S-1/A: Avidia Bancorp Eyes NYSE Listing with $166.75 Million Stock Offering

Avidia Bancorp is set to offer shares of its common stock in an initial public offering tied to Assabet Valley Bancorp's mutual-to-stock conversion, aiming for a New York Stock Exchange listing.

Summary

• Avidia Bancorp, a newly formed Maryland corporation, is offering shares of its common stock at $10.00 per share in connection with the mutual-to-stock conversion of Assabet Valley Bancorp.
• The offering aims to list Avidia Bancorp's common stock on the New York Stock Exchange under the symbol AVBC.
• The plan involves offering between 12,325,000 and 16,675,000 shares, potentially increasing to 19,176,250 shares.
• Keefe, Bruyette & Woods, Inc. is assisting with the sale of shares on a best efforts basis.
• A charitable foundation will be established with 900,000 shares of common stock and $1.0 million in cash.
• The subscription offering expires on June 17, 2025, but may be extended to August 1, 2025, or later with regulatory approval, up to March 11, 2027.
• The 401(k) Plan allows participants to invest up to 50% of their account balances in Avidia Bancorp common stock, potentially purchasing up to 4,920,964 shares.
• As of December 31, 2024, the market value of the assets of the 401(k) Plan attributable to active and former employees of Avidia Bank was approximately $49,209,644.

Sentiment

Score: 7

Explanation: The document presents a balanced view, highlighting both the opportunities and risks associated with the conversion and stock offering. The sentiment is slightly positive due to the potential for growth and community support, but tempered by the inherent risks of the financial industry and the specific challenges of the transaction.

Positives

• The conversion provides access to additional capital for growth and expansion.
• The stock offering allows Avidia Bank to remain an independent community bank.
• The company intends to establish a charitable foundation to support local communities.
• The 401(k) Plan offers employees the opportunity to invest in Avidia Bancorp common stock.
• The company has a strong management team with experience in public companies and mergers and acquisitions.

Negatives

• The future stock price may be less than the purchase price in the stock offering.
• The contribution to the charitable foundation will dilute ownership interest and adversely affect net income in the year of consummation.
• The implementation of stock-based benefit plans is likely to dilute ownership interest.
• Various factors may make takeover attempts more difficult to achieve.
• The company is an emerging growth company, and any decision to comply only with certain reduced reporting and disclosure requirements applicable to emerging growth companies could make our common stock less attractive to investors.

Risks

• Commercial and industrial loans involve credit risks that could adversely affect the company's financial condition.
• The company's condominium association loans involve additional credit risks.
• The company's commercial real estate loans involve credit risks that could adversely affect the company's financial condition.
• The geographic concentration of the company's loan portfolio and lending activities makes it vulnerable to a downturn in the local economy.
• If the company's allowance for credit losses is not sufficient to cover actual credit losses, earnings could decrease.
• Environmental liability associated with the company's lending activities could result in losses.
• The company's payment processors may be unable to satisfy obligations, in which case the company may ultimately be liable.
• Fraud by merchants or others could have a material adverse effect on the company's business and financial condition.
• Changes in card and payment network rules, standards or fees could adversely affect the company's business or operations.
• The company may incur losses due to fraudulent and negligent acts, as well as errors, by third parties or its employees.
• The grant of bank charters and special purpose fintech charters by the Office of the Comptroller of the Currency to fintech companies could present financial risk and market risk to the company generally and the payments processing business specifically.
• Prevailing high market interest rates have reduced the company's profits and asset values.
• Inflation can have an adverse impact on the company's business and on its customers.
• The soundness of other financial institutions could adversely affect the company.
• The company's inability to generate core deposits may cause it to rely more heavily on wholesale funding strategies for funding and liquidity needs, which could have an adverse effect on its profitability.
• The company's funding sources may prove insufficient to replace deposits at maturity and support its future growth.
• If the company's deposits grow too large, it may lose the benefits of excess deposit insurance provided by the Depositors Insurance Fund.
• Changes in laws and regulations and the cost of regulatory compliance with new laws and regulations may adversely affect the company's operations and/or increase its costs of operations.
• Monetary policies and regulations of the Federal Reserve Board could adversely affect the company's business, financial condition and results of operations.
• Strong competition within the company's market area may limit its growth and profitability.
• The company depends on its management team to implement its business strategy and execute successful operations and it could be harmed by the loss of their services.
• The company faces significant operational risks because of its reliance on technology.
• The company outsources critical operations to third-party service providers.
• The company is subject to litigation risk, and any pending or potential litigation may have an adverse effect on its business, financial condition and results of operations.
• The company operates as a community bank and its ability to maintain its reputation, which is critical to the success of its business, may materially adversely affect its performance.
• The cost of additional finance and accounting systems, procedures and controls in order to satisfy the company's new public company reporting requirements will increase its expenses.
• Changes in management's estimates and assumptions may have a material impact on the company's consolidated financial statements and its financial condition or operating results.
• Changes in accounting standards could affect reported earnings.
• The future price of the company's common stock may be less than the purchase price in the stock offering.
• The company has broad discretion in using the net proceeds of the stock offering.
• The capital the company raises in the stock offering may negatively impact its return on equity until it can fully implement its business plan.
• The company's stock-based benefit plans will increase its expenses, which will reduce its net income.
• The implementation of a stock-based benefit plan is likely to dilute your ownership interest.
• Various factors may make takeover attempts more difficult to achieve.
• The company's articles of incorporation provide that, subject to limited exception, state and federal courts in the State of Maryland are the sole and exclusive forum for certain stockholder litigation matters, which could limit the company's stockholders ability to obtain a favorable judicial forum for disputes with the company or its directors, officers, and other employees.
• You may not revoke your order to purchase Avidia Bancorp common stock in the subscription or in any community offering after you send us your order.
• The distribution of subscription rights could have adverse income tax consequences.
• The contribution to the charitable foundation will dilute your ownership interest and adversely affect net income in the year in which we consummate the conversion and stock offering.
• The company's contribution to the charitable foundation may not be tax deductible, which could reduce its profits.

Future Outlook

Avidia Bank intends to operate more like a commercial bank, focusing on commercial and industrial loans, commercial real estate loans, and payments processing activities. The company plans to grow organically and through opportunistic branching or acquisitions.

Management Comments

• As a community bank, we believe that our reputation for providing personalized customer service is our strongest asset and most effective business strategy to continue to grow and be profitable.
• We recognize and embrace the importance of technological innovation to continue to improve customer service and recognize operational efficiency.

Industry Context

The announcement comes amid a trend of mutual-to-stock conversions in the banking industry, as institutions seek to raise capital and enhance their competitive position. The success of the offering will depend on market conditions and investor appetite for community bank stocks.

Comparison to Industry Standards

• The appraisal is based in part on our financial condition and results of operations, the pro forma effect of the capital raised by the sale of shares of common stock in the stock offering, and an analysis of a peer group of publicly traded savings and loan holding companies and bank holding companies that RP Financial considered comparable to us:
• BV Financial, Inc. (BVFL) Nasdaq Baltimore, MD $ 912
• ECB Bancorp, Inc. (ECBK) Nasdaq Everett, MA 1,418
• HarborOne Bancorp, Inc. (HONE) Nasdaq Brockton, MA 5,753
• Hingham Institution for Savings (HIFS) Nasdaq Hingham, MA 4,458
• Kearny Financial Corp. (KRNY) Nasdaq Fairfield, NJ 7,731
• Magyar Bancorp, Inc. (MGYR) Nasdaq New Brunswick, NJ 1,008
• Northeast Community Bancorp, Inc. (NECB) Nasdaq White Plains, NY 2,010
• Northfield Bancorp, Inc. (NFBK) Nasdaq Woodbridge, NJ 5,666
• Ponce Financial Group, Inc. (PDLB) Nasdaq Bronx, NY 3,040
• Provident Bancorp, Inc. (PVBC) Nasdaq Amesbury, MA 1,593
• SR Bancorp, Inc. (SRBK) Nasdaq Bound Brook, NJ 1,065
• TrustCo Bank Corp NY (TRST) Nasdaq Glenville, NY 6,239
• Western New England Bancorp, Inc. (WNEB) Nasdaq Westfield, MA 2,653
• Compared to the average pricing of the peer group, our pro forma pricing ratios at the midpoint of the offering range indicated a discount of 36.26% on a price-to-earnings basis, a discount of 34.70% on a price-to-book value basis and a discount of 34.72% on a price-to-tangible book value basis.

Stakeholder Impact

• Depositors will continue to have their accounts insured by the FDIC and the Massachusetts Depositors Insurance Fund.
• Borrowers will see no change in the terms of their existing loans.
• Employees will have the opportunity to participate in the ESOP and other stock-based benefit plans.
• Shareholders will have the opportunity to invest in Avidia Bancorp and potentially benefit from its future growth.
• Local communities will benefit from the charitable activities of the Avidia Bank Charitable Foundation, Inc.

Next Steps

• Obtain final regulatory approvals from the Massachusetts Commissioner of Banks and the Federal Reserve Board.
• Complete the subscription offering and, if necessary, the community offering or syndicated community offering.
• List the common stock on the New York Stock Exchange under the symbol AVBC.
• Implement the business strategies outlined in the prospectus.
• Establish and fund the charitable foundation.

Key Dates

Keywords

Avidia Bancorp, stock offering, mutual-to-stock conversion, Assabet Valley Bancorp, IPO, NYSE, 401(k) Plan, community bank, financial services, banking