Avidbank posts diluted earnings of $0.94 per share and net income of $10.2 million
Key Facts
Avidbank Holdings reported on October 26 that its net income was $10.2 million in the third quarter of 2026, or $0.94 per diluted share, compared with $7.6 million and $0.71 per share in the second quarter. The result followed a net loss of $37.7 million, or $4.12 per diluted share, in the third quarter of 2025. The bank disclosed reported earnings per share without describing them as adjusted. Net interest income was $28.7 million, up $6 million, or 27%, from the year-earlier period. It also rose $2 million from the previous quarter, equivalent to annualized growth of 30%. The quarterly and annual comparisons put the earnings improvement in the context of higher interest income, alongside pressure on the net interest margin partly caused by a temporary increase in cash and deposits.
Net interest margin was 4.07% in the third quarter, down 19 basis points from the second quarter but 17 basis points above its level a year earlier. The company attributed most of the quarterly decline to a $205 million increase in average interest-earning cash. It said the increase pressured the margin by about 17 basis points and was linked to a temporary rise in deposits. Average deposits increased $283.8 million from the previous quarter, equivalent to 51% on an annualized basis, and rose $449.9 million, or 22%, from the third quarter of 2025. At period-end, deposits were up $290.1 million from the end of June and $562.9 million from the end of September last year. The difference between growth in average deposits and growth in the period-end balance reflects two different time comparisons reported by the bank.
Total deposits were $2.61 billion on September 30, up $290.1 million from the previous quarter. The increase included a $345.4 million rise in money market and savings deposits, including about $270 million from a temporary deposit. This was partly offset by a $55.5 million decline in nonrelationship brokered deposits. The temporary deposit means a large portion of the quarterly increase in some deposit categories was not permanent; the company said its effect extended to interest-earning cash and pressured the margin. The nature of the increase matters when reading deposit expansion alongside higher interest income, because part of it was explicitly attributed to a temporary balance. The disclosure in these results provided no other figure for when the deposit would leave, beyond describing it as temporary during the quarter.
On asset quality, nonperforming loans rose to 0.70% of total loans on September 30, compared with 0.65% at the end of June and 0.14% a year earlier. The company attributed the quarterly increase to a $1.5 million land loan being placed on nonaccrual status. The comparison shows an increase from both the previous quarter and the year-earlier level, while the bank identified a specific loan as the reason for the quarterly rise. On funding, the bank issued $30 million of new subordinated notes during the quarter, due in 2036, with a fixed rate of 7.00% for the first five years. It used part of the proceeds to repay in full $22 million of outstanding subordinated notes due in 2029. The quarter therefore included the issuance of new long-term funding and repayment of older notes, alongside growth in interest income and deposits.
AVBH shares closed at $31.70 on October 23, after closing at $30.78 on October 19, then at $31.06 on both October 20 and 21, and $31.56 on October 22. This sequence puts the stock at its highest close among the five days recorded in EL7 data. These closes came before the results announcement on October 26, so they do not represent a reported market reaction to the results. The company plans to hold a call to discuss third-quarter results on October 27 at 11 a.m. Eastern time, or 8 a.m. Pacific time. The call is scheduled to provide an opportunity to discuss the results after the disclosure, including growth in interest income and deposits, the temporary deposit’s effect on margin, and developments in nonperforming loans.