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Avidbank Holdings, Inc. Announces Net Income of $1,430,000 for the Second Quarter of 2017Avidbank 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 $1,430,000 for the second quarter of 2017 compared to $3,299,000 for the same period in 2016. Net income for the second quarter of 2016 excluding the impact of life insurance proceeds was $1,827,000. Year-to-Date and Second Quarter 2017 Financial Highlights
Mark D. Mordell, Chairman and Chief Executive Officer, stated, "Net interest income increased to $7.6 million in the second quarter of 2017, a 21% increase over the second quarter of 2016 as our strong loan growth continues. Loans grew $27 million in the second quarter of 2017 on top of our $42 million of growth in the first quarter of 2017. As a result of this significant growth and credit rating migrations primarily caused by project delays in our construction loan portfolio due to the significant winter rains, we recorded a $1.1 million loan loss provision in the second quarter, increasing our loan loss reserve to $8.1 million. Also due to the weather this past winter, because many of our construction loans have experienced delays in completion, we did not experience the level of payoffs we normally expect. Since the spring and summer weather is allowing these projects to be completed, we anticipate our construction concentrations will be reduced organically through payoffs over the third and fourth quarters." Mr. Mordell continued, "We have added business development and support staff to accelerate and manage our growth. Non-interest expenses increased by $0.9 million to $4.7 million in the second quarter of 2017 from $3.8 million in the second quarter of 2016, primarily due to these increased investments in staffing. Our efficiency ratio excluding the impact of life insurance proceeds increased to 59.1% in the second quarter of 2017 from 56.5% in the second quarter 2016 due to increased staffing expense. Total deposits increased by $26 million in the second quarter of 2017 and increased by $53 million from the same quarter in 2016. The change from 2016 was primarily due to growth in brokered deposits and CD's greater than $100,000. Our net interest margin grew to 4.32% for the first six months of 2017 compared to 4.17% for the same period of the prior year due to changes in the mix of earning assets in favor of higher yielding loans." Mr. Mordell, stated, "Additionally, we are pleased to report the closing of a $20 million private offering of common shares at a purchase price of $19.00 per share on July 13, 2017 as a subsequent event to our second quarter results. The completion of this offering is a significant step forward for our Company, providing the capital we need to continue our growth and strengthen our balance sheet. We have also strengthened the governance and risk management of our Board with the addition of Marc Verissimo, a 40-year veteran of the banking industry with 24 years of experience at Silicon Valley Bank." Results for the six months ended June 30, 2017 Net interest income before provision for loan losses was $14.6 million in the first six months of 2017, an increase of $2.7 million or 23% over the same period of the prior year. Higher outstanding average loan balances were the primary reason for the increase. Average loans net of deferred fees were $556 million for 2017 compared to $421 million for 2016. Average earning assets were $681 million in the first six months of 2017, a 19% increase over the prior year. Net interest margin was 4.32% in the first six months of 2017 compared to 4.17% for the same period in 2016. The increase in net interest margin was primarily caused by an increase of higher yielding loans in the mix of earning assets. A loan loss provision of $1,806,000 was recorded in the first six months of 2017 and no provision was taken in the same period of 2016. We had no charge-offs and recoveries of $26,000 in the first six months of 2017 compared to no charge-offs and recoveries of $37,000 for the same period in 2016. Non-interest income was $937,000 in the first six months of 2017, a decrease of $1,380,000 or 60% over 2016 which was primarily attributable to $1,472,000 in life insurance proceeds received in the second quarter of 2016. Non-interest expense increased by $1.4 million to $9.1 million in the first six months of 2017 compared to $7.7 million in 2016 due primarily to increased investments in loan production and support personnel. The effective tax rate was 34.8% in the first six months of 2017 compared to 29.8% for the same period in 2016. The unusually low effective tax rate in 2016 was due to proceeds from life insurance benefits. Results for the quarter ended June 30, 2017 For the three months ended June 30, 2017, net interest income before provision for loan losses was $7.6 million, an increase of $1.3 million or 21% compared to the second quarter of 2016. The increase was primarily the result of higher average loans outstanding. Average gross loans outstanding for the quarter ended June 30, 2017 were $571.8 million, compared to $429.8 million for the same quarter in 2016, an increase of $142.1 million or 33%. Average earning assets were $698.6 million in the second quarter of 2017, a 22% increase over the second quarter of the prior year. Loans made up 82% of average earning assets at the end of the second quarter of 2017 compared to 75% at the end of the second quarter of 2016. Net interest margin was 4.37% for the second quarter of 2017, compared to 4.41% for the second quarter of 2016. A loan loss provision of $1,085,000 was taken in the second quarter of 2017 and no loan loss provision was taken in the second quarter of 2016. Non-interest income was $416,000 in the second quarter of 2017, a decrease of $1,516,000 or 78% compared to the second quarter of 2016. The decrease was primarily due to $1,472,000 from life insurance proceeds in the second quarter of 2016. Non-interest expense increased by $933,000 in the second quarter of 2017 to $4,737,000 compared to $3,804,000 for the second quarter of 2016. This increase was primarily due to higher compensation costs related to increased staffing. The Bank's full time equivalent employees at June 30, 2017 and 2016 were 77 and 67, respectively. The Bank's efficiency ratio excluding the benefit of life insurance proceeds increased from 56.5% in the second quarter of 2016 to 59.1% in the second quarter of 2017 due to increased staffing expense. Balance Sheet Total assets increased to $731.1 million as of June 30, 2017, compared to $701.9 million at March 31, 2017 and $641.2 million on the same day one year ago. The increase in total assets of $29.2 million, or 4%, from March 31, 2017 was primarily due to increased loans in the second quarter of 2017. The Company reported loans net of deferred fees at June 30, 2017 of $584.3 million, which represented an increase of $27.4 million, or 5%, from $556.9 million at March 31, 2017, and an increase of $165.5 million, or 40%, over $418.8 million at June 30, 2016. The increase in total gross loans from March 31, 2017 was primarily attributable to increased Construction and Commercial Real Estate loans. The increase in loans from June 30, 2016 was primarily attributable to growth in Construction, CRE and Sponsor Finance loans. "We had $5.2 million in non-accrual loans comprising 0.89% of total loans from one relationship on June 30, 2017 compared to $0.4 million of non-accrual loans comprising 0.09% of total loans at the end of the second quarter of the prior year. We take a conservative approach when placing loans on nonaccrual and make every effort to minimize any potential loss," observed Mr. Mordell. The Company's total deposits were $618.9 million as of June 30, 2017, which represented an increase of $26.2 million, or 4%, compared to $592.7.0 million at March 31, 2017 and an increase of $52.7 million, or 9%, compared to $566.2 million at June 30, 2016. The increase in deposits from March 31, 2017 was due to an increase in money market accounts and CD's over $100,000 partially offset by a decrease in interest checking accounts. The increase from June 30, 2016 was caused by an increase in brokered deposits, demand deposits and money market accounts. In addition to this deposit growth, the Company utilized $30 million in short term Federal Home Loan Bank advances to fund loan growth as of June 30, 2017. Demand and interest bearing transaction deposits represented 45.6% of total deposits at June 30, 2017, compared to 47.6% at March 31, 2017 and 48.9% for the same period one year ago. Core deposits represented 86.0% of total deposits at June 30, 2017, compared to 86.6% at March 31, 2017 and 89.9% at June 30, 2016. The Company's loan to deposit ratio was 94% at June 30, 2017 compared to 91% at December 31, 2016 and 74% at June 30, 2016. 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 pandemic flu; 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.
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