Avidbank earns $10.2 million as deposits climb 27% from a year earlier

Avidbank Holdings, Inc. reported third-quarter 2026 net income of $10.2 million, or $0.94 per diluted share, against $7.6 million, or $0.71, in the second quarter and a $37.7 million loss a year earlier, when the company booked a $62.4 million loss on the sale of available-for-sale securities.

The third-quarter profit was 33.18% above the $7.6 million earned in the second quarter and 51.84% above the $6.7 million reported a year earlier as adjusted net income, a measure that strips out the securities loss.

A temporary deposit lifts the balance sheet and squeezes the margin

Average deposits rose $283.8 million from the second quarter, or 51% annualized, and $449.9 million from the third quarter of 2025. Period-end deposits of $2.61 billion were $290.1 million above June 30 and $562.9 million, or 27%, above a year earlier. The increase was concentrated in money market and savings, up $345.4 million to $883.8 million, partly offset by a $55.47 million drop in non-reciprocal brokered deposits and a $33.38 million decline in non-interest-bearing demand, which slipped to $535.13 million from $568.51 million. Cash due from the Federal Reserve rose to $344.83 million from $146.01 million.

Net interest income was $28.7 million, against $26.68 million in the second quarter and $22.65 million a year earlier, but the net interest margin narrowed to 4.07% from 4.26%, a 19 basis point decline, even as it remained 17 basis points above the 3.90% of a year earlier. The release attributes the sequential compression to a $205 million increase in average interest-earning cash balances, which it says reduced the margin by approximately 17 basis points. The efficiency ratio was 49.80%, against 55.41% in the second quarter and an adjusted 55.72% a year earlier.

Mordell framed the deposit gain as partly temporary: “A significant amount of that deposit growth came from a temporary large client deposit that we expect to leave in the fourth quarter, but our bankers also delivered meaningful core deposit growth across the franchise.”

Loans grow, and the credit file sits in one category

Period-end loans, net of deferred fees, reached $2.28 billion, up $58.4 million, or 10% annualized, from June 30 and $323.9 million, or 17%, from September 30, 2025. Commercial and industrial loans supplied most of the quarterly increase, rising to $1.13 billion from $1.11 billion.

Non-performing loans were $15.94 million, up from $14.45 million at June 30 and $2.76 million a year earlier, and the entire balance sits in construction and land. Non-performing loans to total loans rose to 0.70% from 0.65%, and from 0.14% a year earlier, while criticized loans to total loans fell to 1.68% from 2.16%.

The provision for credit losses was $1.15 million, down from $2.79 million in the second quarter. Net charge-offs were 0.00% of average loans in the quarter, against 0.28% for the first nine months, and the allowance for credit losses on loans equaled 1.00% of total loans and 142.99% of non-performing loans.

A subordinated debt refinancing and a lower leverage ratio

The company redeemed $22.0 million of callable subordinated notes and closed a $30.0 million private placement of new subordinated notes during the quarter. The new notes mature September 1, 2036, and carry a fixed 7.00% rate for the first five years. Subordinated debentures, net, were $29.13 million at September 30 against $22 million at June 30.

Balance-sheet growth outran capital: the Tier 1 leverage ratio fell to 10.82% from 11.50%, while the common equity tier 1 ratio was 11.45% and the total risk-based capital ratio 13.48%. Return on average equity was 13.43%, against 11.23% adjusted a year earlier, and book value per share rose to $27.24 from $26.97, compared with $25.00 at September 30, 2025.

No outlook, and the deposit that is expected to leave

The release offers no earnings guidance and no outlook for the fourth quarter. It says the company will host a conference call on October 27, 2026, at 11:00 a.m. Eastern, and that an earnings supplement is posted on its website and furnished to the SEC. Because management expects the large client deposit to leave, the 51% annualized sequential deposit growth is a poor base for projecting the fourth quarter's margin, and the release gives no size for the expected outflow.

Two other gaps are worth naming. The non-performing balance is concentrated entirely in construction and land, and the release supplies no resolution timetable. Diluted earnings per share were $2.49 for the first nine months, against $2.54 adjusted a year earlier; nine-month net income was $26.85 million.