Avidbank Posts Strong Q4 Growth Amid Focus on Credit Management

Avidbank Navigates Growth and Credit Challenges in Q4 2025

PALO ALTO, Calif. – Avidbank Holdings, Inc. (NASDAQ: AVBH) concluded 2025 with a quarter of significant balance sheet expansion and improved profitability, even as executives confronted a rise in problem loans during the company's fourth-quarter earnings call. The results underscore the bank's aggressive return to a growth posture following the disruptions of 2023, while highlighting the ongoing credit vigilance required in the current economic climate.

Chairman and CEO Mark Mordell characterized the period as "a real strong quarter of growth," driven largely by the sponsor finance and corporate banking divisions. "Nearly every vertical, with the exception of construction, contributed," Mordell noted, adding that deposit growth was fueled by corporate banking and venture lending teams.

The bank's net interest margin (NIM) – a key measure of lending profitability – expanded to 4.13% from 3.90% in the prior quarter. CFO Pat Oakes attributed the improvement to strong loan and core deposit growth, the full benefit of last year's IPO, and a notable decrease in funding costs. Net interest income rose to $25.0 million from $22.7 million.

However, the quarter was not without its headwinds. Mordell directly addressed what he called "the elephant in the room": an increase in non-performing assets (NPAs). The rise was concentrated on two construction loans and one sponsor finance loan. One, a $16 million mixed-use project in Palo Alto, faced delays traced back to COVID-era impacts. Management emphasized these are specific, well-collateralized situations and not indicative of a broader credit downturn, with criticized loans holding steady around $37 million.

"Based on current visibility, we do not expect losses from these specific credits," Mordell stated, though the bank set aside a $1.2 million specific reserve and saw its provision for credit losses double to $2.8 million. The interest reversal on these NPAs shaved approximately 12 basis points off the quarterly NIM, which otherwise would have approached 4.25%.

For the quarter, Avidbank reported net income of $6.9 million, or $0.65 per diluted share. Looking ahead, leadership reiterated a goal of double-digit loan and deposit growth for 2026, buoyed by a solid pipeline. Expense management remains a focus, with a quarterly run rate expected to exceed $14 million in the near term.

The earnings call painted a picture of a bank capitalizing on its post-IPO momentum to fuel expansion, yet carefully navigating the credit complexities inherent in its core markets of Silicon Valley and the San Francisco Bay Area.

Market Voices: Analyst & Investor Reactions

Eleanor Vance, Portfolio Manager at Crestline Advisors: "The underlying fundamentals here are strong—NIM expansion and core deposit growth are exactly what we want to see. The NPA issue appears contained for now. Their transparency on the specific loans and the 12-bp margin impact is reassuring. This feels like disciplined growth."

David Chen, Senior Bank Analyst at Clearwater Research: "The double-digit growth target is ambitious, especially as funding new loans may get more expensive. The construction sector softness is a regional reality, but Avidbank's concentration in sponsor finance could be a volatility amplifier if the venture capital environment cools. The efficiency ratio improvement is a definite positive."

Marcus Thorne, Independent Investor & Frequent Bank Critic: "Here we go again. 'Well-collateralized' is the mantra right before a write-down. A near-doubling of the credit loss provision and a 100% increase in NPAs in one quarter isn't a 'blip'—it's a warning flare. They're chasing growth while credit quality cracks appear. I'm not buying the 'everything is fine' narrative."

Rebecca Shaw, Small Business Owner & Avidbank Client: "As a client, their service has been exceptional. This earnings report tells me they're investing and growing, which I see as stability. The mention of higher expenses for things like FDIC assessments is just the cost of doing business in banking today. I'm more concerned about whether they'll keep lending to local businesses like mine."