As filed with the Securities and Exchange Commission on April 25, 2025

Registration No. 333-285815

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

PRE-EFFECTIVE AMENDMENT NO. 1 TO THE

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

Avidia Bancorp, Inc.

Avidia Bank 401(k) Plan

(Exact Name of Registrant as Specified in Its Charter)

 

 

 

Maryland		6036		33-4239888
(State or Other Jurisdiction of Incorporation or Organization)		(Primary Standard Industrial Classification Code Number)		(I.R.S. Employer Identification Number)

42 Main Street

Hudson, Massachusetts 01749

(800) 508-2265

(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)

 

 

Robert D. Cozzone

President and Chief Executive Officer

Avidia Bancorp, Inc.

42 Main Street

Hudson, Massachusetts 01749

(800) 508-2265

(Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service)

 

 

Copies to:

Lawrence M.F. Spaccasi, Esq.

Kent M. Krudys, Esq.

Victor L. Cangelosi, Esq.

Luse Gorman, PC

5335 Wisconsin Avenue, N.W., Suite 780

Washington, D.C. 20015

(202) 274-2028

 

 

Approximate date of commencement of proposed sale to the public: As soon as practicable after this registration statement becomes effective.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box: ☒

If this Form is filed to register additional shares for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

 

Large accelerated filer		☐		Accelerated filer		☐
Non-accelerated filer		☒		Smaller reporting company		☒
				Emerging growth company		☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act: ☐

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

 

Prospectus Supplement

Interests in

401(k) PLAN AS ADOPTED BY AVIDIA BANK

Offering of Participation Interests of up to 4,920,964 Shares of

Avidia Bancorp, Inc. Common Stock

In connection with the mutual-to-stock conversion of Assabet Valley Bancorp, Avidia Bancorp, Inc. (“Avidia Bancorp”), a newly formed Maryland corporation and the proposed holding company of Avidia Bank, is offering shares of its common stock for sale at $10.00 per share. Following the completion of the conversion and stock offering, it is expected that the common stock of Avidia Bancorp will be listed on the New York Stock Exchange under the symbol “AVBC”. The conversion and stock offering is not contingent on receipt of approval to list on the New York Stock Exchange.

In connection with the conversion and stock offering, Avidia Bank is allowing participants in the 401(k) Plan, as adopted by Avidia Bank (the “401(k) Plan”), to invest a portion of their account balances in Avidia Bancorp common stock. This prospectus supplement relates to elections by 401(k) Plan participants to direct the trustee of the 401(k) Plan to invest up to 50% of their account balances in the 401(k) Plan in Avidia Bancorp common stock in connection with the conversion and stock offering. Based upon the value of the 401(k) Plan assets at December 31, 2024, the trustee of the 401(k) Plan could purchase up to 4,920,964 shares of Avidia Bancorp common stock on behalf of participants, at the purchase price of $10.00 per share.

Before you consider investing, you should read the prospectus of Avidia Bancorp, dated     , 2025, which is enclosed with this prospectus supplement. It contains detailed information regarding the conversion, the stock offering of Avidia Bancorp, and the financial condition, results of operations and business of Assabet Valley Bancorp and Avidia Bank. This prospectus supplement provides information regarding the 401(k) Plan. You should read this prospectus supplement together with the prospectus and keep both for future reference.

For a discussion of risks that you should consider, see “Risk Factors” beginning on page [  ] of the attached prospectus, and “Notice of Your Rights Concerning Employer Securities” in this prospectus supplement.

The interests in the 401(k) Plan and the offering of shares of Avidia Bancorp common stock have not been approved or disapproved by the Securities and Exchange Commission, the Board of Governors of the Federal Reserve System, the Massachusetts Division of Banks, the Federal Deposit Insurance Corporation or any state securities regulator. Any representation to the contrary is a criminal offense.

The securities offered by this prospectus supplement are not deposits or savings accounts and are not insured or guaranteed by the Federal Deposit Insurance Corporation, the Massachusetts Depositors Insurance Fund or any other governmental agency.

This prospectus supplement may be used only in connection with offers and sales by Avidia Bancorp in the stock offering of Avidia Bancorp common stock that may be acquired within the 401(k) Plan. No one may use this prospectus supplement to reoffer or resell interests in shares of Avidia Bancorp common stock acquired through the 401(k) Plan.

You should rely only on the information contained in this prospectus supplement and the attached prospectus. Avidia Bancorp, Assabet Valley Bancorp, Avidia Bank and the 401(k) Plan have not authorized anyone to provide you with different information.

This prospectus supplement does not constitute an offer to sell or solicitation of an offer to buy any securities in any jurisdiction to any person to whom it is unlawful to make an offer or solicitation in that jurisdiction. Neither the delivery of this prospectus supplement and the attached prospectus nor any sale of Avidia Bancorp common stock shall under any circumstances imply that there has not been a change in the affairs of Avidia Bancorp, Assabet Valley Bancorp, Avidia Bank or the 401(k) Plan since the date of this prospectus supplement, or that the information contained in this prospectus supplement or incorporated by reference is correct as of any time after the date of this prospectus supplement.

The date of this prospectus supplement is     , 2025.

TABLE OF CONTENTS

 

RISK FACTORS			1
THE OFFERING			1
Securities Offered			1
Election to Purchase Avidia Bancorp, Inc. Common Stock			2
Purchase Priorities			2
Purchases in the Offering and Oversubscriptions			3
Composition of the Avidia Bancorp, Inc. Stock Fund			3
Minimum and Maximum Investment			4
Value of the Plan Assets			4
How to Order Stock in the Offering			4
Order Deadline			6
Irrevocability of Transfer Direction			6
Future Direction to Purchase and Sell Common Stock			6
Voting Rights of Common Stock			7
DESCRIPTION OF THE 401(k) PLAN			7
Introduction			7
Eligibility and Participation			8
Contributions Under the Plan			8
Limitations on Contributions			8
Benefits Under the 401(k) Plan			8
Investment of Contributions and Account Balances			9
Performance History			10
Description of the Investment Funds			10
Avidia Bancorp, Inc. Stock Fund			15
Withdrawals from the 401(k) Plan			15
Administration of the 401(k) Plan			16
Amendment and Termination			16
Merger, Consolidation or Transfer			16
Federal Income Tax Consequences			16
Notice of Your Rights Concerning Employer Securities			17
Additional ERISA Considerations			18
Securities and Exchange Commission Reporting and Short-Swing Profit Liability			18
Financial Information Regarding 401(k) Plan Assets			19
LEGAL OPINION			19

RISK FACTORS

In addition to considering the material risks disclosed under “Risk Factors” beginning on page   of the attached prospectus, you should also consider the following:

If you elect to purchase Avidia Bancorp common stock using your 401(k) Plan account balance and the stock offering is oversubscribed, you will bear the risk of price changes in the investment funds of the 401(k) Plan.

If you elect to purchase Avidia Bancorp common stock using your 401(k) Plan account balance, the 401(k) Plan trustee will sell the designated amount within your 401(k) Plan account among your investment fund balances. If the stock offering is oversubscribed (i.e., there are more orders for Avidia Bancorp common stock than shares available for sale in the stock offering) and the 401(k) Plan trustee cannot use any or all of the funds you allocate to purchase Avidia Bancorp common stock, the funds that cannot be invested in Avidia Bancorp common stock, and any interest earned on such funds, will be reinvested in your existing investment funds of the 401(k) Plan, according to your then existing investment election (i.e., in proportion to your investment direction for future contributions). During the period from when the 401(k) Plan trustee sells a portion of your investment funds until reinvestment of some or all of those funds back into your investment funds as a result of an oversubscription, you will bear the risk of price changes in the investment funds. It is possible that during this period some or all the investment funds may have increased in value more than the amount of any interest you may have earned on the reinvested funds before reinvestment. See “The Offering – Purchases in the Offering and Oversubscriptions” in this prospectus supplement.

THE OFFERING

 

Securities Offered		Avidia Bank is offering participants in the 401(k) Plan the opportunity to purchase participation interests in shares of Avidia Bancorp common stock through the 401(k) Plan. A “participation interest” represents indirect ownership of a share of Avidia Bancorp common stock that is acquired by the 401(k) Plan and is equivalent to one share of Avidia Bancorp common stock. In this prospectus supplement, “participation interests” are referred to as shares of Avidia Bancorp common stock. At the stock offering purchase price of $10.00 per share and allowing participants to use up to 50% of their account balances, the 401(k) Plan may acquire up to 4,920,964 shares of Avidia Bancorp common stock in the stock offering, based on the approximate fair market value of the 401(k) Plan’s assets as of December 31, 2024.   Only employees of Avidia Bank may become participants in the 401(k) Plan and only participants may purchase shares of Avidia Bancorp common stock through the 401(k) Plan. However, your investment in shares of Avidia Bancorp common stock in connection with the stock offering is subject to the purchase priorities listed below.   Information regarding the 401(k) Plan is contained in this prospectus supplement and information with respect to the consolidated financial condition and results of operations of Assabet Valley Bancorp and the business of Avidia Bancorp and Avidia Bank is contained in the attached prospectus. The address of the corporate/main office of Avidia Bancorp and Avidia Bank is 42 Main Street, Hudson, Massachusetts 01749. The telephone number at this address is (800) 508-2265.   Address questions about this prospectus supplement to Thomas Doane, Executive Vice President, Human Resources, Avidia Bank, 42 Main Street, Hudson, Massachusetts 01749; telephone number (978) 567-3514; email: t.doane@avidiabank.com.   Direct all questions about the stock offering, the prospectus, or obtaining a stock order form to purchase stock in the stock offering outside the 401(k) Plan

 

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		to the Stock Information Center at (877) 821-5783) (toll-free), Monday through Friday, between 10:00 a.m. and 4:00 p.m., Eastern time. The Stock Information Center will be closed on bank holidays.
Election to Purchase Avidia Bancorp, Inc. Common Stock		In connection with the stock offering, you may elect to designate up to 50% of your 401(k) Plan account balance to a money market fund called “Stock Purchase,” which will be used to subscribe for Avidia Bancorp common stock in the stock offering. Before making this election, you should carefully read the prospectus and this prospectus supplement and consider the information set forth on page   of this prospectus supplement under “Notice of Your Rights Concerning Employer Securities — The Importance of Diversifying Your Retirement Savings.” The trustee of the Avidia Bancorp, Inc. Stock Fund will subscribe to purchase shares of Avidia Bancorp common stock at $10.00 per share in accordance with your election. However, your election is subject to the purchase priorities and purchase limitations, as described below.
Purchase Priorities		All 401(k) Plan participants are eligible to elect to subscribe for Avidia Bancorp common stock in the stock offering. However, the elections are subject to the purchase priorities in Assabet Valley Bancorp’s Plan of Conversion, which provides for a subscription offering and, if necessary, a community offering. In the stock offering, the purchase priorities are as follows and apply in case more shares of Avidia Bancorp common stock are ordered than are available for sale (an “oversubscription):   Subscription Offering:   (1)   Each person with $50 or more on deposit at Avidia Bank as of the close of business on December 31, 2023, has first priority.   (2)   Each person with $50 or more on deposit at Avidia Bank as of the close of business on February 28, 2025, who is not in the first priority, has second priority.   (3)   Avidia Bank’s tax-qualified plans, including the employee stock ownership plan, have third priority.   (4)   Employees, officers and directors of Avidia Bank and/or Avidia Bancorp, Inc. and corporators of Assabet Valley Bancorp, who are not in the first or second priority, have fourth priority.   Community Offering:   Shares of Avidia Bancorp common stock not purchased in the subscription offering may be offered for sale to the general public in a “community offering,” with a preference given to natural persons (including trusts of natural persons) in the Local Community (as defined in the Prospectus).   If you fall into subscription offering categories (1), (2) or (4) above, you have subscription rights to purchase Avidia Bancorp common stock in the subscription offering in the highest category and you may use funds (up to 50% of your account balance) in the 401(k) Plan to pay for the Avidia Bancorp common stock.   If you fall into purchase priority (1), (2) or (4), you will separately receive offering materials in the mail, including a stock order form. You may use the stock order form to purchase shares of Avidia Bancorp common stock outside the 401(k) Plan.

 

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		Additionally, instead of (or in addition to) placing an order outside the 401(k) Plan using the stock order form, you may place an order for the purchase of Avidia Bancorp common stock through the 401(k) Plan in the manner described below under “How to Order Stock in the Offering.”
Purchases in the Offering and Oversubscriptions		The trustee of the 401(k) Plan will subscribe for Avidia Bancorp common stock in the stock offering in accordance with your election. Once you make your election, the amount that you elect to transfer from your existing investment option(s) for the purchase of Avidia Bancorp common stock will be sold from your existing investment option(s) and the proceeds will be transferred to the Stock Purchase option (which will be invested in a money market fund during the stock offering period) pending the completion of the conversion and stock offering several weeks later. After the end of the stock offering period, we will determine whether all or any portion of your order will be filled (if the stock offering is oversubscribed you may not receive any or all of your order, depending on your purchase priority, as described above). The amount that can be used toward your order will be applied to the purchase of Avidia Bancorp common stock. Following the closing of the conversion and stock offering, your purchased shares of Avidia Bancorp common stock will be transferred to the 401(k) Plan and will be reflected in your 401(k) Plan account as soon as practicable thereafter.   If the stock offering is oversubscribed, and the trustee of the 401(k) Plan is unable to use the full amount allocated by you to purchase Avidia Bancorp common stock in the stock offering, the amount that cannot be invested in shares of Avidia Bancorp common stock, and any interest earned on that amount, will be transferred from the Stock Purchase option and reinvested in the existing funds of the 401(k) Plan, in accordance with your then existing investment election (in proportion to your investment direction for future contributions). The prospectus describes the allocation procedures in the event of an oversubscription. If you choose not to elect to invest part of your account balances towards the purchase of Avidia Bancorp common stock in connection with the stock offering, your account balances will remain in the investment funds of the 401(k) Plan as previously directed by you.
Composition of the Avidia Bancorp, Inc. Stock Fund		Shares of Avidia Bancorp common stock purchased by the 401(k) Plan in the stock offering will be transferred to the 401(k) Plan and held in the Avidia Bancorp, Inc. Stock Fund. The Avidia Bancorp, Inc. Stock Fund is neither a mutual fund nor a diversified or managed investment option. Rather, it is merely a recordkeeping mechanism established by the 401(k) Plan custodian to track the shares purchased by 401(k) Plan participants in the conversion and stock offering through the 401(k) Plan. The Avidia Bancorp, Inc. Stock Fund will consist solely of shares of Avidia Bancorp common stock purchased by participants in the 401(k) Plan, which will be initially valued at $10.00 per share (i.e., the purchase price).   Following the closing of the conversion and stock offering, each day the aggregate value of Avidia Bancorp, Inc. Stock Fund will be determined by dividing the total market value of the fund at the end of the day by the total number of shares held in the fund by all participants as of the previous day’s end. The change in share value reflects the day’s change in stock price of Avidia Bancorp common stock, and the value of each participation interest should be the same as one share of Avidia Bancorp common stock.

 

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		Investment in Avidia Bancorp common stock involves risks common to investments in shares of common stock. For a discussion of material risks you should consider, see the “Risk Factors” section of the attached prospectus and the section of the prospectus supplement called “Notice of Your Rights Concerning Employer Securities” (see below).   The portion of your 401(k) Plan account invested in the Avidia Bancorp, Inc. Stock Fund will be reported to you on your regular 401(k) Plan participant statements. You can also go online at any time to www.principal.com or call 1-800-547-7754 (toll-free) to review your account balances.
Minimum and Maximum Investment		In connection with the stock offering, the 401(k) Plan will permit you to use up to 50% of your 401(k) Plan account balance for the purchase of Avidia Bancorp common stock in the stock offering.   The trustee of the 401(k) Plan will subscribe for shares of Avidia Bancorp common stock offered for sale in the stock offering, in accordance with each participant’s direction. The trustee will pay $10.00 per share, which will be the same price paid by all other persons who purchase shares in the stock offering. To purchase Avidia Bancorp common stock through the 401(k) Plan, the minimum investment is $250, which will purchase 25 shares. No individual may purchase more than $400,000 (40,000 shares) of Avidia Bancorp common stock. Furthermore, no person or entity, together with associates or persons acting in concert with such person or entity, may purchase more than $600,000 (60,000 shares) of Avidia Bancorp common stock in all categories of the stock offering combined. See the prospectus for further details regarding additional maximum purchase limits for investors in the stock offering.
Value of the Plan Assets		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.
How to Order Stock in the Offering		•  You can elect to transfer up to 50% of your current 401(k) Plan account balance (in whole dollar amounts) to the Stock Purchase option, which will be used by the 401(k) Plan trustee to purchase shares of Avidia Bancorp common stock. This is done by following the procedures described below. Note the following conditions concerning this election:   •  Your election is subject to a minimum purchase of 25 shares of common stock, which equals $250.   •  Your election, plus any order you placed outside the 401(k) Plan, are together subject to a maximum purchase limit of no more than 40,000 shares of Avidia Bancorp common stock, which equals $400,000. The prospectus describes an additional purchase limitation of 60,000 shares of Avidia Bancorp common stock, which equals $600,000, for an individual, together with associates or persons acting in concert with such individual.   •  The election period for the 401(k) Plan purchases ends at 2:00 p.m., Eastern time, on     , 2025 (the “Plan Purchase Period”).   •  Your election to purchase common stock in the stock offering through the 401(k) Plan will be accepted by Principal Financial Group, the recordkeeper of the 401(k) Plan. After your election is accepted by

 

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		Principal Financial Group, it will be rounded down to the closest dollar amount divisible by $10.00 and will be used by the trustee to purchase shares of Avidia Bancorp common stock sold in the conversion and stock offering. This difference will remain in the Stock Purchase option until the completion of the conversion and stock offering, which is expected to be several weeks after the Plan Purchase Period ends. At that time, the Avidia Bancorp common stock purchased based on your election will be transferred to the 401(k) Plan and any remaining funds will be transferred out of the Stock Purchase option for investment in other funds under the 401(k) Plan, based on your election currently on file for future contributions.   •  The amount you elect to transfer to the Stock Purchase option will be held separately until the completion of the conversion and stock offering. Therefore, this money is not available for distributions, loans, or withdrawals until the conversion and stock offering is completed, which is expected to be several weeks after the 401(k) Plan Purchase Period ends.   •  Following the completion of the conversion and stock offering, your purchased shares of Avidia Bancorp common stock will be reflected in your 401(k) Plan account through the Avidia Bancorp, Inc. Stock Fund.   Follow the steps outlined below to make your election to use your account balance in the 401(k) Plan to purchase shares of Avidia Bancorp, Inc. common stock in the stock offering. You are allowed only one election to transfer funds to the Stock Purchase option.   •  Go to www.principal.com and log into your 401(k) Plan account. In Account Login, click on drop down and choose “Personal,” then “GO.” Enter your Username and Password. If you have not established your Username and Password, click on the link “Establish your Username and Password”, and follow the prompts.   •  On your Personal Summary Page, choose the line for the 401(k) Plan as adopted by Avidia Bank Plan and click on “View Details” for your 401(k) Plan account.   •  When you reach “Your Account Overview,” click on “Investments” across the top navigation of the screen, and then click on “Change Investments.”   •  When you reach the “Change Investments” screen, click on the “box titled “Move Balances.” Then click on “Make a Transfer.”   •  Click on “Advanced Transfer Features” and choose “dollars,” then enter the amount you would like to transfer “From” each investment. When you have completed transferring “From” each investment, click on “Continue.”   •  Enter the dollars that you will be transferring into the Stock Purchase account. The Stock Purchase account is a money market investment that will hold the funds until the conversion and stock offering is concluded. All the funds that you transferred “From” other investments must be transferred to another investment. All the dollars must be transferred “To” another investment.

 

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		When you have completed the “To” portion of the transaction, click on “Continue.” You will be taken to a confirmation page. Review your transaction for accuracy. If you need to make changes, click on “Cancel” or “Start Over” or “Previous” to make changes. If the information is correct, click on “Submit Request” to authorize Principal Life Insurance Company to process the request. You will receive a communication in your Message Center confirming your transaction.   After you completed your online election, you will also need to complete the Stock Information Form and return it either by emailing it to Thomas Doane, Executive Vice President, Human Resources, at t.doane@avidiabank.com, by faxing it to (978) 310-1958 or by delivering it in person, to be received by Thomas Doane, Executive Vice President, Human Resources, Avidia Bank, 42 Main Street, Hudson, Massachusetts 01749.
Order Deadline		You must make your election online at www.principal.com and return your Stock Information Form by emailing it to Thomas Doane, Executive Vice President, Human Resources, at t.doane@avidiabank.com, by faxing it to (978) 310-1958 or by delivering it in person, to be received by Thomas Doane, Executive Vice President, Human Resources, Avidia Bank, 42 Main Street, Hudson, Massachusetts 01749; telephone number (978) 567-3514; to be received no later than 2:00p.m., Eastern time, on     , 2025.
Irrevocability of Transfer Direction		Once you make an election to transfer amounts to the Stock Purchase option to be used by the 401(k) Plan trustee to purchase Avidia Bancorp common stock in connection with the conversion and stock offering, you may not change your election.   Your election is irrevocable. You will, however, continue to have the ability to transfer amounts not directed towards the purchase of Avidia Bancorp common stock among all the other investment funds on a daily basis.
Future Direction to Purchase and Sell Common Stock		You will be able to purchase Avidia Bancorp common stock after the completion of the conversion and stock offering through the 401(k) Plan by investing your future contributions through the Avidia Bancorp, Inc. Stock Fund, provided, that no more than 50% of your future contributions (both employer and employee) may be invested in the Avidia Bancorp, Inc. Stock Fund. Additionally, after the completion of the conversion and stock offering, you will be able to transfer no more than 50% of your account balance to the Avidia Bancorp, Inc. Stock Fund.   After the completion of the conversion and stock offering, to the extent that shares are available, the trustee of the 401(k) Plan will acquire shares of Avidia Bancorp common stock at your election in open market transactions at the prevailing price, which may be less than or more than $10.00 per share. In addition, a brokerage commission of $0.05 per share of stock purchased will be charged.   You may change your investment allocation on a daily basis. However, your ability to buy or sell Avidia Bancorp common stock within the 401(k) Plan largely depends upon the existence of an active market for the stock. If Avidia Bancorp common stock is illiquid (meaning there are few buyers and sellers of the stock) on the date you elect to buy or sell Avidia Bancorp common stock within the 401(k) Plan, your election may not be immediately processed. As a result, the prevailing price for Avidia Bancorp, Inc. common stock may be less or more than its fair market value on the date of your election.

 

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		Special restrictions may apply to purchasing shares of Avidia Bancorp common stock by 401(k) Plan participants who are subject to the provisions of Section 16(b) of the Securities Exchange Act of 1934, as amended, relating to the purchase and sale of securities by officers, directors, and principal stockholders of Avidia Bancorp.   If you are an officer of the Avidia Bancorp who is restricted by regulation from selling shares of Avidia Bancorp common stock acquired in the conversion and stock offering for one year, the Avidia Bancorp common stock that you purchased in the conversion and stock offering through the 401(k) Plan will not be tradable until the one-year trading restriction has lapsed.
Voting Rights of Common Stock		You may direct the 401(k) Plan trustee as to how to vote your shares of Avidia Bancorp common stock held in the Avidia Bancorp, Inc. Stock Fund, if permitted by Avidia Bank. If the trustee does not receive your voting instructions, the trustee will be directed by Avidia Bank to vote your shares in the same proportion as the voting instructions received from other participants related to their shares of Avidia Bancorp common stock held by the 401(k) Plan, provided that such vote is made in accordance with the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). All voting instructions will be kept confidential.

DESCRIPTION OF THE 401(k) PLAN

Introduction

General. Avidia Bank originally adopted the 401(k) Plan effective as of February 1, 1991. In connection with the mutual-to-stock conversion of Assabet Valley Bancorp, Avidia Bancorp desires to allow participants to purchase common stock of Avidia Bancorp in their accounts in the 401(k) Plan and Avidia Bank has amended the 401(k) Plan to allow investments in Avidia Bancorp common stock. The 401(k) Plan is a tax-qualified plan with a cash or deferred compensation feature established in accordance with the requirements under Section 401(a) and Section 401(k) of the Internal Revenue Code of 1986, as amended (the “Code”).

Avidia Bank intends that the 401(k) Plan, in operation, will comply with the requirements under Section 401(a) and Section 401(k) of the Code. Avidia Bank will adopt any amendments to the 401(k) Plan that may be necessary to ensure the continuing qualified status of the 401(k) Plan under the Code and applicable Treasury Regulations.

ERISA. The 401(k) Plan is an “individual account plan” other than a “money purchase pension plan” within the meaning of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). As such, the 401(k) Plan is subject to all the provisions of Title I (Protection of Employee Benefit Rights) and Title II (Amendments to the Code Relating to Retirement Plans) of ERISA, except for the funding requirements contained in Part 3 of Title I of ERISA, which by their terms do not apply to an individual account plan (other than a money purchase plan). The 401(k) Plan is not subject to Title IV (Plan Termination Insurance) of ERISA. The funding requirements contained in Title IV of ERISA are not applicable to participants or beneficiaries under the 401(k) Plan.

Reference to Full Text of Plan. This prospectus supplement summarizes certain provisions of the 401(k) Plan. These summaries are not complete and are qualified in their entirety by the full text of the 401(k) Plan. Copies of the 401(k) Plan are available to all employees by going to www.Principal.com.

 

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Eligibility and Participation

Avidia Bank employees generally become eligible to enter the 401(k) Plan as participants upon their attainment of age 18 and the completion of one month of service.

As of December 31, 2024, there were approximately 319 active and former employees with account balances in the 401(k) Plan.

Contributions Under the Plan

Elective Deferrals. Participants are permitted to defer up to [75%] of their compensation as of the date they become a participant in the 401(k) Plan but may choose a different percentage or choose not to defer at all. The amounts of deferrals are also subject to certain restrictions imposed by the Code. For 2025, participants may defer up to $23,500 and may defer an additional $7,500 if they qualify for catch-up contributions as described in the next paragraph. The compensation of each participant taken into account under the 401(k) Plan is limited by the Code, and for 2025 the limit is $350,000 (this limit may change on an annual basis). Canceling or changing a participant’s contribution percentage can be accomplished by going to www.Principal.com.

Catch-up Contributions. If a participant has made the maximum amount of elective deferrals allowed by the 401(k) Plan or other legal limits and has attained at least age 50 (or will reach age 50 before the end of the tax year, which is December 31), that participant is also eligible to make an additional catch-up contribution. For 2025, the maximum catch-up contribution is $7,500. A participant may authorize Avidia Bank to withhold a specified dollar amount of his or her compensation for this purpose.

Employer Contributions. Avidia Bank currently makes a matching contribution tied to participant deferrals under the 401(k) Plan. Avidia Bank reserves the right to eliminate or modify the amount of this contribution at any time and from time to time.

Limitations on Contributions

Contribution Limits. For the tax year beginning January 1, 2025, the amount of a participant’s elective deferrals may not exceed $23,500 per calendar year, or $31,000, if you the participant is eligible to make catch-up contributions. Contributions in excess of this limit are known as excess deferrals. If a participant defers amounts in excess of this limitation, his or her gross income for federal income tax purposes will include the excess in the year of the deferral. In addition, unless the excess deferral is distributed before April 15 of the following year, it will be taxed again in the year distributed. Income on the excess deferral distributed by April 15 of the immediately succeeding year will be treated, for federal income tax purposes, as earned and received by the participant in the tax year in which the contribution is made.

The total amount of contributions that a participant makes and any contribution made by Avidia Bank makes on a participant’s behalf to the 401(k) Plan and other defined contribution tax-qualified retirement plans in one year is generally limited to the lesser of 100% of the participant’s compensation or $70,000 (for 2025).

Rollovers. Participants may make a rollover contribution of an eligible rollover distribution from any other qualified retirement plan or an individual retirement arrangement (IRA). These funds will be maintained in a separate rollover account in which the participant will have a nonforfeitable vested interest.

Benefits Under the 401(k) Plan

Vesting. At all times, participants have a fully vested, nonforfeitable interest in the portion of their account balance attributable to elective deferrals and employer contributions under the 401(k) Plan.

Distribution at Termination of Employment. Participants will be entitled to receive a distribution of the vested amounts in your account when their employment terminates for any reason. A participant’s benefit will be equal to the vested balance of the participant’s account. The 401(k) Plan will make involuntary cash-out distributions of vested account balances in accordance with the 401(k) Plan. If a participant is not a 5% or more owner of his or her employer, their required benefit commencement date is the April 1^st following the close of the year in which the later of the following occurs: they attain age 72 ¹⁄₂ or they terminate employment.

 

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Distribution After Death of Participant. If a participant dies, the value of the participant’s entire account will be payable to the participant’s beneficiary in accordance with the 401(k) Plan.

Investment of Contributions and Account Balances

All amounts credited to a participant’s account under the 401(k) Plan are held in the 401(k) Plan trust (the “Trust”), which is administered by the trustee of the 401(k) Plan. Before the effective date of the stock offering, participants were provided the opportunity to direct the investments of their accounts into one of the investment options described below.

Principal Global Investors Equity Income Separate Account

Principal Global Investors LargeCap S&P 500 Index Separate Account

Principal Global Investors Blue Chip Separate Account

LA Capital Management/Victory MidCap Value I Separate Account

Principal Global Investors MidCap S&P 400 Index Separate Account

Principal Global Investors MidCap Growth Separate Account

Vaughan Nelson/H&W SmallCap Value II Separate Account

Principal Global Investors SmallCap S&P 600 Index Separate Account

AB/Brown/Emerald SmallCap Growth I Separate Account

Principal Real Estate Investment Real Estate Securities Separate Account

Principal Global Investors Global Emerging Markets Separate Account

Causeway/Barrow Hanley Overseas Separate Account

Principal Global Investors Diversified International Separate Account

Principal Global Investors International Equity Index Separate Account

Multiple Sub-Advisors SAM Flexible Income Separate Account

Multiple Sub-Advisors SAM Conservative Balanced Separate Account

Multiple Sub-Advisors SAM Balanced Separate Account

Multiple Sub-Advisors SAM Conservative Growth Separate Account

Multiple Sub-Advisors SAM Strategic Growth Separate Account

Multiple Sub-Advisors Principal LifeTime Hybrid Income CIT Z

Multiple Sub-Advisors Principal LifeTime Hybrid 2015 CIT Z

Multiple Sub-Advisors Principal LifeTime Hybrid 2020 CIT Z

Multiple Sub-Advisors Principal LifeTime Hybrid 2025 CIT Z

Multiple Sub-Advisors Principal LifeTime Hybrid 2030 CIT Z

Multiple Sub-Advisors Principal LifeTime Hybrid 2035 CIT Z

Multiple Sub-Advisors Principal LifeTime Hybrid 2040 CIT Z

Multiple Sub-Advisors Principal LifeTime Hybrid 2045 CIT Z

Multiple Sub-Advisors Principal LifeTime Hybrid 2050 CIT Z

Multiple Sub-Advisors Principal LifeTime Hybrid 2055 CIT Z

Multiple Sub-Advisors Principal LifeTime Hybrid 2060 CIT Z

Multiple Sub-Advisors Principal LifeTime Hybrid 2065 CIT Z

Multiple Sub-Advisors Principal LifeTime Hybrid 2070 CIT Z

Multiple Sub-Advisors Diversified Income Separate Account

Principal Global Investors High Yield Separate Account

Principal Global Investors Bond Market Index Separate Account

Principal Global Investors Core Fixed Income Separate Account

Principal Fixed Income Guaranteed Option

BlackRock Financial Management, Inc. Inflation Protection Separate Account

 

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Performance History

The following table provides performance data with respect to the investment funds in the 401(k) Plan:

 

		Average Annual Total Return (%) (as of December 31, 2024)
Investment Option Name		1-Year				3-Year				5-Year				10-Year
Principal Global Investors Equity Income Separate Account			15.72				4.94				8.63				9.67
Principal Global Investors LargeCap S&P 500 Index Separate Account			24.91				8.87				14.46				13.04
Principal Global Investors Blue Chip Separate Account			21.88				5.88				15.03				15.74
LA Capital Management/Victory MidCap Value I Separate Account			12.26				5.60				10.58				8.80
Principal Global Investors MidCap S&P 400 Index Separate Account			13.82				4.81				10.26				9.60
Principal Global Investors MidCap Growth Separate Account			22.76				-1.96				11.88				11.26
Vaughan Nelson/H&W SmallCap Value II Separate Account			5.32				4.90				9.78				8.17
Principal Global Investors SmallCap S&P 600 Index Separate Account			8.69				1.84				8.25				8.87
AB/Brown/Emerald SmallCap Growth I Separate Account			14.15				-1.47				7.96				10.12
Principal Real Estate Investment Real Estate Securities Separate Account			5.65				-3.48				4.05				6.38
Principal Global Investors Global Emerging Markets Separate Account			6.50				-2.16				2.71				3.68
Causeway/Barrow Hanley Overseas Separate Account			1.46				5.99				6.76				5.47
Principal Global Investors Diversified International Separate Account			5.39				0.05				5.22				5.60
Principal Global Investors International Equity Index Separate Account			3.55				1.55				4.67				5.14
Multiple Sub-Advisors SAM Flexible Income Separate Account			6.90				0.71				3.26				4.18
Multiple Sub-Advisors SAM Conservative Balanced Separate Account			9.12				1.68				4.87				5.39
Multiple Sub-Advisors SAM Balanced Separate Account			12.96				3.37				7.04				7.09
Multiple Sub-Advisors SAM Conservative Growth Separate Account			15.55				4.49				8.82				8.57
Multiple Sub-Advisors SAM Strategic Growth Separate Account			17.31				5.33				10.24				9.42
Multiple Sub-Advisors Principal LifeTime Hybrid Income CIT Z			7.30				1.11				3.60				3.81
Multiple Sub-Advisors Principal LifeTime Hybrid 2015 CIT Z			7.47				1.07				4.45				4.91
Multiple Sub-Advisors Principal LifeTime Hybrid 2020 CIT Z			8.37				1.37				5.21				5.62
Multiple Sub-Advisors Principal LifeTime Hybrid 2025 CIT Z			9.25				1.65				5.93				6.28
Multiple Sub-Advisors Principal LifeTime Hybrid 2030 CIT Z			10.35				1.89				6.60				6.87
Multiple Sub-Advisors Principal LifeTime Hybrid 2035 CIT Z			11.67				2.47				7.39				7.50
Multiple Sub-Advisors Principal LifeTime Hybrid 2040 CIT Z			13.43				3.29				8.24				8.09
Multiple Sub-Advisors Principal LifeTime Hybrid 2045 CIT Z			14.70				3.86				8.87				8.53
Multiple Sub-Advisors Principal LifeTime Hybrid 2050 CIT Z			15.72				4.33				9.34				8.88
Multiple Sub-Advisors Principal LifeTime Hybrid 2055 CIT Z			15.73				4.34				9.44				9.00
Multiple Sub-Advisors Principal LifeTime Hybrid 2060 CIT Z			15.73				4.34				9.56				9.08
Multiple Sub-Advisors Principal LifeTime Hybrid 2065 CIT Z			15.73				4.34				9.68				—
Multiple Sub-Advisors Principal LifeTime Hybrid 2070 CIT Z			15.70				—				—				—
Multiple Sub-Advisors Diversified Income Separate Account			5.65				0.76				2.60				3.85
Principal Global Investors High Yield Separate Account			7.72				3.74				4.73				5.25
Principal Global Investors Bond Market Index Separate Account			1.02				-2.49				-0.45				1.16
Principal Global Investors Core Fixed Income Separate Account			1.70				-1.97				0.11				1.94
Principal Fixed Income Guaranteed Option			—				—				—				—
BlackRock Financial Management, Inc. Inflation Protection Separate Account			1.79				-2.44				1.64				1.97

Description of the Investment Funds

Principal Global Investors Equity Income Separate Account. The investment seeks to provide current income and long-term growth of income and capital. Under normal circumstances, the fund invests at least 80% of its net assets, plus any borrowings for investment purposes, in dividend-paying equity securities at the time of purchase. It usually invests in equity securities of companies with large and medium market capitalizations. The fund invests in value equity securities, an investment strategy that emphasizes buying equity securities that appear to be undervalued.

Principal Global Investors LargeCap S&P 500 Index Separate Account. The investment option normally invests the majority of assets in common stocks of companies that compose the S&P 500 Index. Management attempts to mirror the investment performance of the index by allocating assets in approximately the same weightings as the S&P 500 Index. Over the long-term, management seeks a very close correlation between the performance of the Separate Account before expenses and that of the S&P 500 Index.

Principal Global Investors Blue Chip Separate Account. The investment seeks long-term growth of capital. The fund normally invests at least 80% of its net assets, plus any borrowings for investment purposes,

 

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in equity securities of companies with large market capitalizations that, in the fund’s investment advisor’s opinion, display characteristics of a “blue chip” company. The advisor tends to focus on securities of companies that show potential for growth of capital as well as an expectation for above average earnings. The fund also invests in securities of foreign companies.

LA Capital Management/Victory MidCap Value I Separate Account. The investment seeks long-term growth of capital. Under normal circumstances, the fund invests at least 80% of its net assets, plus any borrowings for investment purposes, in equity securities of companies with medium market capitalizations at the time of purchase. It invests in value equity securities, an investment strategy that emphasizes buying equity securities that appear to be undervalued.

Principal Global Investors MidCap S&P 400 Index Separate Account. The investment option normally invests the majority of assets in common stocks of companies that compose the S&P MidCap 400 Index. Management attempts to mirror the investment performance of the index by allocating assets in approximately the same weightings as the S&P MidCap 400 Index. Over the long-term, management seeks a very close correlation between the performance of the Separate Account before expenses and that of the S&P MidCap 400 Index.

Principal Global Investors MidCap Growth Separate Account. The investment option primarily invests in common stocks of medium capitalization companies with strong earnings growth potential. It normally invests the majority of assets in companies with market capitalizations similar to those companies in the Russell MidCap Growth Index. Management uses a bottom-up approach in selection of individual securities that it believes have an above average potential for earnings growth. It may invest up to 25% of assets in foreign securities.

Vaughan Nelson/H&W SmallCap Value II Separate Account. The investment seeks long-term growth of capital. Under normal circumstances, the fund invests at least 80% of its net assets, plus any borrowings for investment purposes, in equity securities of companies with small market capitalizations at the time of purchase. It invests in value equity securities, an investment strategy that emphasizes buying equity securities that appear to be undervalued.

Principal Global Investors SmallCap S&P 600 Index Separate Account. The investment seeks long-term growth of capital and normally invests the majority of assets in common stocks of companies that compose the S&P SmallCap 600 Index. Management attempts to mirror the investment performance of the index by allocating assets in approximately the same weightings as the S&P 600 Index. Over the long-term, management seeks a very close correlation between the performance of the Separate Account before expenses and that of the S&P 600 Index.

AB/Brown/Emerald SmallCap Growth I Separate Account. The investment seeks long-term growth of capital. Under normal circumstances, the fund invests at least 80% of its net assets, plus any borrowings for investment purposes, in equity securities of companies with small market capitalizations at the time of purchase. The fund may invest up to 30% of the fund’s assets using an index sampling strategy designed to match the performance of the Russell 2000(R) Growth Index.

Principal Real Estate Investment Real Estate Securities Separate Account. The investment seeks to generate a total return. Under normal circumstances, the fund invests at least 80% of its net assets, plus any borrowings for investment purposes, in equity securities of companies principally engaged in the real estate industry at the time of purchase. It invests in equity securities regardless of market capitalization (small, medium or large). The fund concentrates its investments (invest more than 25% of its net assets) in securities in the real estate industry. It is non-diversified

Principal Global Investors Global Emerging Markets Separate Account. The investment option normally invests the majority of assets in equities of companies in emerging market countries. It invests in securities of companies with their principal place of business or principal office in emerging market countries; companies for which the principal securities trade in an emerging market; or companies, regardless of where their securities are traded, that derive 50% of their total revenue from either goods or services produced in emerging market countries. The fund may invest in securities of companies with small to medium market capitalizations.

 

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Causeway/Barrow Hanley Overseas Separate Account. The investment seeks long-term growth of capital. Under normal circumstances, the fund invests at least 80% of its net assets, plus any borrowings for investment purposes, in equity securities that are tied economically to countries outside the U.S. at the time of purchase. It invests in emerging market securities. The fund invests in value equity securities, an investment strategy that emphasizes buying equity securities that appear to be undervalued. It invests in equity securities of small, medium, and large market capitalization companies.

Principal Global Investors Diversified International Separate Account. The investment option normally invests the majority of assets in companies in at least three different countries. It invests in securities of companies with their principal place of business or principal office outside of the United States; companies for which the principal securities trade on a foreign exchange; and companies, regardless of where their securities are traded, that derive 50% or more of their total revenue from goods or services produced or sold outside of the United States. The Separate Account may invest in securities of companies with small to medium market capitalizations.

Principal Global Investors International Equity Index Separate Account. The investment seeks long-term growth of capital. The fund invests at least 80% of its net assets, plus any borrowings for investment purposes, in securities that compose the MSCI EAFE Index. The index is a market-weighted equity index designed to measure the equity performance of developed markets, excluding the United States and Canada. The advisor employs a passive investment approach designed to attempt to track the performance of the index.

Multiple Sub-Advisors SAM Flexible Income Separate Account. The investment seeks to provide a high level of total return (consisting of reinvestment of income with some capital appreciation). The Portfolios operate as funds of funds and invest principally in funds and exchange-traded funds (“ETFs”) of Principal Funds, Inc. and Principal Exchange-Traded Funds (“underlying funds”). It generally invests: between 55% and 95% of its assets in fixed-income funds, and less than 40% in any one fixed-income fund; between 5%and 45% of its assets in equity funds, and less than 30% in any one equity fund; less than 20% of its assets in specialty funds, and less than 20% in any one specialty fund.

Multiple Sub-Advisors SAM Conservative Balanced Separate Account. The investment seeks to provide a high level of total return (consisting of reinvestment of income and capital appreciation), consistent with a moderate degree of principal risk. The fund operate as funds of funds and invest principally in funds and exchange-traded funds (“ETFs”) of Principal Funds, Inc. and Principal Exchange-Traded Funds (“underlying funds”). It generally categorizes each underlying fund as a fixed-income, equity, or specialty fund based on its investment profile.

Multiple Sub-Advisors SAM Balanced Separate Account. The investment seeks to provide as high a level of total return (consisting of reinvested income and capital appreciation) as is consistent with reasonable risk. The fund operates as funds of funds and generally invests: between 20% and 60% of its assets in fixed-income funds, and less than 40% in any one fixed-income fund; between 40% and 80% of its assets in equity funds, and less than 30% in any one equity fund; and less than 20% of its assets in specialty funds, and less than 20% in any one specialty fund.

Multiple Sub-Advisors SAM Conservative Growth Separate Account. The investment seeks to provide long-term capital appreciation. The fund operates as funds of funds and invest principally in funds and exchange-traded funds (“ETFs”) of Principal Funds, Inc. and Principal Exchange-Traded Funds (“underlying funds”). It generally categorizes each underlying fund as a fixed-income, equity, or specialty fund based on its investment profile.

Multiple Sub-Advisors SAM Strategic Growth Separate Account. The investment seeks to provide long-term capital appreciation. The Portfolios operate as funds of funds. It generally invests: between 75% and 100% of its assets in equity funds, and less than 50% in any one equity fund; less than 20% of its assets in specialty funds, and less than 20% in any one specialty fund; such funds generally offer unique combinations of

 

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traditional equity securities or use alternative investment strategies that aim to offer diversification beyond traditional equity securities and include investments in such assets as infrastructure, commodities, currencies, and natural resources companies.

Multiple Sub-Advisors Principal LifeTime Hybrid Income CIT Z. The investment option seeks current income and, as a secondary objective, capital appreciation. To pursue its goal, this Target Date Fund generally invests in affiliated and may invest in nonaffiliated open-ended mutual funds, insurance company separate accounts, and collective trust funds that Principal Trust considers appropriate based on investors who have reached their investment time horizon.

Multiple Sub-Advisors Principal LifeTime Hybrid 2015 CIT Z. The investment option seeks a total return consisting of long-term growth of capital and current income. To pursue its goal, this Target Date Fund generally invests in affiliated open-ended mutual funds, insurance company separate accounts, unaffiliated mutual funds, and unaffiliated collective trust funds that Principal Trust considers appropriate based on the remaining time horizon of a particular Target Date Fund.

Multiple Sub-Advisors Principal LifeTime Hybrid 2020 CIT Z. The investment option seeks a total return consisting of long-term growth of capital and current income. To pursue its goal, this Target Date Fund generally invests in affiliated open-ended mutual funds, insurance company separate accounts, unaffiliated mutual funds, and unaffiliated collective trust funds that Principal Trust considers appropriate based on the remaining time horizon of a particular Target Date Fund.

Multiple Sub-Advisors Principal LifeTime Hybrid 2025 CIT Z. The investment option seeks a total return consisting of long-term growth of capital and current income. To pursue its goal, this Target Date Fund generally invests in affiliated open-ended mutual funds, insurance company separate accounts, unaffiliated mutual funds, and unaffiliated collective trust funds that Principal Trust considers appropriate based on the remaining time horizon of a particular Target Date Fund.

Multiple Sub-Advisors Principal LifeTime Hybrid 2030 CIT Z. The investment option seeks a total return consisting of long-term growth of capital and current income. To pursue its goal, this Target Date Fund generally invests in affiliated open-ended mutual funds, insurance company separate accounts, unaffiliated mutual funds, and unaffiliated collective trust funds that Principal Trust considers appropriate based on the remaining time horizon of a particular Target Date Fund.

Multiple Sub-Advisors Principal LifeTime Hybrid 2035 CIT Z. The investment option seeks a total return consisting of long-term growth of capital and current income. To pursue its goal, this Target Date Fund generally invests in affiliated open-ended mutual funds, insurance company separate accounts, unaffiliated mutual funds, and unaffiliated collective trust funds that Principal Trust considers appropriate based on the remaining time horizon of a particular Target Date Fund.

Multiple Sub-Advisors Principal LifeTime Hybrid 2040 CIT Z. The investment option seeks a total return consisting of long-term growth of capital and current income. To pursue its goal, this Target Date Fund generally invests in affiliated open-ended mutual funds, insurance company separate accounts, unaffiliated mutual funds, and unaffiliated collective trust funds that Principal Trust considers appropriate based on the remaining time horizon of a particular Target Date Fund.

Multiple Sub-Advisors Principal LifeTime Hybrid 2045 CIT Z. The investment option seeks a total return consisting of long-term growth of capital and current income. To pursue its goal, this Target Date Fund generally invests in affiliated open-ended mutual funds, insurance company separate accounts, unaffiliated mutual funds, and unaffiliated collective trust funds that Principal Trust considers appropriate based on the remaining time horizon of a particular Target Date Fund.

Multiple Sub-Advisors Principal LifeTime Hybrid 2050 CIT Z. The investment option seeks a total return consisting of long-term growth of capital and current income. To pursue its goal, this Target Date Fund generally invests in affiliated open-ended mutual funds, insurance company separate accounts, unaffiliated mutual funds, and unaffiliated collective trust funds that Principal Trust considers appropriate based on the remaining time horizon of a particular Target Date Fund.

 

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Multiple Sub-Advisors Principal LifeTime Hybrid 2055 CIT Z. The investment option seeks a total return consisting of long-term growth of capital and current income. To pursue its goal, this Target Date Fund generally invests in affiliated open-ended mutual funds, insurance company separate accounts, unaffiliated mutual funds, and unaffiliated collective trust funds that Principal Trust considers appropriate based on the remaining time horizon of a particular Target Date Fund.

Multiple Sub-Advisors Principal LifeTime Hybrid 2060 CIT Z. The investment option seeks a total return consisting of long-term growth of capital and current income. To pursue its goal, this Target Date Fund generally invests in affiliated open-ended mutual funds, insurance company separate accounts, unaffiliated mutual funds, and unaffiliated collective trust funds that Principal Trust considers appropriate based on the remaining time horizon of a particular Target Date Fund.

Multiple Sub-Advisors Principal LifeTime Hybrid 2065 CIT Z. The investment option seeks a total return consisting of long-term growth of capital and current income. To pursue its goal, this Target Date Fund generally invests in affiliated open-ended mutual funds, insurance company separate accounts, unaffiliated mutual funds, and unaffiliated collective trust funds that Principal Trust considers appropriate based on the remaining time horizon of a particular Target Date Fund.

Multiple Sub-Advisors Principal LifeTime Hybrid 2070 CIT Z. The investment option seeks a total return consisting of long-term growth of capital and current income. To pursue its goal, this Target Date Fund generally invests in affiliated open-ended mutual funds, insurance company separate accounts, unaffiliated mutual funds, and unaffiliated collective trust funds that Principal Trust considers appropriate based on the remaining time horizon of a particular Target Date Fund.

Multiple Sub-Advisors Diversified Income Separate Account. The investment seeks income. The fund generally invests a majority of its assets in fixed income securities, such as investment-grade corporate bonds, high yield bonds (also known as “junk” bonds), preferred securities, securitized products, and emerging market debt securities, in an effort to provide incremental yields over a portfolio of government securities. Such securities include instruments with variable or floating interest rates. The fixed income portion of the fund is not managed to a particular maturity or duration. The fund invests in foreign, including emerging market, securities.

Principal Global Investors High Yield Separate Account. The investment seeks to provide a high level of current income. The fund invests at least 80% of its net assets, plus any borrowings for investment purposes, in below investment grade bonds and bank loans (sometimes called “high yield” or “junk”) which are rated, at the time of purchase, Ba1 or lower by Moody’s and BB+ or lower by S&P Global. It also invests in investment grade bank loans (also known as senior floating rate interests) and securities of foreign issuers.

Principal Global Investors Bond Market Index Separate Account. The investment seeks to provide current income. The fund normally invests at least 80% of its net assets, plus any borrowings for investment purposes, in debt securities held by the Barclays U. S. Aggregate Bond Index at the time of purchase. The index is composed of investment grade, fixed rate debt issues, including government, corporate, asset-backed, and mortgage-backed securities, with maturities of one year or more. It employs a passive investment approach designed to attempt to track the performance of the index.

Principal Global Investors Core Fixed Income Separate Account. The investment seeks to provide a high level of current income consistent with preservation of capital. The fund invests primarily in a diversified pool of investment-grade fixed-income securities, including corporate securities, U.S. government securities, asset-backed securities and mortgage-backed securities. It maintains an average portfolio duration that is within 25% of the duration of the Bloomberg U.S. Aggregate Bond Index.

Principal Fixed Income Guaranteed Option. This is a guaranteed general account-backed group annuity contract. A rate of interest contractually guaranteed by Principal Life is credited to participant account balances. The contract makes benefit payments to participants without restriction (i.e. no early termination

 

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charges or surrender charges for plan benefit events). A surrender elected by a plan fiduciary will be subject to a 12 month advance notice or a 5% surrender charge, whichever the plan fiduciary chooses. Notification of a plan’s intent to terminate its interest may be revoked within 90 days of our receipt of such notice, after which time, notice becomes irrevocable.

BlackRock Financial Management, Inc. Inflation Protection Separate Account. The investment seeks to provide current income and real (after inflation) total returns. The fund invests primarily in inflation-indexed bonds of varying maturities issued by the U.S. and non-U.S. governments, their agencies or instrumentalities, and U.S. and non-U.S. corporations. Under normal circumstances, the fund maintains an average portfolio duration that is within 20% of the duration of the Bloomberg U.S. Treasury Inflation Protected Securities (“TIPS”) Index. The fund is not managed to a particular maturity.

An investment in any of the funds listed above is not a bank deposit or savings account and is not insured or guaranteed by the Federal Deposit Insurance Corporation, the Massachusetts Depositors Insurance Fund or any other government agency. As with any mutual fund investment, there is always a risk that you may lose money on your investment in any of the funds listed above.

Avidia Bancorp, Inc. Stock Fund

In connection with the conversion and stock offering, the 401(k) Plan now offers the Avidia Bancorp, Inc. Stock Fund as an additional choice among the investment options described above. The Avidia Bancorp, Inc. Stock Fund invests primarily in the shares of common stock of Avidia Bancorp. In connection with the conversion and stock offering, you may, in the manner described earlier, elect to direct the 401(k) Plan trustee to invest up to 50% of your 401(k) Plan account in the Avidia Bancorp, Inc. Stock Fund.

As of the date of this prospectus supplement, there is no established market for Avidia Bancorp common stock. Accordingly, there is no record of the historical performance of the Avidia Bancorp, Inc. Stock Fund. Performance of the Avidia Bancorp, Inc. Stock Fund will depend on a number of factors, including the consolidated financial condition and profitability of Avidia Bancorp and Avidia Bank and market conditions for shares of Avidia Bancorp common stock generally.

Investments in the Avidia Bancorp, Inc. Stock Fund involve special risks common to investments in the shares of common stock. In deciding to invest a part of your account balance in the Avidia Bancorp, Inc. Stock Fund, you should carefully consider the information set forth on page   of this prospectus supplement under “Notice of Your Rights Concerning Employer Securities – The Importance of Diversifying Your Retirement Savings.”

For a discussion of material risks you should consider, see “Risk Factors” beginning on page   of the attached prospectus and the section of this prospectus supplement entitled “Notice of Your Rights Concerning Employer Securities” below.

Withdrawals from the 401(k) Plan

Applicable federal law requires the 401(k) Plan to impose substantial restrictions on the right of a 401(k) Plan participant to withdraw amounts held for his or her benefit under the 401(k) Plan before the participant’s termination of employment with Avidia Bank. A substantial federal tax penalty may also be imposed on withdrawals made before the participant’s attainment of age 59 ¹⁄₂, regardless of whether the withdrawal occurs during his or her employment with Avidia Bank or after termination of employment.

Withdrawal from Your Account Before Retirement. Once you have attained age 59 ¹⁄₂, you may request distribution of all, or part of the amounts credited to your account attributable to elective deferrals, matching contributions, and discretionary employer contributions.

Hardship Withdrawals. If you incur a financial hardship, you may request a withdrawal from the portion of your account attributable to your pre-tax and after-tax elective deferrals.

 

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Rollover Contributions. You may withdraw amounts you contributed to the 401(k) Plan as a rollover contribution.

Administration of the 401(k) Plan

401(k) Plan Trustee. The trustee of the 401(k) Plan is Principal Trust Company. Principal Trust Company serves as trustee for all the investments funds under the 401(k) Plan, except that     will serve as trustee of the Avidia Bancorp, Inc. Stock Fund only during the stock offering period.

Plan Administrator. Pursuant to the terms of the 401(k) Plan, the 401(k) Plan is administered by the 401(k) Plan administrator. The name and address of the 401(k) Plan administrator is Avidia Bank, 42 Main Street, Hudson, Massachusetts 01749. The 401(k) Plan administrator is responsible for the administration of the 401(k) Plan, interpretation of the provisions of the 401(k) Plan, prescribing procedures for filing applications for benefits, preparation and distribution of information explaining the 401(k) Plan, maintenance of plan records, books of account and all other data necessary for the proper administration of the 401(k) Plan, preparation and filing of all returns and reports relating to the 401(k) Plan which are required to be filed with the U.S. Department of Labor and the Internal Revenue Service, and for all disclosures required to be made to participants, beneficiaries and others under Sections 104 and 105 of ERISA.

Reports to Plan Participants. The 401(k) Plan administrator will furnish you a statement at least quarterly showing the balance in your account as of the end of the statement period, the amount of contributions allocated to your account for that period, and any adjustments to your account to reflect earnings or losses (if any). In addition, you can go online to www.principal.com or call 1-(800) 547-7754 at any time to review your account balances.

Amendment and Termination

Avidia Bank intends to continue the 401(k) Plan indefinitely. Nevertheless, Avidia Bank may terminate the 401(k) Plan at any time. If the 401(k) Plan is terminated in whole or in part, then regardless of other provisions in the 401(k) Plan, you will have a fully vested interest in your account. Avidia Bank reserves the right to make any amendment or amendments to the 401(k) Plan which do not cause any part of the trust to be used for, or diverted to, any purpose other than the exclusive benefit of participants or their beneficiaries; provided, however, that Avidia Bank may make any amendment it determines necessary or desirable, with or without retroactive effect, to comply with ERISA.

Merger, Consolidation or Transfer

In the event of the merger or consolidation of the 401(k) Plan with another plan, or the transfer of the trust assets to another plan, the 401(k) Plan requires that you receive a benefit immediately after the merger, consolidation or transfer which is equal to or greater than the benefit you would have been entitled to receive immediately before the merger, consolidation, or transfer.

Federal Income Tax Consequences

The following is a brief summary of the material federal income tax aspects of the 401(k) Plan. You should not rely on this summary as a complete or definitive description of the material federal income tax aspects of the 401(k) Plan. Statutory provisions change, as do their interpretations, and their application may vary in individual circumstances. Finally, the consequences under applicable state and local income tax laws may not be the same as under the federal income tax laws. Consult your tax advisor with respect to any distribution from the 401(k) Plan and transactions involving the 401(k) Plan.

As a “tax-qualified retirement plan,” the Code affords the 401(k) Plan special tax treatment, including:

(1) the sponsoring employer is allowed an immediate tax deduction for the amount contributed to the 401(k) Plan each year;

 

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(2) participants pay no current income tax on amounts contributed by the employer on their behalf; and

(3) earnings of the 401(k) Plan are tax-deferred, thereby permitting the tax-free accumulation of income and gains on investments.

Avidia Bank will administer the 401(k) Plan to comply with the requirements of the Code as of the applicable effective date of any change in the law.

Lump-Sum Distribution. A distribution from the 401(k) Plan to a participant or the beneficiary of a participant will qualify as a lump-sum distribution if it is made within one taxable year, on account of the participant’s death, disability or separation from service, or after the participant attains age 59 ¹⁄₂, and consists of the balance credited to the participant under the 401(k) Plan and all other profit sharing plans (and in some cases all other stock bonus plans), if any, maintained by Avidia Bank. The portion of any lump-sum distribution required to be included in a participant’s taxable income for federal income tax purposes consists of the entire amount of the lump-sum distribution, less the amount of after-tax contributions, if any, the participant has made to the 401(k) Plan and any other profit sharing plans maintained by Avidia Bank, which is included in the distribution.

Avidia Bancorp, Inc. Common Stock Included in Lump-Sum Distribution. If a lump-sum distribution includes Avidia Bancorp common stock, the distribution generally will be taxed in the manner described above, except that the total taxable amount may be reduced by the amount of any net unrealized appreciation with respect to Avidia Bancorp common stock, that is, the excess of the value of Avidia Bancorp common stock at the time of the distribution over its cost or other basis of the securities to the trust. The tax basis of Avidia Bancorp common stock, for purposes of computing gain or loss on its subsequent sale, equals the value of Avidia Bancorp common stock at the time of distribution, less the amount of any net unrealized appreciation. Any gain on a subsequent sale or other taxable disposition of Avidia Bancorp common stock, to the extent of the amount of net unrealized appreciation at the time of distribution, will constitute long-term capital gain, regardless of the holding period of Avidia Bancorp common stock. Any gain on a subsequent sale or other taxable disposition of Avidia Bancorp common stock, in excess of the amount of net unrealized appreciation at the time of distribution, will be considered long-term capital gain. The recipient of a distribution may elect to include the amount of any net unrealized appreciation in the total taxable amount of the distribution, to the extent allowed by regulations to be issued by the Internal Revenue Service.

Distributions: Rollovers and Direct Transfers to Another Qualified Plan or to an IRA. You may roll over virtually all distributions from the 401(k) Plan to another qualified plan or to an individual retirement account (IRA) in accordance with the terms of the other plan or the IRA.

Notice of Your Rights Concerning Employer Securities

There has been an important change in Federal law that provides specific rights concerning investments in employer securities, such as Avidia Bancorp common stock. Because you may in the future have investments in Avidia Bancorp, Inc. Stock Fund under the Plan, you should take the time to read the following information carefully.

Your Rights Concerning Employer Securities. The 401(k) Plan must allow you to elect to move any portion of your account that is invested in the Avidia Bancorp, Inc. Stock Fund from that investment into other investment alternatives under the 401(k) Plan. You may contact the 401(k) Plan Administrator disclosed above for specific information regarding this new right, including how to make this election. In deciding whether to exercise this right, you will want to give careful consideration to the information below that describes the importance of diversification. All the investment options under the 401(k) Plan are available to you if you decide to diversify out of the Avidia Bancorp, Inc. Stock Fund.

The Importance of Diversifying Your Retirement Savings. To help achieve long-term retirement security, you should give careful consideration to the benefits of a well-balanced and diversified investment portfolio. Spreading your assets among different types of investments can help you achieve a favorable rate of return, while minimizing your overall risk of losing money. This is because market or other economic conditions that cause one category of assets, or one particular security, to perform well often cause another asset category, or another

 

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particular security, to perform poorly. If you invest more than 20% of your retirement savings in any one company or industry, your savings may not be properly diversified. Although diversification is not a guarantee against loss, it is an effective strategy to help you manage investment risk.

In deciding how to invest your retirement savings, you should take into account all your assets, including any retirement savings outside of the 401(k) Plan. No single approach is right for everyone because, among other factors, individuals have different financial goals, different time horizons for meeting their goals, and different tolerance for risk. Therefore, you should carefully consider the rights described here and how these rights affect the amount of money that you invest in Avidia Bancorp common stock through the 401(k) Plan.

It is also important to periodically review your investment portfolio, your investment objectives, and the investment options under the 401(k) Plan to help ensure that your retirement savings will meet your retirement goals.

Additional ERISA Considerations

As noted above, the 401(k) Plan is subject to certain provisions of ERISA, including special provisions relating to control over the 401(k) Plan’s assets by participants and beneficiaries. The 401(k) Plan’s feature that allows you to direct the investment of your account balances is intended to satisfy the requirements of Section 404(c) of ERISA relating to control over plan assets by a participant or beneficiary. The effect of this is two-fold. First, you will not be deemed a “fiduciary” because of your exercise of investment discretion. Second, no person who otherwise is a fiduciary, such as Avidia Bank, the 401(k) Plan Administrator, or the 401(k) Plan’s trustee, is liable under the fiduciary responsibility provision of ERISA for any loss which results from your exercise of control over the assets in your Plan account.

Because you will be entitled to invest all or a portion of your account balance in the Plan in Avidia Bancorp common stock, the regulations under Section 404(c) of ERISA require that the 401(k) Plan establish procedures that ensure the confidentiality of your decision to purchase, hold, or sell employer securities, except to the extent that disclosure of such information is necessary to comply with federal or state laws not preempted by ERISA. These regulations also require that your exercise of voting and similar rights with respect to the common stock be conducted in a way that ensures the confidentiality of your exercise of these rights.

Securities and Exchange Commission Reporting and Short-Swing Profit Liability

Section 16 of the Securities Exchange Act of 1934, as amended, imposes reporting requirements and liability provisions on officers, directors, and persons beneficially owning more than 10% of public companies such as Avidia Bancorp. Section 16(a) of the Securities Exchange Act of 1934 requires the filing of reports of beneficial ownership. Within 10 days of becoming an officer, director or person beneficially owning more than 10% of the shares of Avidia Bancorp, the individual must file a Form 3 reporting initial beneficial ownership with the Securities and Exchange Commission. Changes in beneficial ownership, such as purchases, sales, and gifts, generally must be reported periodically, either on a Form 4 within two business days after the change occurs, or in limited circumstances, annually on a Form 5 within 45 days after the close of Avidia Bancorp’s fiscal year. Discretionary transactions in and beneficial ownership of the common stock through the Avidia Bancorp, Inc. Stock Fund of the Plan by officers and persons beneficially owning more than 10% of the common stock of Avidia Bancorp generally must be reported to the Securities and Exchange Commission by such individuals.

In addition to the reporting requirements described above, Section 16(b) of the Securities Exchange Act of 1934, as amended, provides for the recovery by Avidia Bancorp of profits realized by an officer, director or any person beneficially owning more than 10% of Avidia Bancorp common stock resulting from non-exempt purchases and sales of Avidia Bancorp common stock within any six-month period.

The Securities and Exchange Commission has adopted rules that provide exemptions from the profit recovery provisions of Section 16(b) for all transactions in employer securities within an employee benefit plan, provided certain requirements are met. These requirements generally involve restrictions upon the timing of elections to acquire or dispose of employer securities for the accounts of Section 16(b) persons.

 

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Except for distributions Avidia Bancorp, Inc. common stock due to death, disability, retirement, termination of employment or under a qualified domestic relations order, persons subject to Section 16(b) are required to hold shares of Avidia Bancorp, Inc. common stock distributed from the 401(k) Plan for six months following such distribution and are prohibited from directing additional purchases within the Avidia Bancorp, Inc. Stock Fund for six months after receiving such a distribution.

Financial Information Regarding 401(k) Plan Assets

Financial information regarding the net assets available for 401(k) Plan benefits and the change in net assets available for 401(k) Plan benefits is available upon written request to the 401(k) Plan Administrator at the address shown above.

LEGAL OPINION

The validity of the issuance of the Avidia Bancorp common stock has been passed upon by Luse Gorman, PC, Washington, D.C., which firm acted as special counsel to Avidia Bancorp in connection with Avidia Bancorp’s stock offering.

 

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PROSPECTUS

 

(Proposed Holding Company for Avidia Bank)

Up to 16,675,000 Shares of Common Stock

(Subject to Increase to up to 19,176,250 Shares)

 

 

Avidia Bancorp, Inc. is offering shares of its common stock for sale in an initial public offering in connection with the conversion of Assabet Valley Bancorp, the mutual holding company and sole stockholder of Avidia Bank, from a mutual holding company to a stock holding company. There is no current public or private market for our common stock. We expect to list the common stock on the New York Stock Exchange under the symbol “AVBC” upon the completion of the conversion and stock offering. We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012.

The shares of common stock are first being offered for sale in a subscription offering to Avidia Bank’s depositors as of specified eligibility dates, to Avidia Bank’s tax-qualified employee benefit plans, and to Avidia Bank’s employees, officers and directors and Assabet Valley Bancorp’s corporators. Shares not purchased in the subscription offering may be offered for sale to the general public in a community offering, with a preference given to residents of the communities Avidia Bank serves. We must sell a minimum of 12,325,000 shares to complete the conversion and stock offering.

In addition to the shares of common stock to be sold in the stock offering, we intend to contribute an additional 900,000 shares of common stock and $1.0 million in cash to a charitable foundation to be established and funded in connection with the conversion and stock offering.

The minimum purchase order is 25 shares. Generally, no individual, or individuals acting through a single qualifying account held jointly, may purchase more than 40,000 shares ($400,000) of common stock, and no person or entity, together with associates or persons acting in concert with such person or entity, may purchase more than 60,000 shares ($600,000) of common stock in all categories of the stock offering combined.

The subscription offering will expire at 2:00 p.m., Eastern time, on __________, 2025. We may extend this expiration date without notice to you until __________, 2025, unless we receive regulatory approval to extend to a later date, which may not be beyond March 11, 2027. No single extension may exceed 90 days, and the stock offering must be completed by _________, 2025. Once submitted, orders are irrevocable unless the subscription offering and any community offering are terminated or extended, with regulatory approval, beyond __________, 2025, or the number of shares of common stock to be sold is increased to more than 19,176,250 shares or decreased to less than 12,325,000 shares. If the subscription offering and any community offering are extended past ___________, 2025, we will notify all subscribers and give them the opportunity to confirm, change or cancel their orders. If you do not respond to the notice of extension, we will promptly return your funds with interest or cancel your deposit account withdrawal authorization. If the number of shares to be sold in the stock offering is increased to more than 19,176,250 shares or decreased to less than 12,325,000 shares, we will resolicit subscribers and promptly return all funds delivered to us to purchase shares of common stock in the subscription offering and in any community offering, with interest. We will hold funds received in the subscription offering and in any community offering in a segregated account at Avidia Bank and the funds will earn interest at 0.10% per annum until completion or termination of the stock offering.

Keefe, Bruyette & Woods, Inc. is assisting us in selling the shares of common stock, on a best efforts basis, in the subscription offering and in any community offering, and will serve as sole manager for any syndicated community offering. Keefe, Bruyette & Woods, Inc. is not required to purchase any shares of common stock being offered for sale in the stock offering.

 

 

This investment involves a degree of risk, including the possible loss of principal. See “Risk Factors” beginning on page 17.

OFFERING SUMMARY

Price: $10.00 per Share

 

		Minimum				Midpoint				Maximum				Adjusted Maximum
Number of shares			12,325,000				14,500,000				16,675,000				19,176,250
Gross offering proceeds		$	123,250,000			$	145,000,000			$	166,750,000			$	191,762,500
Estimated offering expenses, excluding selling agent fees and expenses (1)			3,260,000				3,260,000				3,260,000				3,260,000
Selling agent fees and expenses (2)		$	1,654,688			$	1,926,563			$	2,198,438			$	2,511,094
Estimated net proceeds		$	118,335,312			$	139,813,437			$	161,291,562			$	185,991,406
Estimated net proceeds per share		$	9.60			$	9.64			$	9.67			$	9.70

(1)	Includes records agent fees and expenses payable to Keefe, Bruyette & Woods, Inc. See “The Conversion and Stock Offering – Records Management.”

(2)

See “The Conversion and Stock Offering – Plan of Distribution; Selling Agent and Underwriter Compensation” for a discussion of Keefe, Bruyette & Woods, Inc.’s compensation for the stock offering and the compensation to be received by it and other broker-dealers that may participate in any syndicated community offering.

These securities are not deposits or savings accounts and are not insured or guaranteed by the Federal Deposit Insurance Corporation, the Massachusetts Depositors Insurance Fund or any other government agency.

Neither the Securities and Exchange Commission, the Board of Governors of the Federal Reserve System, the Massachusetts Division of Banks, the Federal Deposit Insurance Corporation nor any state securities regulator has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

 

For assistance, contact the Stock Information Center at _________ (toll-free).

The date of this prospectus is ___________, 2025.

93 NEW HAMPSHIRE 495 95 MASSACHUSET TS 495 93 Leominster M I D D L E S E X 95 Clinton MASSACHUSETTS W O R C E S T E R Hudson BAY Northborough Marlborough 90 BOSTON Shrewsbury Framingham Westborough 90 93 90 95 495 84 395 CONNECTICUT RHODE ISLAND 495 Hudson Headquarters Branch Locations 42 Main Street 17 Pope Street 256 Maple Street Hudson Hudson Marlborough 196 Washington Street 53 W. Main Street ME Hudson Northborough VT 1073 Main Street 23 Maple Avenue NH Clinton Shrewsbury NY 270 Cochituate Road 100 E. Main Street MA BOSTON Framingham Westborough RI 470 Lancaster Street CN

TABLE OF CONTENTS

 

		Page
SUMMARY			1
RISK FACTORS			17
SELECTED FINANCIAL AND OTHER DATA			33
RECENT DEVELOPMENTS			35
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS			41
HOW WE INTEND TO USE THE PROCEEDS FROM THE STOCK OFFERING			43
OUR POLICY REGARDING DIVIDENDS			44
MARKET FOR THE COMMON STOCK			45
HISTORICAL AND PRO FORMA REGULATORY CAPITAL COMPLIANCE			46
CAPITALIZATION			47
PRO FORMA DATA			49
COMPARISON OF INDEPENDENT VALUATION AND PRO FORMA INFORMATION WITH AND WITHOUT CHARITABLE FOUNDATION			53
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			55
BUSINESS OF AVIDIA BANCORP, INC.			67
BUSINESS OF AVIDIA BANK			67
SUPERVISION AND REGULATION			90
TAXATION			102
MANAGEMENT			103
SUBSCRIPTIONS BY DIRECTORS AND EXECUTIVE OFFICERS			114
THE CONVERSION AND STOCK OFFERING			115
AVIDIA BANK CHARITABLE FOUNDATION, INC.			137
RESTRICTIONS ON ACQUISITION OF AVIDIA BANCORP, INC.			140
DESCRIPTION OF CAPITAL STOCK OF AVIDIA BANCORP, INC.			145
TRANSFER AGENT			147
EXPERTS			147
LEGAL AND TAX MATTERS			147
WHERE YOU CAN FIND ADDITIONAL INFORMATION			147
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS OF ASSABET VALLEY BANCORP AND SUBSIDIARY			149

 

 

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RISK FACTORS

You should carefully consider the following risk factors, in addition to all other information in this prospectus, in evaluating an investment in the shares of common stock.

Risks Related to our Lending Activities

Our commercial and industrial loans involve credit risks that could adversely affect our financial condition and results of operations.

At December 31, 2024, commercial and industrial loans totaled $995.1 million, or 45.3% of total loans. Unlike residential real estate loans, which generally are made on the basis of the borrower’s ability to make repayment from his or her employment or other income and are secured by real property whose value tends to be more easily ascertainable, commercial and industrial loans are of higher risk and typically are made based on the borrower’s ability to make repayment from the cash flows of the borrower’s business, and any collateral securing these loans may be difficult to appraise, may fluctuate in value, and may depreciate over time. As a result, the availability of funds for the repayment of commercial and industrial loans may depend substantially on the success of the business itself. Commercial and industrial loans also typically involve larger loan balances to single borrowers or groups of related borrowers compared to one- to four-family residential mortgage loans. In addition, our commercial and industrial loans may be secured by collateral other than real estate, such as inventory and accounts receivable, the value of which may be more difficult to appraise, control or collect and may be more susceptible to fluctuation in value at the time of default. As our commercial and industrial loan portfolio increases, the corresponding risks and potential for losses from these loans may also increase.

Our condominium association loans involve additional credit risks that could adversely affect our financial condition and results of operations.

At December 31, 2024, condominium association loans totaled $494.9 million. Condominium association loans are the largest component of our commercial and industrial loan portfolio. We have made, and expect to continue to make, condominium association loans associated with condominium properties located in states other than Massachusetts. At December 31, 2024, the three states in which we had the largest concentration of condominium association loans were Massachusetts ($241.1 million), Florida ($78.6 million) and New York ($46.2 million). At December 31, 2024, our largest condominium association loan, which is associated with a condominium property located in Miami Beach, Florida, had an outstanding balance of $19.4 million. Condominium properties located along ocean coastal regions, particularly in Florida, as opposed to inland are susceptible to damage from hurricanes, tropical storms and other severe weather events and from salt water corrosion and resulting concrete damage. Any of these occurrences could render a property uninhabitable for prolonged periods of time, which may cause residents to become delinquent in paying their dues, which are the primary source of repayment for our loans. In addition to the difficulties associated with inspecting and monitoring out-of-state properties compared to local properties, we also need to know and comply with applicable laws of other states. Furthermore, we do not have the contractual right to unilaterally replace the members of a condominium association governing board if there is a material adverse event that would jeopardize the association’s ability to repay its loan. As our condominium association loan portfolio increases, the corresponding risks and potential for losses from these loans may also increase.

Our commercial real estate loans involve credit risks that could adversely affect our financial condition and results of operations.

At December 31, 2024, commercial real estate loans totaled $484.1 million or 22.1% of total loans. Given their larger balances and the complexity of the underlying collateral, commercial real estate loans generally have more risk than the one- to four-family residential real estate loans we originate. Commercial real estate loans also typically involve larger loan balances to single borrowers or groups of related borrowers compared to one- to four-family residential mortgage loans. In addition, if we foreclose on commercial real estate loans, our holding period for the collateral may be longer than for a single-family residential property if there are fewer potential purchasers of the collateral. Furthermore, if loans that are collateralized by commercial real estate become troubled and the value of the real estate has been significantly impaired, then we may not be able to recover the full contractual amount of principal and interest that we anticipated at the time we originated the loan. Because the repayment of commercial real estate loans depends on the successful management and operation of the borrower’s properties or related businesses, their repayment can be affected by adverse conditions in the local real estate market or economy. A downturn in the real estate market or the local economy could adversely impact the value of properties securing the loan or the revenues from the borrower’s business, thereby increasing the risk of non-performing loans. As our commercial real estate loan portfolio increases, the corresponding risks and potential for losses from these loans may also increase.

Our historical emphasis on one- to four-family residential mortgage loans exposes us to lending risks.

At December 31, 2024, one- to four-family residential mortgage loans (including residential construction loans) totaled $511.5 million or 23.3% of total loans. One- to four-family residential mortgage lending is generally sensitive to regional and local economic conditions that significantly impact the ability of borrowers to meet their loan payment obligations, making loss levels difficult to predict. Declines in real estate values could cause some of our residential mortgages to be inadequately collateralized, which would expose us to a greater risk of loss if we seek to recover on defaulted loans by selling the real estate collateral.

 

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The geographic concentration of our loan portfolio and lending activities makes us vulnerable to a downturn in the local economy.

A majority of our loans are made to borrowers and secured by collateral within our primary market area. As a result, we face greater risk of loan defaults and losses if there is economic downturn in our primary market area, as adverse economic conditions may have a negative effect on the ability of our borrowers to make timely repayments on their loans. Although our primary market area consists of diverse businesses and there is no single employer group concentration that impacts a significant number of our customers, a significant rise in unemployment and/or personal or business bankruptcies and a significant decline in real estate values are the primary factors that would have a material adverse effect on our primary market area, including its commercial real estate market. Furthermore, a return of recessionary conditions and/or negative developments in the domestic and international credit markets may significantly affect the markets in which we do business, the value of our loans, investments, and collateral securing our loans, and our ongoing operations, costs and profitability. Any of these negative events may result in higher-than-expected loan delinquencies, increase our levels of nonperforming and classified assets, and reduce demand for our products and services, which may cause us to incur losses and may adversely affect our capital, liquidity and financial condition.

If our allowance for credit losses is not sufficient to cover actual credit losses, our earnings could decrease.

We maintain an allowance for credit losses, which is established through a provision for credit losses that represents management’s best estimate of the current expected losses within the loan portfolio. We make various assumptions and judgments about the collectability of our loan portfolio, including the creditworthiness of our borrowers and the value of the real estate and other assets serving as collateral for the repayment of many of our loans. In determining the amount of the allowance for credit losses, we review our loans and our loss and delinquency experience, and we evaluate economic conditions. If our assumptions or the results of our analyses are incorrect, our allowance for credit losses may not be sufficient to cover losses inherent in our loan portfolio, resulting in additions to our allowance. Material additions to our allowance for credit losses would materially decrease our profitability.

We adopted the Current Expected Credit Loss, or “CECL,” standard on January 1, 2023. CECL requires financial institutions to determine periodic estimates of lifetime expected credit losses on loans, and recognize the expected credit losses as allowances for credit losses. This has changed the current method of providing allowances for credit losses that are incurred or probable, which has required us to increase our allowance for credit losses, and to greatly increase the types of data we need to collect and review to determine the appropriate level of the allowance for credit losses. Using loan data as of January 1, 2023, we recorded a credit of $533,000 to the allowance for credit losses on loans as a result of the adoption of CECL.

In addition, our bank regulators and independent auditors periodically review our allowance for credit losses and, as a result of such reviews, we may be required to increase our provision for credit losses or recognize further loan charge-offs. However, regulatory agencies and independent auditors are not directly involved in the process of establishing the allowance for credit losses, as the process is our responsibility and any adjustment of the allowance is the responsibility of our management. Any increase in our allowance for credit losses or loan charge-offs as a result of such review or otherwise may have a material adverse effect on our financial condition and results of operations.

Environmental liability associated with our lending activities could result in losses.

In the course of business, we may acquire, through foreclosure, properties securing loans originated or purchased that are in default. Particularly in commercial real estate lending, there is a risk that material environmental violations could be discovered on these properties. In this event, we might be required to remedy these violations at the affected properties at our sole cost and expense. The cost of remedial action could substantially exceed the value of affected properties. We may not have adequate remedies against the prior owner or other responsible parties and could find it difficult or impossible to sell the affected properties. These events could have an adverse effect on our financial condition and results of operations.

 

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Risks Related to Payments Processing Activities

Our payment processors may be unable to satisfy obligations, in which case we may ultimately be liable or which may otherwise adversely affect our business and financial condition.

We are subject to the risk of our merchants, Independent Sales Organizations (ISOs) or other payment processors being unable to satisfy obligations, in which case we may ultimately be liable. If we are unable to collect amounts due from a merchant or ISO because of insolvency or other reasons, we may bear the loss for those full amounts. We manage our credit risk and attempt to mitigate our risk by obtaining cash reserves, both from merchants, ISOs and other payment processors, and an acquire reserve established at Avidia Bank, as well as through other contractual remedies. Merchant reserve accounts are held and controlled through an account at Avidia Bank, as required by the card brands, which in certain instances can represent a significant number of merchants. As an ISO’s business grows, these reserve accounts can grow to represent deposit concentrations that we monitor and manage on an ongoing basis. It is possible, however, that a default on such obligations by one or more of our ISOs or merchants, could, individually or in the aggregate, have a material adverse effect on our business, financial condition and results of operations if these collective reserves are inadequate. Furthermore, it is possible that one or more ISOs may move their business to another sponsor bank, which could create liquidity risk and require us to rely on more expensive funding sources which would also have a material adverse on our business, financial condition and results of operations.

Fraud by merchants or others could have a material adverse effect on our business and financial condition.

We may be liable for fraudulent transactions initiated by merchants or others. Examples of fraud include when a merchant or other party knowingly uses a stolen or counterfeit card to make a transaction, or if a merchant intentionally fails to deliver the merchandise or services sold in an otherwise valid transaction. Criminals are using increasingly sophisticated methods to engage in illegal activities such as counterfeiting and fraud. It is possible that incidents of fraud could increase in the future. Failure to effectively manage risk and prevent fraud would increase our chargeback liability or other liability. Increases in chargebacks or other liability could have a material adverse effect on our business, financial condition, and results of operations.

The potential for fraud in the card payment industry is significant and could adversely affect our business and results of operations.

Issuers of prepaid and debit cards and other companies have suffered significant losses in recent years with respect to the theft of cardholder data that has been illegally exploited for personal gain. The theft of such information is regularly reported and affects individuals and businesses. Losses from various types of fraud have been substantial for certain card industry participants. We also rely upon third parties for transaction processing services, which subjects us and our customers to risks related to the vulnerabilities of those third parties. We, in many cases, have indemnification agreements with third parties; however, these agreements may not fully cover losses. Fraudulent activity could also result in the imposition of regulatory sanctions, including significant monetary fines, which could adversely affect our business, results of operations and financial condition. Although fraud has not had a material impact on our profitability, it is possible that such activity could adversely impact profitability in the future.

Changes in card and payment network rules, standards or fees could adversely affect our business or operations.

In order to provide our payment processing services, we are members of the Visa and MasterCard networks. As a member, we are subject to card and payment network rules that could subject us or our ISOs and merchants to a variety of fines or penalties that may be assessed on us, our ISOs, and our merchants. The termination of our membership, or the revocation of registration of any of our ISOs, or any changes in card and payment network rules or standards could increase the cost of operating our payment processor business or limit our ability to provide payment processing to or through our customers and could have a material adverse effect on our business, financial condition and results of operations. From time to time, the card networks increase the fees that they charge to acquirers, and we charge to our merchants. It is possible that competitive pressures will result in us absorbing a portion of such increases in the future, which would increase our costs, reduce our profit margin and adversely affect our business and financial condition. In addition, the card networks require acquirers to hold and control merchant reserves that are accumulated and derived from merchant settlement funds or used to guarantee a merchant’s payment system obligations. Any changes to these requirements could materially reduce the amount of deposits related to our payment processing business, negatively impacting our liquidity position and requiring us to utilize alternative, higher cost funding sources to replace those deposits. Furthermore, the card networks require certain capital requirements. An increase in the required capital level would further limit our use of capital for other purposes.

 

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Our business could suffer if consumer behaviors, or other factors, in connection with the use of prepaid cards change, or there are adverse developments with respect to the prepaid financial services industry in general.

As the prepaid financial services industry evolves, consumers may either find prepaid financial services to be less attractive than other financial services or may change the way in which they utilize the service prepaid cards provide. Consumers might not use prepaid financial services for any number of reasons. For example, negative publicity surrounding us or other prepaid financial service providers could impact the Payments business and prospects for growth to the extent it adversely impacts the perception of prepaid financial services. Consumer spending behaviors could increase or decrease, or become more difficult to accurately predict, thereby impacting our operating revenues and/or expenses. Growth of prepaid financial services as an electronic payment mechanism may not occur or may occur more slowly than estimated. These factors could have a material adverse effect on our financial condition and results of operations.

We may incur losses due to fraudulent and negligent acts, as well as errors, by third parties or our employees.

We may incur losses due to fraudulent or negligent acts, misconduct or errors on the part of third parties with which we do business, our employees and individuals and entities unaffiliated with us, including unauthorized wire and automated clearinghouse transactions, the theft of customer data, customer fraud concerning the value of any relevant collateral, identity theft, errors in a customer’s tax return, tax return fraud, the counterfeiting of cards and “skimming” (whereby a skimmer reads a debit card’s encoded mag stripe and a camera records the PIN that is entered by a customer), malicious social engineering schemes (where people are asked to provide a prepaid card or reload product in order to obtain a loan or purchase goods or services) and collusion between participants in the card system to act illegally. Additionally, our employees could hide unauthorized activities from us, engage in improper or unauthorized activities on behalf of our customers, or improperly use confidential information. There can be no assurances that Avidia Bank’s program to monitor fraud and other activities will be able to detect all instances of such conduct or that, even if such conduct is detected, we, our customers or the third parties with which we do business, including the ATM networks and card payment industry in which Avidia Bank participates, will not be the victims of such activities. Even a single significant instance of fraud, misconduct or other error could result in reputational damage to us, which could reduce the use and acceptance of our cards and other products and services, cause retail distributors or their customers to cease doing business with us or them, or could lead to greater regulation that would increase our compliance costs. Such activities could also result in the imposition of regulatory sanctions, including significant monetary fines, and civil claims which could adversely affect our business, operating results and financial condition.

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 us generally and the payments processing business specifically.

In July 2018, the Office of the Comptroller of the Currency announced that it would begin to accept and evaluate charters for entities that wanted to conduct certain components of a banking business pursuant to a federal charter, known as a special purpose national bank charter. Intended to promote economic opportunity and spur financial innovation, an institution with a special purpose national bank charter may engage in paying checks, lending money and taking deposits. While no special purpose national bank charters have been granted as of the date of this prospectus, the Office of the Comptroller of the Currency has granted national bank charters to companies that were previously non-bank fintech companies. If, in the future, the Office of the Comptroller of the Currency determines to grant any special purpose national bank charter applications or continues to grant bank charters to fintech applicants, recipients of such charters may enter the U.S. payments market and other business activities that Avidia Bank conducts, which could increase the competition we face and have a material adverse effect on Avidia Bank and its payments processing activities. This could result in lower fee income, and loss of deposits, related to our payments processing business.

 

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Regulatory and legal requirements applicable to the prepaid and debit card industry are unique and frequently changing.

Changes in rules or standards set by the payment networks, or changes in debit network fees or products or interchange rates, could adversely affect our business, financial position and results of operations. Achieving and maintaining compliance with frequently changing legal and regulatory requirements applicable to prepaid and debit card products requires a significant investment in qualified personnel, hardware, software and other technology platforms, external legal counsel and consultants and other infrastructure components. These investments may not ensure compliance or otherwise mitigate risks involved in this business. Our failure to satisfy regulatory mandates applicable to prepaid financial products could result in actions against us by our regulators, legal proceedings being instituted against us by consumers, each of which could reduce our earnings or result in losses, make it more difficult to conduct our operations, or prohibit us from conducting specific operations. Other risks related to prepaid cards include competition for prepaid, debit and other payment mediums, possible changes in the rules of networks, such as Visa and Mastercard and others, in which Avidia Bank operates, changes in network fees or interchange rates and state regulations related to prepaid cards, including those regarding escheatment. The enactment of Dodd-Frank required the Federal Reserve Board to implement regulations that have substantially limited interchange fees for many issuers. While interchange rates are exempt from the limitations imposed by Dodd-Frank for institutions with less than $10 billion in assets, like Avidia Bank, new legislation could result in changes to the rates we are able to charge. There can be no assurance that such possible future legislation or changes by the payment networks will not substantially impact our revenues.

Changes in rules or standards set by the payment networks, or changes in debit network fees or products or interchange rates, could adversely affect our business, financial position and results of operations.

We are subject to network rules that could subject us to a variety of fines or penalties that may be levied by the card networks for acts or omissions by us or businesses that work with us, including card processors. Furthermore, a substantial portion of our operating revenues is derived directly or indirectly from interchange fees. The amount of prepaid, debit card and related fees that we earn is highly dependent on the interchange rates that the payment networks set and adjust from time to time.

The Dodd-Frank Act required the Federal Reserve Board to implement regulations that have substantially limited interchange fees for many issuers. While the interchange rates that may be earned by us are exempt from the limitations imposed by the Dodd-Frank Act, federal legislators and regulatory authorities have become increasingly focused on interchange, and continue to propose new legislation that could result in significant adverse changes to the rates we are able to charge and there can be no assurance that future regulation or changes by the payment networks will not substantially impact our interchange revenues. If interchange rates decline, whether due to actions by the payment networks or future regulation, we would likely need to change our fee structure to offset the loss of interchange revenues. However, our ability to make these changes is limited by the terms of our contracts and other commercial factors, such as price competition. To the extent we increase the pricing of our products and services, we might find it more difficult to acquire consumers and to maintain or grow card usage and customer retention, and we could suffer reputational damage and become subject to greater regulatory scrutiny. We also might have to discontinue certain products or services. As a result, our total operating revenues, operating results, prospects for future growth and overall business could be materially and adversely affected.

If our prepaid and debit card and other deposit accounts generated by third parties were no longer classified as non-brokered deposits, we may have to rely more heavily on wholesale funding strategies to support our payments processing activities, which could have an adverse effect on our profitability.

Periodically, the FDIC has issued guidance changing the way it classifies prepaid deposit accounts and other deposit accounts obtained in cooperation with third parties, either as brokered deposits or non-brokered deposits. Most recently, in December 2020, the FDIC adopted a regulation which, as of June 30, 2021, reclassified a large portion of our deposits from brokered deposits to non-brokered deposits. This most recent reclassification depends upon ongoing consideration by regulators, including recertification requirements for certain accounts. Because the cost of brokered deposits generally exceed that of non-brokered deposits, a reclassification of a majority of our deposits from non-brokered status to brokered status would have a material adverse effect on our profitability. Furthermore, should Avidia Bank’s capital ratios fall below well-capitalized levels, it would be prohibited from accepting, renewing or rolling over brokered deposits without FDIC consent. Without FDIC consent, we could not operate our payments processing business as presently conducted.

 

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We face funds transfer and payments-related risks.

As a financial institution, we bear funds transfer risks of different types, which result from large transaction volumes and large dollar amounts of incoming and outgoing money transfers. Loss exposure may result if money is transferred before it is received, or legal rights to reclaim monies transferred are asserted, including payments made to merchants for payment clearing, while customers have statutory periods to reverse their payments. Exposure also results from payments made prior to receipt of offsetting funds, as accommodations to customers. We are subject to unique settlement risks as our transfers may be larger than typical financial institutions of our size. Transfers could also be made in error or as a result of fraud. Additionally, as with other financial institutions, we may incur legal liability or reputational risk, if we unknowingly process payments for companies in violation of money laundering laws or other regulations or immoral activities.

Risks Related to Market Interest Rates

Prevailing high market interest rates have reduced our profits and asset values.

Net income is the amount by which net interest income and non-interest income exceed non-interest expense and the provision for loan losses. Net interest income makes up a majority of our income and is based on the difference between:

 

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the interest income we earn on interest-earning assets, such as loans and securities; and

 

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the interest expense we pay on interest-bearing liabilities, such as deposits and borrowings.

Like many savings institutions, our interest-bearing liabilities generally have shorter contractual maturities than our interest-earning assets. Furthermore, the rates we earn on our other interest-earning assets and the rates we pay on our interest-bearing liabilities are generally fixed for a contractual period of time. This imbalance can create significant earnings volatility because market interest rates change over time. Generally, in a period of rising interest rates, the interest income we earn on our interest-earning assets may not increase as rapidly as the interest we pay on deposits and other interest-bearing liabilities. Conversely, in a period of declining interest rates, the interest income we earn on our interest-earning assets may decrease more rapidly than the interest we pay on our interest-bearing liabilities, as borrowers prepay mortgage loans and as mortgage-backed securities and callable investment securities are called, requiring us to reinvest those cash flows at lower, prevailing interest rates.

The high interest rate environment, coupled with the inverted interest rate yield curve until recently, has had an adverse effect on our net interest spread. An inverted interest rate yield curve is where short-term interest rates (which are typically the interest rates at which we and other financial institutions borrow funds and incur interest expense) are higher than long-term interest rates (which are typically the rates at which we and other financial institutions lend funds and earn interest income). Our net interest spread decreased from 2.49% for the year ended December 31, 2023, to 2.37% for the year ended December 31, 2024.

Changes in market interest rates may also negatively affect the value of our assets, including the value of our available for sale investment securities, and ultimately affect our earnings. The value of available for sale investment securities generally decreases when market interest rates rise and generally increase when market interest rates decline. During the years ended December 31, 2023 and 2024, we incurred $11.8 million and $3.7 million, respectively, in net unrealized gains on available for sale investment securities.

For further discussion of how changes in interest rates could impact us, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Management of Market Risk.”

 

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Risks Related to Economic Conditions

Inflation can have an adverse impact on our business and on our customers.

Inflation risk is the risk that the value of assets or income from investments will be worth less in the future as inflation decreases the value of money. Recently, there has been a rise in inflation and the Federal Reserve Board has raised certain benchmark interest rates in an effort to combat inflation. As discussed above under “– Risks Related to Market Interest Rates – Changes in interest rates could reduce our profits and asset values,” as inflation increases and market interest rates rise, the value of our investment securities, particularly those with longer maturities, would decrease, although this effect can be less pronounced for floating rate instruments. In addition, inflation generally increases the cost of goods and services we use in our business operations, such as electricity and other utilities, which increases our noninterest expenses. Furthermore, our customers are also affected by inflation and the rising costs of goods and services used in their households and businesses, which could have a negative impact on their ability to repay their loans with us.

A worsening of economic conditions in our market area could reduce demand for our products and services and/or result in increases in our level of non-performing loans, which could adversely affect our operations, financial condition and earnings.

Local and regional economic conditions have a significant impact on the ability of our borrowers to repay loans and the value of the collateral securing loans. A deterioration in economic conditions, especially local conditions, could have the following consequences, any of which could have a material adverse effect on our business, financial condition, liquidity and results of operations, and could more negatively affect us compared to a financial institution that operates with more geographic diversity:

 

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demand for our products and services may decline;

 

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loan delinquencies, problem assets and foreclosures may increase;

 

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collateral for loans, especially real estate, may decline in value, reducing customers’ future borrowing power, and reducing the value of assets and collateral associated with existing loans; and

 

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the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us.

Moreover, a significant decline in general economic conditions caused by inflation, recession, tariff wars, acts of terrorism, civil unrest, an outbreak of hostilities or other international or domestic calamities, an epidemic or pandemic, unemployment or other factors beyond our control could further impact these local economic conditions and could further negatively affect the financial results of our banking operations. In addition, deflationary pressures, while possibly lowering our operating costs, could have a significant negative effect on our borrowers, especially our business borrowers, and the values of underlying collateral securing loans, which could negatively affect our financial performance.

The soundness of other financial institutions could adversely affect us.

Our ability to engage in routine funding transactions could be adversely affected by the actions and commercial soundness of other financial institutions. Financial services institutions are interrelated as a result of trading, clearing, counterparty relationships, such as counterparties with whom we engage in interest rate swap transactions, and other relationships. We have exposure to several different counterparties, and we routinely execute transactions with counterparties in the financial industry, including brokers, dealers, and other financial institutions. Defaults by, or even rumors or questions about, one or more financial services institutions, or the financial services industry generally, could lead to market-wide liquidity problems and losses or defaults by us or by other institutions and organizations. Many of these transactions expose us to credit risk in the event of default of our counterparty. In addition, our credit risk may be exacerbated when the collateral held by us cannot be liquidated or is liquidated at prices insufficient to recover the full amount of the financial instrument exposure due to us. There is no assurance that any such losses would not materially and adversely affect our financial condition and results of operations.

 

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Risks Related to Our Funding

Our inability to generate core deposits may cause us to rely more heavily on wholesale funding strategies for funding and liquidity needs, which could have an adverse effect on our profitability.

We must maintain sufficient funds to respond to the needs of depositors and borrowers. Deposits have traditionally been our primary source of funds for use in lending and investment activities. We also receive funds from loan repayments, investment maturities and income on other interest-earning assets. While we emphasize generating transaction accounts, we cannot guarantee if and when this will occur. Further, the considerable competition for deposits in our market area also has made, and may continue to make, it difficult for us to obtain reasonably priced deposits. Moreover, deposit balances can decrease if customers perceive alternative investments as providing a better risk/return tradeoff. If we are not able to increase our lower-cost transactional deposits at a level necessary to fund our asset growth or deposit outflows, we may be forced seek other sources of funds, including other certificates of deposit, Federal Home Loan Bank advances, brokered deposits and lines of credit to meet the borrowing and deposit withdrawal requirements of our customers, which may be more expensive and have an adverse effect on our net interest margin and profitability. In addition, if our capital levels fell such that we were no longer considered “well capitalized,” under federal law we would be subject to restrictions on accepting brokered deposits and on paying above-market rates for deposits. Additionally, if, based on a decrease in our tangible equity, the Federal Home Loan Bank of Boston were to determine that we have inadequate capital levels, in its discretion, it may limit our ability to utilize Federal Home Loan Bank advances.

Our funding sources may prove insufficient to replace deposits at maturity and support our future growth.

We must maintain sufficient funds to respond to the needs of depositors and borrowers. As a part of our liquidity management, we use a number of funding sources in addition to core deposit growth and repayments and maturities of loans and investments. As we continue to grow, we are likely to depend more on these other sources, which may include Federal Home Loan Bank borrowings and brokered deposits, among others. Adverse operating results or changes in industry conditions could lead to difficulty or an inability to access these additional funding sources. Our financial flexibility will be severely constrained if we are unable to maintain our access to funding or if adequate financing is not available to accommodate future growth at acceptable interest rates. If we are required to rely more heavily on more expensive funding sources to support future growth, our revenues may not increase proportionately to cover our costs. In this case, our operating margins and profitability would be adversely affected. Moreover, if Avidia Bank ceases to be categorized as “well capitalized” under banking regulations, it would be prohibited from accepting or renewing brokered deposits without FDIC consent.

If our deposits grow too large, we may lose the benefits of excess deposit insurance provided by the Depositors Insurance Fund.

Avidia Bank’s deposits are insured in full beyond federal deposit insurance coverage limits by the Depositors Insurance Fund, a private excess deposit insurer created under Massachusetts law. We believe offering full deposit insurance gives us a competitive advantage for individual, corporate and municipal depositors having deposit balances in excess of federal insurance limits. However, the Depositors Insurance Fund may require member institutions that pose greater than normal loss exposure risk to the Depositors Insurance Fund to take certain risk-mitigating measures or withdraw from the Depositors Insurance Fund and become a Massachusetts trust company by operation of law, subject to the Massachusetts Banking Commissioner’s approval. In such an event, an institution may be required to reduce its level of excess deposits, pay for the reinsurance of excess deposits, make an additional capital contribution to the Depositors Insurance Fund, provide collateral or take other risk-mitigating measures that the Depositors Insurance Fund may require, which may include entering into reciprocal deposit programs with other financial institutions or reciprocal deposit services. Reducing excess deposits by taking any of the above risk-mitigating measures, which allows deposits to run off, reduces our overall level of deposits and increases the extent to which we may need to rely in the future on other, more expensive or less stable sources for funding, which would reduce net income. Shifting excess deposits into reciprocal deposit programs may result in higher funding costs, which also would reduce net income.

 

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Risks Related to Laws and Regulations

Changes in laws and regulations and the cost of regulatory compliance with new laws and regulations may adversely affect our operations and/or increase our costs of operations.

Avidia Bank is subject to extensive regulation, supervision and examination by the Massachusetts Division of Banks and by the FDIC. Upon completion of the conversion and stock offering, Avidia Bancorp will be subject to extensive regulation, supervision and examination by the Federal Reserve Board. Such regulation and supervision govern the activities in which an institution and its holding company may engage and are intended primarily for the protection of the federal deposit insurance fund and the depositors of Avidia Bank, rather than for our stockholders. Regulatory authorities have extensive discretion in their supervisory and enforcement activities, including the imposition of restrictions on our operations, the classification of our assets and determination of the adequacy of the level of our allowance for credit losses. These regulations, along with existing tax, accounting, securities, insurance and monetary laws, rules, standards, policies, and interpretations, control the methods by which financial institutions conduct business, implement strategic initiatives and tax compliance, and govern financial reporting and disclosures. Any change in such regulation and oversight, whether in the form of regulatory policy, regulations, legislation or supervisory action, may have a material impact on our operations.

Non-compliance with the USA PATRIOT Act, Bank Secrecy Act, or other laws and regulations could result in fines or sanctions.

The USA PATRIOT and Bank Secrecy Acts require financial institutions to develop programs to prevent financial institutions from being used for money laundering and terrorist activities. If such activities are suspected, financial institutions are obligated to file suspicious activity reports with FinCEN. These rules require financial institutions to establish procedures for identifying and verifying the identity of customers seeking to open new financial accounts. Failure to comply with these regulations could result in fines or sanctions, including restrictions on pursuing acquisitions or establishing new branches. The policies and procedures we have adopted that are designed to assist in compliance with these laws and regulations may not be effective in preventing violations of these laws and regulations. Furthermore, these rules and regulations continue to evolve and expand.

Monetary policies and regulations of the Federal Reserve Board could adversely affect our business, financial condition and results of operations.

In addition to being affected by general economic conditions, our earnings and growth are affected by the policies of the Federal Reserve Board. An important function of the Federal Reserve Board is to regulate the money supply and credit conditions. Among the instruments used by the Federal Reserve Board to implement these objectives are open market purchases and sales of U.S. government securities, adjustments of the discount rate and changes in banks’ reserve requirements against bank deposits. These instruments are used in varying combinations to influence overall economic growth and the distribution of credit, bank loans, investments and deposits. Their use also affects interest rates charged on loans or paid on deposits. The monetary policies and regulations of the Federal Reserve Board have had a significant effect on the operating results of financial institutions in the past and are expected to continue to do so in the future. The effects of such policies upon our business, financial condition and results of operations cannot be predicted.

We are an emerging growth company, and any decision on our part to comply only with certain reduced reporting and disclosure requirements applicable to emerging growth companies could make our common stock less attractive to investors.

Avidia Bancorp qualifies as an “emerging growth company” under the federal securities laws. For as long as it continues to qualify as an emerging growth company, it may choose to take advantage of exemptions from various public company reporting requirements that are not available to public companies that do not qualify as emerging growth companies, including, but not limited to, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation. As an emerging growth company, Avidia Bancorp also will not be subject to Section 404(b) of the Sarbanes-Oxley Act of 2002, which would require that our independent auditors

 

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audit our internal control over financial reporting. In addition, as an emerging growth company, we have elected to take advantage of the extended transition periods for adopting new or revised financial accounting standards until the date they are required to be adopted by private companies (however, if any new or revised financial accounting standards would not apply to private companies, we would not be able to delay their adoption). Accordingly, our financial statements may not be comparable to those of public companies that adopt new or revised financial accounting standards as of an earlier date. Investors may find our common stock less attractive since we have chosen to rely on these exemptions. If some investors find our common stock less attractive as a result of any choices to reduce future disclosure, there may be a less active trading market for our common stock and the price of our common stock may be more volatile.

We are also a smaller reporting company, and even if we no longer qualify as an emerging growth company, any decision on our part to comply only with certain reduced reporting and disclosure requirements applicable to smaller reporting companies could make our common stock less attractive to investors.

In addition to qualifying as an emerging growth company, Avidia Bancorp qualifies as a “smaller reporting company” under the federal securities laws. For as long as it continues to qualify as a smaller reporting company, it may choose to take advantage of exemptions from various reporting requirements applicable to public companies that are not available to companies that are not smaller reporting companies, including, but not limited to, reduced financial disclosure obligations and reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements. If some investors find our common stock less attractive as a result of any choices to reduce future disclosure, there may be a less active trading market for our common stock and the price of our common stock may be more volatile.

Risks Related to Competitive Matters

Strong competition within our market area may limit our growth and profitability.

Competition in the banking and financial services industry is intense. We compete with commercial banks, savings institutions, mortgage brokerage firms, credit unions, finance companies, mutual funds, insurance companies, brokerage and investment banking firms, financial technology or “fintech companies,” and unregulated or less regulated non-banking entities. Many of these competitors are substantially larger than we are and have substantially greater resources and higher lending limits than we have and offer certain services that we do not or cannot provide. In addition, some of our competitors offer loans with lower interest rates and/or more attractive terms than loans we offer. Competition also makes it increasingly difficult and costly to attract and retain qualified employees. We expect competition to increase in the future as a result of legislative, regulatory and technological changes and the continuing trend of consolidation in the financial services industry. Our profitability depends upon our continued ability to successfully compete for business and qualified employees in our market areas. The greater resources and deposit and loan products offered by some of our competitors may limit our ability to increase our interest-earning assets. See also “—The grant of bank charters and special purpose fintech charters by the Office of the Comptroller of the Currency to fintech companies could present a market risk to us generally and the payments processing business specifically.”

Risks Related to Operational Matters

We depend on our management team to implement our business strategy and execute successful operations and we could be harmed by the loss of their services.

We depend on the services of the members of our senior management team who direct our strategy and operations. Our executive officers and lending personnel possess substantial expertise, extensive knowledge of our markets and key business relationships. Our loss of these persons, or our inability to hire additional qualified personnel, could impact our ability to implement our business strategy and could have a material adverse effect on our results of operations and our ability to compete in our markets. See “Management.”

 

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We face significant operational risks because of our reliance on technology. Our information technology systems may be subject to failure, interruption or security breaches.

Information technology systems are critical to our business. Our business requires us to collect, process, transmit and store significant amounts of confidential information regarding our customers, employees and our own business, operations, plans and business strategies. We use various technology systems to manage our customer relationships, general ledger, investments, deposits, and loans. Our computer systems, data management and internal processes, as well as those of third parties, are integral to our performance. Our operational risks include the risk of malfeasance by employees or persons outside our company, errors relating to transaction processing and technology, systems failures or interruptions, breaches of our internal control systems and compliance requirements, and business continuation and disaster recovery. There have been increasing efforts by third parties to breach data security at financial institutions. Such attacks include computer viruses, malicious or destructive code, phishing attacks, denial of service or information or other security breaches that could result in the unauthorized release, gathering, monitoring, misuse, loss or destruction of confidential, proprietary and other information, damages to systems, or other material disruptions to network access or business operations. We have established policies and procedures to prevent or limit the impact of system failures, interruptions and security breaches, including privacy breaches and cyber-attacks. Although we take protective measures and believe that we have not experienced any of the data breaches described above, the security of our computer systems, software, and networks may be vulnerable to breaches, unauthorized access, misuse, computer viruses, or other malicious code and cyber-attacks that could have an impact on information security. Because the techniques used to cause security breaches change frequently, we may be unable to proactively address these techniques or to implement adequate preventative measures.

If there is a breakdown in our internal control systems, improper operation of systems or improper employee actions, or a breach of our security systems, including if confidential or proprietary information were to be mishandled, misused or lost, we could suffer financial loss, loss of customers and damage to our reputation, and face regulatory action or civil litigation. Any of these events could have a material adverse effect on our financial condition and results of operations. Insurance coverage may not be available for such losses, or where available, such losses may exceed insurance limits.

We outsource critical operations to third-party service providers. Systems failures, interruptions and cybersecurity breaches could have a material adverse effect on us.

We outsource a majority of our data processing requirements to third-party providers. Accordingly, our operations are exposed to the risk that these vendors will not perform according to our contractual agreements with them, or we also could be adversely affected if such an agreement is not renewed by the third-party vendor or is renewed on terms less favorable to us. If our third-party providers encounter difficulties, or if we have difficulty communicating with those service providers, our ability to adequately process and account for transactions could be affected, and our business operations could be adversely affected, which could have a material adverse effect on our financial condition and results of operations. Threats to information security also exist in the processing of customer information through various other vendors and their personnel, and our third-party service providers may be vulnerable to unauthorized access, computer viruses, phishing schemes and other security breaches. We may have to expend additional resources to protect against the threat of such security breaches and computer viruses, or to alleviate problems caused by such security breaches or viruses. To the extent that the activities of our third-party service providers or the activities of our customers involve the storage and transmission of confidential information, security breaches and viruses could expose us to claims, regulatory scrutiny, litigation costs and other possible liabilities. To our knowledge, the services and programs provided to us by third parties have not experienced any material security breaches. However, the existence of cyber-attacks or security breaches at third parties with access to our data, such as vendors, may not be disclosed to us in a timely manner.

We are subject to litigation risk, and any pending or potential litigation may have an adverse effect on our business, financial condition and results of operations.

Although we are not a party to any material pending or potential legal proceedings, pending or potential legal proceedings, including class action lawsuits, can pose significant financial and other risks to our organization. Prosecuting or defending against a lawsuit or other legal proceeding is often costly. Legal issues, such as lawsuits, unenforceable contracts, and adverse judgments, can potentially disrupt our operations, potentially materially reduce our earnings, capital and liquidity, and otherwise materially and adversely affect our business, financial condition, results of operations, and reputation. See “Business of Avidia Bank – Legal Proceedings.”

 

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We operate as a community bank and our ability to maintain our reputation, which is critical to the success of our business, may materially adversely affect our performance.

We are a community bank, and our reputation is one of the most valuable components of our business. A key component of our business strategy is to rely on our reputation for customer service and knowledge of local markets to expand our presence by capturing new business opportunities from existing and prospective customers in our market area and contiguous areas. Threats to our reputation can come from many sources, including adverse sentiment about financial institutions generally, unethical practices, employee misconduct, failure to deliver minimum standards of service or quality, compliance deficiencies, cybersecurity incidents and questionable or fraudulent activities of our customers. Negative publicity regarding our business, employees, or customers, with or without merit, may result in the loss of customers and employees, costly litigation and increased governmental regulation, any or all of which could adversely affect our business and operating results.

The cost of additional finance and accounting systems, procedures and controls in order to satisfy our new public company reporting requirements will increase our expenses.

As a result of the completion of the conversion and stock offering, we will become a public reporting company. The obligations of being a public company, including the substantial public reporting obligations, will require significant expenditures and place additional demands on our management team. We will make changes to our internal controls and procedures for financial reporting and accounting systems to meet our reporting obligations as a public company. Any failure to achieve and maintain an effective internal control environment could have a material adverse effect on our business and stock price. In addition, we may need to hire additional compliance, accounting and financial staff with appropriate public company experience and technical knowledge, and we may not be able to do so in a timely fashion. As a result, we may need to rely on outside consultants to provide these services for us until qualified personnel are hired. These obligations will increase our operating expenses and could divert our management’s attention from our operations.

Acquisition transactions involve execution, financial and other risks.

Although we have no present plans or understandings to engage in any acquisitions, an element of our business strategy is to pursue acquisition opportunities that complement our business plan and strategies should they arise. Among the execution risks of acquisitions are failure to identify and compete for acquisition candidates, failure to effectively integrate the operations of an acquired institution with our own, and failure to effectively manage the operations of the larger combined company so as to realize the expected benefits, financial and otherwise, of a transaction. From a financial perspective an acquisition could involve significant cash expenditures and/or a material increase the number of our outstanding shares of common stock, which could materially dilute stockholder value by diluting stockholders’ equity per share and earnings per share. In addition, a portion of the purchase price of an acquisition may likely be allocated to goodwill and other identifiable intangible assets. Under current accounting rules, if goodwill or other identifiable intangible assets becomes impaired, we would be required to incur a non-cash impairment charge which could have a material adverse effect on our earnings, stockholders’ equity, and stock price. Pursuit of acquisitions may also disrupt our business by diverting management time and resources away from our daily business operations.

Risks Related to Accounting Matters

Changes in management’s estimates and assumptions may have a material impact on our consolidated financial statements and our financial condition or operating results.

In preparing this prospectus, including Assabet Valley Bancorp’s consolidated financial statements, as well as the periodic reports Avidia Bancorp will be required to file with the SEC, our management is and will be required under applicable rules and regulations to make estimates and assumptions as of a specified date. These estimates and assumptions are based on management’s best estimates and experience as of that date and are subject to substantial risk and uncertainty. Materially different results may occur as circumstances change and additional information becomes known. The area requiring significant estimates and assumptions by management include our evaluation of the adequacy of our allowance for credit losses.

 

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Changes in accounting standards could affect reported earnings.

The regulatory bodies responsible for establishing accounting standards, including the Financial Accounting Standards Board, the SEC and other regulatory bodies, periodically change the financial accounting and reporting guidance that governs the preparation of our consolidated financial statements. These changes can be hard to predict and can materially impact how we record and report our financial condition and results of operations. In some cases, we could be required to apply new or revised guidance retroactively.

Risks Related to the Stock Offering

The future price of our common stock may be less than the purchase price in the stock offering.

If you purchase shares of common stock in the stock offering, you may not be able to sell them at or above the $10.00 purchase price. The aggregate purchase price of the shares of common stock sold in the stock offering is based upon an independent third-party appraisal of the pro forma market value of Avidia Bancorp. The appraisal is not intended, and should not be construed, as a recommendation of any kind as to the advisability of purchasing shares of our common stock, and such appraisal is based on certain estimates, assumptions and projections, all of which are subject to change from time to time. Our aggregate pro forma market value as reflected in the final independent appraisal may exceed the market price of our shares of common stock after the completion of the conversion and stock offering, which may result in our stock trading below the initial offering price of $10.00 per share. After the shares of our common stock begin trading, the trading price of the common stock will be determined by the marketplace, and will be influenced by many factors outside of our control, including prevailing interest rates, investor perceptions, securities analyst research reports and general industry, geopolitical and economic conditions. Publicly traded stocks, including stocks of financial institutions, often experience substantial market price volatility. Price fluctuations in our common stock may be unrelated to our operating performance.

We have broad discretion in using the net proceeds of the stock offering. Our failure to effectively deploy the net proceeds of the stock offering may have an adverse effect on our financial performance and the value of our common stock.

We intend to invest between $59.2 million and $80.6 million of the net proceeds of the stock offering (or $93.0 million at the adjusted maximum of the offering range) in Avidia Bank. We also intend to use a portion of the net proceeds to make a cash contribution to the charitable foundations and fund a loan for the purchase of shares of common stock in the stock offering by the ESOP. Avidia Bank intends to use the net proceeds it receives to fund new loans, enhance existing products and services, invest in securities, or for other general corporate purposes. However, except for the loan to the ESOP and the cash contribution to the charitable foundation, we have not allocated specific amounts of the net proceeds for any of these purposes, and we will have broad discretion in determining the amount of the net proceeds we apply to different uses and when we apply or reinvest such proceeds. We have not established a timetable for investing the net proceeds, and, accordingly, we may not invest the net proceeds at a time that is most beneficial to Avidia Bancorp, its stockholders, or Avidia Bank. For additional information see “How We Intend to Use the Proceed From the Stock Offering.”

The capital we raise in the stock offering may negatively impact our return on equity until we can fully implement our business plan. This could negatively affect the trading price of our shares of common stock.

Net income divided by average equity, known as “return on equity,” is a ratio many investors use to compare the performance of a financial institution to its peers. Our return on equity may be relatively low until we are able to implement our business plan and leverage the additional capital we receive from the stock offering. Although we anticipate increasing net interest income using proceeds of the stock offering, our return on equity will be reduced by the capital raised in the stock offering, higher expenses from the costs of being a public company, and added expenses associated with the ESOP and the stock-based benefit plan we intend to adopt. Until we can implement our business plan and increase our net interest income through investment of the proceeds of the stock offering, our return on equity may remain relatively low compared to our peer group, which may reduce the value of our shares.

 

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Our stock-based benefit plans will increase our expenses, which will reduce our net income.

The ESOP intends to purchase 8% of the sum of the shares of common stock sold in the stock offering and contributed to the charitable foundation. The estimated cost of acquiring these shares is between $10.6 million at the minimum of the offering range and $16.1 million at the adjusted maximum of the offering range, assuming it is able to purchase all such shares in the stock offering. We will record an annual ESOP expense in an amount equal to the fair value of shares of common stock committed to be released to participating employees. If our common stock appreciates in value over time, this compensation expense will increase.

In addition, we intend to implement a stock-based benefit plan after the conversion and stock offering, subject to shareholder approval, which would increase our annual compensation and benefit expenses related to stock options and stock awards granted to participants under the stock-based benefit plan. The amount of these stock-related compensation and benefit expenses would depend on the number of options and stock awards granted, the fair value of the options and of our stock on the date of grant, the vesting period, and other factors that we cannot predict at this time. If we implement a stock-based benefit plan within one year following the completion of the conversion and stock offering, the total shares of common stock reserved for issuance pursuant to awards of restricted stock and grants of options under the plan would be limited to 4% and 10%, respectively, of the sum of the shares of common stock sold in the stock offering and contributed to the charitable foundation. If we adopt a stock-based benefit plan more than 12 months after the completion of the conversion and stock offering, the plan could allow for greater amounts of restricted stock awards and stock options and, therefore, we could award restricted shares of common stock or grant options in excess of these amounts, which would further increase costs.

The estimated expense in the first year following the conversion and stock offering for shares purchased in the stock offering (or in the after-market if the stock offering is oversubscribed by the eligible account holders) by the ESOP and for a stock-based benefit plan implemented within one year after the conversion and stock offering, subject to receipt of shareholder approval of the stock-based benefit plan, is approximately $4.5 million ($3.8 million after tax based on an effective combined federal/state tax rate of 25%) at the adjusted maximum of the offering range as set forth in the pro forma financial information under “Pro Forma Data,” assuming the $10.00 per share offering price as fair market value. Actual expense may be higher if the price of our common stock at the time the shares are allocated or awarded is greater than $10.00 per share. For further discussion of our proposed stock-based plans, see “Management – Benefits to be Considered Following Completion of the Conversion and Stock Offering.”

The implementation of a stock-based benefit plan is likely to dilute your ownership interest.

We intend to adopt one or more new stock-based benefit plans following the conversion and stock offering. These plans may be funded either through open market purchases of our common stock or from the issuance of authorized but unissued shares of common stock. Our ability to repurchase shares of our common stock to fund these plans will be subject to many factors, including applicable regulatory restrictions on stock repurchases, the availability of stock in the market, the trading price of our stock, our capital levels, alternative uses for our capital and our financial performance. While our intention is to fund the new stock-based benefit plans through open market purchases, stockholders would experience a 9.09% dilution in ownership interest if newly issued shares of our common stock are used to fund stock options in an amount equal to 10% of the sum of the shares sold in the stock offering and contributed to the charitable foundation, and all such stock options are exercised, and a 3.85% dilution in ownership interest if newly issued shares of our common stock are used to fund grants of restricted common stock in an amount equal to 4% of the sum of shares sold in the stock offering and contributed to the charitable foundation. Such dilution would also reduce earnings per share. If we adopt the plans more than 12 months following the conversion, new stock-based benefit plans would not be subject to these size limitations and stockholders could experience even greater dilution.

 

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Although the implementation of new stock-based benefit plans would be subject to stockholder approval, historically, the overwhelming majority of stock-based benefit plans adopted by savings institutions and their holding companies following mutual-to-stock conversions have been approved by stockholders.

We have not determined when we will adopt one or more stock-based benefit plans following the conversion and stock offering. Stock-based benefit plans adopted more than one year following the completion of the conversion and stock offering may exceed regulatory restrictions on the size of stock-based benefit plans adopted within one year, which would increase both our expenses and dilution to stockholders.

If we adopt stock-based benefit plans more than one year following the completion of the conversion and stock offering, then grants of shares of common stock or stock options under our proposed stock-based benefit plans may exceed 4% and 10%, respectively, of the sum of shares of common stock sold in the stock offering and contributed to the charitable foundation. Stock-based benefit plans that provide for awards in excess of these amounts would increase our costs beyond the amounts estimated in “– Our stock-based benefit plans will increase our expenses, which will reduce our net income.” Stock-based benefit plans that provide for awards in excess of these amounts could also result in dilution to stockholders in excess of that described in “– The implementation of a stock-based benefit plan is likely to dilute your ownership interest.” Although the implementation of stock-based benefit plans would be subject to stockholder approval, the timing of implementation will be at the discretion of our board of directors.

Various factors may make takeover attempts more difficult to achieve.

Certain provisions of Avidia Bancorp’s articles of incorporation and bylaws and of federal and state banking laws, including regulatory approval requirements, could make it more difficult for a third party to acquire control of Avidia Bancorp without the approval of its board of directors. Massachusetts and federal regulations applicable to the conversion and stock offering provide that for a period of three years following completion of the conversion and stock offering, no person may offer to acquire or acquire beneficial ownership of more than 10% of our outstanding common stock without prior approval of the Federal Reserve Board. Under federal law, subject to certain exemptions, a person, entity or group must notify the Federal Reserve Board and receive its non-objection before acquiring control of a bank holding company. There also are provisions in Avidia Bancorp’s articles of incorporation and bylaws that we may use to delay or block a takeover attempt, including a provision that prohibits any person from voting more than 10% of our outstanding shares of common stock. Furthermore, shares of restricted stock and stock options that we may grant to employees and directors, stock ownership by our management and directors and other factors may make it more difficult for companies or persons to acquire control of Avidia Bancorp without the consent of our board of directors, and may increase the cost of an acquisition. Taken as a whole, these statutory or regulatory provisions and provisions in our articles of incorporation and bylaws could make us less attractive to a potential acquirer and therefore could adversely affect the market price of our common stock. For additional information, see “Restrictions on Acquisition of Avidia Bancorp, Inc.” and “Management – Benefits to be Considered Following Completion of the Stock Offering.”

Our 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 our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, and other employees.

Avidia Bancorp’s articles of incorporation provide that, unless Avidia Bancorp consents in writing to the selection of an alternative forum, the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of Avidia Bancorp, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of Avidia Bancorp to Avidia Bancorp or its stockholders, (iii) any action asserting a claim arising pursuant to any provision of the Maryland General Corporation Law, or (iv) any action asserting a claim governed by the internal affairs doctrine, will be conducted in a state or federal court located within the State of Maryland, in all cases subject to the court having personal jurisdiction over the indispensable parties named as defendants. This exclusive forum provision does not apply to claims arising under the federal securities laws. This exclusive forum provision may limit a stockholder’s ability to bring a claim in a judicial forum it finds favorable for disputes with Avidia Bancorp and its directors, officers, and other employees or may cause a stockholder to incur additional expense by having to bring a claim in a judicial forum that is distant from where the stockholder resides, or both. In addition, if a court were to find this exclusive forum provision to be inapplicable or unenforceable in a particular action, we may incur additional costs associated with resolving the action in another jurisdiction, which could have a material adverse effect on our financial condition and results of operations.

 

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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.

Funds submitted or automatic withdrawals authorized in connection with an order to purchase shares of common stock in the subscription and in any community offering will be held by us until the completion or termination of the conversion and stock offering, including any extension of the expiration date and consummation of any syndicated community offering. Because completion of the conversion and stock offering is subject to regulatory approvals and an update of the independent appraisal prepared by RP Financial, among other factors, there may be one or more delays in completing the conversion and stock offering. Orders submitted in the subscription offering and any community offering are irrevocable, and purchasers will have no access to their funds unless the stock offering is terminated or extended beyond    , 2025, or the number of shares to be sold in the stock offering decreased to less than 12,325,000 shares or increased to more than 19,176,250 shares.

The distribution of subscription rights could have adverse income tax consequences.

If the subscription rights granted in connection with the stock offering are deemed to have an ascertainable value, receipt of such rights may be taxable in an amount equal to such value. Whether subscription rights are considered to have ascertainable value is an inherently factual determination. We have received an opinion of counsel, Luse Gorman, PC, that it is more likely than not that such rights have no value; however, such opinion is not binding on the Internal Revenue Service.

Risks Related to Our Contribution to the Charitable Foundation

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.

We intend to establish and fund a new charitable foundation in connection with the conversion and stock offering. We intend to contribute to it $1.0 million in cash and 900,000 shares of our common stock (valued at $10 per share), for a total contribution of $10.0 million. At the midpoint of the offering range, the share contribution to the charitable foundation would dilute an investor’s ownership interest in Avidia Bancorp by 5.84%. The contribution will have an adverse effect on our net income for the quarter and year in which we make the contribution. The after-tax expense of the contribution is expected to reduce net income for the quarter and year in which the contribution is made by approximately $7.5 million, based on an effective combined federal/state tax rate of 25%.

Our contribution to the charitable foundation may not be tax deductible, which could reduce our profits.

We may not have sufficient profits to be able to fully use the tax deduction from our contribution to the charitable foundation. Under the Internal Revenue Code, an entity is permitted to deduct up to 10% of its taxable income (generally income before federal income taxes and charitable contributions expense) in any one year for charitable contributions. Any contribution in excess of the 10% limit may be deducted for federal income tax purposes over each of the five years following the year in which the charitable contribution is made. Accordingly, a charitable contribution could, if necessary, be deducted over a six-year period and expires thereafter.

 

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SELECTED FINANCIAL AND OTHER DATA

The following tables set forth selected consolidated historical financial and other data for Assabet Valley Bancorp at the dates and for the years indicated. This selected information is derived in part from, and should be read together with, the audited consolidated financial statements and related notes beginning on page F-1 of this prospectus.

 

		At December 31,
		2024				2023
		(In thousands)
Selected Consolidated Financial Condition Data:
Total assets		$	2,656,539			$	2,598,291
Cash and due from banks			62,444				70,343
Securities available for sale			265,933				248,491
Securities held to maturity			16,747				15,746
Equity securities			—				12,775
Loans, net			2,176,459				2,111,165
Bank-owned life insurance			35,526				34,578
Goodwill			11,936				11,936
Deposits			2,063,212				1,947,456
Federal Home Loan Bank advances			325,000				401,000
Subordinated debt			27,679				27,542
Total capital			193,827				180,797

 

		For the Years Ended December 31,
		2024				2023
		(In thousands)
Selected Consolidated Operating Data:
Total interest and dividend income		$	123,733			$	111,116
Total interest expense			50,473				39,791
Net interest income			73,260				71,325
Provision for credit losses			1,779				1,912
Net interest income after provision for credit losses			71,481				69,413
Total non-interest income (1)			17,019				20,677
Total non-interest expense			73,097				73,578
Income before income tax expense			15,403				16,512
Income tax expense			3,919				4,072
Net income		$	11,484			$	12,440

(1)

In 2024, total non-interest income includes a loss on sale of investment securities of $1.6 million. In 2023, total non-interest income includes a loss on sale of investment securities of $1.5 million and a gain on sale of bank premises of $3.3 million related to the sale/leaseback of the Westborough, MA branch office.

 

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		At or For the Years Ended December 31,
		2024				2023
Performance Ratios:
Return on average assets			0.44	%			0.48	%
Return on average equity			6.18	%			7.15	%
Interest rate spread (1)			2.37	%			2.49	%
Net interest margin (2)			2.89	%			2.90	%
Noninterest income as a percentage of average assets			0.65	%			0.81	%
Noninterest expense as a percentage of average assets			2.78	%			2.87	%
Efficiency ratio (3)			80.97	%			79.97	%
Average interest-earning assets as a percentage of average interest-bearing liabilities			125.24	%			124.10	%
Capital Ratios (Avidia Bank only):
Total equity as a percentage of total assets			8.12	%			7.82	%
Total capital as a percentage of risk-weighted assets			11.87	%			11.40	%
Tier 1 capital as a percentage of risk-weighted assets			10.78	%			10.34	%
Common equity Tier 1 capital as a percentage of risk-weighted assets			10.78	%			10.34	%
Tier 1 capital as a percentage of average assets			8.39	%			8.17	%
Asset Quality Ratios:
Allowance for credit losses as a percentage of total loans			0.99	%			0.98	%
Allowance for credit losses as a percentage of non-performing loans			544.82	%			396.58	%
Allowance for credit losses as a percentage of non-accrual loans			544.82	%			396.58	%
Non-accrual loans as a percentage of total loans			0.18	%			0.25	%
Net recoveries (charge-offs) as a percentage of average outstanding loans			(0.05	)%			(0.01	)%
Non-performing loans as a percentage of total loans			0.18	%			0.25	%
Non-performing loans as a percentage of total assets			0.15	%			0.25	%
Total non-performing assets as a percentage of total assets			0.15	%			0.20	%
Other Data:
Number of offices			10				10
Number of full-time employees			250				259
Number of part-time employees			4				5

(1)	Represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.

(2)	Represents net interest income as a percentage of average interest-earning assets.

(3)	Represents noninterest expenses divided by the sum of net interest income and noninterest income.

 

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RECENT DEVELOPMENTS

The following tables set forth selected historical consolidated financial information and other data for Assabet Valley Bancorp at the dates and for the periods indicated. The financial information at March 31, 2025 and for the three months ended March 31, 2025 and 2024 is unaudited but, in the opinion of management, includes all normal and recurring adjustments necessary for a fair presentation. Such adjustments are the only adjustments included in such financial information. The results of operations for the three months ended March 31, 2025 are not necessarily indicative of the results of operations for the entire year or for any other period. The financial information at December 31, 2024 is derived from, and should be read together with, the audited consolidated financial statements and related notes beginning on page F-1 of this prospectus.

 

		At March 31, 2025				At December 31, 2024
		(In thousands)
Selected Consolidated Financial Condition Data:
Total assets		$	2,706,631			$	2,656,539
Cash and due from banks			83,082				62,444
Securities available for sale			261,946				265,933
Securities held to maturity			16,746				16,747
Loans, net			2,211,184				2,176,459
Bank-owned life insurance			35,805				35,526
Goodwill			11,936				11,936
Deposits			2,131,068				2,063,212
Federal Home Loan Bank advances			325,000				325,000
Subordinated debt			27,715				27,679
Total capital			186,056				193,827

 

		For the Three Months Ended March 31,
		2025				2024
		(In thousands)
Selected Consolidated Operating Data:
Total interest and dividend income		$	31,049			$	29,848
Total interest expense			11,838				12,261
Net interest income			19,211				17,587
Provision for credit losses			17,616				630
Net interest income after provision for credit losses			1,595				16,957
Total non-interest income (1)			3,727				5,899
Total non-interest expense			21,831				18,097
(Loss) income before income tax expense			(16,509	)			4,759
Income tax (benefit) expense			(4,922	)			1,214
Net (loss) income		$	(11,587	)		$	3,545

(1)	In 2025, includes a loss on sale of investment securities of $541,000. In 2024, includes an unrealized gain on equity securities of $1.4 million.

 

 

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		At or For the Three Months Ended March 31,
		2025				2024
Performance Ratios:
Return on average assets			(1.76	)%			0.55	%
Return on average equity			(23.86	)%			7.78	%
Interest rate spread (1)			2.62	%			2.30	%
Net interest margin (2)			3.04	%			2.83	%
Noninterest income as a percentage of average assets			0.57	%			0.91	%
Noninterest expense as a percentage of average assets			3.32	%			2.80	%
Efficiency ratio (3)			95.18	%			77.05	%
Average interest-earning assets as a percentage of average interest-bearing liabilities			122.65	%			126.58	%
Capital Ratios (Avidia Bank only):
Total equity as a percentage of total assets			7.98	%			7.78	%
Total capital as a percentage of risk-weighted assets			11.18	%			11.53	%
Tier 1 capital as a percentage of risk-weighted assets			10.09	%			10.45	%
Common equity Tier 1 capital as a percentage of risk-weighted assets			10.09	%			10.45	%
Tier 1 capital as a percentage of average assets			7.96	%			8.31	%
Asset Quality Ratios:
Allowance for credit losses as a percentage of total loans			0.98	%			0.98	%
Allowance for credit losses as a percentage of non-performing loans			184.11	%			438.03	%
Allowance for credit losses as a percentage of non-accrual loans			184.11	%			438.03	%
Non-accrual loans as a percentage of total loans			0.53	%			0.22	%
Net recoveries (charge-offs) as a percentage of average outstanding loans			(0.78	)%			(0.01	)%
Total non-accruing assets as a percentage of total assets			0.44	%			0.18	%
Other Data:
Number of offices			10				10
Number of full-time employees			244				248
Number of part-time employees			9				13

(1)	Represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.

(2)	Represents net interest income as a percentage of average interest-earning assets.

(3)	Represents noninterest expenses divided by the sum of net interest income and noninterest income.

Loan Matter

In March 2025, a $25.0 million land loan within the construction and land loan portfolio defaulted after missing an interest payment, triggering a reevaluation of the borrower’s financial condition and a valuation of the collateral. This loan, which contractually requires interest-only payments, is the largest in the construction and land loan portfolio. The loan is classified as collateral dependent and future payments are in doubt as the borrower is experiencing financial difficulties. The land collateral was valued, by an independent appraiser, at $52 million in October 2022, based upon permitting the land for the construction of a large life sciences facility. This valuation resulted in a 48% loan-to-value ratio at the time of loan origination. An updated valuation, by an independent appraiser, as of April 4, 2025, valued the property at $7.1 million based on unpermitted multi-family use. The appraiser determined that multi-family use was the highest and best use of the property. The current estimated collateral value, which reflects the updated appraisal of the land and existing cash reserves on hand of $1.4 million, less the estimated costs to sell the property, is $8.3 million. As a result, we charged-off the expected uncollectable loan balance of $16.7 million during the three months ended March 31, 2025. This loan was on non-accrual status and was classified as substandard as of March 31, 2025.

 

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Beginning in late 2023 and continuing into 2024, the commercial real estate market supporting the Greater Boston life sciences industry has faced challenges primarily due to an oversupply of laboratory space as construction has significantly outpaced demand. This oversupply has contributed to excess sublease space. Furthermore, initial public offering activity in the life sciences sector has weakened, which has reduced industry resources to expand laboratory space, which in turn is contributing to a substantial decline in new tenant demand. This oversupply of laboratory space, coupled with weakness in the life sciences capital markets, has negatively impacted the life sciences market.

Our current underwriting standards have evolved since this loan was originated. A non-cash flowing, collateral dependent loan of this size, considering its heightened risk profile, would typically not align with our current underwriting standards. This loan is a unique asset within our loan portfolio, and we do not have other material credit exposure to the life sciences market. We continue to monitor this loan closely.

Comparison of Financial Condition at March 31, 2025 and December 31, 2024

Total Assets. Total assets increased $50.1 million, or 1.9%, to $2.71 billion at March 31, 2025 from $2.66 billion at December 31, 2024. The increase was primarily the result of increases in net loans and cash and short-term investments, offset, in part, by decreases in securities available for sale.

Cash and Short-term Investments. Cash and short-term investments increased $20.6 million, or 33.0%, to $83.1 million at March 31, 2025 from $62.4 million at December 31, 2024. The increase was due to additional liquidity generated by deposit growth outpacing loan growth.

Securities Available for Sale. Securities available for sale decreased $4.0 million, or 1.5%, to $261.9 million at March 31, 2025 from $265.9 million at December 31, 2024. During the first quarter of 2025, $8.4 million in securities were sold at a net loss of $541,000.

Federal Home Loan Bank Stock. Federal Home Loan Bank stock of $14.7 million remained unchanged from December 31, 2024 to March 31, 2025. The amount of stock we are required to purchase is in proportion to our Federal Home Loan Bank borrowings and our total assets.

Loans, net. Loans, net, increased $34.7 million, or 1.6%, to $2.21 billion at March 31, 2025 from $2.18 billion at December 31, 2024. Loan growth from December 31, 2024 to March 31, 2025 related to increases in commercial real estate loans of $24.3 million, or 5.0%, other commercial and industrial loans of $11.8 million, or 2.4%, multi-family real estate loans of $5.6 million, or 6.6%, one- to four- family residential mortgage loans of $1.7 million, or 0.3%, and home equity and second mortgages of $601,000, or 0.9%.

This loan growth was partially offset by decreases from December 31, 2024 to March 31, 2025 of $1.9 million, or 0.4%, in condominium association loans, $6.8 million, or 13.9%, in construction and land loans, and $346,000, or 6.8%, 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 $279,000, or 0.8%, to $35.8 million at March 31, 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 $67.9 million, or 3.3%, to $2.13 billion at March 31, 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 $78.2 million, or 4.7%, to $1.75 billion at March 31, 2025 from $1.67 billion at December 31, 2024. The increase was the result of growth in all core deposit categories during the period with a $39.0 million, or 5.7%, increase in interest-bearing checking accounts, a $17.6 million, or 4.6%, increase in regular and other savings accounts, a $15.4 million, or 6.2%, increase in money market accounts and a $6.2 million, or 1.7%, increase in

 

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non-interest bearing checking. Certificates of deposit (excluding brokered certificates of deposit) decreased $10.4 million, or 2.9%, to $353.2 million at March 31, 2025 from $363.6 million at December 31, 2024. Brokered deposits remained unchanged at $27.0 million from December 31, 2024 to March 31, 2025.

A significant amount of deposit growth during the three months ended March 31, 2025, resulted, in part, from growth within interest-bearing checking account balances because of increased activity within our commercial deposits and payments businesses.

Federal Home Loan Bank Advances. Advances of $325.0 million remained unchanged from December 31, 2024 to March 31, 2025.

Total Capital. Total capital decreased $7.8 million, or 4.0%, to $186.1 million at March 31, 2025 from $193.8 million at December 31, 2024, due to a net loss of $11.6 million for the three months ended March 31, 2025, offset, in part, by a decrease in accumulated other comprehensive loss of $3.8 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 available for sale securities 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.

 

		For the Three Months Ended March 31,
		2025												2024
		Average Outstanding Balance				Interest				Average Yield/Rate				Average Outstanding Balance				Interest				Average Yield/Rate
		(Dollars in thousands)
Interest-earning assets:
Cash and short-term investments		$	37,105			$	215				2.35	%		$	45,131			$	470				4.19	%
Securities			309,608				2,651				3.47				283,791				2,120				3.00
Loans			2,214,952				28,183				5.16				2,172,173				27,258				5.05
Total interest-earning assets			2,561,665				31,049				4.92				2,501,095				29,848				4.80
Noninterest-earning assets			105,220												95,404
Total assets		$	2,666,885											$	2,596,499
Interest-bearing liabilities:
NOW accounts		$	690,014				813				0.48	%		$	594,571				790				0.53	%
Money market accounts			260,430				842				1.31				312,543				1,156				1.49
Regular and other savings accounts			383,017				2,098				2.22				282,122				1,590				2.27
Certificates of deposit			387,556				3,978				4.16				376,040				4,051				4.33
Total interest-bearing deposits			1,721,017				7,731				1.82				1,565,276				7,587				1.95
Federal Home Loan Bank advances			339,814				3,792				4.53				383,041				4,359				4.58
Subordinated debt			27,691				315				4.61				27,555				315				4.60
Total interest-bearing liabilities			2,088,522				11,838				2.30				1,975,872				12,261				2.50
Noninterest-bearing demand deposits			336,000												394,826
Other noninterest-bearing liabilities			45,439												42,421
Total liabilities			2,469,961												2,413,119
Total capital			196,924												183,380
Total liabilities and capital		$	2,666,885											$	2,596,499
Net interest income						$	19,211											$	17,587
Net interest rate spread (1)											2.62	%											2.30	%
Net interest-earning assets (2)		$	473,143											$	525,223
Net interest margin (3)											3.04	%											2.83	%
Average interest-earning assets to interest-bearing liabilities											122.65	%											126.58	%

(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.

 

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Comparison of Operating Results for the Three Months Ended March 31, 2025 and 2024

Net Loss/Income. Net loss was $11.6 million for the three months ended March 31, 2025, compared to net income of $3.5 million for the three months ended March 31, 2024, a decrease of $15.1 million. The decrease was primarily due to a $17.0 million increase in the provision for credit losses, a $3.7 million increase in non-interest expense, and a $2.2 million decrease in non-interest income, partially offset by a $1.6 million increase in net interest income.

Interest and Dividend Income. Interest and dividend income increased $1.2 million, or 4.0%, to $31.0 million for the three months ended March 31, 2025, from $29.8 million for the three months ended March 31, 2024, primarily due to a $924,000 increase in interest on loans. The increase in interest on loans resulted primarily from an increase of $42.8 million in the average balance of loans to $2.21 billion for the three months ended March 31, 2025 from $2.17 billion for the three months ended March 31, 2024, due to growth in the commercial real estate portfolio. The weighted average yield on loans increased to 5.16% for the three months ended March 31, 2025 compared to 5.05% for the three months ended March 31, 2024.

Average interest-earning assets increased $60.6 million, to $2.56 billion for the three months ended March 31, 2025, from $2.50 billion for the three months ended March 31, 2024. The yield on interest-earning assets increased to 4.92% for the three months ended March 31, 2025, from 4.80% for the three months ended March 31, 2024.

Interest Expense. Total interest expense decreased $423,000, or 3.5%, to $11.8 million for the three months ended March 31, 2025, from $12.3 million for the three months ended March 31, 2024. Interest expense on Federal Home Loan Bank advances decreased $567,000, or 13.0%, to $3.8 million for the three months ended March 31, 2025, from $4.4 million for the three months ended March 31, 2024, due to a decrease in the average advances of $43.2 million between periods. Interest expense on deposit accounts increased $144,000, or 1.9%, to $7.7 million for the three months ended March 31, 2025, from $7.6 million for the three months ended March 31, 2024, due to an increase in the average balance of interest-bearing deposits of $155.7 million, or 9.9%, to $1.72 billion for the three months ended March 31, 2025, from $1.57 billion for the three months ended March 31, 2024, offset, in part, by a decrease in the weighted average rate on interest-bearing deposits to 1.82% for the three months ended March 31, 2025, from 1.95% for the three months ended March 31, 2024.

Net Interest Income. Net interest income increased $1.6 million, or 9.2%, to $19.2 million for the three months ended March 31, 2025, from $17.6 million for the three months ended March 31, 2024, primarily due to an increase in net interest margin to 3.04% for the three months ended March 31, 2025, from 2.83% for the three months ended March 31, 2024 and $60.6 million increase in the average balance of interest-earning assets during the three months ended March 31, 2025. Net interest rate spread increased to 2.62%, for the three months ended March 31, 2025, compared to 2.30% for the three months ended March 31, 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 2.30% for the three months ended March 31, 2025, from 2.50% for the three months ended March 31, 2024.

Provision for Credit Losses. Based on management’s analysis of the adequacy of allowance for credit losses, a provision of $17.6 million was recorded for the three months ended March 31, 2025, compared to a provision of $630,000 for the three months ended March 31, 2024. The $17.0 million increase is primarily related to the $16.7 million charge-off related to the land loan. See “—Loan Matter” above.

Non-interest Income. Non-interest income decreased $2.2 million, or 36.8%, to $3.7 million for the three months ended March 31, 2025, from $5.9 million for the three months ended March 31, 2024. The decrease was primarily due to the $1.9 million decrease in net gains and losses on equity and available for sale securities, from a loss of $541,000 for the three months ended March 31, 2025, compared to a $1.4 million gain for the three months ended March 31, 2024. Non-interest income was also impacted by a $378,000 decrease in the valuation of mortgage servicing rights for the three months ended March 31, 2025, compared to March 31, 2024, resulting from a decline in market interest rates.

 

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Non-interest Expense. Non-interest expense increased $3.7 million, or 20.6%, to $21.8 million for the three months ended March 31, 2025, from $18.1 million for the three months ended March 31, 2024. Salary and employee benefit expenses increased $3.0 million, or 34.4%, primarily due to a $1.1 million increase in the long-term incentive expense resulting from the termination of the plan and immediate vesting of participants, a $1.1 million increase in short-term incentive, payroll taxes and retirement expenses, and a $689,000 increase in salaries. Data processing costs increased $1.2 million, or 53.2%, primarily due to a new on-line banking platform, increased account volume and licensing costs, and one-time expenses of $379,000 related to contract terminations. All other non-interest expenses decreased $397,000, or 5.5%, to $6.9 million for the three months ended March 31, 2025, from $7.3 million for the three months ended March 31, 2024, due to lower advertising expense and the sale of the credit card portfolio.

Income Tax Benefit/Expense. Income tax benefit was $4.9 million for the three months ended March 31, 2025, compared to an income tax expense of $1.2 million for the three months ended March 31, 2024. The effective tax rate was 29.8% and 25.5% for the three months ended March 31, 2025, and 2024, respectively.

 

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus 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,” “intend,” “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. We are under no duty to and do not undertake any obligation to update any forward-looking statements after the date of this prospectus.

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 increase 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 loan and lease 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;

 

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•

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. See “Risk Factors” beginning on page _____.

 

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HOW WE INTEND TO USE THE PROCEEDS FROM THE STOCK OFFERING

Although we cannot determine what the actual net proceeds from the sale of the shares of common stock in the stock offering will be until the conversion and stock offering is completed, we estimate the net proceeds to be between $118.3 million and $161.3 million, or $186.0 million if the offering range is increased to the adjusted maximum.

We intend to distribute the net proceeds from the stock offering as follows:

 

		Based Upon the Sale at $10.00 Per Share of:
		12,325,000 Shares								14,500,000 Shares								16,675,000 Shares								19,176,250 Shares (1)
		Amount				Percent of Net Proceeds				Amount				Percent of Net Proceeds				Amount				Percent of Net Proceeds				Amount				Percent of Net Proceeds
		(Dollars in thousands)
Gross offering proceeds		$	123,250							$	145,000							$	166,750							$	191,763
Less: offering expenses and fees			(4,915	)							(5,187	)							(5,458	)							(5,771	)
Net offering proceeds		$	118,335				100.0	%		$	139,813				100.0	%		$	161,292				100.0	%		$	185,991				100.0	%
Use of net proceeds:
To Avidia Bank		$	59,168				50.0	%		$	69,907				50.0	%		$	80,646				50.0	%		$	92,996				50.0	%
Loan to ESOP			(10,580	)			8.9				(12,320	)			8.8				(14,060	)			8.7				(16,061	)			8.6
Cash contribution to charitable foundation			(1,000	)			0.8				(1,000	)			0.7				(1,000	)			0.6				(1,000	)			0.5
Retained by Avidia Bancorp.		$	47,587				40.3	%		$	56,586				40.5	%		$	65,586				40.7	%		$	75,934				40.9	%

(1)	As adjusted to give effect to an increase in the number of shares, which could occur due to a 15% increase in the offering range, to reflect demand for the shares or changes in market conditions following the commencement of the stock offering.

Payments for shares of common stock made through withdrawals from existing deposit accounts will not result in the receipt of new funds for investment but will reduce Avidia Bank’s deposits. The net proceeds may vary because the total expenses relating to the stock offering may be more or less than our estimates. For example, our expenses would increase if a syndicated community offering were used to sell shares of common stock not purchased in the subscription offering and community offering.

Avidia Bancorp intends to fund a loan to the ESOP to purchase shares of common stock in the stock offering and contribute cash and shares of common stock to our charitable foundation. It may also use the proceeds it retains from the stock offering:

 

•

to invest in investment securities consistent with our investment policy;

 

•

to pay cash dividends to stockholders;

 

•

to repurchase shares of our common stock; and

 

•

for other general corporate purposes.

Except for the loan to the ESOP and the cash contribution to the charitable foundation, Avidia Bancorp has not quantified its plans for use of the offering proceeds for each of the foregoing purposes. Initially, we intend to invest a substantial portion of the net proceeds in shorter term investment securities before deploying the proceeds into new loans.

Under currently applicable regulations, we may not repurchase shares of our common stock during the first year following the conversion, except to fund equity benefit plans other than stock options or except when extraordinary circumstances exist and with prior regulatory approval.

 

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