AVBH Avidbank Holdings Inc (PK)

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 $996,000 for the fourth quarter of 2014 compared to $635,000 for the same period in 2013.

Full Year and Fourth Quarter 2014 Financial Highlights

• Net income was $2,744,000 in 2014, compared to $2,508,000 in 2013. Results for the 2013 period included $748,000 in gains from the sale of investment securities compared to $261,000 in the 2014 period.
• Diluted earnings per common share were $0.62 for the year ended 2014, compared to $0.64 in 2013. Diluted earnings per common share were $0.22 for the fourth quarter of 2014, compared to $0.15 for the fourth quarter of 2013.
• Net income was $996,000 for the fourth quarter of 2014, compared to $635,000 for the fourth quarter of 2013. Results for the fourth quarter of 2013 included no gains from the sale of investment securities compared to $239,000 in the fourth quarter of 2014.
• Total assets decreased by 6% over the past twelve months, ending the fourth quarter at $469 million.
• Total loans outstanding grew by 33% in 2014, ending the fourth quarter at $342 million.
• Total deposits decreased by 14% over the past twelve months, ending the fourth quarter at $386 million.
• The Bank continues to be well capitalized with a Tier 1 Leverage Ratio of 10.5% and a Total Risk Based Capital Ratio of 12.2%.

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 were substantially achieved in 2014. Loans outstanding increased more than $84 million during the year, a 33% 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 2014 grew by 9% over 2013 primarily due to higher loans outstanding and the need for a smaller loan loss provision. We experienced solid growth in all four of our lending divisions in 2014. Our net interest margin improved to 4.20% in the fourth quarter as we have placed a substantial amount of our liquid funds into higher yielding loans."

"The Bank's total deposits decreased by $64 million in 2014 as the runoff of some large transactional and temporary accounts outweighed our increase in relationship deposits. Core deposits make up over 94% of total deposits and our demand and transaction deposits have grown to 42% of total deposits as of the end of 2014", noted Mr. Mordell. "We have successfully deployed 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. We will be opening up a loan production office in San Francisco by the end of the first quarter of 2015."

Results for the year ended December 31, 2014

Net interest income before provision for loan losses was $16.4 million in 2014, an increase of $1,172,000 or 7.7% 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 $437 million in 2014, a 4% increase over the prior year. Net interest margin was 3.79% for 2014 year to date compared to 3.63% for 2013. The increase in net interest margin was primarily caused by growth in average loans and a decrease in Fed funds sold partially offset by a decline in loan yields due to the current interest rate environment. A loan loss provision of $39,000 was recorded in 2014 and a $245,000 provision was made in 2013. We have experienced recoveries net of charge-offs of $46,000 in 2014 compared to net recoveries of $63,000 in 2013.

Non-interest income, excluding gains on sales of securities, was $1,307,000 in 2014, an increase of $591,000 or 83% 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 $261,000 of gains on sales of securities in 2014 and $748,000 of gains on securities sales in 2013.

Non-interest expense grew by $990,000 or 8% in 2014 to $13.4 million compared to $12.4 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 December 31, 2014

For the three months ended December 31, 2014, net interest income before provision for loan losses was $4.5 million, an increase of $785,000 or 21% compared to the fourth quarter of 2013. The increase was primarily the result of higher loans outstanding. Average earning assets were $425 million in the fourth quarter of 2014, a 6% decrease over the fourth quarter of the prior year. Earning assets decreased as loan growth was more than offset by lower Fed funds. Net interest margin was 4.20% for the fourth quarter of 2014, compared to 3.30% for the fourth quarter of 2013. Net interest margin increased due to growth in loans for the quarter. A loan loss provision of $39,000 was taken in the fourth quarter of 2014 and no loan loss provision was taken in the fourth quarter of 2013.

Non-interest income, excluding gains on sales of securities, was $365,000 in the fourth quarter of 2014, an increase of $107,000 or 41% over the fourth quarter of 2013. The increase was due to increases in service charges and other fee generation activities. There were $239,000 of gains on sales of securities in the fourth quarter of 2014 and no gains on securities sales in the fourth quarter of 2013.

Non-interest expense grew by $360,000 in the fourth quarter of 2014 to $3.5 million compared to $3.1 million for the fourth quarter of 2013. This growth was due to the investments in loan production personnel mentioned previously. The company's full time equivalent employees at December 31, 2014 and 2013 were 61 and 51, respectively.

Balance Sheet

Total assets dropped to $469 million as of December 31, 2014, compared to $484 million at September 30, 2014 and $501 million on the same date one year ago. The decrease in total assets of $15 million, or 3%, from September 30, 2014 consisted of a decrease in Fed funds due to a reduction in transactional and temporary deposits.

The Company reported total gross loans outstanding at December 31, 2014 of $342 million, which represented an increase of $47 million, or 16%, over $295 million at September 30, 2014, and an increase of $85 million, or 33%, over $257 million at December 31, 2013. The increase in total gross loans from September 30, 2014 was primarily attributable to growth in construction and commercial real estate loans. We also saw growth in asset based and commercial loans. The increase in loans from December 31, 2013 was primarily attributable to growth in commercial real estate, construction and asset based loans. Non-accrual loans totaled $5.2 million or 1.5% of total loans on December 31, 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 years. Our increase in nonaccrual loans was isolated to one client," observed Mr. Mordell.

The Company’s total deposits were $386 million as of December 31, 2014, which represented a decrease of $42 million, or 10%, compared to $428 million at September 30, 2014 and a decrease of $64 million, or 14%, compared to $450 million at December 31, 2013. The decrease in deposits from September 30, 2014 was primarily attributable to a decrease in money market and interest checking accounts, while the decrease from December 31, 2013 was primarily attributable to a decrease in money market and checking accounts and certificates of deposit over $100,000.

Demand and transaction deposits represented 41.9% of total deposits at December 31, 2014, compared to 43.7% at September 30, 2014 and 39.4% for the same period one year ago. Core deposits represented 94.2% of total deposits at December 31, 2014, compared to 95.1% at September 30, 2014 and 93.3% at December 31, 2013.

During the fourth quarter of 2014, short term Federal Home Loan Bank advances totaling $25 million and excess liquidity of $17 million were utilized to facilitate loan originations, net of repayments, of $42 million. These borrowings bear interest at an annualized rate of 0.25% to 0.26% and mature on a weekly basis.

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

12/31/2014

9/30/2014

6/30/2014

3/31/2014

12/31/2013

Cash and due from banks $17,986 $20,499 $18,049 $15,427 $16,905 Fed funds sold 8,150   68,675   100,445   127,785   151,940 Total cash and cash equivalents 26,136 89,174 118,494 143,212 168,845   Investment securities - available for sale 79,501 78,710 65,282 58,397 58,983   Loans, net of deferred loan fees 341,966 295,410 277,822 254,375 257,434 Allowance for loan losses (4,873)   (4,826)   (4,809)   (4,795)   (4,788) Loans, net of allowance for loan losses 337,093 290,584 273,013 249,580 252,646   Bank owned life insurance 11,944 11,857 11,783 11,694 11,607 Premises and equipment, net 1,024 1,108 1,210 1,287 1,175 Accrued interest receivable & other assets 13,343   13,006   12,983   8,950   7,420 Total assets $469,041   $484,439   $482,765   $473,120   $500,676  

Liabilities

Non-interest-bearing demand deposits $140,429 $166,733 $173,394 $151,538 $158,364 Interest bearing transaction accounts 21,170 20,415 15,523 18,041 18,991 Money market and savings accounts 185,778 201,189 194,892 205,237 222,324 Time deposits 38,544   39,453   42,777   47,250   50,625 Total deposits 385,921 427,790 426,586 422,066 450,304   FHLB Borrowing 25,000 - - - - Other liabilities 6,573   6,273   6,262   2,209   2,340 Total liabilities 417,494 434,063 432,848 424,275 452,644  

Shareholders' equity

Common stock/additional paid-in capital 45,206 45,080 44,985 44,774 44,531 Retained earnings 6,162 5,189 4,574 3,877 3,469 Accumulated other comprehensive income 179   107   358   194   32 Total shareholders' equity 51,547 50,376 49,917 48,845 48,032   Total liabilities and shareholders' equity $469,041   $484,439   $482,765   $473,120   $500,676  

Bank Capital ratios

Tier 1 leverage ratio 10.53% 10.17% 10.36% 9.72% 9.66% Tier 1 risk-based capital ratio 11.03% 11.60% 11.89% 12.89% 12.44% Total risk-based capital ratio 12.19% 12.82% 13.14% 14.14% 13.69%   Book value per common share $11.84 $11.61 $11.51 $11.34 $11.21 Total common shares outstanding 4,352,319 4,338,161 4,336,292 4,308,756 4,283,494  

Other Ratios

Non-interest bearing/total deposits 36.4% 39.0% 40.6% 35.9% 35.2% Loan to deposit ratio 88.6% 69.1% 65.1% 60.3% 57.2% Allowance for loan losses/total loans 1.42% 1.63% 1.73% 1.89%

1.86%

   

Avidbank Holdings, Inc.

Condensed Consolidated Statements of Income

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

         

Quarter Ended

Year Ended

12/31/2014

9/30/2014

12/31/2013

12/31/2014

12/31/2013

Interest and fees on loans and leases $4,128 $3,786 $3,485 $15,204 $14,498 Interest on investment securities 497 430 408 1,739 1,605 Other interest income 28   56   85   231   268 Total interest income 4,653 4,272 3,978 17,174 16,371 Interest expense 170   175   280   798   1,167 Net interest income 4,483 4,097 3,698 16,376 15,204   Provision for loan losses 39   -   -   39   245

Net interest income after provision for loan losses

4,444 4,097 3,698 16,337 14,959   Service charges, fees and other income 278 260 168 970 529 Income from bank owned life insurance 87 74 90 337 187 Gain on sale of investment securities 239   22   0   261   748 Total non-interest income 604 356 258 1,568 1,464   Compensation and benefit expenses 2,147 2,072 1,813 8,295 7,339 Occupancy and equipment expenses 568 568 493 2,325 2,241 Other operating expenses 762   705   811   2,745   2,795

Total expenses

3,477 3,345 3,117 13,365 12,375   Income before income taxes 1,571 1,108 839 4,540 4,048 Provision for income taxes 575   462   204   1,796   1,540 Net income $996   $646   $635   $2,744   $2,508   Preferred dividends & warrant amortization -   -   -   -   210

Net income applicable to common shareholders

$996   $646   $635   $2,744   $2,298     Basic earnings per common share $0.23 $0.15 $0.15 $0.63 $0.66 Diluted earnings per common share $0.22 $0.15 $0.15 $0.62 $0.64   Average common shares outstanding 4,343,719 4,336,761 4,283,109 4,323,826 3,474,788 Average common fully diluted shares 4,428,005 4,419,603 4,344,871 4,400,659 3,565,490   Annualized returns: Return on average assets 0.83% 0.54% 0.52% 0.57% 0.57% Return on average common equity 7.95% 5.16% 5.29% 5.54% 6.23%   Net interest margin 4.20% 3.73% 3.30% 3.79% 3.63% Cost of funds 0.16% 0.16% 0.26% 0.19% 0.30% Efficiency ratio 68.4% 75.1% 78.8% 74.5% 74.2%    

Avidbank, Inc.

Interim Credit Trends

($000, except ratios) (Unaudited)

         

Allowance for Loan Losses

12/31/2014

9/30/2014

6/30/2014

3/31/2014

12/31/2013

Balance, beginning of quarter $4,826 $4,809 $4,795 $4,788 $4,754 Provision for loan losses, quarterly 39 - - - - Charge-offs, quarterly - - - - - Recoveries, quarterly 8   17   14   7   34 Balance, end of quarter $4,873   $ 4,826   $ 4,809   $ 4,795   $ 4,788    

Nonperforming Assets

  Loans accounted for on a non-accrual basis $5,243 $6,412 $2,283 $3,099 $2,015

Loans with principal or interest contractually past due 90 days or more and still accruing interest

-   -   -   -   - Nonperforming loans 5,243 6,412 2,283 3,099 2,015 Other real estate owned -   -   -   -   - Nonperforming assets $5,243   $6,412   $2,283   $3,099   $2,015

Loans restructured and in compliance with modified terms

-   -   -   -   - Nonperforming assets & restructured loans $5,243   $6,412   $2,283   $3,099   $2,015     Nonperforming Loans by Asset Type: Commercial $5,243 $5,917 $1,779 $2,585 $1,492 Other real estate secured loans -   495   504   514   523 Nonperforming loans $5,243   $6,412   $2,283   $3,099   $2,015    

Asset Quality Ratios

Allowance for loan losses / gross loans 1.42% 1.63% 1.73% 1.89% 1.86% Allowance for loan losses / nonperforming loans 92.94% 75.27% 210.64% 154.73% 237.62% Nonperforming assets / total assets 1.12% 1.32% 0.47% 0.66% 0.40% Nonperforming loans / gross loans 1.53% 2.17% 0.82% 1.22% 0.78% Net quarterly charge-offs / gross loans 0.00% -0.01% -0.01% 0.00% -0.01%  

Avidbank Holdings, Inc.Steve Leen, 650-843-2204Executive Vice President and Chief Financial Officersleen@avidbank.comavidbank.com