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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): April 19, 2018

 

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 April 19, 2018, Provident Bancorp, Inc. issued a press release announcing its earnings for the quarter ended March 31, 2018. 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 April 19, 2018

  

 

 

 

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: April 23, 2018 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 for the March 31, 2018 Quarter

 

Company Release – 04/19/2018

 

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 March  31, 2018 of $2.0 million, or $0.22 per diluted share, compared to $1.8 million, or $0.20 per diluted share, for the three months ended March 31, 2017.

 

“As we continue on our path as a high-performing and rapidly growing organization, The Provident is directing energies inward by implementing Lean management principles. By improving and streamlining our internal processes, and reducing waste and redundancy, we can continue to provide an exceptional customer experience. We were recently awarded a grant, funded through the Massachusetts Workforce Training Fund in conjunction with the Massachusetts Banker’s Association (MBA) to provide Lean training for our employees. This program is an excellent forum to engage and empower our workforce, grow leaders and build teamwork. I am excited to provide this growth-opportunity to our team as they learn to use Lean methods to add significant value to our organization and the customers we serve,” said David Mansfield, Chief Executive Officer of The Provident.

 

Net interest and dividend income before provision for loan losses increased by $1.4 million, or 18.9%, compared to the three months ended March 31, 2017. The growth in net interest and dividend income is primarily the result of an increase in our average interest earning assets of $62.4 million, or 8.1%, and an increase in net interest margin of 38 basis points to 4.17%.

 

Provisions for loan losses of $656,000 were booked for the three months ended March 31, 2018 compared to $563,000 for the same period in 2017. The changes in the provision 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 1.33% as of March 31, 2018 compared to 1.30% as of December 31, 2017. The allowance for loan losses as a percentage of non-performing loans was 106.80% as of March 31, 2018 compared to 108.02% as of December 31, 2017. Non-performing assets were $9.6 million, or 1.08% of total assets as of March 31, 2018 compared to $9.0 million, or 1.00% of total assets as of December 31, 2017. The non-performing assets at March 31, 2018 consist primarily of two loan relationships. The relationships were evaluated for impairment and charge-offs of $1.5 million were recorded in 2017. No additional impairment was recorded in the three months ended March 31, 2018.

 

Noninterest income decreased $489,000, or 32.6% to $1.0 million for the three months ended March 31, 2018 compared to $1.5 million for the three months ended March 31, 2017. The decrease is primarily due to decreased gains on sales of securities.

 

Noninterest expense increased $755,000, or 13.4%, to $6.4 million for the three months ended March 31, 2017 compared to $5.6 million for the three months ended March 31, 2017. The primary reason for the increase was salary and employee benefits expense. The increase of $482,000, or 13.1%, for the three months ended March 31, 2018 in salary and employee benefits was primarily due to a higher number of lenders compared to March 31, 2017.

 

As of March 31, 2018, total assets have decreased $11.1 million, or 1.2%, to $891.2 million compared to $902.3 million at December 31, 2017. The primary reason for the decrease is due to a decrease in cash and cash equivalents partially offset by an increase in net loans. The decrease in cash and cash equivalents of $25.4 million, or 53.2%, resulted from utilizing funds for loan growth and decreases of deposits. Net loans increased $17.7 million, or 2.4%, to $759.9 million as of March 31, 2018 compared to $742.1 million at December 31, 2017. The increase in net loans was due to an increase in commercial loans of $19.8 million, or 8.2%.

 

 

 

 

Total liabilities decreased $12.6 million, or 1.6%, due to decreased deposits offset by increased borrowings. Deposits were $719.7 million as of March 31, 2018 representing a decrease of $30.4 million, or 4.0%, compared to December 31, 2017. The primary reason for the decrease in deposits was due to a decrease of $19.6 million, or 6.3%, in NOW and demand deposits, a decrease of $7.5 million, or 7.4%, time deposits, and a decrease in money market deposits of $5.7 million, or 2.5%. The decrease in the NOW and demand deposits is primarily municipal deposits. They are expected to increase in the next quarter. The time deposits reduced primarily due to the roll-off of brokered CDs. Borrowings increased $18.4 million, or 68.4%, due to the decrease in deposits.

 

As of March 31, 2018, shareholders’ equity was $117.3 million compared to $115.8 million at December 31, 2017 representing an increase of $1.6 million, or 1.3%. The increase is primarily due to net income of $2.0 million for the year.

 

 

 

 

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 52.1% 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 
   March 31,   December 31, 
(In thousands)  2018   2017 
Assets  (unaudited)     
Cash and due from banks  $8,809   $10,326 
Interest-bearing demand deposits with other banks   13,511    37,363 
Cash and cash equivalents   22,320    47,689 
Investments in available-for-sale securities (at fair value)   57,790    61,429 
Federal Home Loan Bank stock, at cost   2,166    1,854 
Loans, net   759,882    742,138 
Assets held-for-sale   -    3,286 
Bank owned life insurance   25,711    25,540 
Premises and equipment, net   14,287    10,981 
Accrued interest receivable   2,270    2,345 
Deferred tax asset, net   5,274    4,920 
Other assets   1,472    2,083 
Total assets  $891,172   $902,265 
           
Liabilities and Shareholders' Equity          
Deposits:          
Noninterest-bearing  $181,368   $186,222 
Interest-bearing   538,337    563,835 
Total deposits   719,705    750,057 
Federal Home Loan Bank advances   45,211    26,841 
Other liabilities   8,926    9,590 
Total liabilities   773,842    786,488 
Shareholders' equity:          
Preferred stock; authorized 50,000 shares:          
     no shares issued and outstanding   -    - 
Common stock, no par value: 30,000,000 shares authorized;          
     9,657,319 shares issued, 9,628,496 shares          
     outstanding at March 31, 2018 and December 31, 2017   -    - 
Additional paid-in capital   44,923    44,592 
Retained earnings   76,069    74,047 
Accumulated other comprehensive (loss) income   (270)   589 
Unearned compensation - ESOP   (2,798)   (2,857)
Treasury stock: 28,823 shares at March 31, 2018 and December 31, 2017   (594)   (594)
Total shareholders' equity   117,330    115,777 
Total liabilities and shareholders' equity  $891,172   $902,265 

 

 

 

 

Provident Bancorp, Inc.

Consolidated Income Statements

 

   Three Months Ended 
   March 31, 
(Dollars in thousands, except per share data)  2018   2017 
Interest and dividend income:  (unaudited) 
Interest and fees on loans  $9,276   $7,233 
Interest and dividends on securities   435    873 
Interest on interest-bearing deposits   42    6 
Total interest and dividend income   9,753    8,112 
Interest expense:          
Interest on deposits   920    570 
Interest on Federal Home Loan Bank advances   114    211 
Total interest expense   1,034    781 
Net interest and dividend income   8,719    7,331 
Provision for loan losses   656    563 
Net interest and dividend income after provision for loan losses   8,063    6,768 
Noninterest income:          
Customer service fees on deposit accounts   364    338 
Service charges and fees - other   453    502 
Gain on sale of securities, net   -    482 
Bank owned life insurance income   171    150 
Other income   25    30 
 Total noninterest income   1,013    1,502 
Noninterest expense:          
Salaries and employee benefits   4,158    3,676 
Occupancy expense   450    471 
Equipment expense   122    150 
FDIC assessment   82    68 
Data processing   204    190 
Marketing expense   53    50 
Professional fees   248    214 
Directors' fees   163    145 
Other   896    657 
Total noninterest expense   6,376    5,621 
Income before income tax expense   2,700    2,649 
Income tax expense   678    847 
 Net income  $2,022   $1,802 
           
Income per share:          
Basic  $0.22   $0.20 
Diluted  $0.22   $0.20 
           
Weighted Average Shares:          
Basic   9,219,865    9,192,568 
Diluted   9,295,003    9,192,568 

 

 

 

 

Provident Bancorp, Inc.

Selected Financial Ratios

 

   For the three 
   months ended 
   March 31, 
   2018   2017 
(unaudited)        
Performance Ratios:          
Return on average assets (1)   0.91%   0.88%
Return on average equity (1)   6.92%   6.19%
Interest rate spread (1) (3)   3.95%   3.62%
Net interest margin (1) (4)   4.17%   3.79%
Non-interest expense to average assets (1)   2.88%   2.73%
Efficiency ratio      (5)   65.52%   67.31%
Average interest-earning assets to          
   average interest-bearing liabilities   144.55%   141.65%
Average equity to average assets   13.19%   14.14%

 

   At   At   At 
   March 31,   December 31,   March 31, 
(unaudited)  2018   2017   2017 
Asset Quality Ratios:               
Allowance for loan losses as a percent of total loans (2)   1.33%   1.30%   1.38%
Allowance for loan losses as a percent of non-performing loans   106.80%   108.02%   662.73%
Non-performing loans as a percent of total loans (2)   1.24%   1.20%   0.21%
Non-performing loans as a percent of total assets   1.08%   1.00%   0.17%
Non-performing assets as a percent of total assets (6)   1.08%   1.00%   0.17%

 

(1)Annualized for the three months periods.
(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, excluding gains on securities available for sale, net.
(6)Non-performing assets consists of non-accrual loans plus loans accruing but 90 days overdue and OREO.

 

 

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