Provident Bancorp(PVBC) - 2024 Q4 - Annual Report

Financial Performance - Net income for 2024 was $7.3 million, compared to $10.9 million in 2023, reflecting a decrease of 33.5%[256]. - Net interest and dividend income was $50.5 million for 2024, down from $58.2 million in 2023[256]. - Noninterest income decreased by $1.2 million, or 16.3%, to $5.9 million for the year ended December 31, 2024[316]. - Total noninterest expense decreased by $5.1 million, or 10.0%, to $46.0 million for the year ended December 31, 2024[318]. - The effective tax rate for 2024 was 22.5%, down from 25.9% in 2023, reflecting a higher proportion of tax-exempt income[319]. - Net charge-offs for 2024 were $1,371,000, compared to $4,773,000 in 2023, reflecting a significant reduction in credit losses[291]. - Total charge-offs in 2024 amounted to $2,275,000, a decrease from $5,003,000 in 2023[291]. Asset and Loan Portfolio - Total assets decreased by $77.1 million, or 4.6%, to $1.59 billion at December 31, 2024, compared to $1.67 billion at December 31, 2023[261]. - Total loans were $1.33 billion, a decrease of $16.1 million, or 1.2%, compared to $1.34 billion at December 31, 2023[264]. - The company has transformed its loan portfolio towards traditional commercial real estate and in-market commercial lending, reducing risk exposure[260]. - Commercial real estate loans increased to $559,325 thousand, representing 42.16% of total loans, up from 34.92% in 2023 and 31.41% in 2022[281]. - Non-performing loans as a percentage of total loans rose to 1.57% in 2024 from 1.23% in 2023, while non-performing assets as a percentage of total assets increased to 1.31% from 0.99%[281]. - The allowance for credit losses for loans as a percentage of total loans was 1.59% at December 31, 2024, slightly down from 1.61% in 2023[259]. Deposits and Funding - Total deposits decreased by $22.3 million, or 1.7%, to $1.31 billion at December 31, 2024, driven by a $89.2 million decrease in deposits obtained through listing services, a 65.2% decline[297]. - Retail deposits increased by $112.3 million, or 11.2%, partially offsetting the overall decrease in total deposits[297]. - As of December 31, 2024, total deposits amounted to $1,308.96 million, a slight decrease from $1,331.22 million in 2023, but an increase from $1,279.58 million in 2022[299]. - The company had a borrowing capacity of $166.8 million with the Federal Home Loan Bank of Boston as of December 31, 2024, including $35.0 million in short-term advances[330]. - A significant decrease in deposits could lead the company to seek alternative funding sources, potentially increasing funding costs[333]. Interest Rates and Economic Value - The interest rate spread decreased to 2.27% in 2024 from 2.63% in 2023, reflecting a tightening margin environment[306]. - The average cost of interest-bearing deposits increased by 62 basis points to 3.73% for the year ended December 31, 2024[313]. - The Economic Value of Equity (EVE) under a 300 basis point increase is estimated at $274,786 thousand, reflecting a decrease of 7.30% compared to $255,339 thousand in 2023[326]. - The primary impact of inflation on the company is reflected in increased operating costs, with interest rates having a more significant effect on performance than general inflation levels[336]. Credit Quality and Risk Management - The allowance for credit losses decreased by $484,000, or 2.2%, in 2024, primarily due to a reduction in the general provision from decreases in loan balances and changes in the portfolio mix[289]. - The allowance for credit losses for loans was 100.96% of non-performing loans as of December 31, 2024, compared to 130.60% in 2023 and 104.10% in 2022[281]. - The company modified loans totaling $55.9 million, or 4.21% of total loans, for borrowers experiencing financial difficulty in 2024[286]. - The company actively monitors liquidity and all liquidity measures were in compliance with policy limits established by the Board of Directors as of December 31, 2024[334]. - The company has implemented strategies to manage interest rate risk, including originating loans with adjustable interest rates and promoting core deposit products[321].