Provident Bancorp(PVBC) - 2024 Q2 - Quarterly Report

Financial Performance - Net income for the six months ended June 30, 2024, was $1.7 million, or$0.10 per diluted share, a decrease of $3.9 million, or 69.9$23.5 million, or 1.4%, to $1.65 billion at June 30, 2024, compared to$1.67 billion at December 31, 2023[114]. - Net loans increased by $28.2 million, or 2.1$1.35 billion at June 30, 2024, driven by a $89.9 million increase in mortgage warehouse loans, or 54.0$510.4 million, representing 37.26% of total loans at June 30, 2024, up from 34.92% at December 31, 2023[116]. - Enterprise value loans decreased by $39.5 million, or 9.1$394.2 million at June 30, 2024, accounting for 28.78% of total loans[118]. - Total past due loans decreased by $21.2 million, or 89.5$2.5 million at June 30, 2024, from $23.7 million at December 31, 2023[122]. - Non-accrual loans increased by$4.8 million, or 29.1%, to $21.3 million, representing 1.56$1.27 billion at June 30, 2024, a decrease of $66.6 million, or 5.0$1.33 billion at December 31, 2023[130]. - Total borrowings increased by $42.9 million, or 41.0$147.6 million at June 30, 2024, primarily due to overnight borrowings[130]. - The company had a borrowing capacity of $142.6 million with the Federal Home Loan Bank of Boston, with$130.0 million in overnight advances outstanding[164]. - A significant decrease in deposits could lead the company to seek alternative funding sources, potentially increasing funding costs[167]. Income and Expenses - Net interest and dividend income was $12.0 million for the quarter ended June 30, 2024, a decrease of$2.9 million, or 19.8%, compared to the same quarter in 2023[134]. - Total interest and dividend income decreased by $1.0 million, or 4.4$21.9 million for the quarter ended June 30, 2024, compared to $22.9 million for the same quarter in 2023[141]. - Total interest expense increased by$1.9 million, or 24.4%, to $9.9 million for the quarter ended June 30, 2024, primarily driven by an increase in the cost of interest-bearing deposits[142]. - Noninterest income decreased by$200,000, or 10.5%, to $1.5 million for the quarter ended June 30, 2024, primarily due to decreases in fee income from reduced product offerings[143]. - Noninterest expense decreased by$1.2 million, or 9.1%, to $11.6 million for the quarter ended June 30, 2024, mainly due to a reduction in salaries and employee benefits[144]. Credit Losses and Risk Management - The allowance for credit losses on loans was$20.3 million at June 30, 2024, compared to $21.6 million at December 31, 2023[116]. - The credit loss provision was$6.5 million, leading to a net loss of $3.3 million, or$0.20 per diluted share, for the quarter ended June 30, 2024[133]. - The provision for credit losses was $6.5 million for the quarter ended June 30, 2024, compared to a$1.1 million credit loss benefit for the same quarter in 2023[143]. - The net charge-offs to average loans outstanding during the period were 0.32% for the quarter ended June 30, 2024, down from 0.54% in the previous year[127]. - The bank's credit risk management strategy emphasizes well-defined credit policies and prompt attention to potential problem loans[118]. Liquidity and Capitalization - Cash and cash equivalents decreased by $48.7 million, or 22.1$171.6 million at June 30, 2024, primarily due to a decrease in deposits and an increase in net loans[114]. - Cash and cash equivalents totaled $171.6 million as of June 30, 2024, with additional liquidity from available-for-sale debt securities amounting to$27.3 million[164]. - Warehouse loans with a short-term duration amounted to $208.4 million as of June 30, 2024, providing further liquidity[164]. - The company is considered "well capitalized" under regulatory guidelines as of June 30, 2024, exceeding all applicable regulatory capital requirements[168]. - The company maintains access to multiple liquidity sources, which is crucial in the event of elevated funding costs or economic downturns[168]. Interest Rate Sensitivity - The estimated net interest income for the next 12 months at current rates is projected to be$53,102,000[160]. - A 300 basis point increase in interest rates would decrease EVE by 10.60% to $241.0 million, while a 100 basis point increase would decrease EVE by 3.60$259.7 million[161]. - As of June 30, 2024, the Economic Value of Equity (EVE) is projected to be $269.5 million, with a 0 basis point change in interest rates[161]. - The total cost of interest-bearing liabilities was 3.89% for the quarter ended June 30, 2024, an increase of 83 basis points from 3.06% for the same quarter in 2023[142]. - The total interest-bearing liabilities cost increased to 3.79% for the six months ended June 30, 2024, up from 2.69% for the same period in 2023[154].