Avidbank : Annual Financial Statement

CONSOLIDATED FINANCIAL

STATEMENTS

AS OF DECEMBER 31, 2022 AND 2021

AND FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 AND

INDEPENDENT AUDITOR'S REPORT

AVIDBANK HOLDINGS, INC.

INDEX TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

FOR THE YEAR ENDED DECEMBER 31, 2022

Report of Independent Registered Public Accounting Firm	Page
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Consolidated Financial Statements:
Consolidated Statements of Financial Condition	4
Consolidated Statements of Income	5
Consolidated Statements of Comprehensive (Loss)/Income	6
Consolidated Statements of Changes in Shareholders' Equity	7
Consolidated Statements of Cash Flows	8
Notes to Consolidated Financial Statements	9

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Crowe LLP

Independent Member Crowe Global

INDEPENDENT AUDITOR'S REPORT

Shareholders and Board of Directors

Avidbank Holdings, Inc. and Subsidiary

San Jose, California

Report on the Audit of the Financial Statements

Opinion

We have audited the consolidated financial statements of Avidbank Holdings, Inc. and Subsidiary, which comprise the consolidated statements of financial condition as of December 31, 2022 and 2021, and the related consolidated statements of income, comprehensive (loss) income, changes in shareholders' equity, and cash flows for the years then ended, and the related notes to the financial statements.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of Avidbank Holdings, Inc. and Subsidiary as of December 31, 2022 and 2021, and the results of its operations and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with auditing standards generally accepted in the United States of America, Avidbank Holdings, Inc. and Subsidiary's internal control over financial reporting as of December 31, 2022, based on criteria established in the Internal Control-IntegratedFramework (2013), issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) relevant to reporting objectives for the express purpose of meeting the regulatory requirements of Section 112 of the Federal Deposit Insurance Corporation Improvement Act (FDICIA) and our report dated March 22, 2023 expressed an unmodified opinion.

Basis For Opinion

We conducted our audits in accordance with auditing standards generally accepted in the United States of America, (GAAS). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of Avidbank Holdings, Inc. and Subsidiary and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Responsibilities of Management for the Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about Avidbank Holdings,Inc. and Subsidiary's ability to continue as a going concern for one year from the date the consolidated financial statements are available to be issued.

(Continued)

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Auditor's Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the consolidated financial statements.

In performing an audit in accordance with GAAS, we:

• Exercise professional judgment and maintain professional skepticism throughout the audit.
• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances.
• Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the consolidated financial statements.
• Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about Avidbank Holdings, Inc. and Subsidiary's ability to continue as a going concern for a reasonable period of time.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.

Crowe LLP

Sacramento, California

March 22, 2023

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AVIDBANK HOLDINGS, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

December 31, 2022 and 2021

(in thousands, except share amounts)

		2022			2021
ASSETS		17,435
Cash and due from banks	$	$	29,616
Due from Federal Reserve Bank		29,853			463,727
Total cash and cash equivalents		47,288			493,343
Available-for-sale investment securities		412,993			380,170
Held-to-maturity investment securities		31,671			-
Loans, less allowance for loan losses of $16,481 in 2022 and		1,537,741
$13,054 in 2021				1,210,290
Federal Home Loan Bank stock, at cost		6,698			5,133
Premises and equipment, net		4,163			4,565
Cash surrender value of Bank-owned life insurance policies		32,747			31,875
Accrued interest receivable and other assets		59,967			37,102
		2,133,268
Total assets	$	$	2,162,478
LIABILITIES AND
SHAREHOLDERS' EQUITY
Deposits:
Non-interest bearing	$	765,079		$	993,156
Interest bearing		1,058,156			986,254
		1,823,235
Total deposits				1,979,410
		21,805
Subordinated debt securities, net				21,703
Federal Home Loan Bank and other borrowings		130,000			-
Accrued interest payable and other liabilities		20,690			24,265
		1,995,730
Total liabilities				2,025,378
Commitments and contingent liabilities (Note 12)
Shareholders' equity:
Preferred stock - no par value; $1,000 liquidation preference;
5,000,000 shares authorized, no shares issued and		-			-
outstanding at December 31, 2022 and 2021
Common stock - no par value; 15,000,000 shares
authorized; 7,645,428 and 6,256,682 shares issued and
outstanding at December 31, 2022 and 2021, respectively		102,359			72,799
Retained earnings		93,824			68,801
Accumulated other comprehensive (loss) income, net of taxes		(58,645)			(4,500)
		137,538
Total shareholders' equity				137,100
		2,133,268
Total liabilities and shareholders' equity	$	$	2,162,478
The accompanying notes are an integral part of these consolidated financial statements.
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