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Section 1: 8-K (FORM 8-K)

 

 

 

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

 

FORM 8-K

 

 

 

CURRENT REPORT

 

PURSUANT TO SECTION 13 OR 15(D) OF

THE SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported): July 20, 2017

 

 

 

PROVIDENT BANCORP, INC.

(Exact Name of Registrant as Specified in Charter)

 

 

  

Massachusetts   001-37504   45-3231576
(State or Other Jurisdiction)   (Commission File No.)   (I.R.S. Employer
of Incorporation)       Identification No.)

 

5 Market Street, Amesbury, Massachusetts   01913
(Address of Principal Executive Offices)   (Zip Code)

 

Registrant’s telephone number, including area code:  (978) 834-8555

 

Not Applicable

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company  x

 

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 13(a) of the Exchange Act.  x

 

 

 

 

 

 

Item 2.02Results of Operations and Financial Condition

 

On July 20, 2017, Provident Bancorp, Inc. issued a press release announcing its earnings for the quarter ended June 30, 2017. A copy of the press release is attached as Exhibit 99.1 hereto and incorporated herein by reference. The information contained in this Item 2.02, including the related information set forth in the press release, is being “furnished” and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934.

 

Item 9.01Financial Statements and Exhibits

 

(d)Exhibits

 

ExhibitDescription
   
99.1Press release dated July 20, 2017

 

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

 

 

PROVIDENT BANCORP, INC.

 
     
       
DATE: July 25, 2017 By:   /s/ David P. Mansfield  
    David P. Mansfield  
    President and Chief Executive Officer    

 

 

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Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit 99.1

 

 

Provident Bancorp, Inc. Reports Earnings of the June 30, 2017 Quarter
Company Release – 07/20/2017

 

Amesbury, Massachusetts — Provident Bancorp, Inc. (the “Company”) (NasdaqCM: PVBC), the holding company for The Provident Bank (the “Bank”), reported net income for the three months ended June 30, 2017 of $1.6 million, or $.17 per diluted share, compared to $1.4 million, or $.15 per diluted share, for the three months ended June 30, 2016. Net income for the six months ended June 30, 2017 was $3.4 million, or $.37 per diluted share, compared to $2.9 million, or $.31 per diluted share, for the six months ended June 30, 2016.

 

David P. Mansfield, Chief Executive Officer, said, "Our success this quarter was the result of planned strategic initiatives. With our unique niche lending and high level of service, we attained a significant amount of new loan growth. As we continue toward our goal of being the top commercial bank in our region, we listen carefully to our customers, and by doing so, we were motivated to place significant resources within our international lending niche. Our new Senior Vice President, Leanne Spees, will spearhead our International Banking division. With more than 30 years of international trade finance experience, Leanne can leverage The Provident’s distinction of being the delegated US Export-Import bank in the region. This distinction combined with the mutual partnerships we have established with various state agencies allows The Provident to offer significant benefits to our commercial customers engaged in or interested in international trade."

 

Net interest income before provision for loan losses increased by $1.6 million, or 25.1%, compared to the three months ended June 30, 2016 and increased by $2.6 million, or 20.9%, compared to the six months ending June 30, 2016. The growth in net interest income this quarter over the prior year’s second quarter is primarily the result of an increase in our average interest earning assets of $104.2 million or 14.8% and an increase in net interest margin of 32 basis points to 3.94%. The growth in net interest income for the six months ended June 30, 2017 compared to the six months ended in the same period 2016 is primarily the result of an increase in average interest earning assets of $89.4 million or 12.8% and an increase of the net interest margin of 26 basis points to 3.86% for the six months ended June 30, 2017.

 

Provision for loan losses of $892,000 were booked for the second quarter of 2017 compared to $210,000 for the same period in 2016. For the six months ended June 30, 2017 $1.5 million of provisions were recognized compared to $321,000 for the six months ended June 30, 2016. The provisions were primarily due to an increase in our loan portfolio as we apply loan provisions to newly originated loans based on historical loss ratios, which, absent other factors, results in an increase in the allowance for loan loss. The allowance for loan losses as a percentage of total loans was 1.40% as of June 30, 2017 compared to 1.36% as of December 31, 2016. The allowance for loan losses as a percent of non-performing loans was 235.05% as of June 30, 2017 compared to 542.98% as of December 31, 2016. Non-performing assets were $4.2 million, or 0.48%, to total assets as of June 30, 2017 compared to $1.4 million, or 0.18%, to total asset for the same period 2016.

 

Noninterest income increased $103,000, or 10.7% to $1.1 million for the three months ended June 30, 2017. For the six months ended June 30, 2017, noninterest income increased $669,000, or 35.2%, to $2.6 million. The primary reasons for the increases in both periods presented are due to increased gains on sales of securities and income from service fees.

 

 

 

 

Noninterest expense increased $795,000, or 15.6%, to $5.9 million for the three months ended June 30, 2017. For the six months ended June 30, 2017, noninterest expense increased $1.5 million, or 14.9%, to $11.5 million. The primary reasons for the increase were salary expense, marketing expense, and other expense. The increase in salary and employee benefits was $568,000, or 18.0%, for the three months ended June 30, 2017 and $1.1 million, or 17.9%, for the six months ended June 30, 2017. The primary reason for the increase in salary and employee benefits was a higher head count and stock based compensation expense compared to the prior year. The increase in marketing expense was $49,000, or 96.1%, for the three months ended June 30, 2017 and $42,000, or 38.9%, for the six months ended June 30, 2017. The primary reason for the increase in marketing expense was due to strategic target marketing within the Company’s footprint. The increase in other expense was $262,000, or 36.6%, for the three months ended June 30, 2017 and $351,000, or 24.6%, for the six months ended June 30, 2017. The primary reason for the increase in the other expense category was directors stock based compensation expense and increased software expense. The noninterest expense increases were partially offset by a decrease in professional fees and the FDIC assessment expense. The decrease in professional fees was $98,000, or 31.3%, for the three months ended June 30, 2017 and $149,000, or 25.8%, for the six months ended June 30, 2017. The primary reason for the decrease in professional fees was due to onetime services incurred in 2016. The decrease in the FDIC assessment expense was $23,000, or 24.0%, for the three months ended June 30, 2017 and $49,000, or 25.8%, for the six months ended June 30, 2017. The decrease was related to a change in the FDIC reserve calculation.

 

As of June 30, 2017, total assets have increased $87.6 million, or 11.0%, to $883.1 million compared to $795.5 million at December 31, 2016. The primary reason for the increase is due to net loans with an increase of $77.7 million, or 12.4%, an increase in investments available-for-sale securities of $5.3 million, or 4.4%, and an increase in premises and equipment of $2.9 million, or 24.8%. The increase in net loans was due to an increase in commercial loans of $50.1 million, or 30.1%, an increase in construction and development loans of $15.0 million, or 31.2%, and an increase in consumer loans of $5.8 million, or 93.3%. Deposits were $701.4 million as of June 30, 2017 representing an increase of $73.4 million, or 11.7%, compared to December 31, 2016. The primary reason for the increase in deposits was due to an increase in time deposits of $35.9 million, or 39.5%, an increase of $19.8 million, or 13.7%, in money market deposits, and an increase of $11.7 million, or 4.2%, in NOW deposits. Borrowings increased $10.2 million, or 20.5%, to $60.1 million as of June 30, 2017.

 

As of June 30, 2017, shareholders’ equity was $114.0 million compared to $109.1 million at December 31, 2016 representing an increase of $4.9 million, or 4.4%. The increases are primarily due to year-to-date net income of $3.4 million and in increase an accumulated other comprehensive income of $1.1 million.

 

About Provident Bancorp, Inc.

Provident Bancorp, Inc. is a Massachusetts corporation that was formed in 2011 by The Provident Bank to be its holding company. Approximately 52.2% of Provident Bancorp, Inc. outstanding shares are owned by Provident Bancorp, a Massachusetts corporation and a mutual holding company. The Provident Bank is an innovative, commercial bank that finds solutions for our business clients. We are committed to strengthening the economic development of the regions we serve, by working closely with businesses and delivering superior products and high-touch services to meet their banking needs. The Provident has offices in Massachusetts and New Hampshire. All deposits are insured in full through a combination of insurance provided by the Federal Deposit Insurance Corporation (FDIC) and the Depositors Insurance Fund (DIF). For more information about The Provident Bank please visit our website www.theprovidentbank.com or call 877-487-2977.

 

 

 

 

Forward-looking statements

This news release may contain certain forward-looking statements, such as statements of the Company’s or the Bank’s plans, objectives, expectations, estimates and intentions. Forward-looking statements may be identified by the use of words such as, “expects,” “subject,” “believe,” “will,” “intends,” “will be” or “would.” These statements are subject to change based on various important factors (some of which are beyond the Company’s or the Bank’s control) and actual results may differ materially. Accordingly, readers should not place undue reliance on any forward-looking statements (which reflect management’s analysis of factors only as of the date of which they are given). These factors include general economic conditions, trends in interest rates, the ability of our borrower to repay their loans, the ability of the Company or the Bank to effectively manage its growth and results of regulatory examinations, among other factors. The foregoing list of important factors is not exclusive. Readers should carefully review the risk factors described in other documents of the Company files from time to time with the Securities and Exchange Commission, including Current Reports on Form 8-K.

 

Provident Bancorp, Inc.

Carol Houle, 978-834-8534

Executive Vice President/CFO

choule@theprovidentbank.com

 

 

 

 

Provident Bancorp, Inc.

Consolidated Balance Sheet

 

   At   At 
   June 30,   December 31, 
(In thousands)  2017   2016 
Assets  (unaudited)      
Cash and due from banks  $10,535   $7,939 
Interest-bearing demand deposits with other banks   1,243    2,637 
Money market mutual funds   158    129 
Cash and cash equivalents   11,936    10,705 
Investments in available-for-sale securities (at fair value)   123,143    117,867 
Federal Home Loan Bank stock, at cost   3,008    2,787 
Loans, net   702,085    624,425 
Bank owned life insurance   19,694    19,395 
Premises and equipment, net   14,457    11,587 
Accrued interest receivable   2,532    2,320 
Deferred tax asset, net   4,239    4,913 
Other assets   2,048    1,544 
Total assets  $883,142   $795,543 
           
Liabilities and Equity          
Deposits:          
Noninterest-bearing  $170,136   $158,075 
Interest-bearing   531,214    469,907 
Total deposits   701,350    627,982 
Federal Home Loan Bank advances   60,075    49,858 
Other liabilities   7,715    8,554 
Total liabilities   769,140    686,394 
Shareholders' equity:          
Preferred stock; authorized 50,000 shares: 
no shares issued and outstanding
   -    - 
Common stock, no par value: 30,000,000 shares authorized;
9,633,288 shares issued and outstanding at June 30, 2017
and 9,652,448 issued and outstanding at December 31, 2016
   -    - 
Additional paid-in capital   43,976    43,393 
Treasury stock: 19,160 shares at June 30, 2017   (383)   - 
Retained earnings   69,632    66,229 
Accumulated other comprehensive income   3,753    2,622 
Unearned compensation - ESOP   (2,976)   (3,095)
Total shareholders' equity   114,002    109,149 
Total liabilities and shareholders' equity  $883,142   $795,543 

 

 

 

 

Provident Bancorp, Inc.

Consolidated Income Statements

 

 

   Three Months Ended   Six Months Ended 
   June 30,   June 30, 
(Dollars in thousands, except per share data)  2017   2016   2017   2016 
Interest and dividend income:  (unaudited) 
Interest and fees on loans  $7,911   $6,159   $15,144   $12,250 
Interest and dividends on securities   902    861    1,775    1,742 
Interest on interest-bearing deposits   3    6    9    14 
Total interest and dividend income   8,816    7,026    16,928    14,006 
Interest expense:                    
Interest on deposits   678    529    1,248    1,084 
Interest on Federal Home Loan Bank advances   201    152    411    294 
Total interest expense   879    681    1,659    1,378 
Net interest and dividend income   7,937    6,345    15,269    12,628 
Provision for loan losses   892    210    1,455    321 
Net interest and dividend income after provision for loan losses   7,045    6,135    13,814    12,307 
Noninterest income:                    
Customer service fees on deposit accounts   346    292    684    597 
Service charges and fees - other   481    448    983    866 
Gain on sale of securities, net   58    17    540    37 
Other income   185    210    364    402 
 Total noninterest income   1,070    967    2,571    1,902 
Noninterest expense:                    
Salaries and employee benefits   3,727    3,159    7,403    6,281 
Occupancy expense   450    417    921    782 
Equipment expense   157    164    307    309 
FDIC assessment   73    96    141    190 
Data processing   176    165    366    328 
Marketing expense   100    51    150    108 
Professional fees   215    313    429    578 
Other   977    715    1,779    1,428 
Total noninterest expense   5,875    5,080    11,496    10,004 
Income before income tax expense   2,240    2,022    4,889    4,205 
Income tax expense   639    659    1,486    1,355 
Net income  $1,601   $1,363   $3,403   $2,850 
                     
Income per share:                    
Basic  $0.17    0.15    0.37    0.31 
Diluted  $0.17    0.15    0.37    0.31 
                     
Weighted Average Shares:                    
Basic   9,193,836    9,173,317    9,193,206    9,170,340 
Diluted   9,198,286    9,173,317    9,193,206    9,170,340 

 

 

 

 

Provident Bancorp, Inc.

Selected Financial Ratios

 

   At or for the three   At or for the six 
   months ended   months ended 
   June 30,   June 30, 
   2017   2016   2017   2016 
(unaudited)                
Performance Ratios:                    
Return on average assets (1)   0.75%   0.74%   0.81%   0.77%
Return on average equity (1)   5.68%   5.20%   5.94%   5.50%
Interest rate spread (1) (3)   3.75%   3.43%   3.69%   3.42%
Net interest margin (1) (4)   3.94%   3.62%   3.86%   3.60%
Non-interest expense to average assets (1)   2.77%   2.74%   2.75%   2.70%
Efficiency ratio (5)   65.23%   69.47%   64.44%   68.85%
Average interest-earning assets to
average interest-bearing liabilities
   142.57%   147.93%   142.12%   146.48%
Average equity to average assets   13.28%   14.14%   13.71%   14.00%
                     
           At   At   At 
           June 30,   December 31,   June 30, 
(unaudited)          2017   2016   2016 
Asset Quality Ratios:                       
Allowance for loan losses as a percent of total loans (2)           1.40%   1.36%   1.40%
Allowance for loan losses as a percent of non-performing loans           235.05%   542.98%   601.24%
Non-performing loans as a percent of total loans (2)           0.59%   0.25%   0.23%
Non-performing loans as a percent of total assets           0.48%   0.20%   0.18%
Non-performing assets as a percent of total assets (6)           0.48%   0.20%   0.18%

  

(1)Annualized
(2)Loans are presented before the allowance but include deferred costs/fees.  Loans held-for-sale are excluded.
(3)Represents the difference between the weighted average yield on average interest-earning assets and the weighted average cost of interest-bearing liabilities.
(4)Represents net interest income as a percent of average interest-earning assets.
(5)Represents noninterest expense divided by the sum of net interest income and noninterest income.
(6)Represents non-accrual loans plus loans accruing but 90 days or more overdue and OREO.

 

 

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