Strong core loan growth

SAN DIEGO, April 22, 2022–(BUSINESS WIRE)–Endeavor Bank, the leading San Diego-based merchant bank specializing in advisory banking services to local businesses, announces its first quarter results. We are committed to being a valued resource for our local business community, and since our launch just over four years ago, we have helped over a thousand local businesses with loans to meet their operational needs.

At the end of the first quarter, core loans (the segment of loans that bank management defines as all loans excluding PPP loans), increased by more than $34 million, or 12%, in the first quarter of the year and more than $128 million, or 69%, in the last 12 months. Gross lending totaled $332 million, the same as at the end of 2021, as the Bank’s PPP loan portfolio shrank by more than $34 million in the first quarter of this year. PPP loans are meant to be written off over time and the PPP loan portfolio has actually steadily declined since the PPP stimulus program ended last year.

In direct relation to the Bank’s strong core loan growth and given the cautious outlook for the U.S. economy, management decided to increase the Bank’s loan loss reserves by $420,000 in the first quarter, which had a negative impact on earnings. By comparison, the Bank only increased its loan loss reserves by $280,000 in the first quarter of 2021. Total loan loss reserves now stand at $4,495,000, or 1.43% of the total core loan portfolio. To date, the Bank has not recorded any loan write-offs since its creation.

At the end of the first quarter, total deposits were $328 million, reflecting a decline of nearly $11 million in the first quarter of the year, but annual growth of more than $50 million. dollars since March 31, 2021. The decline in deposits in the first quarter was primarily from business owners who sold their business in 2021 and contributed funds to wealth management accounts outside the Bank.

As the Bank’s PPP program continues to wind down with SBA loan cancellations in the normal course of business, the Bank continues to receive one-time, one-time revenues associated with its participation in the program. The Bank issued PPP loans totaling $304 million during the financing phase of the program. As of March 31, 2022, the remaining PPP portfolio had been repaid at $17.8 million. This is down from $52.6 million at the end of 2021 and $200 million a year ago. To date, the Bank has recognized $9.7 million in PPP charges, including $742,000 that was recognized in the first quarter of 2022.

Year-to-date earnings before loan loss reserves and taxes as of March 31, 2022 were $1,327,000 compared to $768,000 as of March 31, 2021, representing a 72% year-over-year increase on the other. First quarter earnings include annual board-related equity compensation costs of $185,000, which are non-recurring from the rest of the year, plus $145,000 related legal and interest costs the creation of Endeavor Bancorp, regulatory filings and the reorganization to establish a holding company. The first quarter expenses also included an increase in rent and staff costs associated with the opening of the Bank’s newest location, a loan origination office located in East San Diego County. It should be noted that earnings for the first quarter of 2021 included $594,000 in retroactive compensation for organizers and administrators. After adjusting for these non-recurring expenses, the comparison of earnings before provisions for loan losses and taxes represents a decrease from $1,362,000 as at March 31, 2021 to $1,327,000 as at March 31, 2022.

Management continues to internally track the non-GAAP measure of “basic pretax earnings,” which it defines as pretax net earnings excluding interest and net PPP-related expenses. It is important to note this measure of revenue, as the PPP fee is non-recurring as the program ended in 2021. On a year-over-year comparison, “Base Earnings Before Tax” at March 31, 2022 increased by $931,000 compared to the year-to-date “base income before tax” at March 31, 2021.

The Bank’s year-to-date net interest margin improved to 4.07% as at March 31, 2022, compared to 3.67% at the end of fiscal 2021 and 3.03% as of March 31, 2021. This improvement is attributable to higher core loan balances, lower PPP loan balances at the Bank and the recent 25 basis point increase in the federal funds rate.

Dan Yates, CEO, commenting on the first quarter, said, “Our internal review of our growing core loan portfolio continues to indicate the strength of our customers’ financial position. However, the Federal Reserve has made it clear that it will take the necessary steps to reduce inflation and this should reduce economic growth. We believe Endeavor Bank is well placed to provide support to our clients in a slowing economy and we should benefit from rising rates.

Steve Sefton, President, commented, “Endeavor benefits because our team and consultative approach attract the right customers who grow and thrive.

Financial results for March 31, 2022 (in thousands of dollars omitted) – unaudited

The results as of March 31, 2022 relate to Endeavor Bank and its consolidated subsidiary Endeavor Bancorp.
Results for March 31 and December 31, 2021 relate to Endeavor Bank only.

March 31, 2022

December 31, 2021

March 31, 2021

Quarterly results

Previous quarter

Year after year

Comparison

Comparison

Core loan balances

$314,232

$279,521

$185,769

PPP loan balances

$17,826

$52,583

$200,379

Total gross loan balances

$332,058

$332,104

$386,148

Total assets

$382,938

$429,271

$511,649

Total deposits

$313,485

$339,347

$277,698

Total equity

$32,885

$32,705

$27,948

Quarterly net income before tax

$907,000

$2,285,000

$488,000

For detailed financial statements covering the Bank’s results of operations, please refer to the Appeals Report filed with the FDIC located at https://www.otcmarkets.com/stock/EDVR/disclosure.

About Endeavor Bank

Endeavor Bank is primarily owned and operated by San Diegans for San Diego businesses and their owners. The bank’s focus is local: local decision-making, local board of directors, local founders, local owners, and local customer relationships in the San Diego metro market and surrounding areas.

Based in downtown San Diego in the historic Symphony Towers building, the Bank also operates a loan origination and executive administration office in Carlsbad and a new loan origination office in East County. Endeavor Bank provides traditional business banking services across a wide range of industries and specialties. Unique to the bank is its consultative banking approach which pairs our commercial clients with Endeavor Bank’s senior management. Together, we develop strategies and provide resources that solve problems, plan for the future, and help customers grow revenue and profits.

To visit www.bankendeavour.com for more information.

EDVR shareholders

With many of our shareholders transferring their EDVR shares to their brokerage firms, as well as ongoing transactions, the Bank may not have the most recent shareholder contact information. If you are an EDVR shareholder and would like to receive information via a faster method, please complete the Shareholder Communication Preference Form on our website: https://www.bankendeavor.com/investor-relations so that we can keep you up to date with EDVR news and invite you to various shareholder networking events throughout the year.

Forward-looking statements

This press release contains “forward-looking statements”, as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on the current beliefs of the directors and officers of the Bank (collectively, “Management”) . , as well as the assumptions used and the information currently available to the Bank’s Management. All statements regarding the Bank’s business strategy and the Bank’s management’s plans and objectives for future operations are forward-looking statements. When used in this press release, the words “anticipate”, “believe”, “estimate”, “expect” and “intend” and words or expressions of similar meaning, with respect to relates to the Bank or the Bank’s management, are intended to identify forward-looking statements. Although the Bank believes that the expectations reflected in these forward-looking statements are reasonable, it cannot guarantee that these expectations will prove to be correct. Important factors that could cause actual results to differ materially from the Bank’s expectations (“Cautions”) are the effects of the COVID-19 pandemic and related government measures on the Bank and its customers, losses on loans, changes in interest rates, loss of key personnel, lower loan limits and capital than competitors, regulatory restrictions and Bank oversight, safe and efficient implementation of the technology, risks related to the local and national economy, the Bank’s implementation of its business plans and the management of growth, loan performance, interest rates and regulatory matters, the effects trade, monetary and fiscal policies, inflation and changes in accounting policies and practices. As conditions change, should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may differ materially from those described as anticipated, believed, estimated, expected or planned. The Bank does not intend to update these forward-looking statements.

See the source version on businesswire.com: https://www.businesswire.com/news/home/20220421006075/en/

contacts

Dan C. Yates, CEO
(858) 230-5185
[email protected]

Steven D. Sefton, President
(858) 230-4243
[email protected]