News Column

Avidbank Holdings, Inc. Announces Net Income of $696,000 for the Second Quarter of 2014

July 29, 2014

PALO ALTO, Calif.--(BUSINESS WIRE)-- Avidbank Holdings, Inc. ("the Company") (OTCBB:AVBH), a bank holding company and the parent company of Avidbank ("the Bank"), an independent full-service commercial bank serving businesses and consumers in Northern California, announced net income of $696,000 for the second quarter of 2014 compared to $922,000 for the same period in 2013.

Year-to-Date and Second Quarter 2014 Financial Highlights

  • Net income was $1,105,000 for the first six months of 2014, compared to $1,436,000 for the first six months of 2013. Results for the 2013 period included $681,000 in gains from the sale of investment securities compared to none in the 2014 period.
  • Diluted earnings per common share were $0.25 for the first six months of 2014, compared to $0.47 for the first six months of 2013.
  • Net income was $696,000 for the second quarter of 2014, compared to $922,000 for the second quarter of 2013. Results for the 2013 period included $681,000 in gains from the sale of investment securities compared to none in the 2014 period.
  • Diluted earnings per common share were $0.16 for the second quarter of 2014, compared to $0.30 for the second quarter of 2013.
  • Total assets grew by 2% over the past six months, ending the second quarter at $483 million.
  • Total loans outstanding grew by 9%, ending the second quarter at $278 million.
  • Total deposits grew by 1%, ending the second quarter at $427 million.
  • The Bank continues to be well capitalized with a Tier 1 Leverage Ratio of 10.4% and a Total Risk Based Capital Ratio of 13.2%.

    Mark D. Mordell, Chairman and Chief Executive Officer, stated, "The Bank's efforts to build lending infrastructure by increasing loan production staff and facilities yielded positive results in the second quarter of 2014. Loans outstanding increased more than $23 million in the quarter, the largest quarterly loan growth in the Bank's history. These results confirm our progress as we focus on our plan of sustained and prudent growth in our loan portfolio. Net income for the second quarter of 2014 grew by 71% over the first quarter of 2014 primarily due to higher loans outstanding. We will continue with our plan to grow our loan portfolio and leverage the investments in personnel and infrastructure we have made. Our Corporate Finance division, which includes asset-based and technology lending, has demonstrated solid growth in 2014."

    "The Bank's total deposits increased by $4.5 million in the second quarter of 2014, in spite of the fact that we continue to reduce our cost of funds. In addition, core deposits make up over 90% of total deposits and our non-interest bearing deposits have grown to over 40% of total deposits," noted Mr. Mordell. "We have expanded the size of our San Jose loan production office and are very excited about the potential of that market. We have added experienced loan officers in both Palo Alto and San Jose. Our high level of capital and the high quality of our loan portfolio provide us with ample capacity for growth.”

    Results for the six months ended June 30, 2014

    Net interest income before provision for loan losses was $7.8 million in 2014, an increase of $108,000 or 1.4% over the prior year. Higher outstanding loan balances and reductions in the rates paid on deposits were offset by lower loan yields. Average earning assets were $442 million in 2014, a 10% increase over the prior year. Net interest margin was 3.62% for 2014, compared to 3.88% in 2013. The decline in net interest margin was primarily caused by a decline in loan yields due to the current interest rate environment and a change in the mix of earning assets due to a significant increase in liquid funds. No loan loss provision was recorded in the first six months of either 2014 or 2013. We have experienced net recoveries of $21,000 in 2014 compared to net recoveries of $285,000 in 2013. Non-accrual loans totaled $2.3 million or 0.8% of total loans on June 30, 2014 compared to $2.0 million or 0.8% of total loans for the previous year-end. "Our high credit standards have led to a low level of problem loans and to net recoveries in 2014 and 2013," observed Mr. Mordell.

    Non-interest income, excluding gains on sales of securities, was $608,000 in the first six months of 2014, an increase of $324,000 or 114% over 2013. The increase in non-interest income was due to an increase in service charges and other fee generation activities as well as an increase in earnings on bank owned life insurance. There were no gains on sales of securities in 2014 and $681,000 of gains on securities sales in 2013.

    Non-interest expense grew by $374,000 or 6% in the first six months of 2014 to $6.5 million compared to $6.2 million in 2013. This growth was due to investments in loan production personnel and facilities as we continue to expand our footprint and grow our loan portfolio.

    Results for the quarter ended June 30, 2014

    For the three months ended June 30, 2014, net interest income before provision for loan losses was $4.2 million, an increase of $338,000 or 9% compared to the second quarter of 2013. The increase was primarily the result of higher average loans outstanding. Average earning assets were $429 million in the second quarter of 2014, a 7% increase over the second quarter of the prior year. Earning assets increased due to growth in the loan portfolio. Net interest margin was 3.98% for the second quarter of 2014, compared to 3.82% for the second quarter of 2013. Net interest margin increased due to growth in loans for the quarter and prepayment penalties on early payoffs. No loan loss provision was taken in the second quarter of 2014 or in the second quarter of 2013.

    Non-interest income, excluding gains on sales of securities, was $330,000 in the second quarter of 2014, an increase of $171,000 or 108% over the second quarter of 2013. The increase was due to increases in service charges and other fee generation activities as well as an increase in earnings on bank owned life insurance. There were no gains on sales of securities in the second quarter of 2014 and $681,000 of gains on securities sales in the second quarter of 2013.

    Non-interest expense grew by $240,000 in the second quarter of 2014 to $3.3 million compared to $3.1 million for the second quarter of 2013. This growth was due to the investments in loan production personnel and facilities mentioned previously.

    About Avidbank

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

    Forward-Looking Statement:

    This news release contains statements that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on current expectations, estimates and projections about Avidbank's business based, in part, on assumptions made by management. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements due to numerous factors, including those described above and the following: Avidbank's timely implementation of new products and services, technological changes, changes in consumer spending and savings habits and other risks discussed from time to time in Avidbank's reports and filings with banking regulatory agencies. In addition, such statements could be affected by general industry and market conditions and growth rates, and general domestic and international economic conditions. Such forward-looking statements speak only as of the date on which they are made, and Avidbank does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this release.

         

    Avidbank Holdings, Inc.

    Balance Sheet ($000, except share and per share amounts)

    (Unaudited)

     

    Assets

    6/30/2014

    3/31/2014

    6/30/2013

    Cash and due from banks $ 18,049 $ 15,427 $ 13,718
    Fed funds sold     100,445         127,785         115,575  
    Total cash and cash equivalents 118,494 143,212 129,293
     
    Investment securities - available for sale 65,282 58,397 50,541
     
    Loans, net of deferred loan fees 277,822 254,375 247,964
    Allowance for loan losses     (4,809 )       (4,795 )       (4,764 )
    Loans, net of allowance for loan losses 273,013 249,580 243,200
     
    Bank owned life insurance 11,783 11,694 3,471
    Premises and equipment, net 1,210 1,287 1,269
    Accrued interest receivable & other assets     12,983         8,950         4,741  
    Total assets $   482,765     $   473,120     $   432,515  
     

    Liabilities

    Non-interest-bearing demand deposits $ 173,394 $ 151,538 $ 115,115
    Interest bearing transaction accounts 15,523 18,041 16,177
    Money market and savings accounts 194,892 205,237 186,885
    Time deposits     42,777         47,250         58,901  
    Total deposits 426,586 422,066 377,078
     
    Other liabilities     6,262         2,209         2,332  
    Total liabilities 432,848 424,275 379,410
     

    Shareholders' equity

    Preferred stock - - 5,974
    Common stock/additional paid-in capital 44,985 44,774 44,579
    Retained earnings 4,574 3,877 2,436
    Accumulated other comprehensive income     358         194         116  
    Total shareholders' equity 49,917 48,845 53,105
     
    Total liabilities and shareholders' equity $   482,765     $   473,120     $   432,515  
     

    Bank Capital ratios

    Tier 1 leverage ratio 10.36 % 9.72 % 10.98 %
    Tier 1 risk-based capital ratio 11.89 % 12.89 % 13.79 %
    Total risk-based capital ratio 13.14 % 14.14 % 15.04 %
     
    Book value per common share $ 11.51 $ 11.34 $ 11.03
    Total shares outstanding 4,336,292 4,308,756 4,274,014
     

    Other Ratios

    Non-interest bearing/total deposits 40.6 % 35.9 % 30.5 %
    Loan to deposit ratio 65.1 % 60.3 % 65.8 %
    Allowance for loan losses/Total loans 1.73 % 1.88 % 1.92 %
     
           

    Avidbank Holdings, Inc.

    Condensed Statements of Income

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

     
    Quarter Ended

    Year-to-Date

    6/30/2014

    6/30/2013

    6/30/2014

    6/30/2013

    Interest and fees on loans $ 3,878 $ 3,661 $ 7,291 $ 7,383
    Interest on investment securities 437 399 812 803
    Other interest income   60       57       148       111  
    Total interest income 4,375 4,117 8,251 8,297
    Interest expense   209       289       453       607  
    Net interest income 4,166 3,828 7,798 7,690
     
    Provision for loan losses   -       -       -       -  

    Net interest income after provision for loan losses

    4,166 3,828 7,798 7,690
     
    Service charges, fees and other income 330 159 608 284
    Gain on sale of investment securities   -       681       -       681  
    Total non-interest income 330 840 608 965
     
    Compensation and benefit expenses 2,024 1,802 4,076 3,640
    Occupancy and equipment expenses 620 584 1,189 1,151
    Other operating expenses   669       687       1,277       1,378  
    Total non-interest expense 3,313 3,073 6,542 6,169
     
    Income before income taxes 1,183 1,595 1,864 2,486
    Provision for income taxes   487       673       759       1,050  
    Net income $ 696     $ 922     $ 1,105     $ 1,436  
     
    Preferred dividends & warrant amortization   -       84       -       168  

    Net income applicable to common shareholders

    $ 696     $ 838     $ 1,105     $ 1,268  
     
     
     
    Basic earnings per share $ 0.16 $ 0.31 $ 0.26 $ 0.47
    Diluted earnings per share $ 0.16 $ 0.30 $ 0.25 $ 0.47
     
    Average shares outstanding 4,319,447 2,733,948 4,307,140 2,675,349
    Average fully diluted shares 4,397,544 2,773,900 4,379,416 2,715,301
     

    Annualized returns:

    Return on average assets

    0.60 % 0.88 % 0.46 % 0.69 %

    Return on average common equity

    5.62 % 9.86 % 4.51 % 8.25 %
     
    Net interest margin 3.98 % 3.82 % 3.62 % 3.88 %
    Cost of funds 0.20 % 0.31 % 0.21 % 0.33 %
    Efficiency ratio 73.7 % 65.8 % 77.8 % 71.3 %
     





    Avidbank Holdings, Inc.

    Steve Leen, 650-843-2204

    Executive Vice President and Chief Financial Officer

    sleen@avidbank.com

    avidbank.com

    Source: Avidbank Holdings, Inc.


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    Source: Business Wire


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