Executive Summary

Reported GAAP net loss of $37.7M (−$4.12 diluted EPS) driven by a strategic $62.4M loss on sale of AFS securities to reposition the portfolio; adjusted net income was $6.7M ($0.72 adjusted diluted EPS) .
Core profitability improved: net interest margin expanded to 3.90% (from 3.60% in Q2; 3.35% in Q3’24) on lower funding costs, higher DDA mix, and AFS portfolio repositioning .
Balance sheet strengthened by August IPO (net proceeds $61.3M) and repayment of all short-term borrowings; total risk-based capital rose to 13.48% (11.7% Tier 1) .
Versus S&P Global consensus, Primary EPS came in below ($0.72 actual vs $0.76 est.) and “Revenue” missed materially due to the one-time securities loss (−$39.6M actual vs $23.8M est.)—setting up cleaner, higher-margin run-rate into Q4 as reinvestment benefits fully flow through . Primary EPS and Revenue estimates from S&P Global: see Estimates Context.

What Went Well and What Went Wrong

What Went Well

Net interest margin expansion to 3.90% (+30 bps Q/Q; +55 bps Y/Y) on lower funding costs, higher average noninterest-bearing DDA, reduced short-term borrowings, and sale of low-yielding securities .
Capital and funding de-risking: paid off all short-term borrowings; TRBC 13.48%, CET1 11.68%; available contingent liquidity of ~$1.7B illustrated in the investor deck .
Constructive tone on forward NIM: management said margin should be “well over 4%” post-restructure, with 48% floating-rate loans and floors limiting downside as rates fall (though not one-for-one) .

Key quote: “We saw immediate benefits from this repositioning, with our margin expanding to 3.90%… The fourth quarter will include the full impact… leading to further improvements in profitability.” — CFO Patrick Oakes .

What Went Wrong

GAAP P&L dominated by $62.4M realized loss on securities sale (AFS repositioning), driving noninterest income to −$60.9M and a GAAP net loss of $37.7M .
Provision for credit losses increased to $1.4M (vs $0.9M in Q2), partly due to one new nonaccrual loan; NPLs rose to 0.14% of loans (still low) .
Expense uptick to $13.5M on higher compensation, IPO-related costs (~$0.3M), and lower capitalized loan origination costs (run-rate low $13Ms ex-IPO) .

Financial Results

P&L and Profitability (oldest → newest)

Metric	Q3 2024	Q1 2025	Q2 2025	Q3 2025
Net Interest Income ($M)	$18.61	$19.35	$20.29	$22.65
Noninterest Income ($M)	$1.79	$1.17	$1.54	($60.85)
Diluted EPS (GAAP)	$0.77	$0.71	$0.75	($4.12)
Diluted EPS – Adjusted ($)	$0.77	$0.71	$0.75	$0.72
Net Interest Margin (%)	3.35%	3.52%	3.60%	3.90%
Efficiency Ratio – Adjusted (%)	59.29%	62.57%	57.77%	55.72%
ROA (GAAP, %)	1.02%	0.96%	1.00%	(6.35)%
ROA – Adjusted (%)	1.02%	0.96%	1.00%	1.13%

Estimates vs Actuals (S&P Global)

Metric	Q1 2025	Q2 2025	Q3 2025
Primary EPS Consensus Mean	$0.62*	$0.75*	$0.76*
Primary EPS Actual	$0.71*	$0.75*	$0.72*
Revenue Consensus Mean ($)	$20.71M*	$22.45M*	$23.79M*
Revenue Actual ($)	$20.52M*	$20.90M*	($39.56)M*

Values retrieved from S&P Global.

Key Drivers (Q/Q and Y/Y)

NIM +30 bps Q/Q, +55 bps Y/Y; loan yields −3 bps Q/Q to 6.98% on lower prime, while funding costs −9 bps Q/Q; cost of deposits 2.67% (−11 bps Q/Q) .
Noninterest income reflected the one-time −$62.4M AFS loss; excluding this item, adjusted EPS was $0.72 .

Segment/KPI Details

Loan Yields & Funding Costs (Quarterly): Loan yield 6.98% (Q3) vs 7.01% (Q2); cost of interest-bearing deposits 3.50% (Q3) vs 3.54% (Q2); total deposit cost 2.67% (Q3) vs 2.78% (Q2) .
Asset Quality: NPA/Assets 0.12% (Q3) vs 0.06% (Q2); NPL/Loans 0.14%; ACL (loans+unfunded)/Loans 1.19% .
Capital: TRBC 13.48%, CET1 11.68%, Tier 1 11.68%, leverage 11.10% (Q3) .

Loan Portfolio Breakdown (End of Period)

Category ($K)	Q2 2025	Q3 2025	Q/Q Change
Commercial & Industrial	855,049	871,524	+16,475
Multifamily	241,399	249,802	+8,403
Owner-Occupied CRE	168,393	176,171	+7,778
Non-Owner-Occupied CRE	407,955	412,623	+4,668
Construction & Land	204,973	209,750	+4,777
Residential	31,560	36,399	+4,839
Other	2,389	2,316	−73
Total Loans (net of deferred fees)	1,911,718	1,958,585	+46,867

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Interest Margin (TE)	Q4 2025 and near term	Not provided	“Well over 4%… 4.10%+” post-restructure (qualitative)	Introduced (qualitative)
Securities Portfolio Size (% assets)	2H 2025	Not provided	Manage toward ~10–15% of earning assets; add ~$50–$75M in Q4 (qualitative)	Introduced (qualitative)
Noninterest Expense Run-rate	Q4 2025	Not provided	Low $13Ms ex-IPO costs (qualitative)	Introduced (qualitative)
Short-term Borrowings	Q4 2025	Some usage	Expect none post-IPO/securities actions	Lowered (de-risked)

No formal numerical guidance ranges were issued; management provided directional commentary on margin trajectory, securities portfolio, and expense run-rate .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q-2 and Q-1)	Current Period (Q3 2025)	Trend
Margin trajectory	NIM 3.52% (Q1) → 3.60% (Q2); driven by loan growth and stable funding	Repositioning drives NIM 3.90%; management expects >4% ahead	Improving
Capital/liquidity	TBV growth; build capital ahead of IPO; short-term borrowings $145M at Q2	IPO nets $61.3M; all short-term borrowings repaid; TRBC 13.48%	Strengthened
Deposit mix/cost	Q2 cost of deposits 2.78%; beta trending ~59% since Fed cuts	Q3 cost of deposits 2.67%; more DDA; aim to keep beta ~50–60% near term	Positive mix/discipline
Asset sensitivity & floors	Not detailed	~48% floating; ~13% at floors; incremental balances hit floors as rates fall	Moderately asset-sensitive, floors cushion
Credit quality	NPLs 0.07%, NPAs 0.06% in Q2	NPLs 0.14%, NPAs 0.12% (one venture credit fully reserved)	Still strong, slightly higher
Business pipelines	Healthy growth (Q1/Q2)	Strong pipelines into Q4 in fund finance, CRE, sponsor/ABL; construction payoffs abating	Constructive

Management Commentary

“The third quarter of 2025 was pivotal… we completed our successful IPO which enabled us to reposition our securities portfolio… [which] should significantly enhance our future profitability.” — CEO Mark D. Mordell .
“We saw immediate benefits… margin expanding to 3.90%… Q4 will include the full impact… leading to further improvements in profitability.” — CFO Patrick Oakes .
“It obviously should go well over 4% [margin]… 4.10% plus… depending on how things shake out.” — CEO (on NIM) .
“We fully repaid all short-term borrowings… capital ratio has improved meaningfully… total risk-based capital rising to 13.48%.” — CFO .

Q&A Highlights

Margin forward path: management indicates “well over 4%,” with September and Q4 run-rate supportive post-restructure .
Asset sensitivity and loan floors: ~48% floating; more balances hit floors with incremental cuts; benefit not strictly one-for-one as some floors may be renegotiated .
Deposit costs/beta: targeting ~50–60% beta through next cuts; Q3 total deposit cost down to 2.67% .
Growth pipelines: strongest in fund finance, CRE, sponsor/ABL; construction loan payoffs were heavy YTD but should moderate .
Expense run-rate: ex one-time IPO costs, low $13Ms expected near-term .

Estimates Context

Q3 2025 EPS vs S&P Global: $0.72 actual vs $0.76 consensus; modest miss as Street often focuses on “Primary/adjusted EPS”; GAAP EPS was −$4.12 due to $62.4M AFS loss .
Q3 2025 Revenue vs S&P Global: ($39.56)M actual vs $23.79M consensus, reflecting the one-time realized loss on securities (noninterest income −$60.85M) .
With AFS repositioning complete and borrowings repaid, Street estimates may need to raise forward NIM and core earnings run-rate assumptions while removing the Q3 charge from forward models .

Primary EPS and Revenue consensus/actual from S&P Global (see table above). Values retrieved from S&P Global.

Key Takeaways for Investors

Core earnings power improved: NIM 3.90% with management pointing to >4% ahead as full benefits of reinvestment flow through in Q4 .
One-time P&L reset (−$62.4M AFS loss) de-risks the balance sheet and collapses AOCI volatility (AFS net unrealized loss improved to ~$0.7M at 9/30) .
Funding mix better and cheaper: deposit cost down to 2.67%, average DDA up $57.7M Q/Q; no short-term borrowings outstanding at quarter-end .
Capital materially stronger (TRBC 13.48%); capacity to grow targeted verticals (fund finance, CRE, sponsor/ABL) without wholesale funding reliance .
Credit quality remains solid despite a small uptick (one venture NPA fully reserved); reserve coverage robust (ACL+unfunded 1.19%) .
Near-term trading setup: results optically weak on GAAP but constructive for forward NIM/ROA; focus on Q4 margin progression, expense discipline, and loan/deposit pipeline conversion .
Medium-term thesis: improved capital and funding, diversified engines (venture/specialty/CRE), and better AFS yields support sustainably higher core returns through the rate cycle .

Avidbank Holdings, Inc. (AVBH)·Q3 2025 Earnings Summary