SAN JOSE, CA / ACCESSWIRE / January 31, 2022 / Avidbank Holdings, Inc. ("the Company") (OTC PINK:AVBH), a bank holding company and the parent company of Avidbank ("the Bank"), an independent full-service commercial bank serving businesses and individuals primarily in Northern California, announced unaudited consolidated net income of $12.3 million for the year ended December 31, 2021 compared to $9.6 million, or a 28% increase for the year ended December 31, 2020.
Full Year and Fourth Quarter 2021 Financial Highlights
- Net income was $12.3 million in 2021 compared to $9.6 million in 2020. Net income in 2021 benefited from a $735,000 gain on the sale of investment securities and $711,000 of income from an investment fund. Net income in 2021 was reduced by a $3.6 million loan loss provision while a $1.7 million loan loss provision was recorded in 2020. Net interest income was $51.0 million in 2021, an increase of $6.1 million or 13.5% compared to the figure recorded in 2020.
- Diluted earnings per common share were $2.02 in 2021, compared to $1.61 in 2020. Weighted average common fully diluted shares outstanding were 6,062,482 and 5,967,780 in 2021 and 2020, respectively.
- Total interest income was $15.3 million for the fourth quarter of 2021, an increase of $2.3 million over the $13.0 million we recorded in the fourth quarter of 2020. The 17.5% increase over the prior year quarter reflects year over year loan growth and increased investment securities income.
- Net income was $2.5 million for the fourth quarter of 2021, compared to $2.8 million for the fourth quarter of 2020. Results for the fourth quarter of 2021 were affected by a $3.3 million loan loss provision while a $115,000 loan loss provision was taken in the fourth quarter of 2020.
- Diluted earnings per common share were $0.42 for the fourth quarter of 2021, compared to $0.46 for the fourth quarter of 2020.
- Total assets grew by 51.2% in 2021, ending the fourth quarter at $2.16 billion.
- Total loans net of deferred fees and any SBA PPP funding grew by 25.1% in 2021, ending the fourth quarter at $1.22 billion.
- Total deposits grew by 57.9% in 2021, ending the fourth quarter at $1.98 billion.
- The Company continues to be well capitalized for regulatory purposes with a Tier 1 Leverage Ratio of 6.89%, a Tier 1 Risk-Based Capital and Common Equity Tier 1 Risk-Based Capital Ratio of 8.90%, and a Total Risk-Based Capital Ratio of 11.11%.
Mark D. Mordell, Chairman and Chief Executive Officer, stated, "The investments we have made in personnel and infrastructure over the past several years have generated the returns we had planned for in 2021 as Avidbank achieved record levels of loans, deposits and total assets. These results were made possible by the outstanding teamwork and energy of our dedicated staff coming together to overcome the disruptions caused by the pandemic. Net interest income increased to $14.3 million in the fourth quarter of 2021, a 21.6% increase over the fourth quarter of 2020, primarily due to increases in loan interest income and investment securities income. Loans outstanding increased in the fourth quarter of 2021 due to new business generated by all of our lending divisions. Additionally, we increased our investment portfolio $103.5 million in the fourth quarter of 2021 with additional purchases of mortgage-backed securities."
Mr. Mordell continued, "Non-interest expense increased by $1.1 million to $9.5 million in the fourth quarter of 2021, up from $8.5 million in the third quarter of 2021, as a result of higher compensation and benefits costs. Our efficiency ratio decreased to 58.3% in the fourth quarter of 2021, down from 68.9% in the fourth quarter of 2020, as a result of increased net interest income, higher non-interest income and controlling costs. Total deposits increased by $331.8 million in the fourth quarter of 2021 compared to the third quarter of 2021 and increased by $725.7 million from the fourth quarter of 2020. The increase in deposits from September 30, 2021, was due to higher money market and demand deposit accounts, as was the increase in deposits over the fourth quarter of 2020. Our net interest margin dropped to 2.90% in the fourth quarter of 2021, compared to 2.98% in the third quarter of 2021, primarily due to a large surplus in overnight funds and a drop in loan and investment yields. Annualized return on assets was affected by a $3.0 million charge-off taken on a single commercial loan in the fourth quarter of 2021. Return on assets was 0.49% in the fourth quarter of 2021 compared to 0.80% in the third quarter of 2021 and 0.75% in the fourth quarter of 2020."
Mr. Mordell concluded, "We are very pleased with the progress we have made in 2021 as our team has been continuing to adapt to the "Covid" environment. We continue to maintain a hybrid work environment in our offices with the majority of staff splitting their time between the office and remote work at home, and have had a growing number working full-time in the office. Our focus will continue to be employee health and safety along with our fiduciary responsibility to our clients and shareholders. For those reasons, we continue to be cautious in our plans for returning employees to the workplace."
Results for the twelve months ended December 31, 2021
Net interest income before provision for loan losses was $51.0 million in 2021, an increase of $6.1 million or 13.5% over the previous year. Reduced interest expense and higher investment income were the primary reasons for the increase. Average loans net of deferred fees were $1.05 billion in 2021 compared to $981.9 million in 2020. Average earning assets were $1.63 billion in 2021, a 28.3% increase over the prior year figure of $1.27 billion. Net interest margin was 3.12% in 2021 compared to 3.53% for 2020. The decrease in net interest margin was primarily caused by an increase in overnight funds and a decline in loan and investment yields. A $3.6 million loan loss provision was taken in 2021 compared to a $1.7 million loan loss provision recorded in 2020. We had $3.1 million of charge-offs and no recoveries in 2021 compared to $411,000 of charge-offs and no recoveries for 2020.
Non-interest income was $5.3 million in 2021, an increase of $2.7 million or 102% compared to $2.6 million in 2020, reflecting a $735,000 gain on the sale of investments, income of $711,000 from an investment fund and increased service charge income.
Non-interest expense increased by $2.4 million to $35.6 million in 2021 compared to $33.2 million in 2020 due primarily to increased investments in personnel across the entire Bank.
The effective tax rate was 28.5% in 2021 compared to 24.2% for the same period in 2020. The effective tax rate in 2020 reflected the favorable impact of affordable housing tax credit investments and the re-allocation of income taxes to states outside of California.
Results for the quarter ended December 31, 2021
For the three months ended December 31, 2021, interest and fees on loans were $13.9 million, an increase of $1.2 million or 9.4% compared to the fourth quarter of 2020. The increase was primarily the result of higher loan balances partially offset by lower loan yields. Average loans net of deferred fees for the quarter ended December 31, 2021 were $1.15 billion, compared to $1.00 billion for the same quarter in 2020, an increase of 15.6%. Average earning assets were $1.96 billion in the fourth quarter of 2021, a 39.1% increase over the fourth quarter of the prior year. Loans made up 59% of average earning assets at the end of the fourth quarter of 2021 compared to 71% at the end of the fourth quarter of 2020. Net interest margin was 2.90% for the fourth quarter of 2021, compared to 3.33% for the fourth quarter of 2020. A $3.3 million loan loss provision was taken in the fourth quarter of 2021 compared with a $115,000 loan loss provision taken in the fourth quarter of 2020.
Non-interest income was $2.1 million in the fourth quarter of 2021, an increase of $1.4 million or 192.1% compared to the fourth quarter of 2020. The increase resulted from increased income from an investment fund of $711,000, proceeds from a warrant sale of $456,000 and increased BOLI income.
Non-interest expense increased by $953,000 or 11.1% in the fourth quarter of 2021 to $9.5 million compared to $8.6 million for the fourth quarter of 2020. This increase was primarily due to increases in compensation and benefit costs. The Company's full-time equivalent employees at December 31, 2021 and 2020 were 126 for both periods. The Company's efficiency ratio decreased from 68.9% in the fourth quarter of 2020 to 58.3% in the fourth quarter of 2021 primarily due to increased loan and investment interest income, higher non-interest income and controlled expenses.
Total assets were $2.16 billion as of December 31, 2021, compared to $1.83 billion at September 30, 2021 and $1.43 billion at December 31, 2020. The increase in total assets of $334.5 million, or 18.3%, from September 30, 2021 was primarily due to increased deposits funding increases in loans, investments and overnight funds with the Federal Reserve. Investments increased by $103.5 million due to the purchase of mortgage-backed securities with excess funds. The Company reported loans net of deferred fees at December 31, 2021 of $1.22 billion, which represented an increase of $150.2 million, or 14%, from $1.07 billion at September 30, 2021, and an increase of $229.9 million, or 23.1%, over $0.99 billion at December 31, 2020. The increase in loans from September 30, 2021 was primarily the result of an increase in Specialty Finance, CRE and Venture Lending loans. The increase in loans from December 31, 2020 was due to higher CRE, Specialty Finance and Multi-Family loans.
"We had $3.2 million in three non-accrual loans on December 31, 2021, down from a balance of $3.5 million at the end of 2020. Two of the non-accrual loans totaling $3.1 million are secured by commercial real estate with a very low loan to value," observed Mr. Mordell.
The Company's total deposits were $1.98 billion as of December 31, 2021, which represented an increase of $331.8 million, or 20.1%, compared to $1.65 billion at September 30, 2021 and an increase of $725.7 million, or 57.9%, compared to $1.25 billion at December 31, 2020. The increase in deposits from September 30, 2021 was due to higher money market and demand deposit accounts. The increase in deposits from December 31, 2020 was also due to an increase in money market and demand deposit accounts. The Company had no FHLB advances outstanding as of December 31, 2021, September 30, 2021 or December 31, 2020.
Demand and interest bearing transaction deposits represented 53% of total deposits at December 31, 2021, compared to 56% at September 30, 2021 and 55% at December 31, 2020. Core deposits, which include transaction deposits, money market accounts and CDs below $250,000, represented 96% of total deposits at December 31, 2021, compared to 94% at September 30, 2021 and 90% at December 31, 2020. The Company's loan to deposit ratio was 62% at December 31, 2021 compared to 65% at September 30, 2021 and 79% at December 31, 2020.
Avidbank Holdings, Inc. (OTC Pink: AVBH), headquartered in San Jose, California, offers innovative financial solutions and services. We specialize in commercial & industrial lending, venture lending, structured finance, asset-based lending, sponsor finance, real estate construction and commercial real estate lending. Avidbank provides a different approach to banking. We do what we say.
This news release contains statements that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts, and generally include the words "believes," "plans," "intends," "expects," "opportunity," "anticipates," "targeted," "continue," "remain," "will," "should," "may," or words of similar meaning. While we believe that our forward-looking statements and the assumptions underlying them are reasonably based, such statements and assumptions, are, by their nature subject to risks and uncertainties, and thus could later prove to be inaccurate or incorrect. Accordingly, actual results could materially differ from forward-looking statements for a variety of reasons, including, but not limited to local, regional, national and international economic conditions and events and the impact they may have on us and our customers, and in particular in our market areas; ability to attract deposits and other sources of liquidity; oversupply of property inventory and deterioration in values of California real estate, both residential and commercial; a prolonged slowdown or decline in construction activity; changes in the financial performance and/or condition of our borrowers; changes in the level of non-performing assets and charge-offs; the cost or effect of acquisitions we may make; the effect of changes in laws and regulations (including laws, regulations and judicial decisions concerning financial reform, capital requirements, taxes, banking, securities, employment, executive compensation, insurance, and information security) with which we and our subsidiaries must comply; changes in estimates of future reserve requirements and minimum capital requirements based upon the periodic review thereof under relevant regulatory and accounting requirements; ability to adequately underwrite for our asset based and corporate finance lending business lines; our ability to raise capital; inflation, interest rate, securities market and monetary fluctuations; cyber-security threats including loss of system functionality or theft or loss of data; political instability; acts of war or terrorism, or natural disasters, such as earthquakes, or the effects of a pandemic; destabilization in international economies resulting from the European sovereign debt crisis; the effects of the Tax Cuts and Jobs Act; the timely development and acceptance of new banking products and services and perceived overall value of these products and services by users; changes in consumer spending, borrowing and savings habits; technological changes; the ability to increase market share, retain customers and control expenses; ability to retain and attract key management and personnel; changes in the competitive environment among financial and bank holding companies and other financial service providers; continued volatility in the credit and equity markets and its effect on the general economy; the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board and other accounting standard setters; changes in our organization, management, compensation and benefit plans, and our ability to retain or expand our management team; the costs and effects of legal and regulatory developments including the resolution of legal proceedings or regulatory or other governmental inquiries and the results of regulatory examinations or reviews; our success at managing the risks involved in the foregoing items. We do not undertake, and specifically disclaim any obligation to update any forward-looking statements to reflect occurrences or unanticipated events or circumstances after the date of such statements except as required by law.
Executive Vice President and Chief Financial Officer
Avidbank Holdings, Inc.
Consolidated Balance Sheets
($000, except share and per share amounts) (Unaudited)
Cash and due from banks
Due from Federal Reserve Bank
Total cash and cash equivalents
Investment securities - available for sale
Loans, net of deferred loan fees
Allowance for loan losses
Loans, net of allowance for loan losses
Bank owned life insurance
Premises and equipment, net
Other real estate owned
Accrued interest receivable & other assets
Non-interest-bearing demand deposits
Interest bearing transaction accounts
Money market and savings accounts
Subordinated debt, net
Common stock/additional paid-in capital
Accumulated other comprehensive (loss) income
Total shareholders' equity
Total liabilities and shareholders' equity
Tier 1 leverage ratio
Common equity tier 1 capital ratio
Tier 1 risk-based capital ratio
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Book value per common share
Total common shares outstanding
Non-interest bearing deposits to total deposits
Core deposits to total deposits
Loan to deposit ratio
Allowance for loan losses to total loans
Quarterly Average Balances ($000s)
Loans, net of deferred loan fees
Total shareholders' equity
Avidbank Holdings, Inc.
Condensed Consolidated Statements of Income
($000, except share and per share amounts) (Unaudited)
Interest and fees on loans
Interest on investment securities
Other interest income
Total interest income
Deposit interest expense
Other interest expense
Total interest expense
Net interest income
Provision for loan losses
Net interest income after
provision for loan losses
Service charges, fees and other income
Income from bank owned life insurance
Gain on sale of assets
Total non-interest income
Compensation and benefit expenses
Occupancy and equipment expenses
Other operating expenses
Total non-interest expense
Income before income taxes
Provision for income taxes
Basic earnings per common share
Diluted earnings per common share
Average common shares outstanding
Average common fully diluted shares
Return on average assets
Return on average common equity
Net interest margin
Cost of funds
Avidbank Holdings, Inc.
Allowance for Loan Losses
Balance, beginning of quarter
Provision for loan losses, quarterly
Balance, end of quarter
Loans accounted for on a non-accrual basis
Loans with principal or interest contractually past due 90 days or more and still accruing interest
Other real estate owned
Loans restructured and in
compliance with modified terms
Nonperforming assets & restructured loans
Nonperforming Loans by Type:
Commercial Real Estate Loans
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Asset Quality Ratios
Allowance for loan losses (ALLL) to total loans
ALLL to nonperforming loans
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Nonperforming loans to total loans
Net quarterly charge-offs to total loans
SOURCE: Avidbank Holdings, Inc.
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