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 unaudited consolidated net income of $646,000 for the third quarter of 2014 compared to $436,000 for the same period in 2013.
Year-to-Date and Third Quarter 2014 Financial Highlights
- Net income was $1,749,000 for the first nine months of 2014, compared to $1,875,000 for the first nine months of 2013. Results for the 2013 period included $748,000 in gains from the sale of investment securities compared to $22,000 in the 2014 period.
- Diluted earnings per common share were $0.40 for the first nine months of 2014, compared to $0.51 for the first nine months of 2013.
- Net income was $646,000 for the third quarter of 2014, compared to $436,000 for the third quarter of 2013. Results for the 2013 period included $67,000 in gains from the sale of investment securities compared to $22,000 in the 2014 period.
- Diluted earnings per common share were $0.15 for the third quarter of 2014, compared to $0.09 for the third quarter of 2013.
- Total assets grew by 0.3% during the past three months, ending the third quarter at $484 million.
- Total loans outstanding grew by 15% during the first nine months of 2014, ending the third quarter at $295 million.
- Total deposits grew by 0.3% over the past three months, ending the third quarter at $428 million.
- The Bank continues to be well capitalized with a Tier 1 Leverage Ratio of 10.2% and a Total Risk Based Capital Ratio of 12.8%.
Mark D. Mordell, Chairman and Chief Executive Officer, stated, "The Bank's efforts to grow the loan portfolio by increasing loan production staff and facilities continued to yield positive results in the third quarter of 2014. Loans outstanding increased more than $17 million in the quarter, a 25% annualized rate of growth. These results confirm our progress as we focus on our plan of sustained and prudent growth in our loan portfolio. Net income for the third quarter of 2014 grew by 48% over the third quarter of 2013 primarily due to higher loans outstanding and the absence of a loan loss provision. We will continue with our plan to grow our loan portfolio and leverage the investments in personnel and infrastructure we have made. Our Real Estate Lending division, which includes construction lending, has demonstrated substantial growth in commitments in 2014."
"The Bank's total deposits increased by $1.2 million in the third quarter, as the runoff of a large transactional account was replaced by relationship deposits. In addition, core deposits make up over 94% of total deposits and our non-interest bearing deposits have grown to 39% of total deposits since the beginning of the year," noted Mr. Mordell. "We are making progress toward deploying our considerable level of liquid funds into loans. Our high level of capital and the high quality of our loan portfolio provide us with ample capacity for growth."
Results for the nine months ended September 30, 2014
Net interest income before provision for loan losses was $11.9 million in 2014, an increase of $387,000 or 3.4% over the prior year. Higher outstanding loan balances and reductions in the rates paid on deposits were partially offset by lower loan yields. Average earning assets were $441 million in the first nine months of 2014, an 8% increase over the prior year. Net interest margin was 3.66% for 2014 year to date compared to 3.79% for 2013. The decline in net interest margin was primarily caused by a decline in loan yields due to the current interest rate environment offset by growth in average loans and a decrease in Fed funds sold. No loan loss provision was recorded in the first nine months of 2014 and a $245,000 provision was taken in the first nine months of 2013. We have experienced recoveries net of charge-offs of $38,000 in 2014 compared to net recoveries of $29,000 in 2013.
Non-interest income, excluding gains on sales of securities, was $943,000 in the first nine months of 2014, an increase of $485,000 or 106% 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 $22,000 of gains on sales of securities in the first nine months of 2014 and $748,000 of gains on securities sales in 2013.
Non-interest expense grew by $633,000 or 7% in the first nine months of 2014 to $9.9 million compared to $9.3 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 September 30, 2014
For the three months ended September 30, 2014, net interest income before provision for loan losses was $4.1 million, an increase of $282,000 or 7% compared to the third quarter of 2013. The increase was primarily the result of higher loans outstanding. Average earning assets were $442 million in the third quarter of 2014, a 3% increase over the third quarter of the prior year. Earning assets increased due to loan growth partially offset by lower Fed funds sold. Net interest margin was 3.73% for the third quarter of 2014, compared to 3.60% for the third quarter of 2013. Net interest margin increased due to growth in loans for the quarter. No loan loss provision was taken in the third quarter of 2014 and a $245,000 provision was taken in the third quarter of 2013.
Non-interest income, excluding gains on sales of securities, was $334,000 in the third quarter of 2014, an increase of $160,000 or 92% over the third 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 $22,000 of gains on sales of securities in the third quarter of 2014 and $67,000 of gains on securities sales in the third quarter of 2013.
Non-interest expense grew by $257,000 in the third quarter of 2014 to $3.3 million compared to $3.1 million for the third quarter of 2013. This growth was due to the investments in loan production personnel mentioned previously. The Company’s full-time equivalent employees at September 30, 2014 and 2013 were 59 and 50, respectively.
Balance Sheet
Total assets grew to $484 million as of September 30, 2014, compared to $483 million at June 30, 2014 and $483 million on the same date one year ago. The increase in total assets of $1.7 million, or 0.3%, from June 30, 2014 consisted of increases in the loan and investment securities portfolios offset by a decrease in Fed funds.
The Company reported total gross loans outstanding at September 30, 2014 of $295 million, which represented an increase of $17.6 million, or 6%, over $278 million at June 30, 2014, and an increase of $50.9 million, or 21%, over $245 million at September 30, 2013. The increase in total gross loans from June 30, 2014 was primarily attributable to growth in commercial real estate and construction loans. The increase in loans from September 30, 2013 was primarily attributable to growth in commercial real estate and asset based loans. Non-accrual loans totaled $6.4 million or 2.2% of total loans on September 30, 2014 compared to $2.0 million or 0.8% of total loans for the previous year-end. "Our high credit standards have resulted in an absence of net charge-offs for both the 2014 and 2013 periods. Our increase in nonaccrual loans was isolated to one client," observed Mr. Mordell.
The Company’s total deposits were $428 million as of September 30, 2014, which represented an increase of $1.2 million, or 0.3%, compared to $427 million at June 30, 2014 and a decrease of $5.8 million, or 1%, compared to $434 million at September 30, 2013. The increase in deposits from June 30, 2014 was primarily attributable to an increase in money market and interest checking accounts partially offset by a decrease in demand deposit accounts, while the decrease from September 30, 2013 was primarily attributable to a decrease in certificates of deposit over $100,000.
Demand deposits represented 43.7% of total deposits at September 30, 2014, compared to 44.3% at June 30, 2014 and 40.8% for the same period one year ago. Core deposits represented 94.6% of total deposits at September 30, 2014, compared to 93.9% at June 30, 2014 and 91.0% at September 30, 2013.
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. Consolidated Balance Sheets ($000, except share, per share amounts and ratios) (Unaudited) | |||||||||||||||||||||
Assets | 9/30/2014 | 6/30/2014 | 3/31/2014 | 12/31/2013 | 9/30/2013 | ||||||||||||||||
| Cash and due from banks | $ | 20,499 | $ | 18,049 | $ | 15,427 | $ | 16,905 | $ | 22,113 | |||||||||||
| Fed funds sold | 68,675 | 100,445 | 127,785 | 151,940 | 134,965 | ||||||||||||||||
| Total cash and cash equivalents | 89,174 | 118,494 | 143,212 | 168,845 | 157,078 | ||||||||||||||||
| Investment securities - available for sale | 78,710 | 65,282 | 58,397 | 58,983 | 66,147 | ||||||||||||||||
| Loans, net of deferred loan fees | 295,410 | 277,822 | 254,375 | 257,434 | 244,501 | ||||||||||||||||
| Allowance for loan losses | (4,826 | ) | (4,809 | ) | (4,795 | ) | (4,788 | ) | (4,754 | ) | |||||||||||
| Loans, net of allowance for loan losses | 290,584 | 273,013 | 249,580 | 252,646 | 239,747 | ||||||||||||||||
| Bank owned life insurance | 11,857 | 11,783 | 11,694 | 11,607 | 11,517 | ||||||||||||||||
| Premises and equipment, net | 1,108 | 1,210 | 1,287 | 1,175 | 1,171 | ||||||||||||||||
| Accrued interest receivable & other assets | 13,006 | 12,983 | 8,950 | 7,420 | 7,574 | ||||||||||||||||
| Total assets | $ | 484,439 | $ | 482,765 | $ | 473,120 | $ | 500,676 | $ | 483,234 | |||||||||||
Liabilities | |||||||||||||||||||||
Non-interest-bearing demand deposits | $ | 166,733 | $ | 173,394 | $ | 151,538 | $ | 158,364 | $ | 161,517 | |||||||||||
| Interest bearing transaction accounts | 20,415 | 15,523 | 18,041 | 18,991 | 15,226 | ||||||||||||||||
| Money market and savings accounts | 201,189 | 194,892 | 205,237 | 222,324 | 198,731 | ||||||||||||||||
| Time deposits | 39,453 | 42,777 | 47,250 | 50,625 | 58,081 | ||||||||||||||||
| Total deposits | 427,790 | 426,586 | 422,066 | 450,304 | 433,555 | ||||||||||||||||
| Other liabilities | 6,273 | 6,262 | 2,209 | 2,340 | 2,312 | ||||||||||||||||
| Total liabilities | 434,063 | 432,848 | 424,275 | 452,644 | 435,867 | ||||||||||||||||
Shareholders' equity | |||||||||||||||||||||
Preferred stock | - | - | - | - | - | ||||||||||||||||
| Common stock/additional paid-in capital | 45,080 | 44,985 | 44,774 | 44,531 | 44,417 | ||||||||||||||||
| Retained earnings | 5,189 | 4,574 | 3,877 | 3,469 | 2,834 | ||||||||||||||||
| Accumulated other comprehensive income | 107 | 358 | 194 | 32 | 116 | ||||||||||||||||
| Total shareholders' equity | 50,376 | 49,917 | 48,845 | 48,032 | 47,367 | ||||||||||||||||
| Total liabilities and shareholders' equity | $ | 484,439 | $ | 482,765 | $ | 473,120 | $ | 500,676 | $ | 483,234 | |||||||||||
Bank Capital ratios | |||||||||||||||||||||
Tier 1 leverage ratio | 10.17 | % | 10.36 | % | 9.72 | % | 9.66 | % | 10.22 | % | |||||||||||
| Tier 1 risk-based capital ratio | 11.60 | % | 11.89 | % | 12.89 | % | 12.44 | % | 12.76 | % | |||||||||||
| Total risk-based capital ratio | 12.82 | % | 13.14 | % | 14.14 | % | 13.69 | % | 14.01 | % | |||||||||||
| Book value per common share | $ | 11.61 | $ | 11.51 | $ | 11.34 | $ | 11.21 | $ | 11.06 | |||||||||||
| Total common shares outstanding | 4,338,161 | 4,336,292 | 4,308,756 | 4,283,494 | 4,281,482 | ||||||||||||||||
Other Ratios | |||||||||||||||||||||
Non-interest bearing/total deposits | 39.0 | % | 40.6 | % | 35.9 | % | 35.2 | % | 37.3 | % | |||||||||||
| Loan to deposit ratio | 69.1 | % | 65.1 | % | 60.3 | % | 57.2 | % | 56.4 | % | |||||||||||
| Allowance for loan losses/total loans | 1.63 | % | 1.73 | % | 1.89 | % | 1.86 | % | 1.94 | % | |||||||||||
| Avidbank Holdings, Inc. | ||||||||||||||||||||||
| Condensed Consolidated Statements of Income | ||||||||||||||||||||||
| ($000, except share, per share amounts and ratios) (Unaudited) | ||||||||||||||||||||||
| Quarter Ended | Year to Date | |||||||||||||||||||||
9/30/2014 | 6/30/2014 | 9/30/2013 | 9/30/2014 | 9/30/2013 | ||||||||||||||||||
| Interest and fees on loans and leases | $ | 3,786 | $ | 3,878 | $ | 3,630 | $ | 11,076 | $ | 11,014 | ||||||||||||
| Interest on investment securities | 430 | 437 | 393 | 1,242 | 1,196 | |||||||||||||||||
| Other interest income | 56 | 60 | 72 | 204 | 184 | |||||||||||||||||
| Total interest income | 4,272 | 4,375 | 4,095 | 12,522 | 12,394 | |||||||||||||||||
| Interest expense | 175 | 209 | 280 | 628 | 887 | |||||||||||||||||
| Net interest income | 4,097 | 4,166 | 3,815 | 11,894 | 11,507 | |||||||||||||||||
| Provision for loan losses | - | - | 245 | - | 245 | |||||||||||||||||
| Net interest income after provision for | ||||||||||||||||||||||
| loan losses | 4,097 | 4,166 | 3,570 | 11,894 | 11,262 | |||||||||||||||||
| Service charges, fees and other income | 260 | 241 | 128 | 693 | 361 | |||||||||||||||||
| Income from bank owned life insurance | 74 | 89 | 46 | 250 | 97 | |||||||||||||||||
| Gain on sale of investment securities | 22 | - | 67 | 22 | 748 | |||||||||||||||||
| Total non-interest income | 356 | 330 | 241 | 965 | 1,206 | |||||||||||||||||
| Compensation and benefit expenses | 2,072 | 2,024 | 1,885 | 6,148 | 5,525 | |||||||||||||||||
| Occupancy and equipment expenses | 568 | 620 | 537 | 1,757 | 1,688 | |||||||||||||||||
| Other operating expenses | 705 | 669 | 666 | 1,984 | 2,043 | |||||||||||||||||
| Total non-interest expense | 3,345 | 3,313 | 3,088 | 9,889 | 9,256 | |||||||||||||||||
| Income before income taxes | 1,108 | 1,183 | 723 | 2,970 | 3,212 | |||||||||||||||||
| Provision for income taxes | 462 | 487 | 287 | 1,221 | 1,337 | |||||||||||||||||
| Net income | $ | 646 | $ | 696 | $ | 436 | $ | 1,749 | $ | 1,875 | ||||||||||||
| Preferred dividends & warrant amortization | - | - | 38 | - | 206 | |||||||||||||||||
| Net income applicable to common | ||||||||||||||||||||||
| shareholders | $ | 646 | $ | 696 | $ | 398 | $ | 1,749 | $ | 1,669 | ||||||||||||
| Basic earnings per common share | $ | 0.15 | $ | 0.16 | $ | 0.09 | $ | 0.41 | $ | 0.52 | ||||||||||||
| Diluted earnings per common share | $ | 0.15 | $ | 0.16 | $ | 0.09 | $ | 0.40 | $ | 0.51 | ||||||||||||
| Average common shares outstanding | 4,336,761 | 4,319,447 | 4,274,420 | 4,317,122 | 3,214,230 | |||||||||||||||||
| Average common fully diluted shares | 4,419,603 | 4,397,544 | 4,315,848 | 4,395,979 | 3,257,599 | |||||||||||||||||
| Annualized returns: | ||||||||||||||||||||||
| Return on average assets | 0.54 | % | 0.60 | % | 0.38 | % | 0.49 | % | 0.58 | % | ||||||||||||
| Return on average common equity | 5.16 | % | 5.62 | % | 4.13 | % | 4.71 | % | 6.57 | % | ||||||||||||
| Net interest margin | 3.73 | % | 3.98 | % | 3.60 | % | 3.66 | % | 3.79 | % | ||||||||||||
| Cost of funds | 0.16 | % | 0.20 | % | 0.28 | % | 0.20 | % | 0.31 | % | ||||||||||||
| Efficiency ratio | 75.1 | % | 73.7 | % | 76.1 | % | 76.9 | % | 72.8 | % | ||||||||||||
| Avidbank | ||||||||||||||||
| Interim Credit Trends | ||||||||||||||||
| ($000, except ratios) (Unaudited) | ||||||||||||||||
Allowance for Loan Losses | ||||||||||||||||
| 9/30/2014 | 6/30/2014 | 3/31/2014 | 12/31/2013 | 9/30/2013 | ||||||||||||
| Balance, beginning of quarter | $ 4,809 | $ 4,795 | $ 4,788 | $ 4,754 | $ 4,764 | |||||||||||
| Provision for loan losses, quarterly | - | - | - | - | 245 | |||||||||||
| Charge-offs, quarterly | - | - | - | - | (311) | |||||||||||
| Recoveries, quarterly | 17 | 14 | 7 | 34 | 56 | |||||||||||
| Balance, end of quarter | $ 4,826 | $ 4,809 | $ 4,795 | $ 4,788 | $ 4,754 | |||||||||||
Nonperforming Assets | ||||||||||||||||
| Loans accounted for on a non-accrual basis | $ 6,412 | $ 2,283 | $ 3,099 | $ 2,015 | $ 686 | |||||||||||
| Loans with principal or interest contractually | ||||||||||||||||
| past due 90 days or more and still accruing | ||||||||||||||||
| interest | - | - | - | - | - | |||||||||||
| Nonperforming loans | 6,412 | 2,283 | 3,099 | 2,015 | 686 | |||||||||||
| Other real estate owned | - | - | - | - | - | |||||||||||
| Nonperforming assets | $ 6,412 | $ 2,283 | $ 3,099 | $ 2,015 | $ 686 | |||||||||||
| Loans restructured and in compliance with | ||||||||||||||||
| modified terms | - | - | - | - | - | |||||||||||
| Nonperforming assets & restructured loans | $ 6,412 | $ 2,283 | $ 3,099 | $ 2,015 | $ 686 | |||||||||||
| Nonperforming Loans by Asset Type: | ||||||||||||||||
| Commercial | $ 5,917 | $ 1,779 | $ 2,585 | $ 1,492 | $ - | |||||||||||
| Construction | ||||||||||||||||
| Land | ||||||||||||||||
| Other real estate | 495 | 504 | 514 | 523 | 686 | |||||||||||
| Factoring and asset-based lending | ||||||||||||||||
| Other | ||||||||||||||||
| Nonperforming loans | $ 6,412 | $ 2,283 | $ 3,099 | $ 2,015 | $ 686 | |||||||||||
Asset Quality Ratios | ||||||||||||||||
| Allowance for loan losses / gross loans | 1.63% | 1.73% | 1.89% | 1.86% | 1.94% | |||||||||||
| Allowance for loan losses / nonperforming loans | 75.27% | 210.64% | 154.73% | 237.62% | 693.00% | |||||||||||
| Nonperforming assets / total assets | 1.32% | 0.47% | 0.66% | 0.40% | 0.14% | |||||||||||
| Nonperforming loans / gross loans | 2.17% | 0.82% | 1.22% | 0.78% | 0.28% | |||||||||||
| Net quarterly charge-offs / gross loans | -0.01% | -0.01% | 0.00% | -0.01% | 0.10% | |||||||||||
Contacts:
Steve Leen, 650-843-2204
Executive
Vice President and Chief Financial Officer
sleen@avidbank.com
avidbank.com
