Avidbank Q3 Profit Rises as Loans and Deposits Grow

Avidbank Holdings (AVBH) reported third-quarter 2026 net income of $10.2 million, or $0.94 per diluted share, as loan and deposit growth lifted net interest income. Profit increased from $7.6 million, or $0.71 per share, in the second quarter, while the bank’s net interest margin narrowed because temporarily elevated deposits increased lower-yielding cash balances.

The latest result also compared with a GAAP net loss of $37.7 million, or $4.12 per share, in the third quarter of 2025, when Avidbank recorded a $62.4 million loss on the sale of securities. Excluding that prior-year item, adjusted net income rose to $10.2 million from $6.7 million, and adjusted diluted earnings increased to $0.94 from $0.72.

Net interest income reached $28.7 million, up from $26.7 million in the preceding quarter and $22.7 million a year earlier. The bank attributed the sequential increase primarily to temporarily higher deposit balances and the resulting increase in cash, along with higher average loan and debt-security balances.

Net interest margin was 4.07%, down 19 basis points from the second quarter but up from 3.90% a year earlier. Avidbank estimated that higher interest-earning cash associated with temporary deposit balances reduced the quarterly margin by approximately 17 basis points. The average loan yield was 6.66%, compared with 6.67% in the second quarter, while the cost of deposits was unchanged at 2.29%.

The provision for credit losses declined to $1.2 million from $2.8 million in the second quarter and $1.4 million a year earlier. Non-interest income was $1.7 million, compared with $3.1 million in the prior quarter, which included a bank-owned life insurance death benefit. Non-interest expense was $15.1 million, down from $16.5 million sequentially but up from $13.5 million in the prior-year period.

Return on average assets was 1.42%, while return on average equity was 13.43%. The efficiency ratio was 49.80%. Book value per share increased to $27.24 at September 30 from $26.97 at June 30 and $25.00 a year earlier.

Loans and deposits expand

Loans, net of deferred fees, totaled $2.28 billion at quarter-end, increasing by $58 million from June 30 and $324 million, or 17%, from September 2025. Avidbank said commercial and industrial loans plus owner-occupied commercial real estate accounted for 59% of total loans. About 26% of loan balances were outside California, reflecting targeted expansion in national business lines.

Deposits ended the quarter at $2.61 billion, up $290 million from June 30 and $563 million from a year earlier. Average deposits increased by $284 million sequentially and $450 million, or 22%, year over year, although the company noted that part of the increase was temporary. Non-interest-bearing deposits were $535.1 million, down from $568.5 million in the second quarter but above $471.8 million a year earlier.

Avidbank’s venture-lending platform remained a major funding source, with client deposits equal to 2.7 times venture loan balances. The venture portfolio included $190 million of loans to software-as-a-service companies, representing 61% of venture loans. Vertical SaaS exposure totaled $128.3 million, while horizontal SaaS exposure was $61.7 million.

The bank said it is monitoring potential disruption from advances in artificial intelligence, particularly among horizontal SaaS companies. It also said portfolio companies continued to raise equity financing and that SaaS borrowers were broadly adopting AI-driven development tools.

Credit and capital

Non-performing assets represented 0.54% of total assets, unchanged from the second quarter but above 0.12% a year earlier. The allowance for credit losses on loans and unfunded commitments was 1.11%, compared with 1.09% in June and 1.19% in September 2025. Net charge-offs were zero during the quarter.

The bank disclosed that substandard or doubtful loans included two non-performing construction and land loans totaling $15.9 million. Special-mention credits included a non-owner-occupied commercial real estate relationship comprising three loans totaling $29 million, with estimated loan-to-value ratios below 50%.

Avidbank ended the quarter with a Tier 1 leverage ratio of 10.82%, a common equity Tier 1 ratio of 11.45% and a total risk-based capital ratio of 13.48%. During the period, it redeemed $22 million of callable subordinated notes and completed a $30 million private placement of new subordinated notes. The new debt matures on September 1, 2036, and carries a fixed 7.00% interest rate for its first five years.

The presentation did not provide numerical forward guidance. Avidbank continued to emphasize national expansion from its Bay Area base, investment in personnel and growth across venture lending, sponsor finance, fund finance, asset-based lending and other commercial banking businesses. Key uncertainties identified by the company include economic conditions in California and the Bay Area, interest-rate changes, commercial real estate exposure, venture-capital and private-equity activity, borrower credit performance, competition, regulation, liquidity and cybersecurity risks.