Avidia Bancorp Reports $11.6 Million Net Loss in Q1 2025 Amid Increased Credit Loss Provisions

Avidia Bancorp, Inc. reported a net loss of $11.6 million for the first quarter of 2025, a significant decline from the net income of $3.5 million recorded in the same period of 2024. This $15.1 million decrease was primarily attributed to a $17 million increase in the provision for credit losses, which included a notable charge-off of $16.7 million related to a defaulted land loan. Despite the loss, total interest and dividend income rose by 4% to $31 million, driven by a $925,000 increase in interest from loans, reflecting a growing average loan balance of $2.21 billion.

The company's total assets increased by 1.9% to $2.71 billion, bolstered by a $34.7 million rise in net loans. This growth was largely due to increases in commercial real estate loans and other commercial and industrial loans. However, securities available for sale decreased by 1.5% to $261.9 million, following the sale of $8.4 million in securities at a net loss of $541,000. Deposits also saw a healthy increase of $67.9 million, or 3.3%, reaching $2.13 billion, with core deposits growing by 4.7%.

Operationally, Avidia Bancorp is in the process of converting from a mutual to a stock form of organization, which is expected to enhance its capital structure and liquidity. The conversion plan, adopted in March 2025, will result in the establishment of a new stock holding company, Avidia Bancorp, Inc., which will oversee Avidia Bank as a wholly-owned subsidiary. This strategic move aims to facilitate a stock offering to depositors and other investors, potentially increasing the bank's capital base.

The company’s non-interest income fell by 36.8% to $3.7 million, primarily due to a decrease in net gains on securities and a decline in the valuation of mortgage servicing rights. Non-interest expenses increased by 20.6% to $21.8 million, driven by higher salaries and employee benefits, which rose by 34.4% due to increased incentive compensation and payroll taxes. The increase in expenses reflects the company's ongoing investments in its operational capabilities, including a new online banking platform.

Looking ahead, Avidia Bancorp anticipates that the ongoing conversion and stock offering will significantly enhance its liquidity and capital position. The company remains focused on diversifying its loan portfolio and managing interest rate risk effectively, particularly in light of the current economic conditions and market challenges. The management is optimistic about the potential for future growth, contingent on the successful execution of its strategic initiatives and the stabilization of the commercial real estate market.