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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): October 19, 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 October 19, 2017, Provident Bancorp, Inc. issued a press release announcing its earnings for the quarter ended September 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

 

Exhibit Description
99.1 Press release dated October 19, 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: October 20, 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 September 30, 2017 Quarter

 

Company Release – 10/18/2017

 

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 September 30, 2017 of $2.8 million, or $.30 per diluted share, compared to $1.8 million, or $.19 per diluted share, for the three months ended September 30, 2016. Net income for the nine months ended September 30, 2017 was $6.2 million, or $.67 per diluted share, compared to $4.6 million, or $.50 per diluted share, for the nine months ended September 30, 2016.

 

“We are very pleased with the third quarter’s results. Along with maintaining a strong Net Interest Margin, our C&I loan growth is $66 million, which represents an increase of 40% for the year. Our continued focus on commercial and specialty financing enabled The Provident to capture the New Hampshire U.S. Small Business Administration Leading 7(a) Loan Program Lender in Total Dollars for the fourth year in a row. We also received the Community Leader of the Year by the Export-Import Bank of the United States this year. These distinctions validate the momentum of The Provident’s strategy and business model. We will continue to innovate and invest in resources to differentiate the Bank, empower our customers and, in turn, help strengthen the overall economy in the regions we serve,” said David Mansfield, Chief Executive Officer of The Provident.

 

Net interest income before provision for loan losses increased by $1.5 million, or 22.7%, compared to the three months ended September 30, 2016 and increased by $4.2 million, or 21.5%, compared to the nine months ending September 30, 2016. The growth in net interest income this quarter over the prior year’s third quarter is primarily the result of an increase in our average interest earning assets of $124.5 million or 17.3% and an increase in net interest margin of 17 basis points to 3.89%. The growth in net interest income for the nine months ended September 30, 2017 compared to the nine months ended in the same period 2016 is primarily the result of an increase in average interest earning assets of $101.2 million or 14.3% and an increase of the net interest margin of 23 basis points to 3.87% for the nine months ended September 30, 2017.

 

Provision for loan losses of $1.0 million were booked for the three months ended September 30, 2017 compared to $163,000 for the same period in 2016. For the nine months ended September 30, 2017 $2.5 million of provisions were recognized compared to $484,000 for the nine months ended September 30, 2016. The changes in the provision and the allowance for loan losses were based on management’s assessment of loan portfolio growth and composition changes, historical charge-off trends, levels of problem loans and other asset quality trends. The allowance for loan losses as a percentage of total loans was 1.44% as of September 30, 2017 compared to 1.36% as of December 31, 2016. The allowance for loan losses as a percent of non-performing loans was 193.59% as of September 30, 2017 compared to 542.98% as of December 31, 2016. Non-performing assets were $5.6 million, or 0.61%, to total assets as of September 30, 2017 compared to $1.4 million, or 0.18%, to total asset for the same period 2016. The Bank endeavors to work constructively to resolve its non-performing loans. The non-accrual loans as of September 30, 2017 is primarily composed of one commercial real estate property totaling $5.2 million. Based on management’s most recent evaluation, the Bank has assigned a specific reserve of $809,000 as of September 30, 2017.

 

Noninterest income increased $1.5 million, or 112.5% to $2.9 million for the three months ended September 30, 2017. For the nine months ended September 30, 2017, noninterest income increased $2.2 million, or 67.5%, to $5.5 million. The increases in both periods are primarily due to increased gains on sales of securities and income from service fees. Effective January 2018, the Company is adopting ASU (Accounting Standards Update) No. 2016-01, Financial Instruments – Overall (Subtopic 825-10): “Recognition and Measurement of Financial Assets and Financial Liabilities.” This standard will require us to measure our equity investments at fair value with changes in fair value recognized in net income. In order to reduce potential quarterly volatility, the Company may divest more equity securities. As of September 30, 2017, the Company had securities with a total fair value of $12.6 million with a net unrealized gain of $2.7 million.

 

 

 

 

Noninterest expense increased $702,000, or 13.5%, to $5.9 million for the three months ended September 30, 2017. For the nine months ended September 30, 2017, noninterest expense increased $2.2 million, or 14.4%, to $17.4 million. The primary reason for the increase was salary expense. The increase in salary and employee benefits was $724,000, or 22.5%, for the three months ended September 30, 2017 and $1.8 million, or 19.4%, for the nine months ended September 30, 2017. The primary reason for the increase in salary and employee benefits was due to adding additional lenders and stock based compensation expense compared to the prior year.

 

As of September 30, 2017, total assets have increased $133.0 million, or 16.7%, to $928.6 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 $124.1 million, or 19.9%. The increase in net loans was due to an increase in commercial loans of $66.4 million, or 39.9%, an increase in commercial real estate loans of $50.0 million, or 14.9%, and an increase in consumer loans of $8.7 million, or 140.3%. Total liabilities increased $126.1 million, or 18.4%, due to higher deposits and borrowings. Deposits were $725.3 million as of September 30, 2017 representing an increase of $97.3 million, or 15.5%, compared to December 31, 2016. The primary reason for the increase in deposits was due to an increase in time deposits of $41.7 million, or 45.9%, an increase of $50.8 million, or 35.0%, in money market deposits, and an increase of $6.5 million, or 5.9%, in savings deposits. Borrowings increased $28.5 million, or 57.2%, to $78.4 million as of September 30, 2017.

 

As of September 30, 2017, shareholders’ equity was $116.1 million compared to $109.1 million at December 31, 2016 representing an increase of $6.9 million, or 6.3%. The increases are primarily due to year-to-date net income of $6.2 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,” “may,” “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 
   September 30,   December 31, 
(In thousands)  2017   2016 
Assets  (unaudited)     
Cash and due from banks  $ 8,720    $7,939 
Interest-bearing demand deposits with other banks   8,827    2,637 
Money market mutual funds   30    129 
Cash and cash equivalents   17,577    10,705 
Investments in available-for-sale securities (at fair value)   109,684    117,867 
Federal Home Loan Bank stock, at cost   3,737    2,787 
Loans, net   748,537    624,425 
Assets held-for-sale   3,213    - 
Bank owned life insurance   25,362    19,395 
Premises and equipment, net   11,156    11,587 
Accrued interest receivable   2,635    2,320 
Deferred tax asset, net   4,809    4,913 
Other assets   1,869    1,544 
Total assets  $928,579   $795,543 
           
Liabilities and Equity          
Deposits:          
Noninterest-bearing  $170,089   $158,075 
Interest-bearing   555,184    469,907 
Total deposits   725,273    627,982 
Federal Home Loan Bank advances   78,365    49,858 
Other liabilities   8,887    8,554 
Total liabilities   812,525    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;

9,652,448 shares issued, 9,627,988 shares outstanding at September 30, 2017

and 9,652,448 issued and outstanding at December 31, 2016

   -    - 
Additional paid-in capital   44,274    43,393 
Retained earnings   72,403    66,229 
Accumulated other comprehensive income   2,786    2,622 
Unearned compensation - ESOP   (2,917)   (3,095)
Treasury stock: 24,460 shares at September 30, 2017   (492)   - 
Total shareholders' equity   116,054    109,149 
Total liabilities and shareholders' equity  $928,579   $795,543 
           

 

 

 

 

 

Provident Bancorp, Inc.

Consolidated Income Statements

 

   Three Months Ended   Nine Months Ended 
   September 30,   September 30, 
(Dollars in thousands, except per share data)  2017   2016   2017   2016 
Interest and dividend income:  (unaudited) 
Interest and fees on loans  $8,403   $6,611   $23,547   $18,861 
Interest and dividends on securities   822    807    2,597    2,549 
Interest on interest-bearing deposits   14    8    23    22 
Total interest and dividend income   9,239    7,426    26,167    21,432 
Interest expense:                    
Interest on deposits   783    539    2,031    1,623 
Interest on Federal Home Loan Bank advances   222    174    633    468 
Total interest expense   1,005    713    2,664    2,091 
Net interest and dividend income   8,234    6,713    23,503    19,341 
Provision for loan losses   1,012    163    2,467    484 
Net interest and dividend income after provision for loan losses   7,222    6,550    21,036    18,857 
Noninterest income:                    
Customer service fees on deposit accounts   380    339    1,064    936 
Service charges and fees - other   488    427    1,471    1,293 
Gain on sale of securities, net   1,851    438    2,391    475 
Bank owned life insurance income   167    147    467    460 
Other income   11    12    75    101 
 Total noninterest income   2,897    1,363    5,468    3,265 
Noninterest expense:                    
Salaries and employee benefits   3,943    3,219    11,346    9,500 
Occupancy expense   411    412    1,332    1,194 
Equipment expense   149    162    456    471 
FDIC assessment   75    103    216    293 
Data processing   177    163    543    491 
Marketing expense   81    70    231    178 
Professional fees   227    299    656    876 
Directors' fees   133    81    433    226 
Other   718    703    2,197    1,987 
Total noninterest expense   5,914    5,212    17,410    15,216 
Income before income tax expense   4,205    2,701    9,094    6,906 
Income tax expense   1,434    940    2,920    2,295 
 Net income  $2,771   $1,761   $6,174   $4,611 
                     
Income per share:                    
Basic  $0.30    0.19    0.67    0.50 
Diluted  $0.30    0.19    0.67    0.50 
                     
Weighted Average Shares:                    
Basic   9,201,634    9,179,269    9,196,046    9,173,331 
Diluted   9,213,056    9,179,269    9,196,046    9,173,331 

 

 

 

 

Provident Bancorp, Inc.

Selected Financial Ratios

 

   At or for the three   At or for the nine 
   months ended   months ended 
   September 30,   September 30, 
   2017   2016   2017   2016 
(unaudited)                
Performance Ratios:                
Return on average assets (1)   1.24%   0.93%   0.96%   0.82%
Return on average equity (1)   9.59%   6.52%   7.16%   5.85%
Interest rate spread (1) (3)   3.70%   3.53%   3.69%   3.46%
Net interest margin (1) (4)   3.89%   3.72%   3.87%   3.64%
Non-interest expense to average assets (1)   2.65%   2.74%   2.72%   2.72%
Efficiency ratio      (5)   53.13%   64.54%   60.09%   67.31%
Average interest-earning assets to                    
   average interest-bearing liabilities   141.03%   148.84%   141.72%   147.28%
Average equity to average assets   12.97%   14.21%   13.45%   14.07%

 

   At   At   At 
   September 30,   December 31,   September 30, 
(unaudited)  2017   2016   2016 
Asset Quality Ratios:            
Allowance for loan losses as a percent of total loans (2)   1.44%   1.36%   1.40%
Allowance for loan losses as a percent of non-performing loans   193.59%   542.98%   590.56%
Non-performing loans as a percent of total loans (2)   0.74%   0.25%   0.24%
Non-performing loans as a percent of total assets   0.61%   0.20%   0.18%
Non-performing assets as a percent of total assets (6)   0.61%   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, including gains on securities available for sale, net.
(6)Represents non-accrual loans plus loans accruing but 90 days overdue and OREO.

 

 

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