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

About this update from Avidbank Holdings, Inc.

SAN JOSE, CA / ACCESSWIRE / October 21, 2024 / Avidbank Holdings, Inc. (OTC PINK:AVBH) announced net income for the third quarter of 2024 of $5.8 million , or $0.77 per diluted share, compared to $3.5 million , or $0.46 per diluted share, for the second quarter of 2024 and $5.4 million , or $0.72 per diluted share, for the third quarter of 2023. Third Quarter 2024 Highlights Return on average assets was 1.02% compared to 0.62% in the second quarter of 2024 and 0.99% in the third quarter of 2023. Book value per share was $23.95 , an increase of $2.18 , or 10%, from June 30, 2024 , and an increase of $5.12 , or 27%, from September 30, 2023 . The loan to deposit ratio improved to 94.0%, from 103.9% at June 30, 2024 and 97.8% at September 30, 2023 . Period end deposits increased $163.0 million , or 38% annualized, from June 30, 2024 , and $247.2 million , or 15%, from December 31, 2023 . Brokered deposits decreased $22.7 million from June 30, 2024 and $21.3 million from September 30, 2023 . Annualized net charge-offs to average loans totaled 0.02% for the third quarter of 2024 and 0.0% for the second quarter of 2024. Nonperforming assets to total assets totaled 0.16% as of September 30, 2024 , compared to 0.16% as of June 30, 2024 . Consolidated total risk-based capital improved to 12.92% from 12.17% at June 30, 2024 . This improvement included the benefit from a portion of our multifamily loan portfolio that qualifies for a reduced risk-weighted asset treatment. Short-term borrowings were down $170.0 million compared to June 20, 2024 , as increased core deposits enabled paydowns of more expensive sources of funds. "During the third quarter, we continued to make solid progress on our overall goal for this year of strengthening our balance sheet. This included another quarter of strong growth in core deposits and significant improvement in our capital ratios. Total deposits, excluding brokered, increased approximately $186 million compared to the second quarter. Our capital position continues to improve, with a tangible common equity ratio of 8.21% and a total risk-based capital ratio of 12.92%. We also experienced a 10% increase in our tangible book value per share during the third quarter to $23.95 due to improved profitability and a lower unrealized loss on the investment portfolio," said Mark D. Mordell , Chairman and Chief Executive Officer. "Loan growth in the third quarter was impacted by a slight decrease in the amount of new originations along with an elevated level of loan payoffs and paydowns on lines of credit. We are optimistic regarding both our loan and deposit pipelines as we enter the fourth quarter," added Mr. Mordell . Income Statement Net income totaled $5.8 million for the third quarter of 2024, an increase of $2.4 million from the second quarter of 2024, and an increase of $438,000 from the third quarter of 2023. A $3.0 million decrease in the provision for credit losses was a primary contributor to the increase compared to the second quarter of 2024. Taxable equivalent net interest income(1) totaled $18.6 million for the third quarter of 2024, an increase of $88,000 from the second quarter of 2024, and an increase of $1.1 million , or 6%, from the third quarter of 2023. The taxable equivalent net interest margin was 3.35% in the third quarter of 2024, a decrease of 4 basis points compared to the second quarter of 2024, and a decrease of 1 basis point compared to the third quarter of 2023. The decrease in taxable equivalent net interest margin compared to the prior quarter was primarily driven by a decrease in noninterest bearing deposits and an overall increase in the cost of deposits. The yield on loans in the third quarter of 2024 was 7.38%, an increase of 1 basis point from the second quarter of 2024 and an increase of 64 basis points from the third quarter of 2023. The overall increase in loan yields compared to prior periods was primarily due to higher rates on new loans. The cost of deposits in the third quarter of 2024 was 3.22%, an increase of 13 basis points from the second quarter of 2024 and an increase of 70 basis points from the third quarter of 2023. The cost of interest-bearing deposits in the third quarter of 2024 was 4.16% compared to 4.11% in the second quarter of 2024 and 3.66% in the third quarter of 2023. The provision for credit losses was $0 in the third quarter of 2024, compared to $3.0 million in the second quarter of 2024 and $120,000 in the third quarter of 2023. The provision was higher in the second quarter of 2024 primarily due to the addition of a $2.3 million nonaccrual loan. Noninterest income was $1.8 million in the third quarter of 2024 compared to $1.1 million in the second quarter of 2024 and $1.1 million in the third quarter of 2023. The increase in other income was primarily driven by $475,000 in proceeds received from a settlement related to a previously sold foreclosed property. Noninterest expense totaled $12.1 million for the third quarter of 2024, an increase of $339,000 compared to the second quarter of 2024 and an increase of $1.2 million from the third quarter of 2023. The increase from the second quarter was primarily due to a higher personnel expense. There were 146 full-time equivalent employees on September 30, 2024 , compared to 144 on June 30, 2024 . Balance Sheet Total assets were $2.30 billion as of September 30, 2024 , compared to $2.29 billion as of June 30, 2024 , and $2.20 billion at September 30, 2023 . Cash and cash equivalents were $136.5 million on September 30, 2024 , compared to $111.7 million on June 30, 2024 , and $80.0 million on September 30, 2023 . Period end loans on September 30, 2024 , totaled $1.79 billion , a decrease of $19.9 million , or 4% annualized, from June 30, 2024 , and an increase of $116.8 million , or 7%, from September 30, 2023 . The reduction in loans during the third quarter of 2024 included a decrease of $15.2 million in commercial loans and a decrease of $16.2 million in owner occupied commercial real estate loans, partially offset by an increase of $10.4 million and $10.1 million in construction and residential loans, respectively. Quarterly average loans for the third quarter of 2024 decreased $9.3 million , or 1%, from the second quarter of 2024 and increased $164.0 million , or 10%, from the third quarter of 2023. The allowance for credit losses on loans was $22.3 million on September 30, 2024 , representing a decrease of $95,000 from June 30, 2024 . The allowance for credit losses on loans to total loans was 1.25% on September 30, 2024 , compared to 1.24% on June 30, 2024 . Nonperforming loans to total loans was 0.20% on September 30, 3024 and June 30, 2024 . Investment securities were $316.7 million as of September 30, 2024 , compared to $308.7 million on June 30, 2024 , and $345.5 million at September 30, 2023 . Period end deposits were $1.90 billion on September 30, 2024 , an increase of $163.0 million , or 38% annualized, from June 30, 2024 . The change in deposits during the third quarter of 2024 included a $186 million increase in interest-bearing checking, offset by a $24.2 million decrease in time deposits and a $22.7 million decrease in brokered deposits. Quarterly average deposits for the third quarter of 2024 were $1.81 billion , an increase of $48.6 million from the second quarter of 2024, and an increase of $123.6 million from the third quarter of 2023. Short-term borrowings on September 30, 2024 , totaled $160.0 million , a decrease of $170.0 million , or 52%, compared to June 30, 2024 . The short-term borrowings on September 30, 2024 included $70.0 million in borrowings from the Bank Term Funding Program (BTFP). Book value per share was $23.95 on September 30, 2024 , an increase of $2.18 compared to $21.77 on June 30, 2024 . Total shareholders' equity was $188.5 million on September 30, 2024 , an increase of $17.1 million compared to June 30, 2024 . This included an increase in retained earnings of $5.8 million and a decrease in accumulated other comprehensive loss of $10.5 million compared to June 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) Nine months ended 2024 2023 September 30 , Third Second First Fourth Third Quarter Quarter Quarter Quarter Quarter 2024 2023 INCOME HIGHLIGHTS Net income $ 5,846 $ 3,466 $ 5,246 $ 303 $ 5,408 $ 14,558 $ 16,498 Loss on sale of securities, net of tax - - - 3,888 - - 595 Severance, net of income tax - - - 233 - - - BOLI surrender tax expense - - - 478 - - - Adjusted net income (1) $ 5,846 $ 3,466 $ 5,246 $ 4,902 $ 5,408 $ 14,558 $ 17,093 PER SHARE DATA Basic earnings per share $ 0.79 $ 0.47 $ 0.71 $ 0.04 $ 0.74 $ 1.96 $ 2.26 Diluted earnings per share 0.77 0.46 0.69 0.04 0.72 1.92 2.21 Diluted earnings per share - adjusted (1) 0.77 0.46 0.69 0.65 0.72 1.92 2.29 Book value per share 23.95 21.77 21.41 21.27 18.83 23.95 18.83 PERFORMANCE MEASURES Return on average assets (2) 1.02 % 0.62 % 0.95 % 0.05 % 0.99 % 0.86 % 1.02 % Return on average assets - adjusted (1)(2) 1.02 % 0.62 % 0.95 % 0.89 % 0.99 % 0.86 % 1.05 % Return on average equity (2) 12.97 % 8.35 % 12.64 % 0.81 % 14.01 % 11.37 % 14.66 % Net interest margin 3.35 % 3.39 % 3.54 % 3.49 % 3.36 % 3.42 % 3.55 % Efficiency ratio 59.29 % 59.92 % 61.62 % 83.68 % 58.75 % 60.27 % 56.64 % Average loans to average deposits 99.90 % 103.19 % 101.85 % 99.41 % 97.49 % 101.62 % 94.51 % CAPITAL Tier 1 leverage ratio 9.93 % 9.64 % 9.88 % 9.77 % 9.84 % 9.93 % 9.84 % Common equity tier 1 capital ratio 10.75 % 10.08 % 10.03 % 9.88 % 9.95 % 10.75 % 9.95 % Tier 1 risk-based capital ratio 10.75 % 10.08 % 10.03 % 9.88 % 9.95 % 10.75 % 9.95 % Total risk-based capital ratio 12.92 % 12.17 % 12.01 % 11.86 % 11.89 % 12.92 % 11.89 % Tangible common equity ratio 8.21 % 7.50 % 7.40 % 7.41 % 6.61 % 8.21 % 6.61 % SHARES OUTSTANDING Number of common shares outstanding 7,871,818 7,876,082 7,803,900 7,770,439 7,731,404 7,871,818 7,731,404 Average common shares outstanding - basic 7,434,726 7,426,949 7,386,639 7,344,693 7,327,197 7,416,173 7,315,920 Average common shares outstanding - diluted 7,622,428 7,578,613 7,551,406 7,543,616 7,511,373 7,584,349 7,472,158 ASSET QUALITY Allowance for credit losses to total loans 1.37 % 1.36 % 1.21 % 1.22 % 1.19 % 1.37 % 1.19 % Nonperforming assets to total assets 0.16 % 0.16 % 0.06 % 0.06 % 0.70 % 0.16 % 0.70 % Nonperforming loans to total loans 0.20 % 0.20 % 0.08 % 0.08 % 0.08 % 0.20 % 0.08 % Net charge-offs to average loans (2) 0.02 % 0.00 % 0.00 % 0.00 % 0.00 % 0.01 % 0.01 % AVERAGE BALANCES Loans, net of deferred loan fees $ 1,804,107 $ 1,813,422 $ 1,756,770 $ 1,698,690 $ 1,640,080 $ 1,791,479 $ 1,595,197 Investment securities 311,450 307,294 319,440 337,808 365,244 312,723 397,037 Total assets 2,272,623 2,265,583 2,222,778 2,191,198 2,168,443 2,253,729 2,168,162 Deposits 1,805,935 1,757,320 1,724,845 1,708,789 1,682,329 1,762,857 1,687,940 Shareholders' equity 179,260 166,874 166,907 148,723 153,099 171,043 150,491 (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) September 30 , June 30 , March 31 , December 31 , September 30 , Assets 2024 2024 2024 2023 2023 Cash and due from banks $ 15,172 $ 13,750 $ 9,971 $ 9,546 $ 20,456 Due from Federal Reserve Bank and interest-bearing deposits in banks 121,361 97,974 80,208 71,850 59,586 Total cash and cash equivalents 136,533 111,724 90,179 81,396 80,042 Investment securities - available for sale 316,741 308,661 314,793 325,320 345,547 Total investment securities 316,741 308,661 314,793 325,320 345,547 Loans, net of deferred loan fees 1,786,756 1,806,607 1,783,024 1,740,647 1,669,914 Allowance for credit losses on loans (22,315 ) (22,410 ) (19,342 ) (19,131 ) (17,800 ) Loans, net of allowance for credit losses on loans 1,764,441 1,784,197 1,763,682 1,721,516 1,652,114 Bank owned life insurance 12,580 12,490 12,401 12,315 33,440 Premises and equipment, net 2,549 2,810 3,061 3,297 3,558 Other real estate owned - - - - 14,095 Accrued interest receivable and other assets 62,625 67,139 72,395 86,992 73,104 Total assets $ 2,295,469 $ 2,287,021 $ 2,256,511 $ 2,230,836 $ 2,201,900 Liabilities and Shareholders' Equity Deposits: Non-interest-bearing demand $ 405,528 $ 405,644 $ 477,728 $ 472,517 $ 490,289 Interest-bearing checking 1,026,898 840,839 764,766 740,902 784,757 Money market and savings 336,166 312,162 319,692 298,117 322,983 Time 75,033 99,239 56,140 46,676 30,880 Brokered 57,903 80,608 139,532 96,117 79,291 Total deposits 1,901,528 1,738,492 1,757,858 1,654,329 1,708,200 Subordinated debt, net 21,982 21,957 21,931 21,906 21,881 Short-term borrowings 160,000 330,000 290,000 360,000 300,000 Accrued interest payable and other liabilities 23,438 25,123 19,638 29,289 26,250 Total liabilities 2,106,948 2,115,572 2,089,427 2,065,524 2,056,331 Shareholders' Equity Common stock 106,169 105,487 104,771 104,499 104,018 Retained earnings 124,246 118,400 114,934 109,688 109,386 Accumulated other comprehensive (loss) (41,894 ) (52,438 ) (52,621 ) (48,875 ) (67,835 ) Total shareholders' equity 188,521 171,449 167,084 165,312 145,569 Total liabilities and shareholders' equity $ 2,295,469 $ 2,287,021 $ 2,256,511 $ 2,230,836 $ 2,201,900 AVIDBANK HOLDINGS, INC. Consolidated Statements of Income (Unaudited) (in thousands, except share and per share amounts) Three months ended Nine months ended Sept. 30 , June 30 , March 31 , Dec. 31 , Sept. 30 , 2024 2024 2024 2023 2023 2024 2023 Interest and fees on loans $ 33,488 $ 33,255 $ 31,828 $ 31,078 $ 29,125 $ 98,570 $ 81,416 Interest on investment securities 1,767 1,801 1,824 1,979 2,009 5,392 6,679 Federal Home Loan Bank dividends (1) 183 193 190 172 171 567 519 Other interest income 1,198 951 819 654 662 2,968 2,486 Total interest income 36,636 36,200 34,661 33,883 31,967 107,497 91,100 Deposit interest expense 14,602 13,494 12,034 11,692 10,704 40,130 24,722 Interest on short-term borrowings 3,121 3,880 3,442 3,467 3,480 10,443 10,342 Interest on long-term debt 300 300 300 300 300 901 901 Total interest expense 18,023 17,674 15,776 15,459 14,484 51,474 35,965 Net interest income 18,613 18,526 18,885 18,424 17,483 56,023 55,135 Provision for credit losses - 2,998 319 1,266 120 3,317 1,776 Net interest income after provision for credit losses 18,613 15,528 18,566 17,158 17,363 52,706 53,359 Service charges and bank fees 675 658 618 613 560 1,951 1,597 Foreign exchange income 246 208 251 210 53 706 201 Income from bank owned life insurance 90 137 187 201 238 415 693 Gain/(loss) on sale of securities - - - (5,399 ) - - (815 ) Warrant and success fee income - - - 15 8 - 8 Other investment income 240 59 155 (116 ) 142 454 173 Loss on sale of ORE - - - (165 ) - - - Other income 539 36 72 19 62 644 112 Total noninterest income 1,790 1,098 1,283 (4,622 ) 1,063 4,170 1,969 Salaries and benefit expenses 8,336 7,980 8,794 8,137 7,460 25,111 22,435 Occupancy and equipment expenses 1,033 1,039 1,028 986 1,002 3,099 2,967 Data processing 638 597 564 499 538 1,799 1,542 Regulatory assessments 528 568 446 403 478 1,542 1,260 Legal and professional fees 534 541 611 531 483 1,686 1,308 Other operating expenses 1,028 1,033 984 994 935 3,043 2,829 Total noninterest expense 12,097 11,758 12,427 11,550 10,896 36,280 32,341 Income before income taxes 8,306 4,868 7,422 986 7,530 20,596 22,987 Provision for income taxes 2,460 1,402 2,176 683 2,122 6,038 6,489 Net income $ 5,846 $ 3,466 $ 5,246 $ 303 $ 5,408 $ 14,558 $ 16,498 Basic earnings per common share $ 0.79 $ 0.47 $ 0.71 $ 0.04 $ 0.74 $ 1.96 $ 2.26 Diluted earnings per common share 0.77 0.46 0.69 0.04 0.72 1.92 2.21 Weighted average shares - basic 7,434,726 7,426,949 7,386,639 7,344,693 7,327,197 7,416,173 7,315,920 Weighted average shares - diluted 7,622,428 7,578,613 7,551,406 7,543,616 7,511,373 7,584,349 7,472,158 (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 September 30, 2024 June 30, 2024 Average Balance Interest Income/ Expense Yields or Rates (6) Average Balance Interest Income/ Expense Yields or Rates (6) Assets Interest earning assets: Loans (1) $ 1,805,430 $ 33,488 7.38 % $ 1,814,803 $ 33,255 7.37 % Fed funds sold/interest bearing deposits 87,228 1,198 5.46 % 70,491 951 5.43 % Investment securities Taxable investment securities 309,624 1,745 2.24 % 305,492 1,778 2.34 % Non-taxable investment securities (2) 1,826 28 6.10 % 1,802 28 6.25 % Total investment securities 311,450 1,773 2.26 % 307,294 1,806 2.36 % FHLB stock (3) 8,409 183 8.66 % 8,409 193 9.23 % Total interest-earning assets 2,212,517 36,642 6.59 % 2,200,997 36,205 6.62 % Noninterest-earning assets: Cash and due from banks 12,943 12,188 All other assets (4) 47,163 52,398 Total assets $ 2,272,623 $ 2,265,583 Liabilities and Shareholders' Equity Interest-bearing liabilities: Deposits Demand $ 903,542 $ 9,801 4.32 % $ 783,048 $ 8,031 4.12 % Money market and savings 348,125 3,067 3.50 % 304,392 2,598 3.43 % Time 75,972 810 4.24 % 97,430 1,035 4.27 % Brokered 69,670 924 5.28 % 135,952 1,830 5.41 % Total interest-bearing deposits 1,397,309 14,602 4.16 % 1,320,822 13,494 4.11 % Short-term borrowings 237,370 3,121 5.23 % 295,220 3,880 5.29 % Subordinated debt 21,970 300 5.44 % 21,944 300 5.50 % Total interest-bearing liabilities 1,656,649 18,023 4.33 % 1,637,986 17,674 4.34 % Noninterest-bearing liabilities: Demand deposits 408,626 436,498 Accrued expenses and other liabilities 28,088 24,225 Shareholders' equity 179,260 166,874 Total liabilities and shareholders' equity $ 2,272,623 $ 2,265,583 Net interest spread 2.26 % 2.28 % Net interest income and margin (5) $ 18,619 3.35 % $ 18,531 3.39 % Non-taxable equivalent net interest margin 3.35 % 3.39 % Cost of deposits $ 1,805,935 $ 14,602 3.22 % $ 1,757,320 $ 13,494 3.09 % (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 $383 thousand and $409 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 $ 22.4 million and $19.8 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) Three months ended September 30, 2024 September 30, 2023 Average Balance Interest Income/ Expense Yields or Rates (6) Average Balance Interest Income/ Expense Yields or Rates (6) Assets Interest earning assets: Loans (1) $ 1,805,430 $ 33,488 7.38 % $ 1,641,475 $ 29,125 7.04 % Fed funds sold/interest bearing deposits 87,228 1,198 5.46 % 48,350 662 5.36 % Investment securities Taxable investment securities 309,624 1,745 2.24 % 365,244 2,009 2.18 % Non-taxable investment securities (2) 1,826 28 6.10 % - - 0.00 % Total investment securities 311,450 1,773 2.26 % 365,244 2,009 2.18 % FHLB stock (3) 8,409 183 8.66 % 8,409 171 8.07 % Total interest-earning assets 2,212,517 36,642 6.59 % 2,063,478 31,967 6.15 % Noninterest-earning assets: Cash and due from banks 12,943 22,556 All other assets (4) 47,163 82,409 Total assets $ 2,272,623 $ 2,168,443 Liabilities and Shareholders' Equity Interest-bearing liabilities: Deposits Demand $ 903,542 $ 9,801 4.32 % $ 748,016 $ 7,306 3.88 % Money market and savings 348,125 3,067 3.50 % 296,865 2,193 2.93 % Time 75,972 810 4.24 % 41,455 264 2.53 % Brokered 69,670 924 5.28 % 75,420 941 4.95 % Total interest-bearing deposits 1,397,309 14,602 4.16 % 1,161,756 10,704 3.66 % Short-term borrowings 237,370 3,121 5.23 % 285,326 3,480 4.84 % Subordinated debt 21,970 300 5.44 % 21,867 300 5.44 % Total interest-bearing liabilities 1,656,649 18,023 4.33 % 1,468,949 14,484 3.91 % Noninterest-bearing liabilities: Demand deposits 408,626 520,573 Accrued expenses and other liabilities 28,088 25,822 Shareholders' equity 179,260 153,099 Total liabilities and shareholders' equity $ 2,272,623 $ 2,168,443 Net interest spread 2.26 % 2.24 % Net interest income and margin (5) $ 18,619 3.35 % $ 17,483 3.36 % Non-taxable equivalent net interest margin 3.35 % 3.36 % Cost of deposits $ 1,805,935 $ 14,602 3.22 % $ 1,682,329 $ 10,704 2.52 % (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 $383 thousand and $441 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 $22.4 million and $17.6 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) Nine months ended September 30, 2024 September 30, 2023 Average Balance Interest Income/ Expense Yields or Rates (6) Average Balance Interest Income/ Expense Yields or Rates (6) Assets Interest earning assets: Loans (1) $ 1,792,857 $ 98,570 7.34 % $ 1,596,660 $ 81,416 6.82 % Fed funds sold/interest bearing deposits 72,424 2,968 5.47 % 65,855 2,486 4.98 % Investment securities Taxable investment securities 310,891 5,325 2.29 % 387,315 6,415 2.21 % Non-taxable investment securities (2) 1,832 84 6.12 % 9,722 334 4.59 % Total investment securities 312,723 5,409 2.31 % 397,037 6,749 2.27 % FHLB stock (3) 8,409 567 9.01 % 8,129 519 8.53 % Total interest-earning assets 2,186,413 107,514 6.57 % 2,067,681 91,170 5.89 % Noninterest-earning assets: Cash and due from banks 12,723 23,019 All other assets (4) 54,593 77,462 Total assets $ 2,253,729 $ 2,168,162 Liabilities and Shareholders' Equity Interest-bearing liabilities: Deposits Demand $ 811,505 $ 25,272 4.16 % $ 442,948 $ 11,899 3.59 % Money market and savings 318,811 7,935 3.32 % 513,961 10,008 2.60 % Time 76,725 2,400 4.18 % 51,889 684 1.76 % Brokered 113,199 4,523 5.34 % 57,534 2,131 4.95 % Total interest-bearing deposits 1,320,240 40,130 4.06 % 1,066,332 24,722 3.10 % Short-term borrowings 271,427 10,443 5.14 % 282,980 10,342 4.89 % Subordinated debt 21,944 901 5.48 % 21,842 901 5.52 % Total interest-bearing liabilities 1,613,611 51,474 4.26 % 1,371,154 35,965 3.51 % Noninterest-bearing liabilities: Demand deposits 442,617 621,608 Accrued expenses and other liabilities 26,458 24,909 Shareholders' equity 171,043 150,491 Total liabilities and shareholders' equity $ 2,253,729 $ 2,168,162 Net interest spread 2.31 % 2.38 % Net interest income and margin (5) $ 56,040 3.42 % $ 55,205 3.57 % Non-taxable equivalent net interest margin 3.42 % 3.57 % Cost of deposits $ 1,762,857 $ 40,130 3.04 % $ 1,687,940 $ 24,722 1.96 % (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 $1.2 million and $1.3 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 loan losses of $20.5 million and $16.9 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) Sept. 30 , June 30 , March 31 , Dec. 31 , Sept. 30 , Current Quarter Year over Year 2024 2024 2024 2023 2023 Change Change Commercial loans $ 759,492 $ 774,666 $ 736,068 $ 716,075 $ 687,501 $ (15,174 ) $ 71,991 Commercial real estate Multi-family 199,929 202,292 203,170 200,152 189,336 (2,363 ) 10,593 Owner Occupied 141,139 157,376 158,759 158,728 157,143 (16,237 ) (16,004 ) Non-Owner Occupied 406,007 412,473 408,758 411,446 403,952 (6,466 ) 2,055 Construction and land 253,325 242,966 259,562 237,124 214,474 10,359 38,851 Residential 25,799 15,717 16,187 16,816 17,311 10,082 8,488 Total real estate loans 1,026,199 1,030,824 1,046,436 1,024,266 982,216 (4,625 ) 43,983 Other loans 1,065 1,117 520 306 197 (52 ) 868 Total loans $ 1,786,756 $ 1,806,607 $ 1,783,024 $ 1,740,647 $ 1,669,914 $ (19,851 ) $ 116,842 Allowance for Credit Losses on Loans Balance, beginning of quarter $ 22,410 $ 19,342 $ 19,131 $ 17,800 $ 17,636 Provision for credit losses on loans - 3,068 211 1,331 164 Charge-offs (95 ) - - - - Recoveries - - - - - Balance, end of quarter $ 22,315 $ 22,410 $ 19,342 $ 19,131 $ 17,800 Allowance for Credit Losses on Unfunded Commitments Balance, beginning of quarter $ 2,098 $ 2,168 $ 2,060 $ 2,125 $ 2,169 Provision for unfunded commitments - (70 ) 108 (65 ) (44 ) Balance, end of quarter $ 2,098 $ 2,098 $ 2,168 $ 2,060 $ 2,125 Total allowance for credit losses - loans and unfunded commitments $ 24,413 $ 24,508 $ 21,510 $ 21,191 $ 19,925 Provision for credit losses under CECL Provision for credit losses on loans $ - $ 3,068 $ 211 $ 1,331 $ 164 Provision for unfunded commitments - (70 ) 108 (65 ) (44 ) Total provision for credit losses $ - $ 2,998 $ 319 $ 1,266 $ 120 Nonperforming Assets Loans accounted for on a non-accrual basis $ 3,621 $ 3,686 $ 1,370 $ 1,378 $ 1,385 Loans past due 90 days or more and still accruing - - - - - Nonperforming loans 3,621 3,686 1,370 1,378 1,385 Other real estate owned - - - - 14,095 Nonperforming assets $ 3,621 $ 3,686 $ 1,370 $ 1,378 $ 15,480 Nonperforming Loans by Type: Commercial $ 3,621 $ 3,686 $ 1,370 $ 1,378 $ 1,385 Construction and land - - - - - Total Nonperforming loans $ 3,621 $ 3,686 $ 1,370 $ 1,378 $ 1,385 Asset Quality Ratios Allowance for credit losses on loans to total loans 1.25 % 1.24 % 1.08 % 1.10 % 1.07 % Allowance for credit losses to total loans 1.37 % 1.36 % 1.21 % 1.22 % 1.19 % Allowance for credit losses on loans to nonperforming loans 616.27 % 607.98 % 1411.82 % 1388.32 % 1285.20 % Nonperforming assets to total assets 0.16 % 0.16 % 0.06 % 0.06 % 0.70 % Nonperforming loans to total loans 0.20 % 0.20 % 0.08 % 0.08 % 0.08 % Net quarterly charge-offs to average loans (1) 0.02 % 0.00 % 0.00 % 0.00 % 0.00 % Criticized and classified loans to total loans 2.13 % 2.00 % 1.78 % 1.72 % 1.70 % (1) Annualized AVIDBANK HOLDINGS, INC. Deposits (Unaudited) (dollars in thousands) Current Year over Sept. 30 , June 30 , March 31 , Dec. 31 , Sept. 30 , Quarter Year Period End Deposits 2024 2024 2024 2023 2023 Change Change Non-interest-bearing demand $ 405,528 $ 405,644 $ 477,728 $ 472,517 $ 490,289 $ (116 ) $ (84,761 ) Interest-bearing checking 1,026,898 840,839 764,766 740,902 784,757 186,059 242,141 Money market and savings 336,166 312,162 319,692 298,117 322,983 24,003 13,183 Time 75,033 99,239 56,140 46,676 30,880 (24,205 ) 44,153 Brokered 57,903 80,608 139,532 96,117 79,291 (22,705 ) (21,388 ) Total deposits $ 1,901,528 $ 1,738,492 $ 1,757,858 $ 1,654,329 $ 1,708,200 $ 163,036 $ 193,328 Average Deposits Non-interest-bearing demand $ 408,626 $ 436,498 $ 483,100 $ 487,301 $ 520,573 $ (27,872 ) $ (111,947 ) Interest-bearing checking 903,542 783,048 746,916 766,856 748,016 120,494 155,526 Money market and savings 348,125 304,392 303,593 305,240 296,865 43,733 51,260 Time 75,972 97,430 56,783 29,787 41,455 (21,458 ) 34,517 Brokered 69,670 135,952 134,453 119,605 75,420 (66,282 ) (5,750 ) Total deposits $ 1,805,935 $ 1,757,320 $ 1,724,845 $ 1,708,789 $ 1,682,329 $ 48,615 $ 123,606 AVIDBANK HOLDINGS, INC. Non-GAAP performance and Financial Measures Reconciliation (Unaudited) (in thousands, except share and per share amounts) For the nine months ended 2024 2023 September 30 , Non-GAAP adjusted net income reconciliation Third Quarter Second Quarter First Quarter Fourth Quarter Third Quarter 2024 2023 Net income - GAAP $ 5,846 $ 3,466 $ 5,246 $ 303 $ 5,408 $ 14,558 $ 16,498 Loss on sale of securities, net of income tax - - - 3,888 - - 595 Severance, net of income tax - - - 233 - - - BOLI surrender tax expense - - - 478 - - - Adjusted net income (non-GAAP) $ 5,846 $ 3,466 $ 5,246 $ 4,902 $ 5,408 $ 14,558 $ 17,093 Non-GAAP adjusted net income reconciliation Net income - GAAP $ 5,846 $ 3,466 $ 5,246 $ 303 $ 5,408 $ 14,558 $ 16,498 Loss on sale of securities - - - 5,399 - - 815 Tax impact of loss on sale of securities - - - (1,511 ) - - (220 ) Severance - - - 324 - - - Tax impact of severance - - - (91 ) - - - BOLI surrender tax expense - - - 478 - - - Adjusted net income (non-GAAP) $ 5,846 $ 3,466 $ 5,246 $ 4,902 $ 5,408 $ 14,558 $ 17,093 Non-GAAP adjusted diluted earnings per share reconciliation Diluted earnings per share - GAAP $ 0.77 $ 0.46 $ 0.69 $ 0.04 $ 0.72 $ 1.92 $ 2.21 Loss on sale of securities, net of income tax - - - 0.52 - - 0.08 Severance, net of income tax - - - 0.03 - - - BOLI surrender tax expense - - - 0.06 - - - Diluted earnings per share - adjusted (non-GAAP) $ 0.77 $ 0.46 $ 0.69 $ 0.65 $ 0.72 $ 1.92 $ 2.29 Non-GAAP adjusted return on average assets reconciliation Net income - GAAP $ 5,846 $ 3,466 $ 5,246 $ 303 $ 5,408 $ 14,558 $ 16,498 Average total assets 2,272,623 2,265,583 2,222,778 2,191,198 2,168,443 2,253,729 2,168,162 Return on average assets - GAAP 1.02 % 0.62 % 0.95 % 0.05 % 0.99 % 0.86 % 1.02 % Adjusted net income (non-GAAP) $ 5,846 $ 3,466 $ 5,246 $ 4,902 $ 5,408 $ 14,558 $ 17,093 Average total assets 2,272,623 2,265,583 2,222,778 2,191,198 2,168,443 2,253,729 2,168,162 Return on average assets - adjusted (non-GAAP) 1.02 % 0.62 % 0.95 % 0.89 % 0.99 % 0.86 % 1.05 % Non-GAAP taxable equivalent net interest income reconciliation Net interest income - GAAP $ 18,613 $ 18,526 $ 18,885 $ 18,424 $ 17,483 $ 56,023 $ 55,135 Taxable equivalent adjustment 6 5 6 2 - 17 70 Net interest income - taxable equivalent (non-GAAP) $ 18,619 $ 18,531 $ 18,891 $ 18,426 $ 17,483 $ 56,040 $ 55,205 Non-GAAP taxable equivalent net interest margin reconciliation Net interest margin - GAAP 3.35 % 3.39 % 3.54 % 3.49 % 3.36 % 3.42 % 3.57 % Impact of taxable equivalent adjustment - - - - - - - Net interest margin - taxable equivalent (non-GAAP) 3.35 % 3.39 % 3.54 % 3.49 % 3.36 % 3.42 % 3.57 % Non-GAAP total deposits, excluding brokered deposits Total period end deposits - GAAP $ 1,901,528 $ 1,738,492 $ 1,757,858 $ 1,654,329 $ 1,708,200 $ 1,901,528 $ 1,708,200 Brokered deposits 57,903 80,608 139,532 96,117 79,291 57,903 79,291 Total deposits, excluding brokered (non-GAAP) $ 1,843,625 $ 1,657,884 $ 1,618,326 $ 1,558,212 $ 1,628,909 $ 1,843,625 $ 1,628,909 Non-GAAP pre-tax, pre-provision net income Net income - GAAP $ 5,846 $ 3,466 $ 5,246 $ 303 $ 5,408 $ 14,558 $ 16,498 Provision for credit losses - 2,998 319 1,266 120 3,317 1,776 Provision for income taxes 2,460 1,402 2,176 683 2,122 6,038 6,489 Non-GAAP pre-tax, pre-provision net income $ 8,306 $ 7,866 $ 7,741 $ 2,252 $ 7,650 $ 23,913 $ 24,763 SOURCE: Avidbank Holdings, Inc. 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