Provident Bancorp, Inc. Reports Earnings for the June 30, 2021 Quarter and Continues Payment of Quarterly Cash Dividends of $0.04 per Share
07/29/2021 - 04:30 PM
AMESBURY, Mass. , July 29, 2021 /PRNewswire/ -- 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, 2021 of $3.2 million $0.18 $3.3 million $0.18 June 30, 2020 . Net income for the six months ended June 30, 2021 was $7.5 million $0.43 $4.5 million $0.25 June 30, 2020 .
The Company also announced that its Board of Directors has declared a quarterly cash dividend of $0.04 August 27, 2021 to stockholders of record as of August 13, 2021 .
In announcing these results, Dave Mansfield , Chief Executive Officer said, "The development of new technologies and the changing needs of customers has put immense pressure on the banking industry to evolve. Over the past few years our institution has focused on embracing innovation and leveraging new technologies to deliver a better banking experience to businesses who seek digital solutions. By forming new relationships with several digital asset companies and implementing newly developed digital services, we have seen financial benefits in the form of increased non-interest bearing deposits and fee income as well as an expansion in our specialty lending portfolio. Our Bank is excited to be an active participant in the evolution of our industry as we continue to seek new ways to challenge the traditional processes of today to transform the customer experience of tomorrow."
COVID–19 Response
Since the distribution of the first COVID-19 vaccination began in December, additional vaccines have been approved for use and the Company's market area has progressed through different phases of the vaccine rollout. As larger percentages of the population become fully vaccinated, and warmer weather has begun, there has been an uptick in economic activity, particularly in those industries that had been most heavily impacted by the economic downturn caused by the COVID-19 pandemic.
In December 2020 , Congress approved a bill which allocated additional funds to the Small Business Administration ("SBA") for a second round of Paycheck Protection Program ("PPP") loans to assist with the economic fallout caused by the COVID-19 pandemic. The SBA, in consultation with the U.S. Treasury department, resumed the PPP in January of 2021 through May 31, 2021 . During the first round of the PPP, which ran from March to August 2020 , the Company originated $78.0 million June 30, 2021 , the Company has originated an additional $46.0 million June 30, 2021 , of the $124.0 million $43.3 million $1.7 million
The Company's focus has been on meeting the needs of its customers through the height of the pandemic and now through the economic recovery. We continue to maintain close communication with commercial customers, especially in those industries most heavily impacted by the pandemic. Most loans that were modified under the Coronavirus Aid, Relief, and Economic Security ("CARES") Act have resumed repayment or have been paid off. We have not experienced any significant delinquencies related to these loans that have resumed repayment. As of June 30, 2021 , remaining loan modifications that were made under the CARES Act totaled $18.9 million 1.4% of total loans, compared to $44.0 million 3.3% of total loans at December 31, 2020 .
Financial Results
For the three and six month period ended June 30, 2021 , net interest and dividend increased by $1.6 million 12.0% , and increased by $4.4 million 17.5% , compared to the three and six months ended June 30, 2020 , respectively. For the three months ended June 30, 2021 interest and dividend income increased $859,000 5.9% , to $15.5 million $14.7 million $211.7 million 4.20% for the three months ended June 30, 2021 compared to 4.63% for the same period in 2020. Also contributing to the increase in net interest and dividend income for the three months ended June 30, 2021 was a decrease in interest expense of $709,000 43.8% , to $910,000 $1.6 million June 30, 2020 . Interest expense declined as a result of the rate environment and a lower cost of funds of 43 basis points, to 0.43% , for the three months ended June 30, 2021 compared to 0.86% for the same period in 2020. Net interest and dividend income increased by $4.4 million 17.5% , for the six months ended June 30, 2021 compared to the six months ended June 30, 2020 . For the six months ended June 30, 2021 , interest and dividend income increased $2.7 million 9.3% , to $31.4 million $28.7 million $271.0 million 4.27% for the six months ended June 30, 2021 compared to 4.79% for the same period in 2020. Also contributing to the increase in net interest and dividend income for the six months ended June 30, 2021 was a decrease in interest expense of $1.7 million 48.0% , to $1.9 million $3.6 million June 30, 2020 . Interest expense declined as a result of the rate environment and a lower cost of funds of 55 basis points, to 0.44% for the six months ended June 30, 2021 compared to 0.99% for the same period in 2020. The decrease in yield on assets and cost of funds for the three and six months ended June 30, 2021 , are the result of a decrease in the national rate environment. The decreasing rate environment resulted in a decrease in our net interest margin of 17 basis points to 3.95% from 4.12% for the three months ended June 30, 2021 , and 18 basis points to 4.01% from 4.19% for the six months ended June 30, 2021 when compared to the same periods in 2020.
Provision for loan losses of $1.7 million June 30, 2021 compared to $872,000 June 30, 2021 , a provision of $2.4 million $4.0 million June 30, 2020 . The changes in the provision were based on management's assessment of economic conditions, including the impact of the COVID-19 pandemic, 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 1.43% as of June 30, 2021 compared to 1.39% as of December 31, 2020 . The primary reason for the increase was a $1.3 million $956,000 June 30, 2021 were $1.5 million $657,000 $1.2 million $227.1 million and $265.4 million June 30, 2021 and December 31, 2020 , respectively. Loans in this segment are facility lines to non-bank mortgage origination companies for sale into secondary markets, which typically occurs within 15 days of the loan closure. Due to their short-term nature, these loans are assessed at a lower credit risk and do not carry the same allocation as traditional loans. Included in total loans is $43.3 million 1.48% as of June 30, 2021 compared to 1.43% at December 31, 2020 . The allowance for loan losses as a percentage of non-performing loans was 416.12% as of June 30, 2021 compared to 341.72% as of December 31, 2020 . Non-performing loans were $4.7 million 0.29% of total assets as of June 30, 2021 , compared to $5.4 million 0.36% of total assets, as of December 31, 2020 . As of June 30, 2021 , non-performing loans consist primarily of two commercial relationships totaling $3.3 million $2.8 million June 30, 2021 .
Noninterest income increased $399,000 56.7% , to $1.1 million June 30, 2021 compared to $704,000 June 30, 2020 . The increase is primarily due to an increase in other service charges and fees of $177,000 67.8% , and an increase in customer service fees on deposit accounts of $169,000 64.0% . The increase in other service charges and fees is primarily due to waived fees in 2020 for customers impacted by COVID-19 in addition to a loan payoff charge on a commercial real estate loan. The increase in customer service fees on deposit accounts is primarily due to waived fees in 2020 for customers impacted by COVID-19 in addition to fees generated from the cash vault services for our customers who operate Bitcoin ATMs. For the six months ended June 30, 2021 , noninterest income increased $407,000 23.7% , to $2.1 million $1.7 million June 30, 2020 . This was primarily due to an increase in customer service fees on deposit accounts of $196,000 31.8% , and an increase in other service charges and fees of $67,000 9.3% . The increase in customer service fees on deposit accounts was primarily due to waived fees in 2020 for customers impacted by COVID-19 in addition to fees generated from the cash vault services for our customers who operate Bitcoin ATMs. Other service charges and fees increased primarily due to income from a loan payoff charge on a commercial real estate loan partially offset by a decrease in overdraft fee income. Noninterest income for the six months ended June 30, 2021 also increased due to an increase in bank owned life insurance income of $92,000 26.3% , when compared to the same period in 2020 due to the purchase of additional insurance policies in 2020. Other income increased $52,000 192.6% for the six months ended June 30, 2021 primarily due to a one-time incentive payment on a service contract received in the first quarter of 2021.
Noninterest expense increased $1.1 million 14.0% , to $9.5 million June 30, 2021 compared to $8.4 million June 30, 2020 . The increase is primarily due to an increase in salaries and employee benefits expense, professional fees, data processing fees and directors' compensation. The increase of $905,000 15.6% , in salary and employee benefits was primarily due to increased stock-based compensation expense and a higher number of sales and operations positions compared to the same period in 2020. The increase of $102,000 27.8% , in professional fees was primarily due to costs paid to third party vendors for program assistance as well as increased legal, and audit and compliance costs. Data processing fees increased $92,000 41.4% , primarily due to new contracts for deposit services. Directors' compensation increased $90,000 52.6% , primarily due to increased stock-based compensation expense. For the six months ended June 30, 2021 , noninterest expense increased $2.0 million 12.4% , to $18.7 million $16.7 million June 30, 2020 . The increase is primarily due to an increase in salaries and employee benefits expense, data processing fees, directors' compensation, professional fees and deposit insurance expenses, partially offset by a decrease in write downs of other assets and receivables. The increase of $2.0 million 17.7% , for the six months ended June 30, 2021 when compared to the same period in 2020 in salary and employee benefits was primarily due to stock based compensation expense and a higher number of sales and operations positions compared to the same period in 2020. Data processing fees increased $187,000 41.7% , primarily due to new contracts for deposit services. Directors' compensation increased $150,000 41.1% , primarily due to increase stock-based compensation expense. Professional fees increased $147,000 19.5% , primarily due to management fees and an increase in audit and compliance costs. Deposit insurance expenses increased $93,000 75.0% , primarily due to one-time credits that were recognized in the first quarter of 2020 that resulted in a lower expense. These increases were offset by a decrease in write downs of other assets and receivables of $500,000 $500,000
As of June 30, 2021 , total assets have increased $79.3 million 5.3% , to $1.59 billion $1.51 billion $56.6 million 67.5% is primarily due to an increase in deposits. Net loans increased $19.8 million 1.5% , and were $1.33 billion June 30, 2021 compared to $1.31 billion December 31, 2020 . The increase in net loans was due to an increase in commercial loans of $71.8 million 12.7% and construction and land development loans of $4.6 million 15.9% , partially offset by decreases in mortgage warehouse loans of $38.2 million 14.4% , commercial real estate loans of $7.7 million 1.8% , residential real estate loans of $6.2 million 18.8% , and consumer loans of $2.5 million 45.1% . Our commercial loan growth was primarily due to increases in our specialty lending portfolios. As of June 30, 2021 , enterprise value loans increased $17.9 million 6.3% , to $304.0 million $286.1 million December 31, 2020 . Renewable energy loans increased $13.8 million 37.1% , to $51.0 million $37.2 million December 31, 2020 . Also included in commercial loans at June 30, 2021 and December 31, 2020 were $45.0 million $15.0 million
Total liabilities increased $83.6 million 6.6% , due to increased deposits. Deposits were $1.32 billion June 30, 2021 , representing an increase of $84.4 million 6.8% , compared to December 31, 2020. The increase in deposits was due to an increase of $91.9 million 16.6% , in NOW and demand deposits, an increase of $42.2 million 11.9% in money market accounts, an increase of $2.9 million 1.9% , in savings accounts, partially offset by a decrease of $52.6 million 29.5% , in time deposits. NOW and demand deposits and money market deposits increased primarily due to funds from the origination of PPP loans and increased deposit balances from new and expanded relationships with digital asset customers, which totaled $94.6 million June 30, 2021 . The increase in savings accounts is primarily caused by increased consumer savings. The decrease in time deposits is primarily due to roll-off of brokered certificates of deposit. In addition, the Bank has increased focused on growing non-interest bearing deposit balances and as of June 30, 2021 non-interest bearing deposits represented 36.6% total deposits compared to 31.0% at December 31, 2020 .
As of June 30, 2021 , shareholders' equity was $231.6 million $235.9 million $4.3 million 1.8% . The decrease was primarily due to the repurchase of 869,301 shares of common stock for $12.4 million $1.2 million $59,000 $7.5 million $1.3 million $647,000
About Provident Bancorp, Inc.
BankProv, legally operating as The Provident Bank, is a subsidiary of Provident Bancorp, Inc. (NASDAQ: PVBC). BankProv is a future-ready commercial bank for corporate clients, specializing in offering adaptive and technology-first banking solutions to niche markets, including cryptocurrency, renewable energy, fin-tech and search fund lending. We are committed to offering state-of-the-art APIs (application programming interfaces) for all business clients and BaaS (Bank as a Service) partners. Through our offerings, BankProv insures 100% of deposits through a combination of insurance provided by the Federal Deposit Insurance Corporation (FDIC) and the Depositors Insurance Fund (DIF). For more information about BankProv 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; the effects of any pandemic; 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 , 603-334-1253choule@bankprov.com
Provident Bancorp, Inc.
Consolidated Balance Sheet
At
At
June 30,
December 31,
2021
2020
(Dollars in thousands)
(unaudited)
Assets
Cash and due from banks
$
17,808
$
11,830
Short-term investments
122,576
71,989
Cash and cash equivalents
140,384
83,819
Debt securities available-for-sale (at fair value)
32,597
32,215
Federal Home Loan Bank stock, at cost
785
895
Loans, net of allowance for loan losses of $19,412 and $18,518 as of
June 30, 2021 and December 31, 2020, respectively
1,334,635
1,314,810
Bank owned life insurance
37,126
36,684
Premises and equipment, net
14,471
14,716
Accrued interest receivable
5,821
6,371
Right-of-use assets
4,180
4,258
Other assets
15,107
12,013
Total assets
$
1,585,106
$
1,505,781
Liabilities and Shareholders' Equity
Deposits:
Noninterest-bearing
$
484,066
$
383,079
Interest-bearing
837,723
854,349
Total deposits
1,321,789
1,237,428
Long-term borrowings
13,500
13,500
Operating lease liabilities
4,438
4,488
Other liabilities
13,771
14,509
Total liabilities
1,353,498
1,269,925
Shareholders' equity:
Preferred stock; authorized 50,000 shares:
no shares issued and outstanding
—
—
Common stock, $0.01 par value, 100,000,000 shares authorized;
18,246,136 and 19,047,544 shares issued and outstanding
at June 30, 2021 and December 31, 2020, respectively
182
191
Additional paid-in capital
128,666
139,450
Retained earnings
110,752
104,508
Accumulated other comprehensive income
999
1,058
Unearned compensation - ESOP
(8,991)
(9,351)
Total shareholders' equity
231,608
235,856
Total liabilities and shareholders' equity
$
1,585,106
$
1,505,781
Provident Bancorp, Inc.
Consolidated Income Statements
Three Months Ended
Six Months Ended
June 30,
June 30,
2021
2020
2021
2020
(Dollars in thousands, except per share data)
(unaudited)
Interest and dividend income:
Interest and fees on loans
$
15,298
$
14,391
$
30,995
$
28,151
Interest and dividends on debt securities available-for-sale
186
259
355
517
Interest on short-term investments
29
4
52
75
Total interest and dividend income
15,513
14,654
31,402
28,743
Interest expense:
Interest on deposits
839
1,443
1,750
3,089
Interest on borrowings
71
176
141
547
Total interest expense
910
1,619
1,891
3,636
Net interest and dividend income
14,603
13,035
29,511
25,107
Provision for loan losses
1,669
872
2,422
3,971
Net interest and dividend income after provision
12,934
12,163
27,089
21,136
Noninterest income:
Customer service fees on deposit accounts
433
264
812
616
Service charges and fees - other
438
261
788
721
Bank owned life insurance income
223
171
442
350
Other income
9
8
79
27
Total noninterest income
1,103
704
2,121
1,714
Noninterest expense:
Salaries and employee benefits
6,704
5,799
13,181
11,201
Occupancy expense
417
429
829
870
Equipment expense
127
144
249
281
Deposit insurance
111
93
217
124
Data processing
314
222
635
448
Marketing expense
81
71
118
135
Professional fees
469
367
900
753
Directors' compensation
261
171
515
365
Software depreciation and implementation
241
238
487
438
Write down of other assets and receivables
—
—
—
500
Other
803
827
1,610
1,552
Total noninterest expense
9,528
8,361
18,741
16,667
Income before income tax expense
4,509
4,506
10,469
6,183
Income tax expense
1,343
1,256
3,006
1,702
Net income
$
3,166
$
3,250
$
7,463
$
4,481
Earnings per share:
Basic
$
0.19
$
0.18
$
0.44
$
0.25
Diluted
$
0.18
$
0.18
$
0.43
$
0.25
Weighted Average Shares:
Basic
16,778,698
18,150,106
17,019,889
18,131,421
Diluted
17,338,662
18,179,858
17,442,411
18,197,646
Provident Bancorp, Inc.
Net Interest Income Analysis
(Unaudited)
For the Three Months Ended June 30,
2021
2020
Interest
Interest
Average
Earned/
Yield/
Average
Earned/
Yield/
(Dollars in thousands)
Balance
Paid
Rate
Balance
Paid
Rate
Assets:
Interest-earning assets:
Loans
$
1,302,699
$
15,298
4.70%
$
1,207,921
$
14,391
4.77%
Short-term investments
140,985
29
0.08%
18,915
4
0.08%
Debt securities available-for-sale
33,798
183
2.17%
38,503
219
2.28%
Federal Home Loan Bank stock
843
3
1.42%
1,323
40
12.09%
Total interest-earning assets
1,478,325
15,513
4.20%
1,266,662
14,654
4.63%
Non-interest earning assets
70,357
59,271
Total assets
$
1,548,682
$
1,325,933
Liabilities and shareholders' equity:
Interest-bearing liabilities:
Savings accounts
$
151,381
56
0.15%
$
129,753
77
0.24%
Money market accounts
375,537
447
0.48%
281,457
516
0.73%
NOW accounts
157,845
89
0.23%
126,023
113
0.36%
Certificates of deposit
142,258
247
0.69%
160,295
737
1.84%
Total interest-bearing deposits
827,021
839
0.41%
697,528
1,443
0.83%
Borrowings
13,500
71
2.10%
53,438
176
1.32%
Total interest-bearing liabilities
840,521
910
0.43%
750,966
1,619
0.86%
Noninterest-bearing liabilities:
Noninterest-bearing deposits
452,766
324,296
Other noninterest-bearing liabilities
18,731
15,659
Total liabilities
1,312,018
1,090,921
Total equity
236,664
235,012
Total liabilities and
equity
$
1,548,682
$
1,325,933
Net interest income
$
14,603
$
13,035
Interest rate spread (1)
3.77%
3.77%
Net interest-earning assets (2)
$
637,804
$
515,696
Net interest margin (3)
3.95%
4.12%
Average interest-earning assets to
interest-bearing liabilities
175.88%
168.67%
(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,
2021
2020
Interest
Interest
Average
Earned/
Yield/
Average
Earned/
Yield/
(Dollars in thousands)
Balance
Paid
Rate
Balance
Paid
Rate
Assets:
Interest-earning assets:
Loans
$
1,310,127
$
30,995
4.73%
$
1,138,223
$
28,151
4.95%
Short-term investments
126,671
52
0.08%
19,045
75
0.79%
Debt securities available-for-sale
32,578
348
2.14%
39,767
457
2.30%
Federal Home Loan Bank stock
869
7
1.61%
2,242
60
5.35%
Total interest-earning assets
1,470,245
31,402
4.27%
1,199,277
28,743
4.79%
Non-interest earning assets
68,269
58,227
Total assets
$
1,538,514
$
1,257,504
Liabilities and shareholders' equity:
Interest-bearing liabilities:
Savings accounts
$
151,378
111
0.15%
$
125,430
182
0.29%
Money market accounts
375,309
924
0.49%
268,669
1,221
0.91%
NOW accounts
155,582
187
0.24%
125,155
268
0.43%
Certificates of deposit
154,256
528
0.68%
147,057
1,418
1.93%
Total interest-bearing deposits
836,525
1,750
0.42%
666,311
3,089
0.93%
Borrowings
13,500
141
2.09%
66,154
547
1.65%
Total interest-bearing liabilities
850,025
1,891
0.44%
732,465
3,636
0.99%
Noninterest-bearing liabilities:
Noninterest-bearing deposits
432,670
275,368
Other noninterest-bearing liabilities
18,361
15,694
Total liabilities
1,301,056
1,023,527
Total equity
237,458
233,977
Total liabilities and
equity
$
1,538,514
$
1,257,504
Net interest income
$
29,511
$
25,107
Interest rate spread (1)
3.83%
3.80%
Net interest-earning assets (2)
$
620,220
$
466,812
Net interest margin (3)
4.01%
4.19%
Average interest-earning assets to
interest-bearing liabilities
172.96%
163.73%
(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,
2021
2020
2021
2020
(unaudited)
Performance Ratios:
Return on average assets (1)
0.82%
0.98%
0.97%
0.71%
Return on average equity (1)
5.35%
5.53%
6.29%
3.83%
Interest rate spread (1) (3)
3.76%
3.77%
3.83%
3.80%
Net interest margin (1) (4)
3.95%
4.12%
4.01%
4.19%
Non-interest expense to average assets (1)
2.46%
2.52%
2.44%
2.65%
Efficiency ratio (5)
60.66%
60.86%
59.25%
62.14%
Average interest-earning assets to
average interest-bearing liabilities
175.88%
168.67%
172.96%
163.73%
Average equity to average assets
15.28%
17.72%
15.43%
18.61%
At
At
At
June 30,
December 31,
June 30,
2021
2020
2020
Asset Quality
Non-accrual loans:
Commercial real estate
$
114
$
—
$
20,865
Commercial
3,615
4,198
4,309
Residential real estate
923
1,156
844
Construction and land development
—
—
—
Consumer
13
65
21
Mortgage warehouse
—
—
—
Total non-accrual loans
4,665
5,419
26,039
Accruing loans past due 90 days or more
—
—
—
Other real estate owned
—
—
—
Total non-performing assets
$
4,665
$
5,419
$
26,039
Asset Quality Ratios
Allowance for loan losses as a percent of total loans (2)
1.43%
1.39%
1.34%
Allowance for loan losses as a percent of non-performing loans
416.12%
341.72%
65.89%
Non-performing loans as a percent of total loans (2)
0.34%
0.41%
2.03%
Non-performing loans as a percent of total assets
0.29%
0.36%
1.84%
Non-performing assets as a percent of total assets (6)
0.29%
0.36%
1.84%
Capital and Share Related
Stockholders' equity to total assets
14.6%
15.7%
16.7%
Book value per share
$
12.69
$
12.38
$
12.14
Market value per share
$
16.31
$
12.00
$
7.86
Shares outstanding
18,246,136
19,047,544
19,472,310
(1)
Annualized
(2)
Loans are presented before the allowance but include deferred costs/fees.
(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.
https://www.prnewswire.com/news-releases/provident-bancorp-inc-reports-earnings-for-the-june-30--2021-quarter-and-continues-payment-of-quarterly-cash-dividends-of-0-04-per-share-301344661.html
SOURCE Provident Bancorp Inc.
