Kroll Bond Rating Agency assigned a senior unsecured debt rating of BBB, subordinated debt rating of BBB- and short-term debt rating of K3 to San Jose, Calif.-based Avidbank Holdings Inc.
The rating agency also assigned deposit and senior unsecured debt ratings of BBB+, a subordinated debt rating of BBB and short-term deposit and debt ratings of K2 to unit Avidbank. The outlook for all long-term ratings is stable.
As supporting factors for the ratings, Kroll cited Avidbank Holdings' management's extensive industry knowledge and strong ties with the communities it serves and its stakeholders. The rating agency also said the company has made steady progress in improving its profit generation, thanks to a "comparatively favorable" net interest margin and "scaling in its businesses."
Kroll also said Avidbank Holdings has shown "comparatively favorable" asset quality metrics since the financial crisis, albeit aided by a benign operating environment.
The ratings are constrained by Avidbank's "comparatively higher credit risk appetite and profile" and a lack of diversification in revenue sources. However, Kroll said concerns on credit risk appetite and profile are largely mitigated by "appropriate risk-based loan pricing, credit structures and monitoring, as well as the bank's credit loss history, loan growth rates notwithstanding."