Avidbank Swings to $37.7M Loss on Securities Sale

TL;DR

**AVBH took a massive hit selling securities, but it's a calculated move to boost future yields, so don't panic yet.**

AI Summary

Avidbank Holdings, Inc. (AVBH) reported a significant net loss of $37.735 million for the three months ended September 30, 2025, a stark contrast to the net income of $5.846 million in the same period of 2024. This downturn was primarily driven by a substantial $62.391 million loss on the sale of available-for-sale securities during the quarter. For the nine months ended September 30, 2025, the company posted a net loss of $26.502 million, compared to a net income of $14.558 million in the prior year. Total interest income remained relatively stable at $37.254 million for the quarter, up slightly from $36.636 million in Q3 2024, while total interest expense decreased to $14.604 million from $18.023 million, largely due to a reduction in interest on borrowings. Loans, net of allowance for credit losses, increased to $1.937 billion at September 30, 2025, from $1.846 billion at December 31, 2024. Total deposits also grew to $2.049 billion from $1.891 billion over the same period. The company's strategic sale of securities and subsequent reinvestment at an average purchase yield of 4.54% indicates an effort to optimize its investment portfolio despite the immediate realized loss.

Why It Matters

This significant net loss, primarily due to a large securities sale, signals a strategic shift in Avidbank's investment portfolio, likely in response to interest rate changes and liquidity management. For investors, this impacts profitability and could affect future dividend potential or stock performance. Employees might face uncertainty if the bank's financial health continues to be volatile. Customers could see changes in lending rates or deposit offerings as the bank re-optimizes its balance sheet. In the competitive banking landscape, this move could position Avidbank for better long-term net interest margin, but the immediate loss highlights the challenges smaller banks face in navigating market volatility.

Risk Assessment

Risk Level: medium — The company reported a net loss of $37.735 million for Q3 2025, primarily due to a $62.391 million loss on the sale of available-for-sale securities. While this was a strategic move to reinvest at higher yields, the immediate impact on profitability and the size of the loss introduce a medium-term risk to earnings stability and capital ratios, despite an increase in total shareholders' equity to $273.113 million.

Analyst Insight

Investors should closely monitor Avidbank's net interest margin and future earnings reports to assess the effectiveness of its investment portfolio restructuring. The immediate loss is significant, but the stated strategy of reinvesting at a 4.54% average yield suggests potential for improved future interest income. Consider this a 'wait and see' situation, focusing on the next two quarters for evidence of margin expansion.

Financial Highlights

debt To Equity

0.76

revenue

$37,254,000

operating Margin

N/A

total Assets

$2,362,454,000

total Debt

$2,089,341,000

net Income

-$37,735,000

eps

-$4.12

gross Margin

N/A

cash Position

$177,319,000

revenue Growth

+1.68%

Revenue Breakdown

Key Numbers

• $37.735M — Net Loss (Q3 2025) (Significant swing from $5.846M net income in Q3 2024)
• $62.391M — Loss on Sale of Securities (Primary driver of the net loss in Q3 2025)
• $1.937B — Loans, Net (Increased from $1.846B at Dec 31, 2024, indicating loan growth)
• $2.049B — Total Deposits (Increased from $1.891B at Dec 31, 2024, showing deposit growth)
• $173.588M — Securities Available-for-Sale (Decreased from $296.556M at Dec 31, 2024, due to sales)
• 4.54% — Average Purchase Yield (Yield on new available-for-sale securities purchased)
• $273.113M — Total Shareholders' Equity (Increased from $186.362M at Dec 31, 2024, partly due to IPO)
• $4.12 — Basic Loss Per Share (Q3 2025) (Compared to $0.79 basic earnings per share in Q3 2024)
• 10,925,102 — Common Shares Outstanding (Increased from 7,906,761 at Dec 31, 2024, due to IPO)
• $157.803M — Net Increase in Deposits (For the nine months ended September 30, 2025)

Key Players & Entities

• Avidbank Holdings, Inc. (company) — Registrant
• Federal Reserve Bank (regulator) — Source of borrowings
• Federal Home Loan Bank (company) — Source of borrowings and dividends
• Nasdaq Stock Market LLC (company) — Exchange where AVBH is registered
• SEC (regulator) — Securities and Exchange Commission
• FASB (regulator) — Financial Accounting Standards Board
• $37.735 million (dollar_amount) — Net loss for Q3 2025
• $62.391 million (dollar_amount) — Loss on sale of securities for Q3 2025
• $1.937 billion (dollar_amount) — Loans, net at September 30, 2025
• $2.049 billion (dollar_amount) — Total deposits at September 30, 2025

FAQ

Risk Factors

• Significant Loss on Securities Sale [high — financial]: The company reported a substantial $62.391 million loss on the sale of available-for-sale securities in Q3 2025. This single event drove a net loss of $37.735 million for the quarter, a stark contrast to the $5.846 million net income in Q3 2024.
• Deterioration in Profitability [high — financial]: For the nine months ended September 30, 2025, AVBH incurred a net loss of $26.502 million, compared to a net income of $14.558 million in the same period of 2024. This represents a significant swing in profitability.
• Increased Loan Portfolio [medium — financial]: Loans, net of allowance for credit losses, increased to $1.937 billion at September 30, 2025, from $1.846 billion at December 31, 2024. While indicating growth, this also increases exposure to credit risk.
• Interest Rate Sensitivity [medium — financial]: The company's net interest income for Q3 2025 was $22.650 million, up from $18.613 million in Q3 2024, driven by lower interest expense on borrowings. However, changes in interest rates can impact the value of securities and loan demand.
• Regulatory Capital Requirements [medium — regulatory]: As a bank holding company, AVBH is subject to various regulatory capital requirements. Failure to meet these requirements could lead to regulatory intervention and impact its ability to operate.
• Dependence on Deposit Funding [medium — operational]: Total deposits grew to $2.049 billion at September 30, 2025, from $1.891 billion at December 31, 2024. Reliance on deposits for funding can be subject to market conditions and depositor confidence.
• Impact of Securities Portfolio Management [medium — financial]: The strategic sale of securities, while resulting in an immediate loss, was accompanied by reinvestment at an average purchase yield of 4.54%. The long-term success of this portfolio adjustment remains to be seen.
• Dilution from Share Issuance [low — financial]: The number of common shares outstanding increased from 7,906,761 at December 31, 2024, to 10,925,102 at September 30, 2025, largely due to an IPO. This dilutes existing shareholders' ownership and earnings per share.

Industry Context

The banking industry is currently navigating a complex environment characterized by fluctuating interest rates, evolving regulatory landscapes, and increasing competition from traditional and non-traditional financial institutions. Banks are focused on managing interest rate risk, maintaining strong capital levels, and adapting to digital transformation to enhance customer experience and operational efficiency. Deposit growth and loan origination remain core to profitability, while strategic portfolio management is crucial for optimizing returns and mitigating risks.

Regulatory Implications

As a bank holding company, Avidbank Holdings, Inc. is subject to stringent oversight from federal and state banking regulators. Compliance with capital adequacy ratios, liquidity requirements, and consumer protection laws is paramount. Any failure to meet these regulatory standards could result in penalties, restrictions on operations, or increased compliance costs, impacting the company's financial health and strategic flexibility.

What Investors Should Do

1. Monitor the impact of the securities portfolio repositioning.
2. Analyze the drivers of the net loss and assess recovery potential.
3. Evaluate the growth in loans and deposits in the context of credit and interest rate risk.
4. Assess the impact of the IPO on shareholder value and future capital structure.

Key Dates

• 2025-09-30: End of Q3 2025 — Reported a net loss of $37.735 million, heavily impacted by a $62.391 million loss on securities sales.
• 2024-09-30: End of Q3 2024 — Reported a net income of $5.846 million, indicating a significant year-over-year decline in profitability.
• 2025-12-31: End of Fiscal Year 2024 — Total assets were $2,304,488,000, with total shareholders' equity at $186,362,000.
• 2025-09-30: End of Q3 2025 — Total assets reached $2,362,454,000, with total shareholders' equity at $273,113,000.
• 2025-09-30: End of Q3 2025 — Loans, net of allowance for credit losses, stood at $1.937 billion, up from $1.846 billion at the end of 2024.
• 2025-09-30: End of Q3 2025 — Total deposits reached $2.049 billion, up from $1.891 billion at the end of 2024.

Glossary

Available-for-sale securities

Investments that are not classified as held-to-maturity or trading securities. They are reported at fair value, with unrealized gains and losses included in other comprehensive income (loss). (A significant loss on the sale of these securities heavily impacted AVBH's Q3 2025 results.)

Allowance for credit losses

A contra-asset account that reduces the carrying amount of loans to their estimated net realizable value, reflecting expected credit losses. (This allowance is deducted from gross loans to arrive at the net loan balance reported on the balance sheet.)

Net interest income

The difference between interest income generated by a bank's assets (like loans and securities) and the interest expense paid on its liabilities (like deposits and borrowings). (This is a key measure of a bank's core profitability from its lending and funding activities.)

Accumulated other comprehensive loss

A component of shareholders' equity that includes unrealized gains and losses on available-for-sale securities, foreign currency translation adjustments, and other items not recognized in net income. (The change in this account, particularly the reduction in loss, reflects the impact of securities sales and market value changes.)

Subordinated debt

A type of debt that ranks below other secured and unsecured debt in the event of liquidation. It often has a longer maturity and higher interest rate. (This represents a portion of the company's long-term financing.)

Amortized cost

The cost of a bond or other debt instrument adjusted over time to account for amortization of any premium or discount and to include any accretion of discount or amortization of premium. (This is the carrying value of securities before considering fair value adjustments for available-for-sale securities.)

IPO

Initial Public Offering, the first time a company offers its stock for sale to the public. (The IPO is cited as a reason for the increase in common shares outstanding and shareholders' equity.)

Provision for credit losses

The amount charged to earnings during a period to cover anticipated losses on loans and other credit exposures. (This expense directly impacts net income and is related to the allowance for credit losses.)

Year-Over-Year Comparison

Compared to the prior year's third quarter, Avidbank Holdings, Inc. has experienced a dramatic shift from a net income of $5.846 million to a net loss of $37.735 million, primarily due to a $62.391 million loss on the sale of available-for-sale securities. While total interest income remained relatively stable, total interest expense decreased, leading to improved net interest income. However, the significant realized loss on investments overshadowed these operational improvements. The company has also seen substantial growth in its loan and deposit portfolios, alongside an increase in outstanding shares following an IPO, which has altered its capital structure and equity position.

Filing Documents

• avbh-20250930x10q.htm (10-Q) — 10897KB
• avbh-20250930xex31_1.htm (EX-31.1) — 27KB
• avbh-20250930xex31_2.htm (EX-31.2) — 27KB
• avbh-20250930xex32_1.htm (EX-32.1) — 15KB
• avbh-20250930xex32_2.htm (EX-32.2) — 15KB
• 0001443575-25-000051.txt ( ) — 33701KB
• avbh-20250930.xsd (EX-101.SCH) — 48KB
• avbh-20250930_cal.xml (EX-101.CAL) — 97KB
• avbh-20250930_def.xml (EX-101.DEF) — 210KB
• avbh-20250930_lab.xml (EX-101.LAB) — 462KB
• avbh-20250930_pre.xml (EX-101.PRE) — 437KB
• avbh-20250930x10q_htm.xml (XML) — 9748KB

Financial Information

Part I. Financial Information Page Item 1.

Financial Statements (Unaudited)

Financial Statements (Unaudited) 3 Consolidated Statements of Financial Condition (unaudited) at September 30, 2025 and December 31, 2024 3 Consolidated Statements of Operations (unaudited) for the three and nine months ended September 30, 2025 and 2024 4 Consolidated Statements of Comprehensive Income (unaudited) for the three and nine months ended September 30, 2025 and 2024 5 Consolidated Statements of Changes in Shareholders' Equity (unaudited) for the three and nine months ended September 30, 2025 and 2024 6 Consolidated Statements of Cash Flows (unaudited) for the nine months ended September 30, 2025 and 2024 7

Notes to Consolidated Financial Statements (unaudited)

Notes to Consolidated Financial Statements (unaudited) 8 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 30 Item 3.

Quantitative and Qualitative Disclosures about Market Risk

Quantitative and Qualitative Disclosures about Market Risk 62 Item 4.

Controls and Procedures

Controls and Procedures 62

Other Information

Part II. Other Information Item 1.

Legal Proceedings

Legal Proceedings 63 Item 1A.

Risk Factors

Risk Factors 63 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 86 Item 3. Defaults Upon Senior Securities 87 Item 4. Mine Safety Disclosures 87 Item 5. Other Information 87 Item 6. Exhibits 87

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION AVIDBANK HOLDINGS, INC. CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED) (In thousands, except per share data) September 30, 2025 December 31, 2024 Assets Cash and due from banks $ 12,006 $ 8,662 Due from Federal Reserve Bank and interest-bearing deposits in banks 165,313 74,039 Total cash and cash equivalents 177,319 82,701 Securities available-for-sale, at fair value (amortized cost $ 174,278 and $ 369,155 , net of allowance for credit losses of $ 0 and $ 0 ) 173,588 296,556 Loans, net of allowance for credit losses on loans of $ 21,025 in 2025 and $ 18,679 in 2024 1,937,560 1,846,263 Federal Home Loan Bank stock, at cost 8,409 8,409 Premises and equipment, net 1,739 2,331 Cash surrender value of bank-owned life insurance policies 12,953 12,674 Accrued interest receivable and other assets 50,886 55,554 Total assets $ 2,362,454 $ 2,304,488 Liabilities Deposits: Noninterest-bearing $ 471,770 $ 414,327 Interest-bearing 1,577,388 1,477,028 Total deposits 2,049,158 1,891,355 Subordinated debt, net 22,000 22,000 Short-term borrowings – 185,000 Accrued interest payable and other liabilities 18,183 19,771 Total liabilities 2,089,341 2,118,126 Commitments and contingent liabilities (Note 9) Shareholders' equity Preferred stock - no par value; 5,000,000 shares authorized; no shares issued and outstanding at September 30, 2025 and December 31, 2024 – – Common stock - no par value; 25,000,000 shares authorized; 10,925,102 and 7,906,761 shares issued and outstanding at September 30, 2025 and December 31, 2024, respectively 169,342 106,997 Retained earnings 104,201 130,703 Accumulated other comprehensive loss, net of taxes ( 430 ) ( 51,338 ) Total shareholders' equity 273,113 186,362 Total liabilities and shareholders' equity $ 2,362,454 $ 2,304,488 The accompanying

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