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The cost of deposits in the second quarter of 2022 was 0.14%, a decrease of 5 basis points from the second quarter of 2021 and an increase of 1 basis point from the first quarter of 2022. The cost of interest-bearing deposits in the second quarter of 2022 was 0.26%, remaining flat from the first quarter of 2022.

In the second quarter of 2022, we recorded a provision for loan losses of $1.6 million. No loan provision was required in the first quarter of 2022 and the second quarter of 2021. The second quarter provision was primarily attributable to the $135 million increase in loan balances.

Non-interest income was $1.2 million in the second quarter of 2022 compared to $1.5 million in the second quarter of 2021 and $1.1 million in the first quarter of 2022. Service charge income totaled $681,000 in the second quarter of 2022, an increase of $159,000, or 30% from the second quarter of 2021, and an increase of $45,000, or 28% annualized, compared to the first quarter of 2022.

Non-interest expense totaled $10.0 million in the second quarter of 2022 compared to $8.6 million in the second quarter of 2021 and $10.4 million in the first quarter of 2022. This linked quarter decrease was primarily due to higher capitalized loan origination costs and a decrease in the FDIC regulatory assessment. The number of full-time equivalent employees on June 30, 2022 totaled 132 compared to 130 on March 31, 2022.

Balance Sheet

Total assets were $2.01 billion as of June 30, 2022, compared to $2.11 billion on March 31, 2022 and $1.60 billion at June 30, 2021. Cash balances held at the Federal Reserve decreased $284 million in the second quarter of 2022 while investments increased $39 million due to the purchase of tax-exempt municipal and mortgage-backed securities.

Period end loans on June 30, 2022 totaled $1.34 billion, which represented an increase of $135 million, or 45% annualized, from March 31, 2022, and an increase of $322 million, or 32%, from $1.01 billion at June 30, 2021. Quarterly average loans for the second quarter of 2022 increased $239 million, or 23%, from the second quarter of 2021 and $48 million, or 16% annualized, from the first quarter of 2022.

The allowance for loan losses on June 30, 2022 was $14.6 million, representing an increase of $1.6 million from March 31, 2022. The Allowance for Loan Losses to total loans was 1.09% on June 30, 2022, compared to 1.08% on March 31, 2022. Nonperforming loans to total loans was 0.01% on June 30, 2022, a decrease from 0.27% on March 31, 2022. The decrease was primarily attributable to the payoff of a single relationship of approximately $3 million.

Period end deposits were $1.83 billion on June 30, 2022 compared to $1.95 billion at March 31, 2022 and an increase of $402 million, or 28%, compared to $1.43 billion at June 30, 2021. Quarterly average deposits for the second quarter of 2022 increased $512 million, or 37%, compared to the second quarter of 2021 and decreased $59 million, or 12% annualized, from the first quarter of 2022.

Noninterest bearing deposits represented 45.9% of total deposits on June 30, 2022, compared to 48.9% on March 31, 2022 and 51.0% at June 30, 2021. The loan to deposit ratio was 73.1% on June 30, 2022 compared to 61.7% at March 31, 2022 and 71.1% at June 30, 2021.

About Avidbank

Avidbank Holdings, Inc. (OTC Pink: AVBH), headquartered in Palo Alto, California, offers innovative financial solutions and services. We specialize in commercial & industrial lending, technology and asset-based lending, specialty finance, real estate construction and commercial real estate lending. Avidbank provides a different approach to banking. We do what we say.

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. 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.

Contact:

Patrick Oakes
Executive Vice President and Chief Financial Officer
408-831-5653
poakes@avidbank.com

AVIDBANK HOLDINGS, INC.

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Avidbank Holdings, Inc.
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Avidbank Holdings, Inc.
Consolidated Statements of Income (Unaudited)
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Avidbank Holdings, Inc.
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(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 $460 thousand and $628 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) Allowance for loan losses of $14.6 million and $13.1 million, respectively, is included as a contra asset.
(4) Net interest margin is net interest income divided by total interest-earning assets.

Avidbank Holdings, Inc.
Average Balance Sheets and Net Interest Margin Analysis
Selected Financial Information (Unaudited)
($000)

(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 $460 thousand and $514 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) Allowance for loan losses of $14.6 million and $12.6 million, respectively, is included as a contra asset.
(4) Net interest margin is net interest income divided by total interest-earning assets.

Avidbank Holdings, Inc.
Average Balance Sheets and Net Interest Margin Analysis
Selected Financial Information (Unaudited)
($000)