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Income Statement

Net income totaled $5.8 million for the third quarter of 2024, an increase of $2.4 million from the second quarter of 2024, and an increase of $438,000 from the third quarter of 2023. A $3.0 million decrease in the provision for credit losses was a primary contributor to the increase compared to the second quarter of 2024.

Taxable equivalent net interest income⁽¹⁾ totaled $18.6 million for the third quarter of 2024, an increase of $88,000 from the second quarter of 2024, and an increase of $1.1 million, or 6%, from the third quarter of 2023. The taxable equivalent net interest margin was 3.35% in the third quarter of 2024, a decrease of 4 basis points compared to the second quarter of 2024, and a decrease of 1 basis point compared to the third quarter of 2023. The decrease in taxable equivalent net interest margin compared to the prior quarter was primarily driven by a decrease in noninterest bearing deposits and an overall increase in the cost of deposits.

The yield on loans in the third quarter of 2024 was 7.38%, an increase of 1 basis point from the second quarter of 2024 and an increase of 64 basis points from the third quarter of 2023. The overall increase in loan yields compared to prior periods was primarily due to higher rates on new loans.

The cost of deposits in the third quarter of 2024 was 3.22%, an increase of 13 basis points from the second quarter of 2024 and an increase of 70 basis points from the third quarter of 2023. The cost of interest-bearing deposits in the third quarter of 2024 was 4.16% compared to 4.11% in the second quarter of 2024 and 3.66% in the third quarter of 2023.

The provision for credit losses was $0 in the third quarter of 2024, compared to $3.0 million in the second quarter of 2024 and $120,000 in the third quarter of 2023. The provision was higher in the second quarter of 2024 primarily due to the addition of a $2.3 million nonaccrual loan.

Noninterest income was $1.8 million in the third quarter of 2024 compared to $1.1 million in the second quarter of 2024 and $1.1 million in the third quarter of 2023. The increase in other income was primarily driven by $475,000 in proceeds received from a settlement related to a previously sold foreclosed property.

Noninterest expense totaled $12.1 million for the third quarter of 2024, an increase of $339,000 compared to the second quarter of 2024 and an increase of $1.2 million from the third quarter of 2023. The increase from the second quarter was primarily due to a higher personnel expense. There were 146 full-time equivalent employees on September 30, 2024, compared to 144 on June 30, 2024.

Balance Sheet

Total assets were $2.30 billion as of September 30, 2024, compared to $2.29 billion as of June 30, 2024, and $2.20 billion at September 30, 2023. Cash and cash equivalents were $136.5 million on September 30, 2024, compared to $111.7 million on June 30, 2024, and $80.0 million on September 30, 2023.

Period end loans on September 30, 2024, totaled $1.79 billion, a decrease of $19.9 million, or 4% annualized, from June 30, 2024, and an increase of $116.8 million, or 7%, from September 30, 2023. The reduction in loans during the third quarter of 2024 included a decrease of $15.2 million in commercial loans and a decrease of $16.2 million in owner occupied commercial real estate loans, partially offset by an increase of $10.4 million and $10.1 million in construction and residential loans, respectively. Quarterly average loans for the third quarter of 2024 decreased $9.3 million, or 1%, from the second quarter of 2024 and increased $164.0 million, or 10%, from the third quarter of 2023.

The allowance for credit losses on loans was $22.3 million on September 30, 2024, representing a decrease of $95,000 from June 30, 2024. The allowance for credit losses on loans to total loans was 1.25% on September 30, 2024, compared to 1.24% on June 30, 2024. Nonperforming loans to total loans was 0.20% on September 30, 3024 and June 30, 2024.

Investment securities were $316.7 million as of September 30, 2024, compared to $308.7 million on June 30, 2024, and $345.5 million at September 30, 2023.

Period end deposits were $1.90 billion on September 30, 2024, an increase of $163.0 million, or 38% annualized, from June 30, 2024. The change in deposits during the third quarter of 2024 included a $186 million increase in interest-bearing checking, offset by a $24.2 million decrease in time deposits and a $22.7 million decrease in brokered deposits. Quarterly average deposits for the third quarter of 2024 were $1.81 billion, an increase of $48.6 million from the second quarter of 2024, and an increase of $123.6 million from the third quarter of 2023.

Short-term borrowings on September 30, 2024, totaled $160.0 million, a decrease of $170.0 million, or 52%, compared to June 30, 2024. The short-term borrowings on September 30, 2024 included $70.0 million in borrowings from the Bank Term Funding Program (BTFP).

Book value per share was $23.95 on September 30, 2024, an increase of $2.18 compared to $21.77 on June 30, 2024. Total shareholders' equity was $188.5 million on September 30, 2024, an increase of $17.1 million compared to June 30, 2024. This included an increase in retained earnings of $5.8 million and a decrease in accumulated other comprehensive loss of $10.5 million compared to June 30, 2024.

(1) A Non-GAAP performance measure. We provide detailed reconciliations in the "Non-GAAP Performance and Financial Measures Reconciliation" table.

About Avidbank

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, fund finance, and real estate construction and commercial real estate lending. Avidbank provides a different approach to banking. We do what we say.

Non-GAAP Financial Measures

This news release contains certain non-GAAP (Generally Accepted Accounting Principles) financial measures in addition to results presented in accordance with GAAP. Management has presented these non-GAAP financial measures in this earnings release because it believes that they provide useful and comparative information to assess trends in the Company's current quarter and year-to-date results and facilitate comparison of our performance with the performance of our peers. Where applicable, the Company has also presented comparable earnings information using GAAP financial measures. These non-GAAP measures have inherent limitations, are not required to be uniformly applied and are not audited. They should not be considered in isolation or as a substitute for operating results determined in accordance with GAAP. These non-GAAP measures may not be comparable to similarly titled measures reported by other companies.

Forward-Looking Statements

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 nonperforming 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 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
408-200-7390
IR@avidbank.com