Provident Bancorp(PVBC) - 2024 Q3 - Quarterly Report

Financial Position - Total assets decreased by $22.1 million, or 1.3%, to $1.65 billion as of September 30, 2024, compared to $1.67 billion at December 31, 2023[141] - Cash and cash equivalents decreased by $81.7 million, or 37.1%, to $138.7 million at September 30, 2024, primarily due to a decrease in deposits and an increase in net loans[142] - Total deposits were $1.29 billion at September 30, 2024, a decrease of $42.7 million, or 3.2%, from $1.33 billion at December 31, 2023[160] - Shareholders' equity increased by $4.3 million, or 1.9%, to $226.2 million as of September 30, 2024, compared to $221.9 million at December 31, 2023[162] Loan Portfolio - Net loans increased by $65.5 million, or 5.0%, to $1.39 billion at September 30, 2024, driven by a $126.3 million increase in mortgage warehouse loans, or 75.8%[143] - The commercial real estate loan portfolio increased to $549.0 million, representing 38.98% of total loans, up from $468.9 million, or 34.92%, at December 31, 2023[144] - The enterprise value loan portfolio decreased to $348.2 million, or 24.72% of total loans, down from $433.6 million, or 32.29%, at December 31, 2023[147] - Total past due loans decreased by $5.1 million, or 21.8%, to $18.6 million at September 30, 2024, from $23.7 million at December 31, 2023[151] - Non-accrual loans increased by $20.7 million, or 125.0%, to $37.2 million, representing 2.64% of total loans outstanding at September 30, 2024, compared to 1.23% at December 31, 2023[155] Credit Losses and Risk Management - The allowance for credit losses on loans was $21.9 million as of September 30, 2024, compared to $21.6 million at December 31, 2023[144] - The bank recognized an additional $1.7 million reserve on a $17.6 million enterprise value relationship, totaling $8.8 million in individually analyzed reserves[140] - The bank's credit risk management focuses on well-defined credit policies and prompt attention to potential problem loans[148] - Provision for credit losses was $1.7 million in Q3 2024, compared to a credit loss benefit of $156,000 in Q3 2023[173] - Provision for credit losses was $2.6 million for the nine months ended September 30, 2024, compared to $556,000 for the same period in 2023[186] Income and Expenses - Net interest and dividend income was $12.4 million for the quarter ended September 30, 2024, a decrease of $1.5 million, or 10.6%, compared to the same quarter in 2023[165] - Noninterest income decreased to $1.7 million in Q3 2024, down $57,000, or 3.2%, from $1.8 million in Q3 2023[174] - Noninterest expense for Q3 2024 was $11.6 million, a decrease of $1.1 million, or 9.0%, from $12.7 million in Q3 2023[175] - Net income for the nine months ended September 30, 2024, was $2.4 million, or $0.14 per diluted share, a decrease of $5.6 million, or 70.2%, from $8.0 million, or $0.48 per diluted share, in the same period of 2023[177] Interest Income and Margin - The net interest margin was 3.38% for the quarter ended September 30, 2024, compared to 3.44% for the same quarter in 2023[165] - Total interest and dividend income for Q3 2024 was $22.4 million, a decrease of $799,000, or 3.4%, from $23.2 million in Q3 2023[171] - Net interest income for Q3 2024 was $12.4 million, down from $13.9 million in Q3 2023[171] - Total interest expense for Q3 2024 was $10.0 million, an increase of $680,000, or 7.3%, from Q3 2023[172] - Net interest margin for the nine months ended September 30, 2024, was 3.34%, down from 3.80% in the same period of 2023[178] Future Projections and Strategies - The strategy includes limiting asset growth to 5% annually and transforming the loan portfolio towards traditional real estate and in-market commercial lending[140] - The company plans to continue shifting the loan portfolio mix to reduce reliance on high-cost deposits as a primary source of liquidity[140] - If funding costs remain elevated, it could adversely affect the company's net interest margin[202] - A significant decrease in deposits could lead the company to seek alternative funding sources, potentially at higher rates[201] - The company is considered "well capitalized" under regulatory guidelines as of September 30, 2024, exceeding all applicable regulatory capital requirements[203] Liquidity and Borrowing Capacity - Cash and cash equivalents totaled $138.7 million as of September 30, 2024, providing significant liquidity[197] - The company has a borrowing capacity of $136.8 million with the Federal Home Loan Bank of Boston, with $60.0 million in short-term advances outstanding[198] - Loan commitments outstanding were $10.9 million as of September 30, 2024, compared to $8.6 million at December 31, 2023[200] - The company had $259.4 million in warehouse loans as of September 30, 2024, contributing to liquidity[197] - The company had $160.5 million in unadvanced funds to borrowers as of September 30, 2024[200]