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Section 1: 8-K (8-K)

20200630 8-K Earnings Release



 

 

 

 

 

 

 

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 17, 2020



 

 

 

 

 

PROVIDENT BANCORP, INC.

(Exact Name of Registrant as Specified in Charter)



 

 

 

 

 

Maryland

001-39090

84-4132422

(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))



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 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

 

 



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.




 

Item 2.02Results of Operations and Financial Condition

On July 17, 2020, Provident Bancorp, Inc. (the “Company”) issued a press release announcing its earnings for the quarter ended June 30, 2020.  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 8.01 Other Events

On July 17, 2020, the Company announced that its Board of Directors declared a quarterly cash dividend of $0.03 per share of common stock. The dividend will be payable on August 13, 2020 to shareholders of record as of July 30, 2020. A copy of the press release is attached as Exhibit 99.1 hereto and incorporated herein by reference. 



Item 9.01 Financial Statements and Exhibits

(d) Exhibits

ExhibitDescription

99.1Press release dated July 17, 2020






 

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 22, 2020

 

By:

/s/ David P. Mansfield

 



 

 

David P. Mansfield

 



 

 

President and Chief Executive Officer

 












































(Back To Top)

Section 2: EX-99.1 (EX-99.1)

Earnings Release

Provident Bancorp, Inc. Reports Earnings for the June 30, 2020 Quarter and Initiates Payment of Quarterly Cash Dividends of $0.03 per Share

Company Release – 7/17/2020



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, 2020 of $3.3 million, or $0.18 per diluted share, compared to $2.5 million, or $0.13 per diluted share, for the three months ended June 30, 2019. Net income for the six months ended June 30, 2020 was $4.5 million, or $0.25 per diluted share, compared to $4.8 million, or $0.25 per diluted share, for the six months ended June 30, 2019. As a result of the completion of the second-step conversion and related stock offering in October 2019, all historical share and per share information has been restated to reflect the 2.0212-to-one exchange ratio.



The Company also announced that its Board of Directors has declared a quarterly cash dividend of $0.03 per share, which will be paid on August 13, 2020 to stockholders of record as of July 30, 2020.



“The obstacles of the day, while serious and requiring the Bank’s focus, will not hinder the entrepreneurial spirit and growth-mindset of our organization,” said Dave Mansfield, CEO. “I’m happy to highlight that we just completed a successful launch of our new ‘BankProv’ brand, an initiative that began in early 2019. Our new brand embodies the Bank’s 200-year evolution by connecting its deep banking roots to a Future Ready, technologically innovative commercial institution committed to delivering an exceptional customer experience.



COVID–19 Response



The outbreak of COVID-19 has adversely impacted a broad range of industries in which the Company’s customers operate and could impair their ability to fulfill their financial obligations. The World Health Organization has declared COVID-19 to be a global pandemic indicating that almost all public commerce and related business activities must be, to varying degrees, curtailed with the goal of decreasing the rate of new infections. The spread of the outbreak has caused significant disruption in the U.S. economy and has disrupted banking and other financial activity in the areas in which the Company operates.

 

Congress and the bank regulatory agencies have taken several actions designed to cushion the economic fallout. The Coronavirus Aid Relief and Economic Security (“CARES”) Act was signed into law at the end of March 2020. The goal of the CARES Act is to prevent severe economic downturn through various measures, including direct financial aid to American families and economic stimulus to significantly impacted industry sectors. In addition to the general impact of COVID-19, certain provisions of the CARES Act as well as other recent legislative and regulatory relief efforts are expected to have a material impact on the Company’s operations.



State and local governments are closely monitoring key public health data as the situation continues to evolve. The Company’s market area has implemented a phased reopen plan and has not seen a significant spike in cases since the implementation began. The continued progression has allowed businesses to reopen and service customers with restrictions in place. The Company’s business depends upon the willingness and ability of its employees and customers to conduct banking and other financial transactions. If the global response to contain COVID-19 escalates further or is unsuccessful, the Company could experience a material adverse effect on its business, financial condition, results of operations and cash flows. While it is not possible to know the full extent that the impact of COVID-19 will have on the Company’s operations, the Company will be disclosing potentially material items of which it is aware.



During the second quarter of 2020, the Company has focused on meeting the needs of its customer base during the pandemic. The impact of our response during the second quarter is as follows:



·

Decreased customer service fees on deposit accounts of $92,000, or 25.8% and decreased in other service charges and fees of $245,000, or 48.4%, when comparing the three months ended June 30, 2020 to the three months ended June 30, 2019 primarily due to fees waived for customers;

·

Recognized additional reserves of $581,000 to address economic uncertainties and increased unemployment;

·

Originated loans as part of the Small Business Administration’s (“SBA’s”) 7(a) Paycheck Protection Program (“PPP”) totaling $78.0 million which resulted in the collection of $2.8 million in fees from the SBA; and

·

Modified loans under the CARES Act totaling $274.2 million, or 21.4% of total loans.




 

Financial Results for June 30, 2020 Quarter



Net interest and dividend income before provision for loan losses increased by $2.4 million, or 23.0%, compared to the three months ended June 30, 2019 and increased by $4.3 million, or 20.9%, compared to the six months ended June 30,  2019. The growth in net interest and dividend income for the three months ended June 30, 2020 compared to the three months ended June 30, 2019 is primarily the result of an increase in our average interest earning assets of $324.1 million, or 34.4%, offset by a decrease in net interest margin of 38 basis points to 4.12%. The growth in net interest and dividend income for the six months ended June 30, 2020 compared to the same period in 2019 is primarily the result of an increase in average interest earning assets of $266.0 million, or 28.5%, offset by a decrease in the net interest margin of 26 basis points to 4.19%. 



Provision for loan losses of $872,000 were recognized for the three months ended June 30, 2020 compared to $1.4 million for the same period in 2019. The decrease of $482,000, or 35.6% was primarily due to net charge-offs incurred in the second quarter of 2019. For the six months ended June 30, 2020, a provision of $4.0 million was recognized compared to $2.8 million for the six months ended June 30, 2019.  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 Company has reviewed certain qualitative factors in light of significant economic deterioration due to COVID-19. As some businesses remain shut down and others operate at reduced capacities, the Company continues to work with borrowers and offer relief in the form of short-term payment deferrals. There remains significant uncertainty of the full impact of COVID-19 as there is no set timeline as to when our customers can return to full operations. In reviewing the modifications performed as of June 30, 2020, an increased provision was recognized to address the economic uncertainties and increased unemployment that COVID-19 has had on our commercial customers. As of June 30, 2020 we have modified 110 commercial real estate loans totaling $133.9 million and 157 commercial loans totaling $116.1 million.



The allowance for loan losses as a percentage of total loans was 1.34% as of June 30, 2020 compared to 1.42% as of December 31, 2019. Included in total loans is $78.0 million in PPP loans originated as part of the CARES Act that have no credit risk, therefore we have not provided for losses for these loans, which has lowered the allowance as a percentage of total loans. The allowance for loan losses as a percentage of non-performing loans was 65.9% as of June 30, 2020 compared to 237.6% as of December 31, 2019. Non-performing loans were $26.0 million, or 1.8% of total assets as of June 30, 2020, compared to $5.8 million, or 0.52% of total assets, as of December 31, 2019.  As of June 30, 2020, non-performing loans consist primarily of two commercial relationships and one commercial real estate relationship. These loan relationships were evaluated and specific reserves of $1.74 million were allocated as of June 30, 2020.



Noninterest income decreased $352,000, or 33.3%, to $704,000 for the three months ended June 30, 2020 compared to $1.1 million for the same period in 2019. The decrease is primarily due to a decrease in other service charges and fees of $245,000, or 48.4%, and a decrease in customer service fees on deposit accounts of $92,000, or 25.8%. For the six months ended June 30, 2020, noninterest income decreased $388,000, or 18.5%, to $1.7 million compared to $2.1 million for the six months ended June 30, 2019. The decrease is primarily due to a decrease in the gains on sales of securities of $113,000, or 100.0%, a decrease in other service charges and fees of $197,000, or 21.5%, and a decrease of $69,000, or 10.1% in customer services fees on deposit accounts. The decreases in other service charges and fees and customer service fees on deposit accounts for both periods was primarily due to waiving fees for customers impacted by COVID-19.



Noninterest expense increased $1.5 million, or 21.5%,  to $8.4 million for the three months ended June 30, 2020 compared to $6.9 million for the three months ended June 30, 2019. The increase is primarily due to an increase in salaries and employee benefits expense and other expense, partially offset by a decrease in occupancy expense and professional fees.  The increase of $1.5 million, or 35.7%, for the three months ended June 30, 2020 in salary and employee benefits was primarily due to a higher number of sales and operations positions compared to the same period in 2019, the addition of staff from the warehouse business line purchase, and our ESOP expense. The warehouse business line purchase increased salary and employee benefits by $241,000. ESOP expense increased $49,000 due to the acquisition of additional shares from our second-step conversion and related stock offering in October 2019. Other expense increased $82,000, or 9.5%, due to increased loan workout expenses. Occupancy expense decreased $121,000, or 22.0%, primarily due to the acceleration of our leasehold improvements amortization related to the closure of our Hampton, New Hampshire branch in 2019. Professional fees decreased $129,000, or 26.0%, primarily due to one-time consulting services incurred in 2019 to aid in implementing a continuous improvement culture and our development of deposit products and services. For the six months ended June 30, 2020, noninterest expense increased $3.0 million, or 22.3%, to $16.6 million compared to $13.6 million for the six months ended June 30, 2019. The increase is primarily due to an increase in salaries and employee benefits expense, write-down of a notes receivable, and other expense, partially offset by a decrease in occupancy expense and professional fees. The increase of $2.6 million, or 30.7%, for the six months ended June 30, 2020 in salary and employee benefits was primarily due to a higher number of sales and operations positions compared to the same period in 2019, the addition of staff from the warehouse business line purchase, and our ESOP expense. The warehouse business line purchase increased salary and employee benefits by $411,000 and ESOP expense increased $163,000, as described above. A write-down of a notes receivable was completed after the Company evaluated the collectability and determined that $500,000 is uncollectible. Other expense increased $186,000, or 12.1%, due to increased loan workout expenses. Occupancy expense decreased $324,000, or 27.1%, primarily due to the acceleration of our leasehold improvements amortization related to the closure of our Hampton, New Hampshire branch in 2019. Professional fees decreased $165,000, or 18.0%, primarily due to one-time consulting


 

services incurred in 2019 to aid in implementing a continuous improvement culture and our development of deposit products and services.



As of June 30, 2020, total assets have increased $293.0 million, or 26.1%, to $1.41 billion compared to $1.12 billion at December 31, 2019. The primary reasons for the increase are increases in net loans,  bank owned life insurance and accrued interest receivable, partially offset by a decrease cash and cash equivalents and in investments in available-for-sale securities. Net loans increased $305.8 million, or 31.9%, to $1.27 billion as of June 30, 2020 compared to $959.3 million at December 31, 2019. The increase in net loans was due to an increase in commercial loans of $309.0 million, or 68.4%, an increase in construction and land development loans of $10.3 million, or 22.1%, and an increase in commercial real estate loans of $3.5 million, or 0.8%, partially offset by decreases in residential real estate loans of $6.3 million, or 13.8%, and consumer loans of $4.2 million, or 33.2%. The increase in commercial loans was primarily due to loans in the warehouse business line of $184.8 million and the origination of $78.0 million in SBA PPP loans. The increase in bank owned life insurance of $9.3 million, or 34.5%, was primarily due to the purchase of additional insurance. The increase in accrued interest receivable of $1.9 million, or 66.6%, was primarily due to deferred interest on loan modifications as part of the CARES Act. The decrease in cash and cash equivalents of $21.5 million, or 36.0%, resulted from the purchase of the warehouse business line partially offset by an increase in deposits. The decrease in investments in available-for-sale securities of $4.8 million, or 11.5%, resulted primarily from principal pay downs on government mortgage-backed securities.



Total liabilities increased $287.6 million, or 32.3%, due to increased deposits and an increase in borrowings. Deposits were $1.12 billion as of June 30, 2020, representing an increase of $270.6 million,  or 31.8%, compared to December 31, 2019. The primary reason for the increase in deposits was due to an increase of $133.3 million, or 36.1%, in NOW and demand deposits, an increase of $21.4 million, or 25.7% in money market accounts, $76.7 million, or 81.2%, in time deposits, and an increase of $39.2 million, or 33.9%, in savings accounts. Money market deposits and NOW and demand deposits increased due to funds from the origination of PPP loans and strategic deposit growth strategy.  The increase in time deposits is primarily due to increases in brokered certificates of deposit of $65.6 million, or 135.0%, and an increase of $12.9 million, or 148.9%, from Qwickrate, where we gather certificates of deposit nationwide by posting rates we will pay on these deposits.  The increase in savings accounts is primarily due to municipal deposits and growth from our online deposit products.  Borrowings increased $17.0 million, or 68.1%, to $42.0 million as of June 30, 2020 primarily due to funding loan growth.



As of June 30, 2020, shareholders’ equity was $236.3 million compared to $230.9 million at December 31, 2019, representing an increase of $5.4 million, or 2.3%. The increase was primarily due to year-to-date net income of $4.5 million, stock-based compensation expense of $503,000, other comprehensive income of $544,000 and employee stock ownership plan shares earned of $444,000, partially offset by a decrease of $583,000 from dividends declared.



About Provident Bancorp, Inc.



Provident Bancorp, Inc. is a Maryland corporation that was formed in 2019 to be the successor corporation to Provident Bancorp, Inc., a Massachusetts corporation, and the holding company for The Provident Bank, which also operates under the name BankProv. The Provident Bank, a subsidiary of Provident Bancorp, Inc., is an innovative, commercial bank that finds solutions for our business and private clients. We are committed to strengthening the economic development of the regions we serve, by working closely with businesses and private clients 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.bankprov.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 borrowers to repay their loans; and 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 Annual and Quarterly Reports on Forms 10-K and 10-Q, and Current Reports on Form 8-K.



Provident Bancorp, Inc.

Carol Houle, 603-334-1253

Executive Vice President/CFO

choule@bankprov.com




 

Provident Bancorp, Inc.

Consolidated Balance Sheet







 

 

 

 

 



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 










 





Provident Bancorp, Inc.

Consolidated Income Statements







 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 



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

 

 

 

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

 

 

 

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).


















 

Provident Bancorp, Inc.

Net Interest Income Analysis

(Unaudited)













 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



For the Three Months Ended June 30,



2020

 

2019



 

 

 

Interest

 

 

 

 

 

 

Interest

 

 



Average

 

Earned/

 

Yield/

 

Average

 

Earned/

 

Yield/



Balance

 

Paid

 

Rate

 

Balance

 

Paid

 

Rate

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans 

$

1,207,921 

 

$

14,391 

 

4.77% 

 

$

880,501 

 

$

12,270 

 

5.57% 

Short-term investments

 

18,915 

 

 

 

0.08% 

 

 

8,859 

 

 

41 

 

1.85% 

Investment securities

 

38,503 

 

 

219 

 

2.28% 

 

 

49,188 

 

 

366 

 

2.98% 

Federal Home Loan Bank stock

 

1,323 

 

 

40 

 

12.09% 

 

 

3,986 

 

 

54 

 

5.42% 

          Total interest-earning assets

 

1,266,662 

 

 

14,654 

 

4.63% 

 

 

942,534 

 

 

12,731 

 

5.40% 

Non-interest earning assets

 

59,271 

 

 

 

 

 

 

 

60,743 

 

 

 

 

 

          Total assets

$

1,325,933 

 

 

 

 

 

 

$

1,003,277 

 

 

 

 

 

Liabilities and shareholders' equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Savings accounts

$

129,753 

 

 

77 

 

0.24% 

 

$

109,052 

 

 

78 

 

0.29% 

Money market accounts

 

281,457 

 

 

516 

 

0.73% 

 

 

223,318 

 

 

667 

 

1.19% 

NOW accounts

 

126,023 

 

 

113 

 

0.36% 

 

 

108,963 

 

 

113 

 

0.41% 

Certificates of deposit

 

160,295 

 

 

737 

 

1.84% 

 

 

122,896 

 

 

673 

 

2.19% 

Total interest-bearing deposits

 

697,528 

 

 

1,443 

 

0.83% 

 

 

564,229 

 

 

1,531 

 

1.09% 

Borrowings

 

53,438 

 

 

176 

 

1.32% 

 

 

90,710 

 

 

599 

 

2.64% 

Total interest-bearing liabilities

 

750,966 

 

 

1,619 

 

0.86% 

 

 

654,939 

 

 

2,130 

 

1.30% 

Noninterest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

 

324,296 

 

 

 

 

 

 

 

203,706 

 

 

 

 

 

Other noninterest-bearing liabilities

 

15,659 

 

 

 

 

 

 

 

14,361 

 

 

 

 

 

Total liabilities

 

1,090,921 

 

 

 

 

 

 

 

873,006 

 

 

 

 

 

Total equity

 

235,012 

 

 

 

 

 

 

 

130,271 

 

 

 

 

 

Total liabilities and

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

equity

$

1,325,933 

 

 

 

 

 

 

$

1,003,277 

 

 

 

 

 

Net interest income

 

 

 

$

13,035 

 

 

 

 

 

 

$

10,601 

 

 

Interest rate spread (1)

 

 

 

 

 

 

3.77% 

 

 

 

 

 

 

 

4.10% 

Net interest-earning assets (2)

$

515,696 

 

 

 

 

 

 

$

287,595 

 

 

 

 

 

Net interest margin (3)

 

 

 

 

 

 

4.12% 

 

 

 

 

 

 

 

4.50% 

Average interest-earning assets to

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

interest-bearing liabilities

 

168.67% 

 

 

 

 

 

 

 

143.91% 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Net interest rate spread represents the difference between the weighted average yield on interest-bearing assets and the weighted

average rate of interest-bearing liabilities.

(2) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.

(3) Net interest margin represents net interest income divided by average total interest-earning assets.










































 

















 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



For the Six Months Ended June 30,



2020

 

2019



 

 

 

Interest

 

 

 

 

 

 

Interest

 

 



Average

 

Earned/

 

Yield/

 

Average

 

Earned/

 

Yield/



Balance

 

Paid

 

Rate

 

Balance

 

Paid

 

Rate

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans 

$

1,138,223 

 

$

28,151 

 

4.95% 

 

$

872,912 

 

$

23,969 

 

5.49% 

Short-term investments

 

19,045 

 

 

75 

 

0.79% 

 

 

6,620 

 

 

67 

 

2.02% 

Investment securities

 

39,767 

 

 

457 

 

2.30% 

 

 

49,980 

 

 

738 

 

2.95% 

Federal Home Loan Bank stock

 

2,242 

 

 

60 

 

5.35% 

 

 

3,761 

 

 

86 

 

4.57% 

          Total interest-earning assets

 

1,199,277 

 

 

28,743 

 

4.79% 

 

 

933,273 

 

 

24,860 

 

5.33% 

Non-interest earning assets

 

58,227 

 

 

 

 

 

 

 

62,044 

 

 

 

 

 

          Total assets

$

1,257,504 

 

 

 

 

 

 

$

995,317 

 

 

 

 

 

Liabilities and shareholders' equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Savings accounts

$

125,430 

 

 

182 

 

0.29% 

 

$

113,518 

 

 

186 

 

0.33% 

Money market accounts

 

268,669 

 

 

1,221 

 

0.91% 

 

 

227,518 

 

 

1,366 

 

1.20% 

NOW accounts

 

125,155 

 

 

268 

 

0.43% 

 

 

112,451 

 

 

229 

 

0.41% 

Certificates of deposit

 

147,057 

 

 

1,418 

 

1.93% 

 

 

113,431 

 

 

1,187 

 

2.09% 

Total interest-bearing deposits

 

666,311 

 

 

3,089 

 

0.93% 

 

 

566,918 

 

 

2,968 

 

1.05% 

Borrowings

 

66,154 

 

 

547 

 

1.65% 

 

 

85,625 

 

 

1,133 

 

2.65% 

Total interest-bearing liabilities

 

732,465 

 

 

3,636 

 

0.99% 

 

 

652,543 

 

 

4,101 

 

1.26% 

Noninterest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

 

275,368 

 

 

 

 

 

 

 

196,664 

 

 

 

 

 

Other noninterest-bearing liabilities

 

15,694 

 

 

 

 

 

 

 

15,303 

 

 

 

 

 

Total liabilities

 

1,023,527 

 

 

 

 

 

 

 

864,510 

 

 

 

 

 

Total equity

 

233,977 

 

 

 

 

 

 

 

130,807 

 

 

 

 

 

Total liabilities and

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

equity

$

1,257,504 

 

 

 

 

 

 

$

995,317 

 

 

 

 

 

Net interest income

 

 

 

$

25,107 

 

 

 

 

 

 

$

20,759 

 

 

Interest rate spread (1)

 

 

 

 

 

 

3.80% 

 

 

 

 

 

 

 

4.07% 

Net interest-earning assets (2)

$

466,812 

 

 

 

 

 

 

$

280,730 

 

 

 

 

 

Net interest margin (3)

 

 

 

 

 

 

4.19% 

 

 

 

 

 

 

 

4.45% 

Average interest-earning assets to

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  interest-bearing liabilities

 

163.73% 

 

 

 

 

 

 

 

143.02% 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Net interest rate spread represents the difference between the weighted average yield on interest-bearing assets and the weighted

average rate of interest-bearing liabilities.

(2) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.

(3) Net interest margin represents net interest income divided by average total interest-earning assets.






 

Provident Bancorp, Inc.

Select Financial Highlights





 

 

 

 

 

 

 

 

 

 

 



 

 

 



Three Months Ended

 

Six Months Ended



June 30,

 

June 30,



2020

 

2019

 

2020

 

2019

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

Performance Ratios:

 

 

 

 

 

 

 

 

 

 

 

Return on average assets (1)

 

0.98% 

 

 

1.01% 

 

 

0.71% 

 

 

0.95% 

Return on average equity (1)

 

5.53% 

 

 

7.77% 

 

 

3.83% 

 

 

7.26% 

Interest rate spread (1) (3)

 

3.77% 

 

 

4.10% 

 

 

3.80% 

 

 

4.07% 

Net interest margin (1) (4)

 

4.12% 

 

 

4.50% 

 

 

4.19% 

 

 

4.45% 

Non-interest expense to average assets (1)

 

2.52% 

 

 

2.74% 

 

 

2.65% 

 

 

2.74% 

Efficiency ratio (5)

 

60.86% 

 

 

59.05% 

 

 

62.14% 

 

 

59.91% 

Average interest-earning assets to

 

 

 

 

 

 

 

 

 

 

 

average interest-bearing liabilities

 

168.67% 

 

 

143.91% 

 

 

163.73% 

 

 

143.02% 

Average equity to average assets

 

17.72% 

 

 

12.98% 

 

 

18.61% 

 

 

13.14% 























 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 



At

 

At

 

At



June 30,

 

December 31,

 

June 30,



2020

 

2019

 

2019

Asset Quality

 

 

 

 

 

 

 

 

Non-accrual loans:

 

 

 

 

 

 

 

 

Real estate:

 

 

 

 

 

 

 

 

Commercial

$

20,865 

 

$

1,701 

 

$

519 

Residential

 

844 

 

 

969 

 

 

1,052 

Construction and land development

 

 -

 

 

165 

 

 

 —

Commercial

 

4,309 

 

 

2,955 

 

 

3,760 

Consumer

 

21 

 

 

37 

 

 

87 

Total non-accrual loans

 

26,039 

 

 

5,827 

 

 

5,418 

Accruing loans past due 90 days or more

 

 —

 

 

 —

 

 

 —

Other real estate owned

 

 —

 

 

 —

 

 

1,740 

Total non-performing assets

$

26,039 

 

$

5,827 

 

$

7,158 

Asset Quality Ratios

 

 

 

 

 

 

 

 

Allowance for loan losses as a percent of total loans (2)

 

1.34% 

 

 

1.42% 

 

 

1.31% 

Allowance for loan losses as a percent of non-performing loans

 

65.89% 

 

 

237.58% 

 

 

217.61% 

Non-performing loans as a percent of total loans (2)

 

2.03% 

 

 

0.60% 

 

 

0.60% 

Non-performing loans as a percent of total assets

 

1.84% 

 

 

0.52% 

 

 

0.53% 

Non-performing assets as a percent of total assets (6)

 

1.84% 

 

 

0.52% 

 

 

0.69% 

Capital and Share Related (7)

 

 

 

 

 

 

 

 

Stockholders' equity to total assets

 

16.7% 

 

 

20.6% 

 

 

12.8% 

Book value per share

$

12.14 

 

$

11.86 

 

$

6.78 

Market value per share

$

7.86 

 

$

12.45 

 

$

13.85 

Shares outstanding

 

19,472,310 

 

 

19,473,818 

 

 

19,447,627 



 

 

 

 

 

 

 

 

(1) Annualized where appropriate.

(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.

(7) 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).






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