# Avidia Bancorp, Inc.: Form 10-Q for the period ended Jun 30, 2025

- Company: [Avidia Bancorp, Inc.](/companies/avbc.md) (CIK 2058758)
- Form: 10-Q
- Filed: 2025-08-14
- Accepted by EDGAR: Aug 14, 2025, 16:34 ET
- Period: 2025-06-30
- Accession: 0000950170-25-108987
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/2058758/000095017025108987/avbc-20250630.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/2058758/000095017025108987/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2025-06-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Income tax | 3 months, 2025-04-01 to 2025-06-30 | $1.2m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 6 months, 2025-01-01 to 2025-06-30 | −$3.8m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2025-04-01 to 2025-06-30 | $3.9m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2025-01-01 to 2025-06-30 | −$7.7m | us-gaap:NetIncomeLoss |
| Operating cash flow | 6 months, 2025-01-01 to 2025-06-30 | −$4.6m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 6 months, 2025-01-01 to 2025-06-30 | $2.6m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Total assets | at 2025-06-30 | $2.96bn | us-gaap:Assets |
| Total liabilities | at 2025-06-30 | $2.77bn | us-gaap:Liabilities |
| Shareholders' equity | at 2025-06-30 | $191.4m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 49,607 characters.

### General

Management’s discussion and analysis is intended to enhance your understanding of our financial condition and results of operations. The financial information in this section is derived from the accompanying consolidated financial statements and related notes. You should read the financial information in this section in conjunction with the business and financial information contained in this report and in the Company’s definitive prospectus dated May 13, 2025, as filed with the Securities and Exchange Commission on May 21, 2025.

### Cautionary Note Regarding Forward-Looking Statements

This report contains forward-looking statements, which can be identified by the use of words such as “estimate,” “project,” “believe,” “intend,” “anticipate,” “assume,” “plan,” “seek,” “expect,” “will,” “may,” “should,” “indicate,” “would,” “believe,” “contemplate,” “continue,” “target” and words of similar meaning. These forward-looking statements include, but are not limited to:

- statements of our goals, intentions and expectations;
- statements regarding our business plans, prospects, growth and operating strategies;
- statements regarding the quality of our loan portfolio; and
- estimates of our risks and future costs and benefits.

These forward-looking statements are based on our current beliefs and expectations and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change.

The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements:

- general economic conditions, either nationally or in our market areas, that are worse than expected including as a result of employment levels and labor shortages, and the effects of inflation, a potential recession or slowed economic growth caused by supply chain disruptions or otherwise;
- inflation and changes in the interest rate environment that reduce our margins and yields, our mortgage banking revenues, the fair value of financial instruments, including our mortgage servicing rights asset, or our level of loan originations, or increases in the level of defaults, losses and prepayments on loans we have made and make;
- changes in the level and direction of loan delinquencies and write-offs and changes in estimates of the adequacy of the allowance for credit losses;
- changes in liquidity, including the size and composition of our deposit portfolio, including the percentage of uninsured deposits in the portfolio;
- our ability to access cost-effective funding;
- fluctuations in real estate values and both residential and commercial real estate market conditions;
- demand for loans and deposits in our market area;
- our ability to implement and change our business strategies;
- competition among depository and other financial institutions;
- adverse changes in the securities or secondary mortgage markets;
- changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory fees, capital requirements and insurance premiums;
- changes in the quality or composition of our loan or investment portfolios;
- technological changes that may be more difficult or expensive than expected;
- the inability of third-party providers to perform as expected;
- losses suffered by merchants or Independent Sales Organizations (ISOs) with whom we do business in connection with our payments processing activities;
- our ability to effectively manage risks related to our payments processing activities;
- a failure or breach of our operational or security systems or infrastructure, including cyberattacks;
- our ability to manage market risk, credit risk and operational risk;
- our ability to enter new markets successfully and capitalize on growth opportunities;
- changes in consumer spending, borrowing and savings habits;
- changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board, the SEC or the Public Company Accounting Oversight Board;
- our ability to attract and retain key employees; and
- changes in the financial condition, results of operations or future prospects of issuers of securities that we own.

Because of these and a wide variety of other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements. Except as required by applicable law or regulation, the Company assumes no obligation and disclaims any obligation to update any forward-looking statements.

### Critical Accounting Policies and Use of Critical Accounting Estimates

The discussion and analysis of the financial condition and results of operations are based on our consolidated financial statements, which are prepared to conform with U.S. GAAP. The preparation of these consolidated financial statements requires management to make estimates and assumptions affecting the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and the reported amounts of income and expenses. We consider the accounting policy discussed below to be our critical accounting policy. The estimates and assumptions that we use are based on historical experience and various other factors and are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions, resulting in a change that could have a material impact on the carrying value of our assets and liabilities and our results of operations.

The Jumpstart Our Business Startups Act of 2012 contains provisions that, among other things, reduce certain reporting requirements for qualifying public companies. As an “emerging growth company” we may delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. We have elected to take advantage of the benefits of this extended transition period. Accordingly, our consolidated financial statements may not be comparable to companies that comply with such new or revised accounting standards.

We consider the following accounting policies to be our critical accounting policies:

***Allowance for Credit Losses.*** The allowance for credit losses (“ACL”) is a valuation account that is deducted from the loans’ amortized cost basis to present the net amount expected to be collected on the loans. Loans are charged off against the allowance when management believes the uncollectibility of a loan balance is confirmed. Expected recoveries do not exceed the aggregate of amounts previously charged-off and expected to be charged-off. Management evaluates the appropriateness of the ACL on loans quarterly. This evaluation is inherently subjective as it requires material estimates that may be susceptible to significant change from period to period.

Management estimates the allowance balance using relevant available information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. A reversion methodology is applied beyond the reasonable and supportable forecasts. Qualitative adjustments are then considered for differences in current loan-specific risk characteristics, such as differences in underwriting standards, portfolio mix, delinquency level, or term as well as for changes in environmental conditions, such as changes in unemployment rates, property values, or other relevant factors, that may include, but are not limited to, results of internal loan reviews, examinations by bank regulatory agencies, or other such events such as a natural disaster. The ACL on loans represents our estimated risk of loss within its loan portfolio as of the reporting date. To appropriately measure expected credit losses, management disaggregates the loan portfolio into pools of similar risk characteristics.

Management may also adjust its assumptions to account for differences between expected and actual losses from period-to-period. The variability of management’s assumptions could alter the ACL on loans materially and impact future results of operations and financial condition. The loss estimation models and methods used to determine the ACL are continually refined and enhanced.

***Off-Balance Sheet Credit Exposures.*** In the ordinary course of business, we enter into commitments to extend credit, including commercial letters of credit and standby letters of credit. Such financial instruments are recorded as loans when they are funded. We estimate expected credit losses over the contractual period in which we are exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by us. The ACL on off-balance sheet credit exposures is adjusted through credit loss expense. To appropriately measure expected credit losses, management disaggregates the off-balance sheet credit exposures into similar risk characteristics, identical to those determined for the loan portfolio. An estimated funding rate is then applied to the qualifying unfunded loan commitments and letters of credit using historical information or industry benchmarks provided by a reputable and independent source, to estimate the expected funded amount for each loan segment as of the reporting date. Once the expected funded amount for each loan segment is determined, the loss rate, which is the calculated expected loan loss as a percent of the amortized cost basis for each loan segment, is applied to calculate the ACL on off-balance sheet credit exposures as of the reporting date.

***Securities Valuation and Allowance for Credit Loss.*** Debt securities that management has the positive intent and ability to hold to maturity are classified as “held to maturity” and recorded at amortized cost. Debt securities not classified as held to maturity are classified as “available for sale” and recorded at fair value, with unrealized gains and losses excluded from earnings and reported in other comprehensive income (loss), net of tax. For available for sale debt securities in an unrealized loss position, we first assesses whether we intend to sell, or it is more likely than not that we will be required to sell the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through income. For available for sale debt securities that do not meet the aforementioned criteria, we evaluate whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an ACL is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. Any impairment that has not been recorded through an ACL is recognized in other comprehensive income.

Changes in the ACL are recorded as credit loss expense (or reversal). Losses are charged against the allowance when management believes the uncollectibility of an available for sale debt security is confirmed or when either of the criteria regarding intent or requirement to sell is met.

Management measures expected credit losses on held to maturity debt securities on an individual basis by major security types that share similar risk characteristics, which may include, but is not limited to, credit ratings, financial asset type, collateral type, size, effective interest rate, term, geographical location, industry, and vintage. Management classifies the held to maturity portfolio into the following major security types: subordinated debt and corporate bonds. We invest in subordinated debt issued only by financial institutions.

The estimate of expected credit losses considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. Given the rarity of subordinated debt and corporate bond defaults and losses, we utilize external third-party financial analysis models as the sole source of default and loss rates. Management may exercise discretion to make adjustments based on various qualitative factors. Changes in the ACL are recorded as credit loss expense (or reversal). A held to maturity debt security is written-off in the period in which a determination is made that all or a portion of the financial asset is uncollectible. Any previously recorded allowance, if any, is reversed and then the amortized cost basis is written down to the amount deemed to be collectible, if any.

***Income Taxes.*** We use the asset and liability (or balance sheet) method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Deferred tax assets are reduced by a valuation allowance when it is more likely than not that some portion of the deferred tax asset will not be realized. We exercise significant judgment in evaluating the amount and timing of recognition of the resulting tax liabilities and assets. These judgments may require us to make projections of future taxable income and/or to carryback to taxable income in prior years. The judgments and estimates we make in determining our deferred tax assets, which are inherently subjective, are reviewed on a continual basis as regulatory and business factors change. Any reduction in estimated future taxable income may require us to record a valuation allowance against our deferred tax assets.

***Goodwill.*** Goodwill is recognized when the fair value of consideration transferred in an acquisition is greater than the fair value of assets acquired and liabilities assumed. Goodwill has an indefinite useful life and is evaluated on at least an annual basis for potential impairment, and more often if circumstances warrant more frequent evaluations. An impairment loss is recognized to the extent that the carrying value exceeds fair value. Significant judgment and assumptions are utilized by management in the impairment analysis. Avidia Bank was created by a merger between Hudson Savings Bank and The Westborough Savings Bank in 2007. Goodwill of $11.9 million resulting from the merger is not amortized but is evaluated for impairment on an annual basis. Impairment of goodwill is recognized in earnings. As of June 30, 2025, no impairment has been recognized.

***Mortgage Servicing Rights.*** Servicing rights are recognized as separate assets when rights are acquired through sale of financial assets and recorded at fair value. Fair value is determined using prices for similar assets with similar characteristics, when available, or based upon discounted cash flows using market-based assumptions. Changes in fair value are reported in mortgage banking income.

### Comparison of Financial Condition at June 30, 2025 and December 31, 2024

***Total Assets.*** Total assets increased $301.4 million, or 11.3%, to $2.96 billion at June 30, 2025 from $2.66 billion at December 31, 2024. The increase was primarily the result of increases in cash and cash equivalents and in net loans.

***Cash and Cash Equivalents.*** Cash and short-term investments increased $246.1 million, or 394.2%, to $308.6 million at June 30, 2025 from $62.4 million at December 31, 2024. The increase was primarily related to the funds received from the IPO subscription offering.

***Securities Available for Sale.*** Securities available for sale increased $316 thousand, or 0.1%, to $266.2 million at June 30, 2025 from $265.9 million at December 31, 2024. During the first half of 2025, $8.9 million in securities were sold at a net loss of $619 thousand.

***Federal Home Loan Bank Stock.*** Federal Home Loan Bank stock decreased $2.6 million, or 18%, to $12.1 million at June 30, 2025 from $14.7 million at December 31, 2024. The amount of stock we are required to own is in proportion to our Federal Home Loan Bank borrowings and our total assets.

***Net Loans.*** Net loans increased $48.1 million, or 2.2%, to $2.22 billion at June 30, 2025 from $2.18 billion at December 31, 2024. Loan growth from December 31, 2024 to June 30, 2025 related to increases in commercial real estate loans of $28.4 million, or 5.9%, home equity and second mortgages of $8.1 million, or 12.2%, multi-family real estate loans of $7.9 million, or 9.5%, one to four family residential mortgage loans of $2.6 million, or 0.5%, and commercial and industrial loans of $2.5 million, or 0.5%.

This loan growth was partially offset by a decrease from December 31, 2024 to June 30, 2025 of $517 thousand, or 10.2% in consumer loans.

The growth in loans reflects our strategy to grow the balance sheet by continuing to diversify into higher-yielding loans to improve net margins and manage interest rate risk.

***Bank-owned Life Insurance.*** We invest in bank-owned life insurance to help offset the costs of our employee benefit plan obligations. Bank-owned life insurance also generally provides noninterest income that is non-taxable. Bank-owned life insurance increased $567 thousand, or 1.6%, to $36.1 million at June 30, 2025 from $35.5 million at December 31, 2024. The increase was primarily due to an increase in the cash surrender value of existing policies.

***Deposits.*** Deposits increased $376.4 million, or 18.2%, to $2.44 billion at June 30, 2025 from $2.06 billion at December 31, 2024. Core deposits (which we define as all deposits, other than certificates of deposit and brokered deposits) increased $428.5 million, or 25.6%, to $2.10 billion at June 30, 2025 from $1.67 billion at December 31, 2024. The increase was primarily related to the funds received from the IPO subscription offering and growth in most core deposits categories during the period with a $399.0 million, or 58.4%, increase in interest-bearing checking accounts, a $25.4 million, or 6.6%, increase in regular and other savings accounts, a $18.4 million, or 7.3%, increase in money market accounts, offset by a $14.2 million, or 4.0%, decrease in non-interest bearing checking. Certificates of deposit (excluding brokered certificates of deposit) decreased $37.1 million, or 10.2%, to $326.4 million at June 30, 2025 from $363.6 million at December 31, 2024. Brokered deposits decreased $15.0 million to $12.0 million at June 30, 2025 from $27.0 million from December 31, 2024.

***Federal Home Loan Bank Advances.*** Advances decreased $65.0 million, or 20.0%, to $260.0 million at June 30, 2025 from $325.0 million at December 31, 2024 due to repayment of advances.

***Total Capital.*** Total capital decreased $2.4 million, or 1.2%, to $191.4 million at June 30, 2025 from $193.8 million at December 31, 2024, due to a net loss of $7.7 million for the six months ended June 30, 2025, offset by a decrease in accumulated other comprehensive loss of $5.3 million. The decrease in accumulated other comprehensive loss was primarily due to the impact of the lower market interest rate environment on our unrealized loss on securities available for sale and interest rate swaps.

***Average Balances and Yields.*** The following table sets forth average balance sheets, average yields and costs, and certain other information for the periods indicated. Yields on tax-exempt securities have not been computed on a tax-equivalent basis, as the effects are immaterial. Average balances are calculated using daily average balances. Non-accrual loans are included in average balances only. Average yields include the effect of deferred fees, discounts, and premiums that are amortized or accreted to interest income or interest expense. Deferred loan fees are immaterial. Loan balances include loans held for sale.

*(Dollars in thousands)*

| Interest-earning assets: | For the Three Months Ended June 30, 2025 Average Outstanding Balance | Interest | Average Yield/Rate | 2024 Average Outstanding Balance | Interest | Average Yield/Rate |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Cash and short-term investments | $67,357 | $421 | 2.51% | $49,032 | $568 | 4.66% |
| Securities | 296,321 | 2,555 | 3.46 | 352,204 | 2,833 | 3.24 |
| Loans | 2,229,893 | 28,883 | 5.20 | 2,140,977 | 27,492 | 5.16 |
| Total interest-earning assets | 2,593,571 | 31,859 | 4.93 | 2,542,213 | 30,893 | 4.89 |
| Noninterest-earning assets | 122,176 |  |  | 104,623 |  |  |
| Total assets | $2,715,747 |  |  | $2,646,836 |  |  |
| **Interest-bearing liabilities:** |  |  |  |  |  |  |
| NOW accounts | $697,452 | 700 | 0.40% | $605,633 | 737 | 0.49% |
| Money market accounts | 270,969 | 848 | 1.26 | 299,203 | 1,117 | 1.50 |
| Regular and other savings accounts | 401,215 | 2,278 | 2.28 | 348,440 | 2,231 | 2.58 |
| Certificates of deposit | 347,419 | 3,416 | 3.94 | 371,674 | 4,200 | 4.54 |
| Total interest-bearing deposits | 1,717,055 | 7,242 | 1.69 | 1,624,950 | 8,285 | 2.05 |
| Federal Home Loan Bank advances | 333,834 | 3,647 | 4.38 | 362,083 | 3,985 | 4.43 |
| Subordinated debt | 27,782 | 352 | 5.08 | 27,592 | 315 | 4.59 |
| Total interest-bearing liabilities | 2,078,671 | 11,241 | 2.17 | 2,014,625 | 12,585 | 2.51 |
| Noninterest-bearing demand deposits | 415,035 |  |  | 388,380 |  |  |
| Other noninterest-bearing liabilities | 33,242 |  |  | 43,526 |  |  |
| Total liabilities | 2,526,948 |  |  | 2,446,531 |  |  |
| Total capital | 188,799 |  |  | 200,305 |  |  |
| Total liabilities and capital | $2,715,747 |  |  | $2,646,836 |  |  |
| Net interest income |  | $20,618 |  |  | $18,308 |  |
| Net interest rate spread (1) |  |  | 2.76% |  |  | 2.38% |
| Net interest-earning assets (2) | $514,900 |  |  | $525,223 |  |  |
| Net interest margin (3) |  |  | 3.19% |  |  | 2.90% |
| Average interest-earning assets to interest-bearing liabilities |  |  | 124.77% |  |  | 126.19% |

(1) Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate of interest-bearing liabilities.

(2) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.

(3) Net interest margin represents net interest income divided by average total interest-earning assets.

*(Dollars in thousands)*

| Interest-earning assets: | For the Six Months Ended June 30, 2025 Average Outstanding Balance | Interest | Average Yield/Rate | 2024 Average Outstanding Balance | Interest | Average Yield/Rate |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Cash and short-term investments | $52,314 | $636 | 2.45% | $47,081 | $1,038 | 4.43% |
| Securities | 300,168 | 5,206 | 3.50 | 342,177 | 4,953 | 2.91 |
| Loans | 2,222,464 | 57,067 | 5.18 | 2,136,326 | 54,750 | 5.15 |
| Total interest-earning assets | 2,574,946 | 62,909 | 4.93 | 2,525,584 | 60,741 | 4.84 |
| Noninterest-earning assets | 116,726 |  |  | 103,380 |  |  |
| Total assets | $2,691,672 |  |  | $2,628,964 |  |  |
| **Interest-bearing liabilities:** |  |  |  |  |  |  |
| NOW accounts | $693,753 | 1,407 | 0.41% | $600,102 | 1,493 | 0.50% |
| Money market accounts | 268,184 | 1,690 | 1.27 | 306,137 | 2,273 | 1.49 |
| Regular and other savings accounts | 392,166 | 4,376 | 2.25 | 315,281 | 3,821 | 2.44 |
| Certificates of deposit | 367,373 | 7,500 | 4.12 | 364,511 | 8,285 | 4.57 |
| Total interest-bearing deposits | 1,721,476 | 14,973 | 1.75 | 1,586,031 | 15,872 | 2.01 |
| Federal Home Loan Bank advances | 337,016 | 7,439 | 4.45 | 372,789 | 8,344 | 4.50 |
| Subordinated debt | 27,891 | 667 | 4.82 | 27,575 | 630 | 4.59 |
| Total interest-bearing liabilities | 2,086,383 | 23,079 | 2.23 | 1,986,395 | 24,846 | 2.52 |
| Noninterest-bearing demand deposits | 375,739 |  |  | 391,606 |  |  |
| Other noninterest-bearing liabilities | 39,167 |  |  | 48,478 |  |  |
| Total liabilities | 2,501,289 |  |  | 2,426,479 |  |  |
| Total capital | 190,383 |  |  | 202,485 |  |  |
| Total liabilities and capital | $2,691,672 |  |  | $2,628,964 |  |  |
| Net interest income |  | $39,830 |  |  | $35,895 |  |
| Net interest rate spread (1) |  |  | 2.70% |  |  | 2.32% |
| Net interest-earning assets (2) | $488,563 |  |  | $539,189 |  |  |
| Net interest margin (3) |  |  | 3.12% |  |  | 2.86% |
| Average interest-earning assets to interest-bearing liabilities |  |  | 123.42% |  |  | 127.14% |

(1) Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate of interest-bearing liabilities.

(2) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.

(3) Net interest margin represents net interest income divided by average total interest-earning assets.

### Comparison of Operating Results for the Three and Six Months Ended June 30, 2025 and 2024

***Net Loss/Income.*** Net income for the three months ended June 30, 2025 was $3.9 million, compared to net income of $2.4 million for the three months ended June 30, 2024, an increase of $1.5 million. The increase was primarily due to a $2.3 million increase in net interest income, $1.8 million increase in non-interest income, partially offset by a $1.4 million increase in credit loss expense for credit losses and $800 thousand increase in non-interest expense.

Net loss for the six months ended June 30, 2025 was $7.7 million, compared to net income of $5.9 million for the six months ended June 30, 2024, a decrease of $13.6 million. The decrease was primarily due to a $18.4 million increase in the credit loss expense, a $4.5 million increase in non-interest expense, and a $370 thousand decrease in non-interest income, partially offset by a $3.9 million increase in net interest income.

***Interest and Dividend Income.*** Interest and dividend income increased $1.0 million, or 3.1%, to $31.9 million for the three months ended June 30, 2025, from $30.9 million for the three months ended June 30, 2024, primarily due to a $1.4 million increase in interest on loans. The increase in interest on loans resulted primarily from an increase of $88.9 million in the average balance of loans to $2.23 billion for the three months ended June 30, 2025 from $2.14 billion for the three months ended June 30, 2024. The weighted average yield on loans increased to 5.20% for the three months ended June 30, 2025 compared to 5.16% for the three months ended June 30, 2024.

Interest and dividend income increased $2.2 million, or 3.6%, to $62.9 million for the six months ended June 30, 2025, from $60.7 million for the six months ended June 30, 2024, primarily due to a $2.3 million increase in interest on loans. The increase in interest on loans resulted primarily from an increase of $86.1 million in the average balance of loans to $2.22 billion for the six months ended June 30, 2025 from $2.14 billion for the six months ended June 30, 2024. The weighted average yield on loans increased to 5.18% for the six months ended June 30, 2025 compared to 5.15% for the six months ended June 30, 2024.

Average interest-earning assets increased $51.4 million, to $2.59 billion for the three months ended June 30, 2025, from $2.54 billion for the three months ended June 30, 2024. The yield on interest-earning assets increased to 4.93% for the three months ended June 30, 2025, from 4.89% for the three months ended June 30, 2024.

Average interest-earning assets increased $49.4 million, to $2.57 billion for the six months ended June 30, 2025, from $2.53 billion for the six months ended June 30, 2024. The yield on interest-earning assets increased to 4.93% for the six months ended June 30, 2025, from 4.84% for the six months ended June 30, 2024.

***Interest Expense.*** Total interest expense decreased $1.3 million, or 10.7%, to $11.2 million for the three months ended June 30, 2025, from $12.6 million for the three months ended June 30, 2024. Interest expense on deposit accounts decreased $1.0 million, or 12.6%, to $7.2 million for the three months ended June 30, 2025, from $8.3 million for the three months ended June 30, 2024, due to a decrease in the weighted average rate on interest-bearing deposits to 1.69% for the three months ended June 30, 2025, from 2.05% for the three months ended June 30, 2024. Interest expense on Federal Home Loan Bank advances decreased $338 thousand, or 8.5%, to $3.6 million for the three months ended June 30, 2025, from $4.0 million for the three months ended June 30, 2024, due to a decrease in the average advances of $28.2 million between periods.

Total interest expense decreased $1.8 million, or 7.1%, to $23.1 million for the six months ended June 30, 2025, from $24.8 million for the six months ended June 30, 2024. Interest expense on Federal Home Loan Bank advances decreased $905 thousand, or 10.8%, to $7.4 million for the six months ended June 30, 2025, from $8.3 million for the six months ended June 30, 2024, due to a decrease in the average advances of $35.8 million between periods. Interest expense on deposit accounts decreased $900 thousand, or 5.7%, to $15.0 million for the six months ended June 30, 2025, from $15.9 million for the six months ended June 30, 2024, due to a decrease in the weighted average rate on interest-bearing deposits to 1.75% for the six months ended June 30, 2025, from 2.01% for the six months ended June 30, 2024.

***Net Interest Income.*** Net interest income increased $2.3 million, or 12.6%, to $20.6 million for the three months ended June 30, 2025, from $18.3 million for the three months ended June 30, 2024, primarily due to an increase in net interest margin to 3.19% for the three months ended June 30, 2025, from 2.90% for the three months ended June 30, 2024 and a $51.4 million increase in the average balance of interest-earning assets during the three months ended June 30, 2025. Net interest rate spread increased to 2.76%, for the three months ended June 30, 2025, compared to 2.38% for the three months ended June 30, 2024. The increase in net interest margin and spread was driven by an increase in the weighted average yield on interest earning assets combined with a decrease in the weighted average rate paid on interest-bearing liabilities to 2.17% for the three months ended June 30, 2025, from 2.51% for the three months ended June 30, 2024.

Net interest income increased $3.9 million, or 11.0%, to $39.8 million for the six months ended June 30, 2025, from $35.9 million for the six months ended June 30, 2024, primarily due to an increase in net interest margin to 3.12% for the six months ended June 30, 2025, from 2.86% for the six months ended June 30, 2024 and $49.4 million increase in the average balance of interest-earning assets during the six months ended June 30, 2025. Net interest rate spread increased to 2.70%, for the six months ended June 30, 2025, compared to 2.32% for the six months ended June 30, 2024. The increase in net interest margin and spread was driven by an increase in the weighted average yield on interest earning assets combined with a decrease in the weighted average rate paid on interest-bearing liabilities to 2.23% for the six months ended June 30, 2025, from 2.52% for the six months ended June 30, 2024.

***Allowance for Credit Losses.*** Based on management’s analysis of the adequacy of allowance for credit losses, a credit loss expense of $1.1 million was recorded for the three months ended June 30, 2025, compared to a credit loss reversal of $320 thousand for the three months ended June 30, 2024.

A credit loss expense of $18.7 million was recorded for the six months ended June 30, 2025, compared to a provision of $310 thousand for the six months ended June 30, 2024. The $18.4 million increase is primarily due to the $16.7 million charge-off in the first quarter related to a land loan, as previously disclosed.

***Non-interest Income.*** Non-interest income increased $1.8 million, or 52.3%, to $5.2 million for the three months ended June 30, 2025, from $3.4 million for the three months ended June 30, 2024. The increase was primarily due to the $1.3 million decrease in net loss on securities available for sale, from a loss of $78 thousand for the three months ended June 30,

2025, compared to a $1.4 million loss for the three months ended June 30, 2024. Non-interest income was also impacted by a $281 thousand increase in payment processing income, $193 thousand increase in commercial loan fees and $143 thousand increase in swap fees for the three months ended June 30, 2025.

Non-interest income decreased $370 thousand, or 4.0%, to $9.0 million for the six months ended June 30, 2025, from $9.3 million for the six months ended June 30, 2024. The decrease was primarily due to a $1.6 million decrease in net gains on equity securities, from no gains for the six months ended June 30, 2025, compared to a $1.6 million gain for the six months ended June 30, 2024. The decrease was also due to a $747 thousand decrease in net loss on securities available for sale, from losses of $619 thousand for the six months ended June 30, 2025, compared to a $1.4 million loss for the six months ended June 30, 2024. Non-interest income was also impacted by a $356 thousand write-down of equipment no longer in use and a $498 thousand decrease in the valuation of mortgage servicing rights for the six months ended June 30, 2025, compared to June 30, 2024, resulting from a decline in market interest rates. This was partially offset by a $611 thousand increase in payment processing income and a $250 thousand gain on the sale of the Direct Merchant Processing Book for the six months ended June 30, 2025.

***Non-interest Expense.*** Non-interest expense increased $800 thousand, or 4.2%, to $19.8 million for the three months ended June 30, 2025, from $19.0 million for the three months ended June 30, 2024. Data processing costs increased $776 thousand, or 35.0%, primarily due to the new on-line banking platform, increased account volume and licensing costs. All other non-interest expenses increased $24 thousand, or 0.1%, to $16.8 million for the three months ended June 30, 2025, from $16.7 million for the three months ended June 30, 2024, due to higher salaries and employee benefits, higher consulting expenses, and lower occupancy and equipment expense.

Non-interest expense increased $4.5 million, or 12.2%, to $41.6 million for the six months ended June 30, 2025, from $37.1 million for the six months ended June 30, 2024. Salary and employee benefit expenses increased $3.2 million, or 18.3%, primarily due to a $756 thousand increase in the long-term incentive expense which was primarily the result of the termination of the plan and immediate vesting of participants, a $1.3 million increase in short-term incentives, payroll taxes and retirement expenses, and a $879 thousand increase in salaries. Data processing costs increased $1.9 million, or 44.1%, primarily due to a new on-line banking platform, increased account volume and licensing costs, and one-time expenses of $379 thousand related to contract terminations. All other non-interest expenses decreased $580 thousand, or 3.8%, to $14.7 million for the six months ended June 30, 2025, from $15.3 million for the six months ended June 30, 2024, due to lower occupancy and equipment expense and the sale of the credit card portfolio.

***Income Tax Benefit/Expense.*** Income tax expense was $1.2 million for the three months ended June 30, 2025, compared to an income tax expense of $759 thousand for the three months ended June 30, 2024. The effective tax rate was 23.0% and 24.4% for the three months ended June 30, 2025, and June 30, 2024, respectively.

Income tax benefit was $3.8 million for the six months ended June 30, 2025, compared to an income tax expense of $2.0 million for the six months ended June 30, 2024. The effective tax rate was 32.8% and 25.1% for the six months ended June 30, 2025, and June 30, 2024, respectively.

### Liquidity and Capital Resources

Liquidity describes our ability to meet the financial obligations that arise in the ordinary course of business. Liquidity is primarily needed to meet the borrowing and deposit withdrawal requirements of our customers and to fund current and planned expenditures. Our primary sources of funds are deposits, principal and interest payments on loans and securities, and proceeds from maturities of securities. In addition, we have available credit facilities with the Federal Home Loan Bank of Boston, correspondent banks, and the Federal Reserve Bank of Boston. At June 30, 2025, we had the ability to borrow $680.4 million from the Federal Home Loan Bank of Boston, of which $260.0 million was outstanding. At June 30, 2025, we also had a $500 thousand line of credit with the Federal Home Loan Bank of Boston with no borrowings outstanding. At June 30, 2025, we had $18.0 million of available lines of credit with correspondent banks with no borrowings outstanding under any of them. At June 30, 2025, we also had aggregate available borrowing capacity of $324.1 million through the discount window and the borrower-in-custody program at the Federal Reserve Bank of Boston with no borrowings under either facility.

While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows and loan prepayments are greatly influenced by interest rates, economic conditions, and competition. Our most liquid assets are cash and short-term investments. The levels of these assets depend on our operating, financing, lending, and investing activities during any given period.

Our cash flows are comprised of three primary classifications: cash flows from operating activities, cash flows from investing activities, and cash flows from financing activities. See the accompanying Consolidated Statements of Cash Flows for further information.

We are committed to maintaining a strong liquidity position. We monitor our liquidity position daily. We anticipate that we will have sufficient funds to meet our current funding commitments. Based on our deposit retention experience and current pricing strategy, we anticipate that a significant portion of maturing time deposits will be retained. The net proceeds from the stock offering will significantly increase our liquidity.

At June 30, 2025, Avidia Bank exceeded all of its regulatory capital requirements and was categorized as well-capitalized at that date. Management is not aware of any conditions or events since the most recent notification of well-capitalized status that would change this categorization.

### Off-Balance Sheet Arrangements and Aggregate Contractual Obligations

***Commitments.*** As a financial services provider, we routinely are a party to various financial instruments with off-balance-sheet risks, such as commitments to extend credit and unused lines of credit. While these contractual obligations represent our future cash requirements, a significant portion of commitments to extend credit may expire without being drawn upon. We anticipate that we will have sufficient funds available to meet our current lending commitments. At June 30, 2025, off-balance sheet commitments totaled $426.9 million.

***Contractual Obligations.*** In the ordinary course of business, we enter into certain contractual obligations, including operating leases for premises and equipment, among others.

### Management of Market Risk

***General.*** Our most significant form of market risk is interest rate risk because, as a financial institution, the majority of our assets and liabilities are sensitive to changes in market interest rates. Therefore, a principal part of our operations is to manage interest rate risk and limit the exposure of our financial condition and results of operations to changes in market interest rates. Our Asset Liability Committee is responsible for evaluating the interest rate risk inherent in our assets and liabilities, for determining the level of risk that is appropriate given our business strategy, operating environment, capital, liquidity and performance objectives, and for managing this risk according to the policy and guidelines approved by our board of directors. The Asset Liability Committee meets at least quarterly, is comprised of executive officers and certain senior management, and reports to the full board of directors on at least a quarterly basis. We currently utilize a third-party modeling program, prepared on a quarterly basis, to evaluate our sensitivity to changing interest rates, given our business strategy, operating environment, capital, liquidity and performance objectives, and for managing this risk consistent with the guidelines approved by the board of directors.

We seek to manage our interest rate risk in order to minimize the exposure of our earnings and capital to changes in interest rates. We have implemented the following strategies to manage our interest rate risk:

- maintaining capital levels that exceed the thresholds for well-capitalized status under applicable regulations;
- maintaining a prudent level of liquidity;
- growing our volume of low-cost core deposit accounts;
- using our investment securities portfolio and interest rate swaps as part of our balance sheet asset and liability and interest rate risk management strategy to reduce the impact of market interest rate movements on net interest income and economic value of equity;
- using wholesale funding, in the form of Federal Home Loan Bank advances and brokered deposits in a prudent manner;
- continuing to diversify our loan portfolio by seeking to grow commercial-related loans, which typically have shorter maturities; and
- continuing to sell long term, fixed-rate one-to-four family residential mortgage loans in the secondary market while retaining adjustable-rate one-to-four family residential mortgage loans in our loan portfolio.

Shortening the average term of our interest-earning assets by increasing our investments in shorter-term assets, as well as originating loans with variable interest rates, helps to match the maturities and interest rates of our assets and liabilities better, thereby reducing the exposure of our net interest income to changes in market interest rates.

***Interest Rate Swaps.*** We employ various financial risk methodologies that limit, or “hedge,” the adverse effects of increasing or decreasing market interest rates on our investment portfolio, loan portfolio and short-term liabilities, such as Federal Home Loan Bank advances. At June 30, 2025, we had interest rate swaps related to Federal Home Loan Bank advances with a notional amount of $100.0 million and interest rate swaps on agency securities with a notional amount of $35.0 million. We also engage in hedging strategies with respect to arrangements where our commercial banking customers swap floating interest rate obligations for fixed interest rate obligations, or vice versa. At June 30, 2025, we had interest rate swaps related to customer loans of a notional amount of $105.3 million. Our hedging activity varies based on the level and volatility of interest rates and other changing market conditions.

***Change in Net Interest Income.*** We analyze our sensitivity to changes in interest rates through a net interest income model. Net interest income is the difference between the interest income we earn on our interest-earning assets, such as loans and securities, and the interest we pay on our interest-bearing liabilities, such as deposits and borrowings.

The following table sets forth, as of June 30, 2025, the calculation of the estimated changes in our net interest income that would result from the designated immediate changes in the United States Treasury yield curve. The changes indicated in the following table are within policy guidelines adopted by the board of directors.

*(Dollars in thousands)*

| June 30, 2025 Change in Interest Rates (basis points) (1) | Net Interest Income Year 1 Forecast Year 1 Change from Level |
| ---: | ---: |
| 400 | $95,799 (5.7)% |
| 300 | 97,388 (4.1)% |
| 200 | 98,905 (2.6)% |
| 100 | 100,375 (1.2)% |
| Level | 101,589% |
| (100) | 99,517 (2.0)% |
| (200) | 97,178 (4.3)% |
| (300) | 94,598 (6.9)% |
| (400) | 92,524 (8.9)% |

(1) Assumes an immediate uniform change in interest rates at all maturities. One hundred basis points equals 1.00%.

The table above indicates that at June 30, 2025, we would have experienced a 2.6% decrease in net interest income in the event of an instantaneous parallel 200 basis point increase in market interest rates and a 4.3% decrease in net interest income in the event of an instantaneous 200 basis point decrease in market interest rates.

***Economic Value of Equity.*** We also compute amounts by which the net present value of our assets and liabilities (economic value of equity or “EVE”) would change in the event of a range of assumed changes in market interest rates. This model uses a discounted cash flow analysis and an option-based pricing approach to measure the interest rate sensitivity of net portfolio value. The model estimates the economic value of each type of asset, liability and off-balance sheet contract under the assumptions that the United States Treasury yield curve increases instantaneously by 100, 200, 300 and 400 basis point increments or decreases instantaneously by 100 or 200 basis point increments, with changes in interest rates representing immediate and permanent, parallel shifts in the yield curve.

The following table sets forth, as of June 30, 2025, the calculation of the estimated changes in our EVE that would result from the designated immediate changes in the United States Treasury yield curve. The changes indicated in the following table are within policy guidelines adopted by our board of directors.

*June 30, 2025*

*(Dollars in thousands)*

| Change in Interest Rates (basis points) (1) | Estimated EVE (2) | Estimated Increase (Decrease) in EVE Amount | Percent | EVE as a Percentage of Present Value of Assets (3) EVE Ratio (4) | Increase (Decrease) (basis points) |
| ---: | ---: | ---: | ---: | ---: | ---: |
| 400 | $293,399 | $(97,165) | (24.9)% | 11.8% | -228 |
| 300 | 320,584 | (69,980) | (17.9)% | 12.5% | -153 |
| 200 | 346,424 | (44,140) | (11.3)% | 13.1% | -89 |
| 100 | 370,364 | (20,200) | (5.2)% | 13.7% | -36 |
| Level | 390,564 | - | 0% | 14.0% | - |
| (100) | 395,510 | 4,946 | 1.3% | 13.8% | -19 |
| (200) | 387,089 | (3,475) | (0.9)% | 13.2% | -81 |
| (300) | 369,819 | (20,745) | (5.3)% | 12.3% | -171 |
| (400) | 318,333 | (72,231) | (18.5)% | 10.5% | -357 |

(1) Assumes an immediate uniform change in interest rates at all maturities. One hundred basis points equals 1.00%.

(2) EVE is the discounted present value of expected cash flows from assets, liabilities and off-balance sheet contracts.

(3) Present value of assets represents the discounted present value of incoming cash flows on interest-earning assets.

(4) EVE Ratio represents EVE divided by the present value of assets.

The table above indicates that at June 30, 2025, we would have experienced a 11.3% decrease in EVE in the event of an instantaneous parallel 200 basis point increase in market interest rates and a 0.9% decrease in EVE in the event of an instantaneous 200 basis point decrease in market interest rates.

Certain shortcomings are inherent in the methodologies used in the above interest rate risk measurements. Modeling changes require making certain assumptions that may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates. The net interest income and net economic value tables presented assume that the composition of our interest-sensitive assets and liabilities existing at the beginning of a period remains constant over the period being measured and assumes that a particular change in interest rates is reflected uniformly across the yield curve regardless of the duration or repricing of specific assets and liabilities. Accordingly, although the tables provide an indication of our interest rate risk exposure at a particular point in time, such measurements are not intended to and do not provide a precise forecast of the effect of changes in market interest rates, and actual results may differ.

Interest rate risk calculations also may not reflect the fair values of financial instruments. For example, decreases in market interest rates can increase the fair values of our loans, mortgage servicing rights, deposits and borrowings.

## Market risk

As filed, 192 characters.

The information in Item 2 under “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Management of Market Risk” is incorporated in this Item 3 by reference.

## Controls and procedures

As filed, 959 characters.

***Disclosure Controls and Procedures.*** An evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) promulgated under the Securities and Exchange Act of 1934, as amended) as of June 30, 2025. Based on that evaluation, the Company’s management, including the Chief Executive Officer and Chief Financial Officer, concluded that the Company’s disclosure controls and procedures were effective

***Changes in Internal Controls Over Financial Reporting.*** During the quarter ended June 30, 2025, there have been no changes in the Company’s internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Filed Aug 14, 2025.
Source: SEC EDGAR, the filing index for accession 0000950170-25-108987. Last ingested by Listed: Nov 3, 2026, 21:57 ET. No prices; not investment advice.