Provident Bancorp(US:PVBC)2025-11-07 15:46Financial Performance - The Company reported net income of $2.7 million, or $0.16 per diluted share, for Q3 2025, compared to $716,000, or $0.04 per diluted share, for Q3 2024, reflecting a significant increase in profitability[155]. - For the nine months ended September 30, 2025, net income was $7.7 million, or $0.45 per diluted share, compared to $2.4 million, or $0.14 per diluted share, for the same period in 2024[168]. - Net interest and dividend income increased by $777,000, or 6.3%, to $13.2 million for Q3 2025 compared to Q3 2024[156]. - Net interest and dividend income for the nine months ended September 30, 2025, was $39.6 million, an increase of $2.8 million, or 7.4%, compared to $36.8 million for the same period in 2024[169]. - Noninterest income was $1.6 million for Q3 2025, a decrease of $150,000, or 8.8%, from Q3 2024[165]. - Noninterest income increased by $582,000, or 12.7%, to $5.2 million for the nine months ended September 30, 2025[178]. Asset and Loan Management - Total assets decreased by $101.5 million, or 6.4%, to $1.49 billion at September 30, 2025, compared to $1.59 billion at December 31, 2024[136]. - Net loans decreased by $54.5 million, or 4.2%, to $1.25 billion at September 30, 2025, driven by a strategy to reduce enterprise value loan exposure by $77.8 million, or 25.1%[137]. - The commercial real estate portfolio grew by $38.0 million, or 6.8%, since December 31, 2024[137]. - At September 30, 2025, commercial real estate loans represented 46.98% of total loans, up from 42.16% at December 31, 2024[138]. - Total deposits decreased by $76.6 million, or 5.8%, to $1.23 billion at September 30, 2025, from $1.31 billion at December 31, 2024[151]. - Non-accrual loans increased by $13.5 million, or 64.7%, to $34.4 million, representing 2.71% of total loans outstanding at September 30, 2025, compared to 1.57% at December 31, 2024[146]. - Total non-performing assets rose to $34.4 million at September 30, 2025, up from $20.9 million at December 31, 2024[145]. - The percentage of non-performing loans to total loans increased to 2.71% at September 30, 2025, from 1.57% at December 31, 2024[145]. Credit Losses and Allowances - The allowance for credit losses for loans was $20.414 million at September 30, 2025, compared to $21.087 million at December 31, 2024[138]. - The allowance for credit losses for loans decreased to $20.4 million at September 30, 2025, from $21.9 million at the end of 2024, reflecting a $116.2 million, or 33.4%, decrease in the enterprise value portfolio[149]. - The allowance for credit losses for loans as a percentage of non-performing loans was 59.34% at September 30, 2025, down from 100.96% at December 31, 2024[145]. - The Company recognized a credit loss benefit of $418,000 for Q3 2025, compared to a provision of $1.7 million for Q3 2024, indicating improved credit quality[164]. - The Company recognized a credit loss benefit of $808,000 for the nine months ended September 30, 2025, compared to a provision of $2.6 million for the same period in 2024[177]. Mergers and Acquisitions - The proposed merger with NB Bancorp is expected to close on or about November 15, 2025, following the receipt of all required regulatory approvals[133]. - Shareholders can elect to receive either 0.691 shares of the Buyer's common stock or $13.00 in cash for each share of the Company's common stock in the merger[132]. Regulatory and Tax Considerations - The Company is currently evaluating the income tax implications of the recently signed legislation, which is not expected to have a material impact on financial statements[135]. - The effective tax rate increased to 28.4% for Q3 2025, compared to 15.6% for Q3 2024, primarily due to nondeductible merger-related expenses[166][167]. - The effective tax rate increased to 27.8% for the nine months ended September 30, 2025, compared to 19.3% for the same period in 2024[181]. - As of September 30, 2025, the company exceeded all applicable regulatory capital requirements and was considered "well capitalized" under regulatory guidelines[193]. Liquidity and Funding - Total borrowings decreased by $37.1 million, or 83.3%, to $7.5 million at September 30, 2025, indicating improved liquidity management[152]. - The company maintained access to multiple sources of liquidity, but elevated funding costs could adversely affect the net interest margin[192]. - The company had a borrowing capacity of $150.8 million with the Federal Home Loan Bank of Boston, and an available line of credit of $301.1 million with the Federal Reserve Bank of Boston[188]. - Loan commitments outstanding were $1.4 million as of September 30, 2025, down from $15.0 million at December 31, 2024[189]. Interest Income and Expenses - Total interest and dividend income decreased by $1.1 million, or 5.0%, to $21.3 million for Q3 2025, driven by a $1.7 million, or 7.8%, decrease in interest and fees on loans[162]. - Total interest expense decreased by $1.9 million, or 18.9%, to $8.1 million for Q3 2025, primarily due to a 55 basis point reduction in the cost of interest-bearing deposits[163]. - Interest expense decreased by $5.9 million, or 20.0%, to $23.6 million for the nine months ended September 30, 2025, driven by a 59 basis point decrease in the average cost of interest-bearing deposits[176]. - The interest rate spread improved to 2.63% and the net interest margin increased to 3.67% for Q3 2025, compared to 2.19% and 3.38% for Q3 2024, respectively[156]. Economic Indicators - Estimated net interest income for the next 12 months is projected to be $56,208,000 under current market rates[183]. - Economic Value of Equity (EVE) is estimated at $295,346,000 under current market rates[184]. - The yield on interest-earning assets was 5.90% for the nine months ended September 30, 2025, down 12 basis points from the previous year[175]. - The average balance of loans decreased by $40.5 million, or 3.0%, from September 30, 2024[175]. Legal Matters - A contingency of $350,000 related to a legal matter was reversed during the quarter ended September 30, 2025, following the conclusion of an SEC investigation with no enforcement action recommended[197].