Arizona Tribune - Avidbank Holdings, Inc. Announces Financial Results for the Fourth Quarter and Full Year of 2025

Fourth Quarter 2025 Highlights

• Period-end loans, net of deferred loan fees increased $189.9 million, or 38% annualized, from September 30, 2025.

• Average deposits increased $91.6 million, or 18% annualized, from the third quarter of 2025 and $241.6 million, or 13%, from the fourth quarter of 2024. Period-end deposits increased $136.9 million, or 27% annualized, from September 30, 2025.

• Net interest margin expanded to 4.13% in the fourth quarter of 2025, compared to 3.90% in the third quarter of 2025 and 3.49% in the fourth quarter of 2024.

• Return on average assets was 1.12% compared to (6.35%) in the third quarter of 2025 and 1.14% in the fourth quarter of 2024. The return on average assets-adjusted⁽¹⁾ was 1.12% for the fourth quarter of 2025, compared to 1.13% in the third quarter of 2025.

• The efficiency ratio was 51.72% compared to (35.28%) in the third quarter of 2025 and 52.53% in the fourth quarter of 2024. The efficiency ratio-adjusted⁽¹⁾ was 51.72% compared to 55.72% in the third quarter of 2025.

• Book value per share was $25.66 at December 31, 2025, an increase of $0.66 from September 30, 2025, and an increase of $2.09 from December 31, 2024.

• Non-performing assets to total assets totaled 0.95% as of December 31, 2025 compared to 0.12% at September 30, 2025 and 0.06% at December 31, 2024. The increase in the fourth quarter of 2025 was primarily due to the downgrade of two well-collateralized construction loans and one commercial loan.

Full Year 2025 Highlights

• In August of 2025, the Company completed an initial public offering ("IPO") of its common stock, issuing an aggregate total of 3,001,500 shares of common stock at the public offering price of $23.00 per share. After deductions for underwriting fees, commissions and offering expenses, the Company's net proceeds from the IPO totaled $61.3 million.

• We repositioned the securities portfolio and took the following actions. Sold $274.7 million in available-for-sale securities for a loss of $62.4 million; purchased $205.4 million in available-for-sale securities with an average purchase yield of 4.57%; and paid off existing short-term borrowings using proceeds from the IPO and securities sales.

• Period-end loans, net of deferred loan fees increased $283.5 million, or 15%, for the year ended December 31, 2025, compared to December 31, 2024.

• Average deposits increased $241.6 million, or 13%, for the year ended December 31, 2025, compared to December 31, 2024. Period-end deposits increased $294.7 million, or 16%, from December 31, 2024.

• Net interest margin expanded to 3.80% for the year ended December 31, 2025, compared to 3.44% for the same period in the prior year.

• Return on average assets was (0.83%) for the year ended December 31, 2025, compared to 0.93% for the previous year. Excluding the loss on the sale of available-for-sale securities, the return on average assets-adjusted⁽¹⁾, was 1.06% for the year ended December 31, 2025, compared to 0.93% for the same period in 2024.

• The efficiency ratio was 170.65% at December 31, 2025, compared to 58.27% at December 31, 2024. Excluding the loss from the sale of available-for-sale securities, the adjusted efficiency ratio⁽¹⁾ improved to 56.56% for the year ended December 31, 2025.

Mark Mordell, Chairman and Chief Executive Officer stated, "We closed 2025 with a strong quarter as well as significant momentum and a clear trajectory for 2026. Our fourth quarter performance was driven by all five of our verticals in both loans and deposits. We achieved this through the dedication and resilience of our bankers and employees."

Mordell added, "While non-performing loans increased this quarter partially due to the downgrade of two construction credits, these loans are well‑collateralized and supported by strong underlying collateral."

Mordell concluded, "Asset quality remains solid overall, and we remain confident in the strength of our loan portfolio and our disciplined underwriting practices."

Results of Operations

Net interest income totaled $25.0 million for the fourth quarter of 2025, an increase of $2.4 million, or 41% annualized, from the third quarter of 2025, and an increase of $5.8 million, or 30%, from the fourth quarter of 2024. Net interest margin was 4.13% in the fourth quarter of 2025, an increase of 23 basis points compared to the third quarter of 2025, and a 64-basis-point increase compared to the fourth quarter of 2024. The increase in net interest margin compared to the prior quarter was primarily driven by higher average loan balances, lower average short-term borrowings, an increase in average non-interest-bearing demand deposits, and lower cost of deposits as well as improvement in interest income due to the sale of low-yielding securities as part of the repositioning of our available-for-sale securities portfolio during the third quarter of 2025. In addition, the fourth quarter of 2025 included $726 thousand in interest income reversals related to loans placed on non-accrual status. For the year ended December 31, 2025, net interest income increased $12.1 million, or 16%, compared to the year ended December 31, 2024, while net interest margin increased 36 basis points from 3.44% to 3.80% during the same period.

The yield on securities increased in the fourth quarter of 2025 to 4.61% compared to 2.55% in the third quarter of 2025 and 2.29% in the fourth quarter of 2024 due to the sale of lower-yielding available-for-sale securities during the third quarter of 2025. The yield on loans in the fourth quarter of 2025 was 6.68%, a decrease of 30 basis points from the third quarter of 2025 and a decrease of 40 basis points from the fourth quarter of 2024. The decrease in loan yields was driven by reductions in the prime rate and lower loan fees. For the year ended December 31, 2025, the yield on securities increased 55 basis points while loan yields decreased 38 basis points compared to the same period in the prior year.

The yield on interest-earning assets decreased 10 basis points during the fourth quarter of 2025 compared to the third quarter of 2025 while overall funding costs declined by 34 basis points during the same period. For the year ended December 31, 2025, the yield on interest-earning assets decreased 18 basis points, and the overall cost of funding was down 63 basis points compared to the same period in 2024.

The cost of interest-bearing deposits in the fourth quarter of 2025 was 3.18%, a decrease of 32 basis points compared to the third quarter of 2025 and a decrease of 61 basis points compared to the fourth quarter of 2024. The cost of deposits in the fourth quarter of 2025 was 2.39%, a decrease of 28 basis points from the third quarter of 2025 and a decrease of 55 basis points from the fourth quarter of 2024. For the year ended December 31, 2025, the cost of interest-bearing deposits was 3.43%, a decrease of 56 basis points compared to the year ended December 31, 2024. The cost of deposits for the year ended December 31, 2025 was 2.64%, down 37 basis points from the same period in the prior year.

The provision for credit losses was $2.8 million in the fourth quarter of 2025, compared to $1.4 million in the third quarter of 2025 and $779 thousand in the fourth quarter of 2024. The provision was higher in the fourth quarter of 2025 compared to the third quarter primarily due to higher loan balances and the specific reserve on one commercial non-accrual loan. For the year ended December 31, 2025, the provision for credit losses totaled $5.1 million compared to $4.1 million for the year ended December 31, 2024.

Non-interest income was $1.8 million in the fourth quarter of 2025 compared to ($60.9) million in the third quarter of 2025 and $1.8 million in the fourth quarter of 2024. The fourth quarter of 2025 included $375 thousand in warrant and success fee income, partially offset by a decrease in other investments income. For the year ended December 31, 2025, non-interest income totaled ($56.4) million compared to $6.0 million for the prior year. Included in the 2025 year-to-date total was a $62.4 million loss on the sale of securities resulting from the repositioning of the available-for-sale securities portfolio.

Non-interest expense totaled $13.9 million for the fourth quarter of 2025, compared to $13.5 million in the third quarter of 2025 and $11.1 million in the fourth quarter of 2024. The increase from the third quarter was primarily due to higher legal and professional fees, partially offset by a decrease in salaries and benefits expense driven by higher capitalized loan origination costs during the fourth quarter of 2025. For the year ended December 31, 2025, non-interest expense was $52.8 million, an increase of $5.4 million, or 12%, compared to the same period in the prior year primarily driven by an increase in salaries and benefits. There were 151 full-time equivalent employees on December 31, 2025, unchanged from September 30, 2025, and compared to 148 on December 31, 2024.

The effective tax rate for the fourth quarter of 2025 was 31.1% compared to 28.9% in the third quarter of 2025 and 29.9% in the fourth quarter of 2024. The increase in the current quarter was primarily due to state tax impacts from changes in California law requiring financial institutions to apportion business income using a single sales factor for tax years beginning on or after January 1, 2025, which included further remeasurement of deferred tax assets. For the year ended December 31, 2025, the effective tax rate was 27.5% compared to 29.5% for the year ended December 31, 2024.

Financial Condition

Total assets were $2.57 billion as of December 31, 2025, compared to $2.36 billion as of September 30, 2025, and $2.30 billion at December 31, 2024. Cash and cash equivalents were $154.6 million on December 31, 2025, compared to $177.3 million on September 30, 2025, and $82.7 million on December 31, 2024.

Loans, net of deferred loan fees, on December 31, 2025, totaled $2.15 billion, an increase of $189.9 million, or 38% annualized, from September 30, 2025, and an increase of $283.5 million, or 15%, from December 31, 2024. The increase in loans during the fourth quarter of 2025 included an increase of $178.0 million in commercial and industrial loans, $15.3 million in multi-family loans and $11.5 million in non-owner-occupied loans. Partially offsetting the increase in loans were decreases of $13.5 million in construction and land loans and $11.0 million in owner-occupied loans.

The allowance for credit losses on loans was $22.3 million on December 31, 2025, representing an increase of $1.2 million from September 30, 2025, and an increase of $3.6 million compared to December 31, 2024. The allowance for credit losses - loans and unfunded commitments to total loans was 1.15% on December 31, 2025, compared to 1.19% on September 30, 2025 and 1.12% as of December 31, 2024. Non-performing loans to total loans was 1.14% at December 31, 3025, up 100 basis points compared to September 30, 2025 and up 107 basis points from December 31, 2024. The increase in the fourth quarter of 2025 was primarily due to the downgrade of two well-collateralized construction loans.

The available-for-sale securities portfolio totaled $218.2 million as of December 31, 2025, compared to $173.6 million at September 30, 2025, and $296.6 million as of December 31, 2024. The increase during the fourth quarter of 2025 was due to purchases of securities resulting from repositioning our available-for-sale securities portfolio. The net unrealized loss for the available-for-sale portfolio totaled $328 thousand as of December 31, 2025, compared to $689 thousand at September 30, 2025 and $72.6 million as of December 31, 2024.

Deposits were $2.19 billion on December 31, 2025, an increase of $136.9 million, or 27% annualized, from September 30, 2025, and an increase of $294.7 million, or 16% from December 31, 2024. The change in deposits during the fourth quarter of 2025 included an $85.2 million increase in non-interest-bearing demand deposits and an increase of $67.0 million in money market and savings, partially offset by a $15.2 million decrease in time deposits. Quarterly average deposits for the fourth quarter of 2025 were $2.14 billion, an increase of $91.6 million from the third quarter of 2025, and an increase of $241.6 million from the fourth quarter of 2024. Average non-interest-bearing demand deposits increased $43.8 million compared to the third quarter of 2025 and $103.8 million compared to the fourth quarter of 2024.

Short-term borrowings outstanding at December 31, 2025 were $60.0 million, compared to $0 at September 30, 2025, and $185.0 million at December 31, 2024.

Book value per share was $25.66 on December 31, 2025, an increase of $0.66 compared to September 30, 2025, and an increase of $2.09 compared to December 31, 2024. The overall increase was due to new shares issued as part of the IPO during the third quarter of 2025. Total shareholders' equity was $281.0 million on December 31, 2025, an increase of $7.9 million compared to September 30, 2025, and an increase of $94.6 million from December 31, 2024.

Other Information

The Company will host a conference call on January 30, 2026, at 11:00 a.m. (Eastern Time) / 8:00 a.m. (Pacific Time) to discuss the earnings results for the fourth quarter and full year of 2025. Investors may call in by dialing (800) 715-9871 within the US and +1(646) 307-1963 for all other locations (Conference ID: 1715743). Participants may also pre-register for the conference by navigating to https://events.q4inc.com/attendee/815368039.

Alternatively, individuals may listen to a live webcast of the presentation by visiting the link on the Company's website at www.avidbank.com under About Us, Investor Relations. An audio replay of the live webcast is expected to be available by the evening of January 30, 2026, through the Investor Relations section of the Company's website. The recording will be available for one year from the day of posting. Information which may be discussed on the conference call is provided in an earnings supplement presentation available on the Company's website and furnished with the SEC and available at www.sec.gov.

⁽¹⁾ A non-GAAP performance measure. We provide detailed reconciliations in the "Non-GAAP Performance and Financial Measures Reconciliation" table.

About Avidbank Holdings

Avidbank Holdings, Inc. (NASDAQ:AVBH), headquartered in San Jose, California, offers innovative financial solutions and services. We specialize in commercial & industrial lending, venture lending, structured finance, asset-based lending, sponsor finance, fund finance, and real estate construction and commercial real estate lending. Avidbank provides a different approach to banking. We do what we say.

Non-GAAP Financial Measures

This press release includes financial information prepared in accordance with accounting principles generally accepted in the United States ("GAAP"). This press release also includes non-GAAP financial information, which should be considered supplemental to, not a substitute for, or superior to, the financial measure calculated in accordance with GAAP. Management has presented these non-GAAP financial measures because we believe that these measures provide useful information to management and investors that is supplementary to our financial condition, results of operations and cash flows computed in accordance with GAAP. Management believes that adjusted net income, adjusted diluted earnings per share, adjusted return on average assets, adjusted return on average equity, adjusted efficiency ratio and taxable equivalent net interest income are reasonable measures to understand the Company's core operating performance and are important to many investors who are interested in understanding our profitability prospects from our core operations.

However, we acknowledge that our non-GAAP financial measures have a number of limitations. As such, you should not view these disclosures as a substitute for results determined in accordance with GAAP, and they are not necessarily comparable to non-GAAP financial measures that other banking companies use. Other banking companies may use names similar to those we use for the non-GAAP financial measures we disclose but may calculate them differently. You should understand how we and other companies each calculate their non-GAAP financial measures when making comparisons. For a description of the non-GAAP financial information included herein and reconciliations to the most directly comparable GAAP measure, see the "Non-GAAP Performance and Financial Measures Reconciliation" table.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of U.S. federal securities laws, which involve risks and uncertainties. You should not place undue reliance on forward-looking statements because they are subject to numerous uncertainties and factors relating to our operations and business, all of which are difficult to predict and many of which are beyond our control. All statements, other than statements of historical fact, are forward-looking statements. Forward-looking statements include statements concerning our possible or assumed financial condition, results of operations, including descriptions of our business plans, strategy and expectations, capital and financing needs and liquidity and regulatory and competitive outlook. These forward-looking statements are generally identified by the use of forward-looking terminology, including the terms "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "plan," "potential," "predict," "project," "should," "target," "will," "would" and, in each case, their negative or other variations or comparable terminology and expressions. The results, events and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events, or circumstances could differ materially from those described in the forward-looking statements. We caution that the forward-looking information and statements are based largely on our expectations and are subject to a number of known and unknown risks and uncertainties that are subject to change based on factors which are, in many instances, beyond our control. Such forward-looking statements are based on various assumptions (some of which may be beyond our control) and are subject to risks and uncertainties, which change over time, and other factors which could cause actual results to differ materially from those currently anticipated. Such risks and uncertainties include, but are not limited to: uncertain market conditions and economic trends nationally, regionally and particularly in the Bay Area (which we define as the counties of Alameda, Contra Costa, Marin, Monterey, Napa, San Francisco, San Mateo, Santa Clara, Santa Cruz, Solano, and Sonoma) and California; economic conditions affecting the venture capital and private equity industries, including any decline in overall portfolio company investment, merger and acquisition activity and other liquidity events affecting venture and private equity fund and their portfolio companies; risks related to the concentration of our business in California, and specifically within the Bay Area, including risks associated with any downturn in the real estate sector; incurrence of losses in connection with the repositioning of our available-for-sale securities portfolio utilizing the proceeds from our recently completed public offering; the effects of a prolonged government shutdown; the occurrence of significant natural disasters, including fires and earthquakes, and acts of war or terrorism; our ability to conduct our business could be disrupted by natural or man-made disasters, including the effects of pandemic viruses; changes in market interest rates that affect the pricing of our loans and deposits and our net interest income; risks related to our strategic focus on lending to small to medium-sized businesses; the sufficiency of the assumptions and estimates we make in establishing reserves for potential loan losses and the value of loan collateral and securities; our ability to attract and retain executive officers and key employees and their client and community relationships; adverse changes in the financial performance and/or condition of our borrowers and, as a result, increased loan delinquency rates, deterioration in asset quality and losses in our loan portfolio; the costs of effects and results of legal and regulatory developments, including legal proceedings and lawsuits we are or may become subject to; the results of regulatory examinations or reviews and the effect of and our ability to comply with, any regulations or regulatory orders or actions we are or may become subject to; our level of non-performing assets and the costs associated with resolving problem loans; our ability to maintain adequate liquidity and to raise necessary capital to fund our growth strategy and operations or to meet increased minimum regulatory capital levels; the effects of increased competition from a wide variety of local, regional, national and other providers of financial services; technological changes and developments; negative trends in our market capitalization and adverse changes in the price of our common stock; risks associated with unauthorized access, cyber-crime and other threats to data security; the effects of any strategic transactions we may make or evaluate, and the costs associated with any potential or actual strategic transaction; our ability to comply with various governmental and regulatory requirements applicable to financial institutions, including supervisory actions by federal and state banking agencies; the impact of recent and future legislative and regulatory changes, including changes in banking, accounting, securities and tax laws and regulations and their application by our regulators, and economic stimulus programs; governmental monetary and fiscal policies, including the policies of the Federal Reserve and policies related to tariffs; our ability to implement, maintain and improve effective internal controls; our use of the net proceeds from our recent public offering; and our success at managing any of the risks involved any of the foregoing items. Additional factors that could cause actual results to differ materially from those expressed in the forward-looking statements are discussed in the Company's filings with the SEC, including the Company's most recent annual report on Form 10-K and quarterly reports on Form 10-Q under the heading "Risk Factors" therein and available at the SEC's Internet site www.sec.gov. The foregoing factors should not be considered exhaustive. New risks and uncertainties may emerge from time to time, and it is not possible for us to predict their occurrence or how they will affect us. If one or more of the factors affecting our forward-looking information and statements proves incorrect, then our actual results, performance or achievements could differ materially from those expressed in, or implied by, forward-looking information. Therefore, we caution you not to place undue reliance on our forward-looking information and statements. We disclaim any duty to revise or update the forward-looking statements, whether written or oral, to reflect actual results or changes in the factors affecting the forward-looking statements, except as specifically required by law.

Contact: Patrick Oakes
Executive Vice President and Chief Financial Officer
408-200-7390
[email protected]

AVIDBANK HOLDINGS, INC.
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AVIDBANK HOLDINGS, INC.
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AVIDBANK HOLDINGS, INC.
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AVIDBANK HOLDINGS, INC.
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⁽¹⁾ Non-performing loans are included in average loan balances. No adjustment has been made for these loans in the calculation of yields. Interest income on loans includes net amortization of deferred loan fees / (costs) of $353 thousand and $444 thousand, for the three months ended December 31, 2025 and September 30, 2025, respectively.
⁽²⁾ Interest income on tax-exempt securities has been increased to reflect comparable interest on taxable securities. The rate used was 21%, reflecting the statutory federal income tax rate.
⁽³⁾ Including negative balance on average allowance for credit losses on loans of $21.8 million and $20.1 million, respectively.
⁽⁴⁾ Net interest margin is net interest income divided by total interest-earning assets.
⁽⁵⁾ Annualized for the periods presented.

AVIDBANK HOLDINGS, INC.
Average Balance Sheets and Net Interest Margin Analysis (Unaudited)
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⁽¹⁾ Non-performing loans are included in average loan balances. No adjustment has been made for these loans in the calculation of yields. Interest income on loans includes net amortization of deferred loan fees / (costs) of $353 thousand and $491 thousand, for the three months ended December 31, 2025 and December 31, 2024, respectively.
⁽²⁾ Interest income on tax-exempt securities has been increased to reflect comparable interest on taxable securities. The rate used was 21%, reflecting the statutory federal income tax rate.
⁽³⁾ Including negative balance on average allowance for credit losses on loans of $21.8 million and $22.2 million, respectively.
⁽⁴⁾ Net interest margin is net interest income divided by total interest-earning assets.
⁽⁵⁾ Annualized for the periods presented.

AVIDBANK HOLDINGS, INC.
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AVIDBANK HOLDINGS, INC.
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⁽¹⁾ Annualized for the periods presented.

AVIDBANK HOLDINGS, INC.
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⁽¹⁾ FDIC regulations impose a general cap on reciprocal deposits that may be exempt from brokered deposits classification equal to 20% of the Bank's total liabilities. As of December 31, 2025, September 30, 2025, June 30, 2025, March 31, 2025 and December 31, 2024, an additional $475.4 million, $522.5 million, $495.4 million, $447.8 million, and $470.0 million of our deposits were considered brokered deposits by the FDIC due to being in excess of the general cap, respectively.

AVIDBANK HOLDINGS, INC.
Non-GAAP Performance and Financial Measures Reconciliation (Unaudited)
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Management believes that adjusted net income, adjusted diluted earnings per share, adjusted return on average assets, adjusted return on average equity, adjusted efficiency ratio and taxable equivalent net interest income are reasonable measures to understand the Company's core operating performance and are important to many investors who are interested in understanding our profitability prospects from our core operations. In addition, management reviews yields on certain asset categories and the net interest margin of the Company on a fully taxable equivalent basis. The non-GAAP taxable equivalent net interest income adjustment facilitates performance comparisons between taxable and tax-free assets by increasing the tax-free income by an amount equivalent to the Federal income taxes that would have been paid if this income were taxable at the Company's 21% Federal statutory rate.