UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x        QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2020

o         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________ to ______________________

Commission File No. 001-39090

Provident Bancorp, Inc.

(Exact name of registrant as specified in its charter)

Maryland	84-4132422
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification Number)
5 Market Street, Amesbury, Massachusetts	01913
(Address of Principal Executive Offices)	Zip Code

(978) 834-8555

(Registrant’s telephone number)

N/A

(Former name, former address, and former fiscal year if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
Common stock	PVBC	The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such requirements for the past 90 days.  YES  x  NO  o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   YES  x  NO  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer	o	Accelerated Filer	x
Non-accelerated Filer	o	Smaller Reporting Company	x
Emerging Growth Company	x

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  YES  o  NO  x

As of August 3, 2020, there were 19,472,310 shares of the Registrant’s common stock, $0.01 par value per share, outstanding. 
‎

Provident Bancorp, Inc.

Form 10-Q

Part I.	Financial Information	Page
Item 1.	Interim Financial Statements	2
	Consolidated Balance Sheets as of June 30, 2020 (unaudited) and December 31, 2019	2
	Consolidated Statements of Income for the Three and Six Months Ended June 30, 2020 and 2019 (unaudited)	3
	Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2020 and 2019 (unaudited)	4
	Consolidated Statements of Changes in Shareholders’ Equity for the Three and Six Months Ended June, 2020 and 2019 (unaudited)	5
	Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2020 and 2019 (unaudited)	6
	Notes to Consolidated Financial Statements (unaudited)	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operation	29
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	45
Item 4.	Controls and Procedures	45
Part II.	Other Information	46
Item 1.	Legal Proceedings	45
Item 1A.	Risk Factors	46
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	46
Item 3.	Defaults upon Senior Securities	46
Item 4.	Mine Safety Disclosures	46
Item 5.	Other Information	46
Item 6.	Exhibits	47
Signatures		48

Part I.Financial Information

Item 1.Financial Statements

PROVIDENT BANCORP, INC.

CONSOLIDATED BALANCE SHEETS

	At		At
	June 30,		December 31,
	2020		2019
(Dollars in thousands)	(unaudited)
Assets
Cash and due from banks	$	12,327	$	11,990
Short-term investments		25,851		47,668
Cash and cash equivalents		38,178		59,658
Debt securities available-for-sale (at fair value)		36,992		41,790
Federal Home Loan Bank stock, at cost		1,050		1,416
Loans, net of allowance for loan losses of $17,158 and $13,844 as of
June 30, 2020 and December 31, 2019, respectively		1,265,091		959,286
Bank owned life insurance		36,225		26,925
Premises and equipment, net		14,771		14,728
Accrued interest receivable		4,756		2,854
Right-of-use assets		4,336		3,713
Other assets		13,413		11,418
Total assets	$	1,414,812	$	1,121,788
Liabilities and Shareholders' Equity
Deposits:
Noninterest-bearing	$	361,022	$	222,088
Interest-bearing		759,463		627,817
Total deposits		1,120,485		849,905
Borrowings		42,021		24,998
Operating lease liabilities		4,534		3,877
Other liabilities		11,450		12,075
Total liabilities		1,178,490		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;
19,472,310 and 19,473,818 shares issued and outstanding
at June 30, 2020 and December 31, 2019, respectively		195		195
Additional paid-in capital		146,778		146,174
Retained earnings		98,057		94,159
Accumulated other comprehensive income		1,002		458
Unearned compensation - ESOP		(9,710)		(10,053)
Total shareholders' equity		236,322		230,933
Total liabilities and shareholders' equity	$	1,414,812	$	1,121,788

The accompanying notes are an integral part of the unaudited consolidated financial statements.

2

PROVIDENT BANCORP, INC.

CONSOLIDATED STATEMENTS OF INCOME

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2020		2019		2020		2019
(Dollars in thousands, except per share data)	(unaudited)
Interest and dividend income:
Interest and fees on loans	$	14,391	$	12,270	$	28,151	$	23,969
Interest and dividends on securities		259		420		517		824
Interest on short-term investments		4		41		75		67
Total interest and dividend income		14,654		12,731		28,743		24,860
Interest expense:
Interest on deposits		1,443		1,531		3,089		2,968
Interest on borrowings		176		599		547		1,133
Total interest expense		1,619		2,130		3,636		4,101
Net interest and dividend income		13,035		10,601		25,107		20,759
Provision for loan losses		872		1,354		3,971		2,816
Net interest and dividend income after provision for loan losses		12,163		9,247		21,136		17,943
Noninterest income:
Customer service fees on deposit accounts		264		356		616		685
Service charges and fees - other		261		506		721		918
Gain on sale of securities, net		—		—		—		113
Bank owned life insurance income		171		173		350		350
Other income		8		21		27		36
Total noninterest income		704		1,056		1,714		2,102
Noninterest expense:
Salaries and employee benefits		5,799		4,274		11,201		8,568
Occupancy expense		429		550		870		1,194
Equipment expense		144		109		281		215
Data processing		195		150		396		354
Marketing expense		71		69		135		124
Professional fees		367		496		753		918
Directors' compensation		171		188		365		369
Software depreciation and implementation		238		182		438		345
Write down of note receivable		—		—		500		—
Other		947		865		1,728		1,542
Total noninterest expense		8,361		6,883		16,667		13,629
Income before income tax expense		4,506		3,420		6,183		6,416
Income tax expense		1,256		889		1,702		1,667
Net income	$	3,250	$	2,531	$	4,481	$	4,749
Earnings per share: (1)
Basic	$	0.18	$	0.13	$	0.25	$	0.25
Diluted	$	0.18	$	0.13	$	0.25	$	0.25
Weighted Average Shares: (1)
Basic		18,150,106		18,758,735		18,131,421		18,744,781
Diluted		18,179,858		18,895,918		18,197,646		18,856,903

(1) Amounts related to periods prior to the date of the Conversion (October 16, 2019) have been restated to give the retroactive recognition to the exchange ratio applied in the Conversion (2.0212-to-one).

The accompanying notes are an integral part of the unaudited consolidated financial statements.

3

PROVIDENT BANCORP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2020		2019		2020		2019
(In thousands)
Net income	$	3,250	$	2,531	$	4,481	$	4,749
Other comprehensive income:
Unrealized holding gains arising during the period on debt securities available-for-sale		721		760		731		975
Reclassification adjustment for realized gains in net income		—		—		—		(113)
Unrealized gain		721		760		731		862
Income tax effect		(160)		(190)		(187)		(223)
Total other comprehensive income		561		570		544		639
Comprehensive income	$	3,811	$	3,101	$	5,025	$	5,388

The accompanying notes are an integral part of the unaudited consolidated financial statements.

‎

4

PROVIDENT BANCORP, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited)

For the three months ended June 30, 2020 and 2019

Accumulated

Shares of

Additional

Other

Unearned

Common

Common

Paid-in

Retained

Comprehensive

Compensation

Treasury

(In thousands, except share data)

Stock (1)

Stock

Capital

Earnings

Income (Loss)

ESOP

Stock

Total

Balance, March 31, 2020

19,476,248

$

195

$

146,500

$

95,390

$

441

$

(9,868)

$

—

$