperforming loans to total loans 0.07 % 0.20 % 0.20 % 0.08 % 0.08 % 0.07 % 0.08 % Net charge-offs to average loans(2) 0.93 % 0.02 % 0.00 % 0.00 % 0.00 % 0.24 % 0.01 % AVERAGE BALANCES Loans, net of deferred loan fees $ 1,815,933 $ 1,804,107 $ 1,813,422 $ 1,756,770 $ 1,698,690 $ 1,797,626 $ 1,621,283 Investment securities 308,502 311,450 307,294 319,440 337,808 311,662 382,108 Total assets 2,250,086 2,272,623 2,265,583 2,222,778 2,191,198 2,252,814 2,173,969 Deposits 1,894,321 1,805,935 1,757,320 1,724,845 1,708,789 1,795,904 1,693,195 Shareholders' equity 188,170 179,260 166,874 166,907 148,723 175,348 150,045 (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) December 31 , September 30 , June 30 , March 31 , December 31 , Assets 2024 2024 2024 2024 2023 Cash and due from banks $ 8,662 $ 15,172 $ 13,750 $ 9,971 $ 9,546 Due from Federal Reserve Bank and interest-bearing deposits in banks 74,039 121,361 97,974 80,208 71,850 Total cash and cash equivalents 82,701 136,533 111,724 90,179 81,396 Investment securities - available for sale 296,556 316,741 308,661 314,793 325,320 Total investment securities 296,556 316,741 308,661 314,793 325,320 Loans, net of deferred loan fees 1,864,942 1,786,756 1,806,607 1,783,024 1,740,647 Allowance for credit losses on loans (18,679 ) (22,315 ) (22,410 ) (19,342 ) (19,131 ) Loans, net of allowance for credit losses on loans 1,846,263 1,764,441 1,784,197 1,763,682 1,721,516 Bank owned life insurance 12,674 12,580 12,490 12,401 12,315 Premises and equipment, net 2,331 2,549 2,810 3,061 3,297 Other real estate owned - - - - - Accrued interest receivable and other assets 63,963 62,625 67,139 72,395 86,992 Total assets $ 2,304,488 $ 2,295,469 $ 2,287,021 $ 2,256,511 $ 2,230,836 Liabilities and Shareholders' Equity Deposits: Non-interest-bearing demand $ 414,327 $ 405,528 $ 405,644 $ 477,728 $ 472,517 Interest-bearing checking 993,219 1,026,898 840,839 764,766 740,902 Money market and savings 338,578 336,166 312,162 319,692 298,117 Time 74,468 75,033 99,239 56,140 46,676 Brokered 70,763 57,903 80,608 139,532 96,117 Total deposits 1,891,355 1,901,528 1,738,492 1,757,858 1,654,329 Subordinated debt, net 22,000 21,982 21,957 21,931 21,906 Short-term borrowings 185,000 160,000 330,000 290,000 360,000 Accrued interest payable and other liabilities 19,771 23,438 25,123 19,638 29,289 Total liabilities 2,118,126 2,106,948 2,115,572 2,089,427 2,065,524 Shareholders' Equity Common stock 106,997 106,169 105,487 104,771 104,499 Retained earnings 130,703 124,246 118,400 114,934 109,688 Accumulated other comprehensive (loss) (51,338 ) (41,894 ) (52,438 ) (52,621 ) (48,875 ) Total shareholders' equity 186,362 188,521 171,449 167,084 165,312 Total liabilities and shareholders' equity $ 2,304,488 $ 2,295,469 $ 2,287,021 $ 2,256,511 $ 2,230,836 AVIDBANK HOLDINGS, INC. Consolidated Statements of Income (Unaudited) (in thousands, except share and per share amounts) Three months ended Twelve months ended Dec. 31 , Sept. 30 , June 30 , March 31 , Dec. 31 , 2024 2024 2024 2024 2023 2024 2023 Interest and fees on loans $ 32,308 $ 33,488 $ 33,255 $ 31,828 $ 31,078 $ 130,878 $ 112,494 Interest on investment securities 1,770 1,767 1,801 1,824 1,979 7,162 8,658 Federal Home Loan Bank dividends(1) 185 183 193 190 172 752 690 Other interest income 681 1,198 951 819 654 3,649 3,140 Total interest income 34,944 36,636 36,200 34,661 33,883 142,441 124,982 Deposit interest expense 14,015 14,602 13,494 12,034 11,692 54,146 36,414 Interest on short-term borrowings 1,437 3,121 3,880 3,442 3,467 11,879 13,808 Interest on subordinated debt 293 300 300 300 300 1,194 1,201 Total interest expense 15,745 18,023 17,674 15,776 15,459 67,219 51,423 Net interest income 19,199 18,613 18,526 18,885 18,424 75,222 73,559 Provision for credit losses 779 - 2,998 319 1,266 4,096 3,042 Net interest income after provision for credit losses 18,420 18,613 15,528 18,566 17,158 71,126 70,517 Service charges and bank fees 649 675 658 618 613 2,600 2,209 Foreign exchange income 191 246 208 251 210 896 411 Income from bank owned life insurance 93 90 137 187 201 508 894 Gain/(loss) on sale of securities - - - - (5,399 ) - (6,214 ) Warrant and success fee income 65 - - - 15 65 23 Other investment income 637 240 59 155 (116 ) 1,092 56 Loss on sale of ORE - - - - (165 ) - (165 ) Other income 205 539 36 72 19 849 134 Total noninterest income 1,840 1,790 1,098 1,283 (4,622 ) 6,010 (2,652 ) Salaries and benefit expenses 7,389 8,336 7,980 8,794 8,137 32,499 30,572 Occupancy and equipment expenses 919 1,033 1,039 1,028 986 4,019 3,954 Data processing 613 638 597 564 499 2,412 2,041 Regulatory assessments 541 528 568 446 403 2,083 1,663 Legal and professional fees 452 534 541 611 531 2,139 1,839 Other operating expenses 1,138 1,028 1,033 984 994 4,181 3,824 Total noninterest expense 11,052 12,097 11,758 12,427 11,550 47,333 43,893 Income before income taxes 9,208 8,306 4,868 7,422 986 29,803 23,972 Provision for income taxes 2,751 2,460 1,402 2,176 683 8,788 7,171 Net income $ 6,457 $ 5,846 $ 3,466 $ 5,246 $ 303 $ 21,015 $ 16,801 Basic earnings per common share $ 0.87 $ 0.79 $ 0.47 $ 0.71 $ 0.04 $ 2.83 $ 2.29 Diluted earnings per common share 0.84 0.77 0.46 0.69 0.04 2.76 2.24 Weighted average shares - basic 7,455,650 7,434,726 7,426,949 7,386,639 7,344,693 7,426,096 7,323,172 Weighted average shares - diluted 7,661,711 7,622,428 7,578,613 7,551,406 7,543,616 7,604,442 7,490,779 (1) Federal Home Loan Bank dividends have been reclassified from total noninterest income to total interest income for all periods presented. AVIDBANK HOLDINGS, INC. Average Balance Sheets and Net Interest Margin Analysis (Unaudited) (dollars in thousands) Three months ended December 31, 2024 September 30, 2024 Interest Yields Interest Yields Average Income/ or Average Income/ or Balance Expense Rates(6) Balance Expense Rates(6) Assets Interest earning assets: Loans(1) $ 1,817,101 $ 32,308 7.07 % $ 1,805,430 $ 33,488 7.38 % Fed funds sold/interest bearing deposits 57,698 681 4.70 % 87,228 1,198 5.46 % Investment securities Taxable investment securities 305,963 1,741 2.26 % 309,624 1,745 2.24 % Non-taxable investment securities(2) 2,539 36 5.64 % 1,826 28 6.10 % Total investment securities 308,502 1,777 2.29 % 311,450 1,773 2.26 % FHLB stock(3) 8,409 185 8.75 % 8,409 183 8.66 % Total interest-earning assets 2,191,710 34,951 6.34 % 2,212,517 36,642 6.59 % Noninterest-earning assets: Cash and due from banks 14,016 12,943 All other assets(4) 44,360 47,163 Total assets $ 2,250,086 $ 2,272,623 Liabilities and Shareholders' Equity Interest-bearing liabilities: Deposits Demand $ 994,121 $ 9,840 3.94 % $ 903,542 $ 9,801 4.32 % Money market and savings 351,126 2,794 3.17 % 348,125 3,067 3.50 % Time 77,203 744 3.83 % 75,972 810 4.24 % Brokered 49,064 637 5.16 % 69,670 924 5.28 % Total interest-bearing deposits 1,471,514 14,015 3.79 % 1,397,309 14,602 4.16 % Short-term borrowings 119,707 1,437 4.78 % 237,370 3,121 5.23 % Subordinated debt 21,993 293 5.30 % 21,970 300 5.44 % Total interest-bearing liabilities 1,613,214 15,745 3.88 % 1,656,649 18,023 4.33 % Noninterest-bearing liabilities: Demand deposits 422,807 408,626 Accrued expenses and other liabilities 25,895 28,088 Shareholders' equity 188,170 179,260 Total liabilities and shareholders' equity $ 2,250,086 $ 2,272,623 Net interest spread 2.46 % 2.26 % Net interest income and margin(5) $ 19,206 3.49 % $ 18,619 3.35 % Non-taxable equivalent net interest margin 3.48 % 3.35 % Cost of deposits $ 1,894,321 $ 14,015 2.94 % $ 1,805,935 $ 14,602 3.22 % (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 $491 thousand and $383 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) Federal Home Loan Bank dividends have been reclassified from total noninterest income to total interest income for all periods presented. (4) Average allowance for credit losses on loans of $22.2 million and $22.4 million , respectively, is included as a contra asset. (5) Net interest margin is net interest income divided by total interest-earning assets. (6) Annualized AVIDBANK HOLDINGS, INC Average Balance Sheets and Net Interest Margin Analysis (Unaudited) (dollars in thousands) Three months ended December 31, 2024 December 31, 2023 Interest Yields Interest Yields Average Income/ or Average Income/ or Balance Expense Rates(6) Balance Expense Rates(6) Assets Interest earning assets: Loans(1) $ 1,817,101 $ 32,308 7.07 % $ 1,700,094 $ 31,078 7.25 % Fed funds sold/interest bearing deposits 57,698 681 4.70 % 47,906 654 5.34 % Investment securities Taxable investment securities 305,963 1,741 2.26 % 337,021 1,971 2.32 % Non-taxable investment securities(2) 2,539 36 5.64 % 787 10 5.04 % Total investment securities 308,502 1,777 2.29 % 337,808 1,981 2.33 % FHLB stock(3) 8,409 185 8.75 % 8,409 172 8.12 % Total interest-earning assets 2,191,710 34,951 6.34 % 2,094,217 33,885 6.42 % Noninterest-earning assets: Cash and due from banks 14,016 12,528 All other assets(4) 44,360 84,453 Total assets $ 2,250,086 $ 2,191,198 Liabilities and Shareholders' Equity Interest-bearing liabilities: Deposits Demand $ 994,121 $ 9,840 3.94 % $ 766,856 $ 7,650 3.96 % Money market and savings 351,126 2,794 3.17 % 305,240 2,218 2.88 % Time 77,203 744 3.83 % 29,787 252 3.36 % Brokered 49,064 637 5.16 % 119,605 1,572 5.21 % Total interest-bearing deposits 1,471,514 14,015 3.79 % 1,221,488 11,692 3.80 % Short-term borrowings 119,707 1,437 4.78 % 281,457 3,467 4.89 % Subordinated debt 21,993 293 5.30 % 21,893 300 5.44 % Total interest-bearing liabilities 1,613,214 15,745 3.88 % 1,524,838 15,459 4.02 % Noninterest-bearing liabilities: Demand deposits 422,807 487,301 Accrued expenses and other liabilities 25,895 30,336 Shareholders' equity 188,170 148,723 Total liabilities and shareholders' equity $ 2,250,086 $ 2,191,198 Net interest spread 2.46 % 2.40 % Net interest income and margin(5) $ 19,206 3.49 % $ 18,426 3.49 % Non-taxable equivalent net interest margin 3.48 % 3.49 % Cost of deposits $ 1,894,321 $ 14,015 2.94 % $ 1,708,789 $ 11,692 2.71 % (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 loan includes net amortization of deferred loan fees / (costs) of $491 thousand and $449 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) Federal Home Loan Bank dividends have been reclassified from total noninterest income to total interest income for all periods presented. (4) Average allowance for credit losses on loans of $22.2 million and $17.8 million , respectively, is included as a contra asset. (5) Net interest margin is net interest income divided by total interest-earning assets. (6) Annualized AVIDBANK HOLDINGS, INC. Average Balance Sheets and Net Interest Margin Analysis (Unaudited) (dollars in thousands) Twelve months ended December 31, 2024 December 31, 2023 Interest Yields Interest Yields Average Income/ or Average Income/ or Balance Expense Rates(6) Balance Expense Rates(6) Assets Interest earning assets: Loans(1) $ 1,798,951 $ 130,878 7.28 % $ 1,622,731 $ 112,494 6.93 % Fed funds sold/interest bearing deposits 68,722 3,649 5.31 % 61,331 3,140 5.12 % Investment securities Taxable investment securities 309,652 7,067 2.28 % 374,638 8,387 2.24 % Non-taxable investment securities(2) 2,010 120 5.97 % 7,470 343 4.59 % Total investment securities 311,662 7,187 2.31 % 382,108 8,730 2.28 % FHLB stock(3) 8,409 752 8.94 % 8,199 690 8.42 % Total interest-earning assets 2,187,744 142,466 6.51 % 2,074,369 125,054 6.03 % Noninterest-earning assets: Cash and due from banks 13,048 20,375 All other assets(4) 52,022 79,225 Total assets $ 2,252,814 $ 2,173,969 Liabilities and Shareholders' Equity Interest-bearing liabilities: Deposits Demand $ 857,409 $ 35,112 4.10 % $ 524,591 $ 19,548 3.73 % Money market and savings 326,934 10,729 3.28 % 461,352 12,226 2.65 % Time 76,846 3,144 4.09 % 46,318 937 2.02 % Brokered 97,078 5,161 5.32 % 73,179 3,703 5.06 % Total interest-bearing deposits 1,358,267 54,146 3.99 % 1,105,440 36,414 3.29 % Short-term borrowings 233,290 11,879 5.09 % 282,596 13,808 4.89 % Subordinated debt 21,956 1,194 5.44 % 21,855 1,201 5.50 % Total interest-bearing liabilities 1,613,513 67,219 4.17 % 1,409,891 51,423 3.65 % Noninterest-bearing liabilities: Demand deposits 437,637 587,755 Accrued expenses and other liabilities 26,316 26,278 Shareholders' equity 175,348 150,045 Total liabilities and shareholders' equity $ 2,252,814 $ 2,173,969 Net interest spread 2.34 % 2.38 % Net interest income and margin(5) $ 75,247 3.44 % $ 73,631 3.55 % Non-taxable equivalent net interest margin 3.44 % 3.55 % Cost of deposits $ 1,795,904 $ 54,146 3.01 % $ 1,693,195 $ 36,414 2.15 % (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 $1.8 million and $1.9 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) Federal Home Loan Bank dividends have been reclassified from total noninterest income to total interest income for all periods presented. (4) Average allowance for credit losses on loans of $20.9 million and $17.2 million , respectively, is included as a contra asset. (5) Tax equivalent net interest income divided by total interest-earning assets. (6) Annualized AVIDBANK HOLDINGS, INC. Loans and Credit Data (Unaudited) (dollars in thousands) Dec. 31 , Sept. 30 , June 30 , March 31 , Dec. 31 , Current Quarter Year over Year 2024 2024 2024 2024 2023 Change Change Commercial loans $ 816,963 $ 759,492 $ 774,666 $ 736,068 $ 716,075 $ 57,471 $ 100,888 Commercial real estate Multi-family 216,018 199,929 202,292 203,170 200,152 16,089 15,866 Owner Occupied 142,650 141,139 157,376 158,759 158,728 1,511 (16,078 ) Non-Owner Occupied 414,551 406,007 412,473 408,758 411,446 8,544 3,105 Construction and land 246,301 253,325 242,966 259,562 237,124 (7,024 ) 9,177 Residential 27,494 25,799 15,717 16,187 16,816 1,695 10,678 Total real estate loans 1,047,014 1,026,199 1,030,824 1,046,436 1,024,266 20,815 22,748 Other loans 965 1,065 1,117 520 306 (100 ) 659 Total loans $ 1,864,942 $ 1,786,756 $ 1,806,607 $ 1,783,024 $ 1,740,647 $ 78,186 $ 124,295 Allowance for Credit Losses on Loans Balance, beginning of quarter $ 22,315 $ 22,410 $ 19,342 $ 19,131 $ 17,800 Provision for credit losses on loans 630 - 3,068 211 1,331 Charge-offs (4,266 ) (95 ) - - - Recoveries - - - - - Balance, end of quarter $ 18,679 $ 22,315 $ 22,410 $ 19,342 $ 19,131 Allowance for Credit Losses on Unfunded Commitments Balance, beginning of quarter $ 2,098 $ 2,098 $ 2,168 $ 2,060 $ 2,125 Provision for unfunded commitments 149 - (70 ) 108 (65 ) Balance, end of quarter $ 2,247 $ 2,098 $ 2,098 $ 2,168 $ 2,060 Total allowance for credit losses - loans and unfunded commitments $ 20,926 $ 24,413 $ 24,508 $ 21,510 $ 21,191 Provision for credit losses under CECL Provision for credit losses on loans $ 630 $ - $ 3,068 $ 211 $ 1,331 Provision for unfunded commitments 149 - (70 ) 108 (65 ) Total provision for credit losses $ 779 $ - $ 2,998 $ 319 $ 1,266 Nonperforming Assets Loans accounted for on a non-accrual basis $ 1,347 $ 3,621 $ 3,686 $ 1,370 $ 1,378 Loans past due 90 days or more and still accruing - - - - - Nonperforming loans 1,347 3,621 3,686 1,370 1,378 Other real estate owned - - - - - Nonperforming assets $ 1,347 $ 3,621 $ 3,686 $ 1,370 $ 1,378 Nonperforming Loans by Type: Commercial $ 1,347 $ 3,621 $ 3,686 $ 1,370 $ 1,378 Total Nonperforming loans $ 1,347 $ 3,621 $ 3,686 $ 1,370 $ 1,378 Asset Quality Ratios Allowance for credit losses on loans to total loans 1.00 % 1.25 % 1.24 % 1.08 % 1.10 % Allowance for credit losses to total loans 1.12 % 1.37 % 1.36 % 1.21 % 1.22 % Allowance for credit losses on loans to nonperforming loans 1386.71 % 616.27 % 607.98 % 1411.82 % 1388.32 % Nonperforming assets to total assets 0.06 % 0.16 % 0.16 % 0.06 % 0.06 % Nonperforming loans to total loans 0.07 % 0.20 % 0.20 % 0.08 % 0.08 % Net quarterly charge-offs to average loans(1) 0.93 % 0.02 % 0.00 % 0.00 % 0.00 % Criticized loans to total loans 2.27 % 1.62 % 1.49 % 1.40 % 1.25 % Classified loans to total loans 0.22 % 0.51 % 0.52 % 0.39 % 0.47 % (1) Annualized AVIDBANK HOLDINGS, INC. Deposits (Unaudited) (dollars in thousands) Current Year over Dec. 31 , Sept. 30 , June 30 , March 31 , Dec. 31 , Quarter Year Period End Deposits 2024 2024 2024 2024 2023 Change Change Non-interest-bearing demand $ 414,327 $ 405,528 $ 405,644 $ 477,728 $ 472,517 $ 8,799 $ (58,190 ) Interest-bearing checking 993,219 1,026,898 840,839 764,766 740,902 (33,679 ) 252,317 Money market and savings 338,578 336,166 312,162 319,692 298,117 2,412 40,461 Time 74,468 75,033 99,239 56,140 46,676 (565 ) 27,792 Brokered 70,763 57,903 80,608 139,532 96,117 12,860 (25,354 ) Total deposits $ 1,891,355 $ 1,901,528 $ 1,738,492 $ 1,757,858 $ 1,654,329 $ (10,173 ) $ 237,026 Average Deposits Non-interest-bearing demand $ 422,807 $ 408,626 $ 436,498 $ 483,100 $ 487,301 $ 14,181 $ (64,494 ) Interest-bearing checking 994,121 903,542 783,048 746,916 766,856 90,579 227,265 Money market and savings 351,126 348,125 304,392 303,593 305,240 3,001 45,886 Time 77,203 75,972 97,430 56,783 29,787 1,231 47,416 Brokered 49,064 69,670 135,952 134,453 119,605 (20,606 ) (70,541 ) Total deposits $ 1,894,321 $ 1,805,935 $ 1,757,320 $ 1,724,845 $ 1,708,789 $ 88,386 $ 185,532 AVIDBANK HOLDINGS, INC. Non-GAAP performance and Financial Measures Reconciliation (Unaudited) (in thousands, except share and per share amounts) Twelve months ended 2024 2023 December 31 , Non-GAAP adjusted net income reconciliation Fourth Quarter Third Quarter Second Quarter First Quarter Fourth Quarter 2024 2023 Net income - GAAP $ 6,457 $ 5,846 $ 3,466 $ 5,246 $ 303 $ 21,015 $ 16,801 Loss on sale of securities, net of income tax - - - - 3,888 - 4,483 Severance, net of income tax - - - - 233 - 233 BOLI surrender tax expense - - - - 478 - 478 Adjusted net income (non-GAAP) $ 6,457 $ 5,846 $ 3,466 $ 5,246 $ 4,902 $ 21,015 $ 21,995 Non-GAAP adjusted net income reconciliation Net income - GAAP $ 6,457 $ 5,846 $ 3,466 $ 5,246 $ 303 $ 21,015 $ 16,801 Loss on sale of securities - - - - 5,399 - 6,214 Tax impact of loss on sale of securities - - - - (1,511 ) - (1,731 ) Severance - - - - 324 - 324 Tax impact of severance - - - - (91 ) - (91 ) BOLI surrender tax expense - - - - 478 - 478 Adjusted net income (non-GAAP) $ 6,457 $ 5,846 $ 3,466 $ 5,246 $ 4,902 $ 21,015 $ 21,995 Non-GAAP adjusted diluted earnings per share reconciliation Diluted earnings per share - GAAP $ 0.84 $ 0.77 $ 0.46 $ 0.69 $ 0.04 $ 2.76 $ 2.24 Loss on sale of securities, net of income tax - - - - 0.52 - 0.60 Severance, net of income tax - - - - 0.03 - 0.03 BOLI surrender tax expense - - - - 0.06 - 0.06 Adjusted diluted earnings per share (non-GAAP) $ 0.84 $ 0.77 $ 0.46 $ 0.69 $ 0.65 $ 2.76 $ 2.94 Non-GAAP adjusted return on average assets reconciliation Net income - GAAP $ 6,457 $ 5,846 $ 3,466 $ 5,246 $ 303 $ 21,015 $ 16,801 Average total assets 2,250,086 2,272,623 2,265,583 2,222,778 2,191,198 2,252,814 2,173,969 Return on average assets - GAAP 1.14 % 1.02 % 0.62 % 0.95 % 0.05 % 0.93 % 0.77 % Adjusted net income (non-GAAP) $ 6,457 $ 5,846 $ 3,466 $ 5,246 $ 4,902 $ 21,015 $ 21,995 Average total assets 2,250,086 2,272,623 2,265,583 2,222,778 2,191,198 2,252,814 2,173,969 Adjusted return on average assets (non-GAAP) 1.14 % 1.02 % 0.62 % 0.95 % 0.89 % 0.93 % 1.01 % Non-GAAP taxable equivalent net interest income reconciliation Net interest income - GAAP $ 19,199 $ 18,613 $ 18,526 $ 18,885 $ 18,424 $ 75,222 $ 73,559 Taxable equivalent adjustment 7 6 5 6 2 25 72 Net interest income - taxable equivalent (non-GAAP) $ 19,206 $ 18,619 $ 18,531 $ 18,891 $ 18,426 $ 75,247 $ 73,631 Non-GAAP taxable equivalent net interest margin reconciliation Net interest margin - GAAP 3.49 % 3.35 % 3.39 % 3.54 % 3.49 % 3.44 % 3.55 % Impact of taxable equivalent adjustment (0.01 ) - - - - - - Net interest margin - taxable equivalent (non-GAAP) 3.48 % 3.35 % 3.39 % 3.54 % 3.49 % 3.44 % 3.55 % Non-GAAP total deposits, excluding brokered deposits Total period end deposits - GAAP $ 1,891,355 $ 1,901,528 $ 1,738,492 $ 1,757,858 $ 1,654,329 $ 1,891,355 $ 1,654,329 Brokered deposits 70,763 57,903 80,608 139,532 96,117 70,763 96,117 Total deposits, excluding brokered (non-GAAP) $ 1,820,592 $ 1,843,625 $ 1,657,884 $ 1,618,326 $ 1,558,212 $ 1,820,592 $ 1,558,212 Non-GAAP pre-tax, pre-provision net income Net income - GAAP $ 6,457 $ 5,846 $ 3,466 $ 5,246 $ 303 $ 21,015 $ 16,801 Provision for credit losses 779 - 2,998 319 1,266 4,096 3,042 Provision for income taxes 2,751 2,460 1,402 2,176 683 8,788 7,171 Non-GAAP pre-tax, pre-provision net income $ 9,987 $ 8,306 $ 7,866 $ 7,741 $ 2,252 $ 33,899 $ 27,014 SOURCE: Avidbank Holdings, Inc. 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