Chronicle Journal: Finance

Provident Bancorp, Inc. Reports Earnings for the December 31, 2020 Quarter and Year and Continues Payment of Quarterly Cash Dividends of $0.03 per Share

AMESBURY, Mass., Jan. 28, 2021 (GLOBE NEWSWIRE) -- Provident Bancorp, Inc. (the “Company”) (NasdaqCM: PVBC), the holding company for The Provident Bank (the “Bank”), reported net income for the three months ended December 31, 2020 of $4.3 million, or $0.24 per diluted share, compared to $2.6 million, or $0.14 per diluted share, for the three months ended December 31, 2019. Net income for the year ended December 31, 2020 was $12.0 million, or $0.66 per diluted share, compared to $10.8 million, or $0.60 per diluted share, for the year ended December 31, 2019.

The Company also announced that its Board of Directors has declared a quarterly cash dividend of $0.03 per share, which will be paid on February 26, 2021 to stockholders of record as of February 11, 2021.

In announcing these results, Dave Mansfield, Chief Executive Officer said, “As we reflect on 2020, I am proud of how adaptable and resilient our organization has been in the face of intense and unprecedented challenges. Our team worked tirelessly to ensure we were able to assist our customers and local businesses as they weathered the financial impacts caused by the COVID-19 pandemic. From the beginning of the pandemic through its recent resurgence, we worked diligently to ensure operations could continue with little-to-no disruption, processed hundreds of applications for Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”) loans and subsequently assisted with applications to the SBA for forgiveness on these loans. We launched our new BankProv brand, instituted a stock repurchase program and succeeded in forming new lending relationships to grow our loan portfolio. None of this would have been possible without the dedication and perseverance of our employees. It is because of them that we were able to triumph over an incredibly challenging year. Although there is still a great deal of uncertainty surrounding the continued and lasting impacts of the pandemic, it is with a strong financial foundation and great optimism that we enter this new year. With that we are excited to announce the payment of our fourth quarterly cash dividend.”

COVID–19 Response

The Company’s market area has experienced a surge in COVID-19 cases in the fourth quarter. Although the Company’s market area had implemented a phased reopen plan, the resurgence of COVID-19 has resulted in a re-tightening of restrictions. Many companies have been able to adjust their operations to adapt to the COVID-19 environment, however, restrictions continue to limit many companies’ ability to operate at full capacity and continue to cause significant disruption.

To cushion the continued economic fallout, Congress approved a bill in December which allocated additional funds to the SBA for a second round of PPP loans. The SBA, in consultation with the U.S. Treasury department, announced that it will resume the PPP in January of 2021. The Company plans to actively participate in the second round of the PPP, which will provide loans to small businesses negatively impacted by the COVID-19 pandemic. Loans issued under this program are fully guaranteed by the U.S. government. During the first round of the PPP the Company originated $78.0 million in PPP loans, of which $36.2 million were forgiven by the SBA and $41.8 million were outstanding at December 31, 2020. The Company continues to work with customers who received loans under the first wave of the PPP on applying for loan forgiveness.

The Company continues to focus on meeting the needs of its customers and strives to operate as normally as possible during the pandemic. Due to the resurgence of COVID-19 cases in the fourth quarter, the Company limited customer access to most retail branch lobbies to appointment only. The Company continues to maintain close communication with commercial customers and has allowed for loan deferral extensions on an as-needed and case-by-case basis. Most loans that were modified under the CARES Act during the first two quarters of 2020 have resumed repayment or have been paid off. We have not noted any significant delinquencies related to these loans. As of December 31, 2020, remaining loan modifications that were made under the CARES Act totaled $43.1 million, or 3.2% of total loans, compared to $175.4 million, or 12.9% of total loans at September 30, 2020.

The newly developed vaccines do provide optimism, however, there remains significant uncertainty about COVID-19 as there is no way to know if or when full economic activity will resume to pre-pandemic levels. While it is not possible to know the full extent of the impact COVID-19 will have on the Company’s operations, the Company will continue to disclose potentially material items of which it is aware.

Financial Results

Net interest and dividend income before provision for loan losses increased by $3.8 million, or 32.8%, compared to the three months ended December 31, 2019 and increased by $11.1 million, or 25.5%, compared to the year ended December 31, 2019. The growth in net interest and dividend income for the three months ended December 31, 2020 compared to the three months ended December 31, 2019 is primarily the result of an increase in our average interest-earning assets of $364.0 million, or 34.9%, offset by an increase in average interest-bearing liabilities of $178.8 million, or 26.9%, and a decrease in net interest margin of six basis points to 4.37%. The growth in net interest and dividend income for the year ended December 31, 2020 compared to 2019 is primarily the result of an increase in average interest-earning assets of $309.6 million, or 31.7%, offset by an increase in average interest-bearing liabilities of $111.2 million, or 16.7%, and a decrease in the net interest margin of 21 basis points to 4.23%. The decrease in the net interest margin is the result of a combination of factors including a decreasing rate environment and an increase in mortgage warehouse loan balances which yield a lower rate. The net interest margin benefitted from the accretion of fee income related to the forgiveness of the SBA PPP loans. The amount of income recognized from the forgiveness totaled $962,000 for the three months and year ended December 31, 2020. Excluding this income, net interest margin would be 4.09% and 4.16% for the three months and year ended December 31, 2020, respectively. As of December 31, 2020, there was $993,000 in SBA PPP fee income remaining to be accreted.

Provision for loan losses of $866,000 were recognized for the three months ended December 31, 2020 compared to $1.7 million for the same period in 2019. For the year ended December 31, 2020, provision for loan losses of $5.6 million were recognized compared to $5.3 million for the year ended December 31, 2019. 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 Company has reviewed certain qualitative factors in light of significant economic deterioration due to COVID-19. Due to the continued uncertainty caused by COVID-19, including the surge of cases in the fourth quarter, continued provisions were recognized. The decrease in the provision for the quarter ended December 31, 2020 compared to the same period in 2019 is related to $1.4 million in specific reserves that were recognized in the fourth quarter of 2019. The reserves were related to an $18.6 million loan relationship that was restructured in the first quarter of 2020. For the year ended December 31, 2020 the increased provision was offset by a decrease in net charge offs, which were $925,000 for the year ended December 31, 2020 compared to $3.2 million for the year ended December 31, 2019.

The allowance for loan losses as a percentage of total loans was 1.39% as of December 31, 2020 compared to 1.42% as of December 31, 2019. Included in total loans is $41.8 million in PPP loans originated as part of the CARES Act that we believe have no credit risk due to a government guarantee, therefore we have not provided for losses for these loans. Excluding these loans, the allowance for loan losses as a percentage of total loans was 1.43% as of December 31, 2020. As of December 31, 2020, we had $265.4 million in outstanding mortgage warehouse loan balances. Loans in this segment are facility lines to non-bank mortgage origination companies for sale into secondary markets, which is typically within 15 days of the loan closure. Due to their short-term nature, these loans are assessed at a lower credit risk and do not carry the same allocation as traditional loans. The allowance for loan losses as a percentage of non-performing loans was 341.72% as of December 31, 2020 compared to 237.58% as of December 31, 2019. Non-performing loans were $5.4 million, or 0.36% of total assets as of December 31, 2020, compared to $5.8 million, or 0.52% of total assets, as of December 31, 2019. As of December 31, 2020, non-performing loans consist primarily of two commercial relationships. These loan relationships were evaluated for impairment and specific reserves of $1.9 million were allocated as of December 31, 2020.

Noninterest income decreased $51,000, or 5.3%, to $918,000 for the three months ended December 31, 2020 compared to $969,000 for the same period in 2019. The decrease is primarily due to a decrease in other service charges and fees, and customer service fees on deposit accounts partially offset by an increase in bank owned life insurance income. Other service charges and fees decreased $66,000, or 15.9%, and customer service fees on deposit accounts decreased $30,000, or 8.3%, primarily due to higher average deposit balances, which resulted in decreased overdraft fees and service charges. Bank owned life insurance income increased $52,000, or 30.1%, due to the purchase of additional insurance policies. For the year ended December 31, 2020, noninterest income decreased $568,000, or 13.8%, to $3.5 million compared to $4.1 million for the year ended December 31, 2019. The decrease is primarily due to a decrease in gains on sales of securities, other service charges and fees, and customer service fees on deposit accounts, partially offset by an increase in bank owned life insurance income. Gains on sales of securities were zero for the year ended December 31, 2020 compared to $113,000 for the year ended December 31, 2019 as we repositioned our investment portfolio in debt securities available for sale by selling securities with maturity dates that were coming due and purchasing securities with longer terms to maturity. Other service charges and fees decreased $461,000, or 25.9%, and customer service fees on deposit accounts decreased $121,000, or 8.3%, primarily due to waived service charges and fees during the second quarter for customers impacted by COVID-19 and decreased consumer spending. Bank owned life insurance income increased $110,000, or 15.7%, due to the purchase of additional insurance policies.

Noninterest expense increased $2.0 million, or 26.6%, to $9.5 million for the three months ended December 31, 2020 compared to $7.5 million for the three months ended December 31, 2019. The increase is primarily due to an increase in salaries and employee benefits expense, professional fees and a write down of other assets and receivables partially offset by a decrease in marketing expense. The increase of $848,000, or 16.3%, for the three months ended December 31, 2020 in salary and employee benefits was primarily due to a higher number of sales and operations positions compared to the same period in 2019 and the addition of staff from the mortgage warehouse lending asset purchase. Professional fees increased $480,000, or 280.7%, primarily due to additional legal costs associated with the adoption of our 2020 equity incentive plan, increased audit and compliance costs and consulting services to aid in the development of deposit and lending products and services. A write-down of other assets and receivables was completed after the Company performed an evaluation and deemed $400,000 impaired. Marketing expense decreased $104,000, or 71.2%, primarily due to increased marketing costs in 2019 related to the development of the new BankProv brand which was rolled out in 2020. For the year ended December 31, 2020, noninterest expense increased $8.2 million, or 29.9%, to $35.8 million compared to $27.6 million for the year ended December 31, 2019. The increase is primarily due to an increase in salaries and employee benefits, professional fees, deposit insurance costs and write-downs on other assets and receivables partially offset by decreases in occupancy and marketing expenses. The increase of $4.9 million, or 27.0%, for the year ended December 31, 2020 in salary and employee benefits was primarily due to a higher number of sales and operations positions compared to 2019, the addition of staff from the mortgage warehouse operations and ESOP expense, which increased due to the acquisition of additional shares from our second-step conversion and related stock offering in October 2019. Write down of other assets and receivables were $2.2 million for the year ended December 31, 2020 compared to zero for the year ended December 31, 2019. In the fourth quarter a write-down of other investments was completed after the Company performed an evaluation and deemed $400,000 impaired. A write-down of an SBA receivable balance was completed in the third quarter after the Company evaluated the collectability and determined that $1.3 million was uncollectible. In addition, a write-down of a notes receivable balance of $500,000 was completed in the first quarter after the Company evaluated the collectability and determined it was uncollectible. Deposit insurance costs increased $213,000 or 104.9%, primarily due to decreased expenses in 2019 relating to FDIC assessment credits. Professional fees increased $658,000 or 54.4%, primarily due to increased audit and compliance costs as well as consulting services to aid in the development of deposit and lending services. The increase is also a result of a one-time credit received in 2019 relating to an insurance settlement. Occupancy expense decreased $284,000, or 14.4%, primarily due to the acceleration of amortization on our leasehold improvements related to the closure of our Hampton, New Hampshire branch in 2019. Marketing expense decreased $162,000, or 42.1%, primarily due to increased marketing costs in 2019 related to the development of the new BankProv brand which was rolled out in 2020.

As of December 31, 2020, total assets have increased $383.4 million, or 34.2%, to $1.51 billion compared to $1.12 billion at December 31, 2019. The primary reasons for the increase are increases in net loans, cash and cash equivalents, bank owned life insurance and accrued interest receivable, partially offset by a decrease in investments in debt securities available-for-sale. Net loans increased $355.5 million, or 37.1%, to $1.31 billion as of December 31, 2020 compared to $959.3 million at December 31, 2019. The increase in net loans was due to an increase in commercial loans of $114.2 million, or 25.3%, the acquisition and growth of mortgage warehouse loans to $265.4 million, and an increase in commercial real estate loans of $20.6 million, or 4.9%, partially offset by decreases in construction and land development loans of $17.8 million, or 38.1%, residential real estate loans of $12.9 million, or 28.3%, and consumer loans of $7.2 million, or 56.4%. Included in commercial loans at December 31, 2020 are $41.8 million in SBA PPP loans. The increase in cash and cash equivalents of $24.2 million, or 40.5% is primarily due to an increase in deposits. The increase in bank owned life insurance of $9.8 million, or 36.2%, was primarily due to the purchase of additional insurance policies. The increase in accrued interest receivable of $3.5 million, or 123.2%, was primarily due to deferred interest on loan modifications as part of the CARES Act. The decrease in debt securities available-for-sale of $9.6 million, or 22.9%, resulted primarily from principal pay downs on government mortgage-backed securities.

Total liabilities increased $379.1 million, or 42.6%, primarily due to increased deposits partially offset by a decrease in borrowings. Deposits were $1.24 billion as of December 31, 2020, representing an increase of $387.5 million, or 45.6%, compared to December 31, 2019. The increase in deposits was due to an increase of $184.7 million, or 50.0%, in NOW and demand deposits, an increase of $83.3 million, or 30.8% in money market accounts, $83.8 million, or 88.7%, in time deposits, and an increase of $35.7 million, or 30.9%, in savings accounts. Money market deposits and NOW and demand deposits increased primarily due to funds from the origination of PPP loans and increased deposit balances from our existing customer base. The increase in time deposits is primarily due to increases in brokered certificates of deposit of $65.5 million, or 134.9%, and an increase of $31.3 million, or 361.6%, from Qwickrate deposits, where we gather certificates of deposit nationwide by posting rates we will pay on these deposits. The increase in savings accounts is primarily caused by decreased consumer spending which resulted in increased consumer savings. Borrowings decreased $11.5 million, or 46.0%, to $13.5 million as of December 31, 2020 primarily due to increased deposits funding the loan growth.

As of December 31, 2020, shareholders’ equity was $235.9 million compared to $230.9 million at December 31, 2019, representing an increase of $5.0 million, or 2.1%. The increase was primarily due to net income of $12.0 million, stock-based compensation expense of $1.1 million, other comprehensive income of $600,000 and employee stock ownership plan shares earned of $841,000, partially offset by a decrease of $7.8 million related to the repurchase of common stock and $1.6 million from dividends declared.

About Provident Bancorp, Inc.

Provident Bancorp, Inc. is a Maryland corporation that was formed in 2019 to be the successor corporation to Provident Bancorp, Inc., a Massachusetts corporation, and the holding company for The Provident Bank, which also operates under the name BankProv. The Provident Bank 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.bankprov.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; the effects of any pandemic; trends in interest rates; the ability of our borrowers to repay their loans; 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.
Consolidated Balance Sheet

      
 At At
 December 31, December 31,
 2020  2019 
(Dollars in thousands) (unaudited)   
Assets     
Cash and due from banks$11,830  $11,990 
Short-term investments 71,989   47,668 
Cash and cash equivalents 83,819   59,658 
Debt securities available-for-sale (at fair value) 32,215   41,790 
Federal Home Loan Bank stock, at cost 895   1,416 
Loans, net of allowance for loan losses of $18,518 and $13,844 as of     
December 31, 2020 and 2019, respectively 1,314,810   959,286 
Bank owned life insurance 36,684   26,925 
Premises and equipment, net 14,716   14,728 
Accrued interest receivable 6,371   2,854 
Right-of-use assets 4,258   3,713 
Other assets 12,013   11,418 
Total assets$1,505,781  $1,121,788 
      
Liabilities and Shareholders' Equity     
Deposits:     
Noninterest-bearing$383,079  $222,088 
Interest-bearing 854,349   627,817 
Total deposits 1,237,428   849,905 
Borrowings 13,500   24,998 
Operating lease liabilities 4,488   3,877 
Other liabilities 14,509   12,075 
Total liabilities 1,269,925   890,855 
Shareholders' equity:     
Preferred stock; authorized 50,000 shares:     
no shares issued and outstanding     
Common stock, $0.01 par value, 100,000,000 shares authorized;     
19,047,544 and 19,473,818 shares issued and outstanding     
at December 31, 2020 and 2019, respectively 191   195 
Additional paid-in capital 139,450   146,174 
Retained earnings 104,508   94,159 
Accumulated other comprehensive income 1,058   458 
Unearned compensation - ESOP (9,351)  (10,053)
Total shareholders' equity 235,856   230,933 
Total liabilities and shareholders' equity$1,505,781  $1,121,788 


Provident Bancorp, Inc.
Consolidated Income Statements

            
            
 Three Months Ended  Twelve Months Ended
 December 31,  December 31,
 2020 2019  2020  2019
(Dollars in thousands, except per share data)(unaudited)
Interest and dividend income:           
Interest and fees on loans$16,268 $12,883 $59,391 $49,693
Interest and dividends on debt securities available-for-sale 196  319  913  1,549
Interest on short-term investments 18  160  99  296
Total interest and dividend income 16,482  13,362  60,403  51,538
Interest expense:           
Interest on deposits 1,039  1,599  5,203  6,258
Interest on borrowings 73  189  728  1,890
Total interest expense 1,112  1,788  5,931  8,148
Net interest and dividend income 15,370  11,574  54,472  43,390
Provision for loan losses 866  1,677  5,597  5,326
Net interest and dividend income after provision for loan losses 14,504  9,897  48,875  38,064
Noninterest income:           
Customer service fees on deposit accounts 333  363  1,331  1,452
Service charges and fees - other 349  415  1,322  1,783
Gain on sale of securities, net       113
Bank owned life insurance income 225  173  809  699
Other income 11  18  81  64
Total noninterest income 918  969  3,543  4,111
Noninterest expense:           
Salaries and employee benefits 6,045  5,197  23,175  18,243
Occupancy expense 430  401  1,684  1,968
Equipment expense 145  124  577  444
Deposit insurance 174  90  416  203
Data processing 300  217  1,000  826
Marketing expense 42  146  223  385
Professional fees 651  171  1,868  1,210
Directors' compensation 208  184  750  741
Software depreciation and implementation 265  215  959  734
Write down of other assets and receivables 400    2,207  
Other 795  721  2,949  2,802
Total noninterest expense 9,455  7,466  35,808  27,556
Income before income tax expense 5,967  3,400  16,610  14,619
Income tax expense 1,665  849  4,625  3,811
Net income $4,302 $2,551 $11,985 $10,808
Earnings per share:           
Basic$0.24 $0.14 $0.66 $0.60
Diluted$0.24 $0.14 $0.66 $0.60
Weighted Average Shares:           
Basic 17,912,975  18,006,471  18,090,229  17,958,186
Diluted 18,007,580  18,135,220  18,131,025  18,066,968


Provident Bancorp, Inc.
Net Interest Income Analysis
(Unaudited)

                
 For the Three Months Ended December 31,
 2020  2019 
    Interest      Interest  
 Average Earned/ Yield/ Average Earned/ Yield/
 Balance Paid Rate Balance Paid Rate
(Dollars in thousands)               
Assets:               
Interest-earning assets:               
Loans$1,290,973  $16,268 5.04% $950,589  $12,883 5.42%
Debt securities available-for-sale 82,969   18 0.09%  48,318   160 1.32%
Investment securities 33,546   187 2.23%  43,981   260 2.36%
Federal Home Loan Bank stock 895   9 4.02%  1,519   59 15.54%
Total interest-earning assets 1,408,383   16,482 4.68%  1,044,407   13,362 5.12%
Non-interest earning assets 66,170        61,358      
Total assets$1,474,553       $1,105,765      
Liabilities and shareholders' equity:               
Interest-bearing liabilities:               
Savings accounts$143,725   57 0.16% $149,108   95 0.25%
Money market accounts 337,814   477 0.56%  267,281   774 1.16%
NOW accounts 159,428   151 0.38%  112,529   118 0.42%
Certificates of deposit 188,084   354 0.75%  108,929   612 2.25%
Total interest-bearing deposits 829,051   1,039 0.50%  637,847   1,599 1.00%
Borrowings 14,885   73 1.96%  27,272   189 2.77%
Total interest-bearing liabilities 843,936   1,112 0.53%  665,119   1,788 1.08%
Noninterest-bearing liabilities:               
Noninterest-bearing deposits 371,290        235,747      
Other noninterest-bearing liabilities 17,286        15,560      
Total liabilities 1,232,512        916,426      
Total equity 242,041        189,339      
Total liabilities and               
equity$1,474,553       $1,105,765      
Net interest income   $15,370      $11,574  
Interest rate spread (1)      4.15%       4.04%
Net interest-earning assets (2)$564,447       $379,288      
Net interest margin (3)      4.37%       4.43%
Average interest-earning assets to               
interest-bearing liabilities 166.88%       157.03%     

(1) Net interest rate spread represents the difference between the weighted average yield on interest-bearing assets and the weighted average rate of interest-bearing liabilities.
(2) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
(3) Net interest margin represents net interest income divided by average total interest-earning assets.

                
                
 For the Twelve Months Ended December 31,
 2020  2019 
    Interest      Interest  
 Average Earned/ Yield/ Average Earned/ Yield/
 Balance Paid Rate Balance Paid Rate
(Dollars in thousands)               
Assets:               
Interest-earning assets:               
Loans$1,209,736  $59,391 4.91% $906,909  $49,693 5.48%
Short-term investments 38,048   99 0.26%  19,106   296 1.55%
Debt securities available-for-sale 37,320   830 2.22%  47,793   1,344 2.81%
Federal Home Loan Bank stock 1,582   83 5.25%  3,281   205 6.25%
Total interest-earning assets 1,286,686   60,403 4.69%  977,089   51,538 5.27%
Non-interest earning assets 62,741        62,522      
Total assets$1,349,427       $1,039,611      
Liabilities and shareholders' equity:               
Interest-bearing liabilities:               
Savings accounts$137,679   314 0.23% $128,438   419 0.33%
Money market accounts 295,483   2,159 0.73%  238,708   2,857 1.20%
NOW accounts 136,613   518 0.38%  108,658   423 0.39%
Certificates of deposit 163,032   2,212 1.36%  117,126   2,559 2.18%
Total interest-bearing deposits 732,807   5,203 0.71%  592,930   6,258 1.06%
Borrowings 43,682   728 1.67%  72,361   1,890 2.61%
Total interest-bearing liabilities 776,489   5,931 0.76%  665,291   8,148 1.22%
Noninterest-bearing liabilities:               
Noninterest-bearing deposits 319,451        212,753      
Other noninterest-bearing liabilities 16,293        15,178      
Total liabilities 1,112,233        893,222      
Total equity 237,194        146,389      
Total liabilities and               
equity$1,349,427       $1,039,611      
Net interest income   $54,472      $43,390  
Interest rate spread (1)      3.93%       4.05%
Net interest-earning assets (2)$510,197       $311,798      
Net interest margin (3)      4.23%       4.44%
Average interest-earning assets to               
interest-bearing liabilities 165.71%       146.87%     

(1) Net interest rate spread represents the difference between the weighted average yield on interest-bearing assets and the weighted average rate of interest-bearing liabilities.
(2) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
(3) Net interest margin represents net interest income divided by average total interest-earning assets.

Provident Bancorp, Inc.
Select Financial Highlights

            
    
 Three Months Ended Twelve Months Ended
 December 31, December 31,
 2020  2019  2020  2019 
(unaudited)           
Performance Ratios:           
Return on average assets (1) 1.17%  0.92%  0.89%  1.04%
Return on average equity (1) 7.11%  5.39%  5.05%  7.38%
Interest rate spread (1) (3) 4.15%  4.04%  3.93%  4.05%
Net interest margin (1) (4) 4.37%  4.43%  4.23%  4.44%
Non-interest expense to average assets (1) 2.56%  2.70%  2.65%  2.65%
Efficiency ratio (5) 58.05%  59.52%  61.72%  58.15%
Average interest-earning assets to           
average interest-bearing liabilities 166.88%  157.03%  165.71%  146.87%
Average equity to average assets 16.41%  17.12%  17.58%  14.08%


      
      
 At At
 December 31, December 31,
 2020  2019 
Asset Quality     
Non-accrual loans:     
Real estate:     
Commercial$  $1,701 
Residential 1,156   969 
Construction and land development    165 
Commercial 4,198   2,955 
Consumer 65   37 
Warehouse     
Total non-accrual loans 5,419   5,827 
Accruing loans past due 90 days or more     
Other real estate owned     
Total non-performing assets$5,419  $5,827 
Asset Quality Ratios     
Allowance for loan losses as a percent of total loans (2) 1.39%  1.42%
Allowance for loan losses as a percent of non-performing loans 341.72%  237.58%
Non-performing loans as a percent of total loans (2) 0.41%  0.60%
Non-performing loans as a percent of total assets 0.36%  0.52%
Non-performing assets as a percent of total assets (6) 0.36%  0.52%
Capital and Share Related     
Stockholders' equity to total assets 15.7%  20.6%
Book value per share$12.38  $11.86 
Market value per share$12.00  $12.45 
Shares outstanding 19,047,544   19,473,818 

(1) Annualized where appropriate
(2) Loans are presented before the allowance but include deferred costs/fees.
(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.


Provident Bancorp, Inc.
Carol Houle, 603-334-1253
Executive Vice President/CFO
choule@bankprov.com

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