SAN JOSE, Calif.--(BUSINESS WIRE)--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 consumers in Northern California, announced unaudited consolidated net income of $2,107,000 for the first quarter of 2018 compared to $1,554,000 for the same period in 2017.
First Quarter 2018 Financial Highlights
- Net interest income was $8,586,000 for the first quarter of 2018, an increase of $1,618,000 over the $6,968,000 we achieved in the first quarter of 2017. The 23% increase over the prior year quarter reflects the impact of our loan growth over the past twelve months.
- Net income was $2,107,000 for the first quarter of 2018, compared to $1,554,000 for the first quarter of 2017. Results for the first quarter of 2018 included no loan loss provision compared to a loan loss provision of $721,000 in the first quarter of 2017.
- Diluted earnings per common share were $0.36 for the first quarter of 2018, compared to $0.33 for the first quarter of 2017.
- Total assets grew by 5% in the first three months of 2018, ending the first quarter at $822 million.
- Total loans net of deferred fees grew by 2% in the first three months of 2018, ending the first quarter at $662 million.
- Total deposits grew by 3% in the first three months of 2018, ending the first quarter at $666 million.
- The Company continues to be well capitalized for regulatory purposes with a Tier 1 Leverage Ratio of 11.4%, a Tier 1 Risk Based Capital and Common Equity Tier 1 Risk Based Capital Ratio of 10.8%, and a Total Risk Based Capital Ratio of 13.2%.
Mark D. Mordell, Chairman and Chief Executive Officer, stated, "Net interest income increased to $8.6 million in the first quarter of 2018, a 23% increase over the first quarter of 2017 due to our loan growth over the past twelve months. Loans grew $14 million in the first quarter even as we absorbed our record growth from the previous quarter and experienced a high level of payoffs in our Specialty Finance division due primarily to the active merger and acquisition markets. We are committed to a growth strategy to achieve optimal profitability and have made substantial investments in personnel and facilities to help realize that goal responsibly. In January 2018, we more than doubled the size of our space at our San Francisco location to accommodate our rapidly growing staff. We are well positioned to continue the franchise growth strategy to scale our balance sheet and infrastructure to serve our markets.”
Mr. Mordell continued, "In 2017, we added both business development and support staff to sustain and manage our growth. We also expanded and relocated our facilities to accommodate our growth in staff as well as increase staff retention due to more favorable commute times. Non-interest expenses increased by $1.9 million to $6.3 million in the first quarter of 2018, from $4.4 million in the first quarter of 2017 primarily due to these increased investments. Our efficiency ratio increased to 67.3% in the first quarter of 2018 from 58.7% in the first quarter of 2017 as a result of the increased expenses. Total deposits increased by $20 million in the first quarter of 2018 compared to the fourth quarter of 2017 and increased by $74 million from the same quarter in 2017. The increase in deposits for the first quarter of 2018 was primarily due to an increase in demand deposits and money market accounts. Our net interest margin grew to 4.55% in the first quarter of 2018 compared to 4.26% in the first quarter of 2017 due to changes in the mix of earning assets in favor of higher yielding loans. Return on assets was 1.06% in the first quarter of 2018 compared to 0.91% in the first quarter of 2017."
Results for the quarter ended March 31, 2018
For the three months ended March 31, 2018, net interest income before provision for loan losses was $8.6 million, an increase of $1.6 million or 23% compared to the first quarter of 2017. The increase was primarily the result of higher average loans outstanding. Average total loans outstanding for the quarter ended March 31, 2018 were $654 million, compared to $539 million for the same quarter in 2017, an increase of 21%. Average earning assets were $766 million in the first quarter of 2018, a 16% increase over the first quarter of the prior year. Loans made up 85% of average earning assets at the end of the first quarter of 2018 compared to 81% at the end of the first quarter of 2017. Net interest margin was 4.55% for the first quarter of 2018, compared to 4.26% for the first quarter of 2017. No loan loss provision was taken in the first quarter of 2018 compared with a loan loss provision of $721,000 taken in the first quarter of 2017.
Non-interest income was $704,000 in the first quarter of 2018, an increase of $183,000 or 35% compared to the first quarter of 2017. Non-interest income in the first quarter of 2018 included $281,000 from earnings from an investment in a Small Business Investment Corporation (SBIC) fund while non-interest income in the prior year's quarter included $112,000 from the exercise of common stock warrants related to a Specialty Finance loan.
Non-interest expense increased by $1,857,000 in the first quarter of 2018 to $6,252,000 compared to $4,395,000 for the first quarter of 2017. This increase was primarily due to higher compensation costs related to increased staffing and increased occupancy costs due to the expansion of our facilities. The Bank's full time equivalent employees at March 31, 2018 and 2017 were 88 and 70, respectively. The Bank's efficiency ratio increased from 58.7% in the first quarter of 2017 to 67.3% in the first quarter of 2018 due to increased staffing and facilities costs to accommodate our growth.
The effective tax rate was 30.6% in the first three months of 2018 compared to 34.5% for the same period in 2017. The rate declined in 2018 due to the Tax Cuts and Jobs Act federal income tax rate reduction becoming effective for the 2018 tax year.
Total assets increased to $822 million as of March 31, 2018, compared to $783 million at December 31, 2017 and $702 million on the same day one year ago. The increase in total assets of $39 million, or 5%, from December 31, 2017 was primarily due to increased FHLB borrowings and increased demand deposit accounts in the first quarter of 2018. The Company reported total loans at March 31, 2018 of $662 million, which represented an increase of $14 million, or 2%, from $648 million at December 31, 2017, and an increase of $105 million, or 19%, over $557 million at March 31, 2017. The increase in total loans for both periods was primarily attributable to growth in commercial real estate, multi-family and construction loans. The increase in loans from March 31, 2017 also included higher Specialty Finance and commercial loans.
"We had $2.3 million in non-accrual loans comprising 0.34% of total loans from one relationship on March 31, 2018 compared to $5.2 million in non-accrual loans at the end of the prior year. We are pleased that the balance of our non-accrual loans was reduced by more than half in the first quarter of 2018,” observed Mr. Mordell.
The Company’s total deposits were $666 million as of March 31, 2018, which represented an increase of $20 million, or 3%, compared to $646 million at December 31, 2017 and an increase of $73 million, or 12%, compared to $593 million at March 31, 2017. The increase in deposits from December 31, 2017 was due to an increase in demand deposits and money market accounts. The increase from March 31, 2017 was caused by an increase in money market accounts, demand deposits and CDs greater than $250,000. The Company had $50 million of Federal Home Loan Bank advances outstanding as of March 31, 2018.
Demand and interest bearing transaction deposits represented 46% of total deposits at March 31, 2018, compared to 45% at December 31, 2017 and 48% for the same period one year ago. Core deposits, which include transaction deposits, money market accounts and CDs below $250,000, represented 87% of total deposits at March 31, 2018, compared to 87% at December 31, 2017 and 87% at March 31, 2017. The Company’s loan to deposit ratio was 99% at March 31, 2018 compared to 100% at December 31, 2017 and 94% at March 31, 2017.
Avidbank Holdings, Inc. (OTC Pink: AVBH), headquartered in San Jose, California, offers innovative financial solutions and services. We specialize in commercial & industrial lending, technology and 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 pandemic flu; 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.
|Avidbank Holdings, Inc.|
|Consolidated Balance Sheets|
|($000, except share and per share amounts) (Unaudited)|
|Cash and due from banks||$15,729||$10,650||$11,068||$10,845||$17,431|
|Due from Federal Reserve Bank||48,475||22,710||74,970||32,510||21,265|
|Total cash and cash equivalents||64,204||33,360||86,038||43,355||38,696|
|Investment securities - available for sale||70,797||74,364||76,742||82,986||86,905|
|Loans, net of deferred loan fees||662,005||648,273||578,524||584,342||556,969|
|Allowance for loan losses||(8,297)||(8,297)||(8,191)||(8,076)||(6,991)|
|Loans, net of allowance for loan losses||653,708||639,976||570,333||576,266||549,978|
|Bank owned life insurance||10,686||10,619||10,551||10,479||10,406|
|Premises and equipment, net||6,349||5,946||3,387||1,155||668|
|Accrued interest receivable & other assets||16,749||18,728||16,756||16,818||15,205|
|Non-interest-bearing demand deposits||$281,967||$275,925||$295,862||$264,514||$261,172|
|Interest bearing transaction accounts||23,228||16,555||16,988||17,642||20,786|
|Money market and savings accounts||250,218||243,198||229,143||220,474||207,106|
|Subordinated debt, net||11,782||11,761||11,740||11,719||11,698|
|Common stock/additional paid-in capital||67,230||66,996||66,704||47,421||47,259|
|Accumulated other comprehensive income (loss)||(1,466)||(700)||(523)||(707)||(915)|
|Total shareholders' equity||90,814||89,107||87,983||66,856||65,055|
|Total liabilities and shareholders' equity||$822,493||$782,993||$763,807||$731,059||$701,858|
|Tier 1 leverage ratio||11.45%||11.43%||11.87%||9.28%||9.52%|
|Common equity tier 1 capital ratio||10.84%||10.70%||11.61%||8.94%||9.24%|
|Tier 1 risk-based capital ratio||10.84%||10.70%||11.61%||8.94%||9.24%|
|Total risk-based capital ratio||13.24%||13.13%||14.27%||11.61%||11.91%|
|Book value per common share||$15.25||$15.12||$14.99||$13.91||$13.57|
|Total common shares outstanding||5,956,609||5,893,144||5,870,691||4,806,377||4,793,827|
|Non-interest bearing deposits to total deposits||42.3%||42.7%||44.9%||42.7%||44.1%|
|Core deposits to total deposits||86.9%||87.4%||86.7%||86.0%||86.6%|
|Loan to deposit ratio||99.4%||100.3%||87.7%||94.4%||94.0%|
|Allowance for loan losses to total loans||1.25%||1.28%||1.42%||1.38%||1.26%|
|Avidbank Holdings, Inc.|
Condensed Consolidated Statements of Income
|($000, except share and per share amounts) (Unaudited)|
|Interest and fees on loans and leases||$8,896||$8,186||$6,978|
|Interest on investment securities||455||477||529|
|Other interest income||149||245||69|
|Total interest income||9,500||8,908||7,576|
|Deposit interest expense||549||496||334|
|Other interest expense||365||230||274|
|Total interest expense||914||726||608|
|Net interest income||8,586||8,182||6,968|
|Provision for loan losses||-||106||721|
|Net interest income after provision for loan losses||8,586||8,076||6,247|
|Service charges, fees and other income||637||407||449|
|Income from bank owned life insurance||67||68||72|
|Total non-interest income||704||475||521|
|Compensation and benefit expenses||3,883||3,126||2,868|
|Occupancy and equipment expenses||1,066||1,038||584|
|Other operating expenses||1,303||1,068||943|
|Total non-interest expense||6,252||5,232||4,395|
|Income before income taxes||3,038||3,319||2,373|
|Provision for income taxes||931||2,310||819|
|Basic earnings per common share||$0.37||$0.18||$0.34|
|Diluted earnings per common share||$0.36||$0.17||$0.33|
|Average common shares outstanding||5,732,820||5,712,595||4,627,271|
|Average common fully diluted shares||5,850,614||5,825,747||4,728,967|
|Return on average assets||1.06%||0.51%||0.91%|
|Return on average common equity||9.43%||4.48%||9.69%|
|Net interest margin||4.55%||4.33%||4.26%|
|Cost of funds||0.52%||0.42%||0.39%|
|Avidbank Holdings, Inc.|
Allowance for Loan Losses
|Balance, beginning of quarter||$8,297||$8,191||$8,076||$6,991||$6,244|
|Provision for loan losses, quarterly||-||106||74||1,085||721|
|Balance, end of quarter||$8,297||$8,297||$8,191||$8,076||$6,991|
|Loans accounted for on a non-accrual basis||$2,256||$5,151||$5,543||$5,210||$0|
|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||$2,256||$5,151||$5,543||$5,210||$0|
Nonperforming Loans by Type:
|Real Estate Loans||-||704||714||724||-|
|Total Nonperforming loans||$2,256||$5,151||$5,543||$5,210||$0|
Asset Quality Ratios
|Allowance for loan losses (ALLL) to total loans||1.25%||1.28%||1.42%||1.38%||1.26%|
|ALLL to nonperforming loans||367.81%||161.08%||147.77%||155.01%||0.00%|
|Nonperforming assets to total assets||0.27%||0.66%||0.73%||0.71%||0.00%|
|Nonperforming loans to total loans||0.34%||0.79%||0.96%||0.89%||0.00%|
|Net quarterly charge-offs to total loans||0.00%||0.00%||-0.01%||0.00%||0.00%|