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 18, 2019

 

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 18, 2019, Provident Bancorp, Inc. issued a press release announcing its earnings for the quarter ended March 31, 2019. 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 April 18, 2019

 

 

 

 

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 19, 2019 By: /s/ David P. Mansfield  
    David P. Mansfield  
    President and Chief Executive Officer  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit 99.1

 

Provident Bancorp, Inc. Reports Earnings for the March 31, 2019 Quarter

 

Company Release – 04/18/2019

 

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, 2019 of $2.2 million, or $0.24 per diluted share, compared to $2.0 million, or $0.22 per diluted share, for the three months ended March 31, 2018.

 

Dave Mansfield, Chief Executive Officer said, “I am pleased with our first quarter results. Loan growth remains strong, and ongoing efforts to implement a continuous improvement culture based on lean principals have enhanced both our employee and customer experience. In the first quarter, we took steps to establish technology partnerships, which may enable us to roll out unique deposit offerings later in the year. These efforts and initiatives are essential to growing low-cost, stable deposits that will greatly benefit the Bank’s liquidity and net interest margin.”

 

Net interest and dividend income before provision for loan losses increased by $1.4 million, or 16.5%, compared to the three months ended March 31, 2018. The growth in net interest and dividend income this quarter over the prior year’s first quarter is primarily the result of an increase in our average interest-earning assets of $86.8 million, or 10.4%, and an increase in net interest margin of 23 basis points to 4.40%.

 

Provisions for loan losses of $1.5 million were recognized for the three months ended March 31, 2019 compared to $656,000 for the same period in 2018. 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 1.36% as of March 31, 2019 compared to 1.38% as of December 31, 2018. The allowance for loan losses as a percentage of non-performing loans was 141.58% as of March 31, 2019 compared to 186.55% as of December 31, 2018. Non-performing loans were $8.4 million, or 0.84% of total assets as of March 31, 2019, compared to $6.3 million, or 0.64% of total assets as of December 31, 2018. The non-performing loans at March 31, 2019 consist primarily of four commercial and industrial loan relationships. Impairment was evaluated and specific reserves of $886,000 were allocated to impaired loans as of March 31, 2019.

 

During the quarter ended March 31, 2019, the Bank charged-off a commercial and industrial loan that was originated through the BancAlliance network totaling $917,000. BancAlliance has a membership of approximately 200 community banks that together participate in middle market commercial and industrial loans as a way to diversify their commercial portfolio. As of March 31, 2019, the Bank has ten BancAlliance loan relationships remaining totaling $13.9 million. Out of the ten relationships, five totaling $6.8 million are pass rated, two totaling $3.4 million are on watch and three totaling $3.7 million are substandard. Two relationships totaling $3.2 million are on non-accrual and deemed impaired. We have allocated specific reserves totaling $345,000 for these impaired loans. Our last BancAlliance loan origination was in February 2017 and at this time we are not anticipating originating any new loans through this network.

 

Noninterest income increased $33,000, or 3.3%, and was $1.0 million for each of the three months ended March 31, 2019 and 2018. The increase is primarily due to an increase in gains on sales of securities of $113,000, partially offset by decreases of $33,000, or 9.1%, in customer service fees on deposit accounts and $43,000, or 9.5%, in other service charges and fees.

 

 

 

 

Noninterest expense increased $370,000, or 5.8%, to $6.7 million for the three months ended March 31, 2019 compared to $6.4 million for the three months ended March 31, 2018. The primary increases for the three months ended March 31, 2019 were salary and employee benefits expense, occupancy expense, and professional fees, offset by a decrease in other expense. The increase of $130,000, or 3.1%, for the three months ended March 31, 2019 in salary and employee benefits was primarily due to a higher number of sales and operations positions compared to the same period in 2018. The increase of $194,000, or 43.1%, in occupancy expense for the three months ended March 31, 2019 was primarily due to the acceleration of our leasehold improvements amortization related to the closure of our Hampton, New Hampshire branch in May 2019. The increase of $174,000, or 70.2%, for the three months ended March 31, 2019 in professional fees was due to increased consulting services and increased legal expenses related to certain subordinated lienholders that are disputing the priority of the Bank’s liens and the right of the Bank to retain proceeds from a foreclosure sale. The decrease of $131,000, or 13.5%, in other expense was primarily due to FDIC assessment credits received and decreased loan workout expenses.

 

As of March 31, 2019, total assets have increased $24.4 million, or 2.5%, to $998.5 million compared to $974.1 million at December 31, 2018. The primary reasons for the increase are due to increases in net loans and premises and equipment, partially offset by decreases in cash and cash equivalents and investments in available-for-sale securities. Net loans increased $23.7 million, or 2.8%, to $859.3 million as of March 31, 2019 compared to $835.5 million at December 31, 2018. The increase in net loans was due to an increase in commercial loans of $20.8 million, or 5.7%, and an increase in commercial real estate loans of $8.6 million, or 2.3%, offset by a decrease of $2.5 million, or 4.3%, in residential real estate loans and a decrease of $2.2 million, or 4.9%, in construction and land development loans. The increase in premises and equipment of $5.4 million, or 33.5%, was primarily due to increases in construction in progress costs of $1.6 million, or 28.1%, and the adoption of ASU (Accounting Standards Update) No. 2016-02, Leases (Topic 842). This standard was effective January 1, 2019 and required us to recognize on our balance sheet right-of-use assets, which approximate the present value of our remaining lease payments. As of March 31, 2019, the balance of the right-of-use assets was $3.8 million. The decrease in cash and cash equivalents of $4.9 million, or 17.1%, was due to utilizing funds for loan growth. The decrease in investments in available-for-sale securities of $1.7 million, or 3.4%, resulted primarily from principal pay downs and also a decrease in the fair value of the securities.

 

Total liabilities increased $21.8 million, or 2.6%, due to increased deposits, borrowings, and operating lease liabilities. Deposits were $775.3 million as of March 31, 2019, representing an increase of $7.2 million, or 0.9%, compared to December 31, 2018. The primary reason for the increase in deposits was due to an increase of $22.7 million, or 23.3%, in time deposits and an increase of $6.3 million, or 5.8%, in savings accounts, partially offset by a decrease in NOW and demand deposits of $19.8 million, or 6.0%. The increase in time deposits is primarily due to increases in brokered certificates of deposit of $13.3 million, or 23.9%, and an increase of $9.9 million, or 190.6%, 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 transferring from NOW and demand deposits to a savings account product. In addition to the municipal deposit transfer, NOW and demand deposits decreased due to the seasonality of municipal deposit balances as well as a decrease in some of our high rate relationships. Borrowings increased $11.9 million, or 17.5%, to $79.9 million as of March 31, 2019 primarily due to loan growth funding. Operating lease liabilities were $3.9 million as of March 31, 2019 due to the adoption of ASU No. 2016-02.

 

As of December 31, 2018, shareholders’ equity was $128.3 million compared to $125.6 million at December 31, 2018, representing an increase of $2.7 million, or 2.1%. The increase is primarily due to net income of $2.2 million for the current 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 52.3% of Provident Bancorp, Inc.’s outstanding shares are owned by Provident Bancorp, a Massachusetts corporation and a mutual holding company. 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.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 borrowers to repay their loans, the effects of the recent federal government shutdown, 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, 978-834-8534

Executive Vice President/CFO

choule@theprovidentbank.com

 

 

 

 

Provident Bancorp, Inc.

Consolidated Balance Sheet

 

   At   At 
   March 31,   December 31, 
(In thousands)  2019   2018 
Assets  (unaudited)     
Cash and due from banks  $9,151   $10,941 
Short-term investments   14,575    17,672 
Cash and cash equivalents   23,726    28,613 
Investments in available-for-sale securities (at fair value)   49,662    51,403 
Federal Home Loan Bank stock, at cost   3,515    2,650 
Loans, net   859,269    835,528 
Bank owned life insurance   26,403    26,226 
Premises and equipment, net   21,467    16,086 
Other real estate owned   1,720    1,676 
Accrued interest receivable   3,171    2,638 
Deferred tax asset, net   6,589    6,437 
Other assets   2,997    2,822 
Total assets  $998,519   $974,079 
           
Liabilities and Shareholders' Equity          
Deposits:          
Noninterest-bearing  $198,733   $195,293 
Interest-bearing   576,544    572,803 
Total deposits   775,277    768,096 
Borrowings   79,942    68,022 
Operating lease liabilities   3,919    - 
Other liabilities   11,109    12,377 
Total liabilities   870,247    848,495 
Shareholders' equity:          

Preferred stock; authorized 50,000 shares:

no shares issued and outstanding

   -    - 

Common stock, no par value: 30,000,000 shares authorized; 

9,662,181 shares issued, 9,625,719 shares outstanding

at March 31, 2019 and December 31, 2018

   -    - 
Additional paid-in capital   46,236    45,895 
Retained earnings   85,569    83,351 
Accumulated other comprehensive (loss) income   (186)   (255)
Unearned compensation - ESOP   (2,559)   (2,619)
Treasury stock: 36,462 shares   (788)   (788)
Total shareholders' equity   128,272    125,584 
Total liabilities and shareholders' equity  $998,519   $974,079 
           

 

 

 

 

Provident Bancorp, Inc.

Consolidated Income Statements

 

   Three Months Ended 
   March 31, 
(Dollars in thousands, except per share data)  2019   2018 
Interest and dividend income:  (unaudited) 
Interest and fees on loans  $11,699   $9,276 
Interest and dividends on securities   404    435 
Interest on short-term investments   26    42 
Total interest and dividend income   12,129    9,753 
Interest expense:          
Interest on deposits   1,437    920 
Interest on borrowings   534    114 
Total interest expense   1,971    1,034 
Net interest and dividend income   10,158    8,719 
Provision for loan losses   1,462    656 
Net interest and dividend income after provision for loan losses   8,696    8,063 
Noninterest income:          
Customer service fees on deposit accounts   329    362 
Service charges and fees - other   412    455 
Gain on sale of securities, net   113    - 
Bank owned life insurance income   177    171 
Other income   15    25 
 Total noninterest income   1,046    1,013 
Noninterest expense:          
Salaries and employee benefits   4,294    4,164 
Occupancy expense   644    450 
Equipment expense   106    122 
Data processing   203    204 
Marketing expense   55    53 
Professional fees   422    248 
Directors' fees   181    163 
Other   841    972 
Total noninterest expense   6,746    6,376 
Income before income tax expense   2,996    2,700 
Income tax expense   778    678 
 Net income  $2,218   $2,022 
           
Earnings per share:          
Basic  $0.24   $0.22 
Diluted  $0.24   $0.22 
           
Weighted Average Shares:          
Basic   9,267,106    9,219,865 
Diluted   9,305,284    9,295,003 
           

 

 

 

 

Provident Bancorp, Inc.

Selected Financial Ratios

 

   For the three 
   months ended 
   March 31, 
   2019   2018 
(unaudited)        
Performance Ratios:        
Return on average assets (1)   0.90%   0.91%
Return on average equity (1)   6.75%   6.92%
Interest rate spread (1) (3)   4.04%   3.95%
Net interest margin (1) (4)   4.40%   4.17%
Non-interest expense to average assets (1)   2.73%   2.88%
Efficiency ratio      (5)   60.82%   65.52%
Average interest-earning assets to          
   average interest-bearing liabilities   142.11%   144.55%
Average equity to average assets   13.30%   13.17%

 

   At   At   At 
   March 31,   December 31,   March 31, 
(unaudited)  2019   2018   2018 
Asset Quality Ratios:            
Allowance for loan losses as a percent of total loans (2)   1.36%   1.38%   1.33%
Allowance for loan losses as a percent of non-performing loans   141.58%   186.55%   106.80%
Non-performing loans as a percent of total loans (2)   0.96%   0.74%   1.24%
Non-performing loans as a percent of total assets   0.84%   0.64%   1.08%
Non-performing assets as a percent of total assets (6)   1.01%   0.81%   1.08%
                

 

(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.