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Section 1: 10-Q (10-Q)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x        QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2020

o         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________ to ______________________

Commission File No. 001-39090

Provident Bancorp, Inc.

(Exact name of registrant as specified in its charter)

Maryland

84-4132422

(State or other jurisdiction of

(I.R.S. Employer

incorporation or organization)

Identification Number)

5 Market Street, Amesbury, Massachusetts

01913

(Address of Principal Executive Offices)

Zip Code

(978) 834-8555

(Registrant’s telephone number)

N/A

(Former name, former address, and former fiscal year if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Common stock

PVBC

The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such requirements for the past 90 days.  YES  x  NO  o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   YES  x  NO  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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

o

 

Accelerated Filer

x

Non-accelerated Filer

o

 

Smaller Reporting Company

x

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  YES  o  NO  x

As of August 3, 2020, there were 19,472,310 shares of the Registrant’s common stock, $0.01 par value per share, outstanding. 


Provident Bancorp, Inc.

Form 10-Q

Part I.

Financial Information

Page

 

 

Item 1.

Interim Financial Statements

2

 

 

 

Consolidated Balance Sheets as of June 30, 2020 (unaudited) and December 31, 2019

2

 

 

 

Consolidated Statements of Income for the Three and Six Months Ended June 30, 2020 and 2019 (unaudited)

3

 

 

 

Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2020 and 2019 (unaudited)

4

 

Consolidated Statements of Changes in Shareholders’ Equity for the Three and Six Months Ended June, 2020 and 2019 (unaudited)

5

 

 

 

Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2020 and 2019 (unaudited)

6

 

 

 

Notes to Consolidated Financial Statements (unaudited)

8

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operation

29

 

 

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

45

 

 

Item 4.

Controls and Procedures

45

 

 

Part II.

Other Information

46

 

 

Item 1.

Legal Proceedings

45

 

 

Item 1A.

Risk Factors

46

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

46

 

 

Item 3.

Defaults upon Senior Securities

46

 

 

Item 4.

Mine Safety Disclosures

46

 

 

Item 5.

Other Information

46

 

 

Item 6.

Exhibits

47

 

 

Signatures

 

48

 

 


Part I.Financial Information

Item 1.Financial Statements

PROVIDENT BANCORP, INC.

CONSOLIDATED BALANCE SHEETS

At

At

June 30,

December 31,

2020

2019

(Dollars in thousands)

(unaudited)

Assets

Cash and due from banks

$

12,327

$

11,990

Short-term investments

25,851

47,668

Cash and cash equivalents

38,178

59,658

Debt securities available-for-sale (at fair value)

36,992

41,790

Federal Home Loan Bank stock, at cost

1,050

1,416

Loans, net of allowance for loan losses of $17,158 and $13,844 as of

June 30, 2020 and December 31, 2019, respectively

1,265,091

959,286

Bank owned life insurance

36,225

26,925

Premises and equipment, net

14,771

14,728

Accrued interest receivable

4,756

2,854

Right-of-use assets

4,336

3,713

Other assets

13,413

11,418

Total assets

$

1,414,812

$

1,121,788

Liabilities and Shareholders' Equity

Deposits:

Noninterest-bearing

$

361,022

$

222,088

Interest-bearing

759,463

627,817

Total deposits

1,120,485

849,905

Borrowings

42,021

24,998

Operating lease liabilities

4,534

3,877

Other liabilities

11,450

12,075

Total liabilities

1,178,490

890,855

Shareholders' equity:

Preferred stock; authorized 50,000 shares:

no shares issued and outstanding

Common stock, $0.01 par value, 100,000,000 shares authorized;

19,472,310 and 19,473,818 shares issued and outstanding

at June 30, 2020 and December 31, 2019, respectively

195

195

Additional paid-in capital

146,778

146,174

Retained earnings

98,057

94,159

Accumulated other comprehensive income

1,002

458

Unearned compensation - ESOP

(9,710)

(10,053)

Total shareholders' equity

236,322

230,933

Total liabilities and shareholders' equity

$

1,414,812

$

1,121,788

The accompanying notes are an integral part of the unaudited consolidated financial statements.

 

2


PROVIDENT BANCORP, INC.

CONSOLIDATED STATEMENTS OF INCOME

Three Months Ended

Six Months Ended

June 30,

June 30,

2020

2019

2020

2019

(Dollars in thousands, except per share data)

(unaudited)

Interest and dividend income:

Interest and fees on loans

$

14,391

$

12,270

$

28,151

$

23,969

Interest and dividends on securities

259

420

517

824

Interest on short-term investments

4

41

75

67

Total interest and dividend income

14,654

12,731

28,743

24,860

Interest expense:

Interest on deposits

1,443

1,531

3,089

2,968

Interest on borrowings

176

599

547

1,133

Total interest expense

1,619

2,130

3,636

4,101

Net interest and dividend income

13,035

10,601

25,107

20,759

Provision for loan losses

872

1,354

3,971

2,816

Net interest and dividend income after provision for loan losses

12,163

9,247

21,136

17,943

Noninterest income:

Customer service fees on deposit accounts

264

356

616

685

Service charges and fees - other

261

506

721

918

Gain on sale of securities, net

113

Bank owned life insurance income

171

173

350

350

Other income

8

21

27

36

Total noninterest income

704

1,056

1,714

2,102

Noninterest expense:

Salaries and employee benefits

5,799

4,274

11,201

8,568

Occupancy expense

429

550

870

1,194

Equipment expense

144

109

281

215

Data processing

195

150

396

354

Marketing expense

71

69

135

124

Professional fees

367

496

753

918

Directors' compensation

171

188

365

369

Software depreciation and implementation

238

182

438

345

Write down of note receivable

500

Other

947

865

1,728

1,542

Total noninterest expense

8,361

6,883

16,667

13,629

Income before income tax expense

4,506

3,420

6,183

6,416

Income tax expense

1,256

889

1,702

1,667

Net income

$

3,250

$

2,531

$

4,481

$

4,749

Earnings per share: (1)

Basic

$

0.18

$

0.13

$

0.25

$

0.25

Diluted

$

0.18

$

0.13

$

0.25

$

0.25

Weighted Average Shares: (1)

Basic

18,150,106

18,758,735

18,131,421

18,744,781

Diluted

18,179,858

18,895,918

18,197,646

18,856,903

(1) Amounts related to periods prior to the date of the Conversion (October 16, 2019) have been restated to give the retroactive recognition to the exchange ratio applied in the Conversion (2.0212-to-one).

The accompanying notes are an integral part of the unaudited consolidated financial statements.

 

3


PROVIDENT BANCORP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

Three Months Ended

Six Months Ended

June 30,

June 30,

2020

2019

2020

2019

(In thousands)

Net income

$

3,250

$

2,531

$

4,481

$

4,749

Other comprehensive income:

Unrealized holding gains arising during the period on debt securities available-for-sale

721

760

731

975

Reclassification adjustment for realized gains in net income

(113)

Unrealized gain

721

760

731

862

Income tax effect

(160)

(190)

(187)

(223)

Total other comprehensive income

561

570

544

639

Comprehensive income

$

3,811

$

3,101

$

5,025

$

5,388

The accompanying notes are an integral part of the unaudited consolidated financial statements.

 


4


PROVIDENT BANCORP, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited)

For the three months ended June 30, 2020 and 2019

Accumulated

Shares of

Additional

Other

Unearned

Common

Common

Paid-in

Retained

Comprehensive

Compensation

Treasury

(In thousands, except share data)

Stock (1)

Stock

Capital

Earnings

Income (Loss)

ESOP

Stock

Total

Balance, March 31, 2020

19,476,248 

$

195 

$

146,500 

$

95,390 

$