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 September 30, 2021

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

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. o

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 November 3, 2021, there were 17,925,430 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 September 30, 2021 (unaudited) and December 31, 2020	2
	Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2021 and 2020 (unaudited)	3
	Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2021 and 2020 (unaudited)	4
	Consolidated Statements of Changes in Shareholders’ Equity for the Three and Nine Months Ended September 30, 2021 and 2020 (unaudited)	5
	Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2021 and 2020 (unaudited)	7
	Notes to Consolidated Financial Statements (unaudited)	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operation	30
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	46
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
	September 30,		December 31,
	2021		2020
(Dollars in thousands)	(unaudited)
Assets
Cash and due from banks	$	19,517	$	11,830
Short-term investments		171,644		71,989
Cash and cash equivalents		191,161		83,819
Debt securities available-for-sale (at fair value)		35,901		32,215
Federal Home Loan Bank stock, at cost		785		895
Loans, net of allowance for loan losses of $18,142 and $18,518 as of
September 30, 2021 and December 31, 2020, respectively		1,322,485		1,314,810
Bank owned life insurance		36,826		36,684
Premises and equipment, net		14,363		14,716
Accrued interest receivable		5,070		6,371
Right-of-use assets		4,141		4,258
Other assets		14,566		12,013
Total assets	$	1,625,298	$	1,505,781
Liabilities and Shareholders' Equity
Deposits:
Noninterest-bearing	$	494,839	$	383,079
Interest-bearing		866,280		854,349
Total deposits		1,361,119		1,237,428
Long-term borrowings		13,500		13,500
Operating lease liabilities		4,413		4,488
Other liabilities		15,005		14,509
Total liabilities		1,394,037		1,269,925
Shareholders' equity:
Preferred stock; authorized 50,000 shares:
no shares issued and outstanding		—		—
Common stock, $0.01 par value, 100,000,000 shares authorized;
17,889,759 and 19,047,544 shares issued and outstanding
at September 30, 2021 and December 31, 2020, respectively		179		191
Additional paid-in capital		123,797		139,450
Retained earnings		115,163		104,508
Accumulated other comprehensive income		933		1,058
Unearned compensation - ESOP		(8,811)		(9,351)
Total shareholders' equity		231,261		235,856
Total liabilities and shareholders' equity	$	1,625,298	$	1,505,781

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

2

PROVIDENT BANCORP, INC.

CONSOLIDATED STATEMENTS OF INCOME

	Three Months Ended					Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
(Dollars in thousands, except per share data)	(unaudited)
Interest and dividend income:
Interest and fees on loans	$	16,084	$	14,972	$	47,079	$	43,123
Interest and dividends on debt securities available-for-sale		183		200		538		717
Interest on short-term investments		69		6		121		81
Total interest and dividend income		16,336		15,178		47,738		43,921
Interest expense:
Interest on deposits		760		1,075		2,510		4,164
Interest on borrowings		72		108		213		655
Total interest expense		832		1,183		2,723		4,819
Net interest and dividend income		15,504		13,995		45,015		39,102
Provision for loan losses		232		760		2,654		4,731
Net interest and dividend income after provision for loan losses		15,272		13,235		42,361		34,371
Noninterest income:
Customer service fees on deposit accounts		485		382		1,297		998
Service charges and fees - other		818		252		1,606		973
Bank owned life insurance income		509		234		951		584
Other income		11		43		90		70
Total noninterest income		1,823		911		3,944		2,625
Noninterest expense:
Salaries and employee benefits		7,136		5,929		20,317		17,130
Occupancy expense		449		384		1,278		1,254
Equipment expense		128		151		377		432
Deposit insurance		124		118		341		242
Data processing		320		253		955		701
Marketing expense		36		46		154		181
Professional fees		410		464		1,310		1,217
Directors' compensation		259		177		774		542
Software depreciation and implementation		255		256		742		694
Write down of other assets and receivables		225		1,307		225		1,807
Other		726		601		2,336		2,153
Total noninterest expense		10,068		9,686		28,809		26,353
Income before income tax expense		7,027		4,460		17,496		10,643
Income tax expense		1,940		1,258		4,946		2,960
Net income	$	5,087	$	3,202	$	12,550	$	7,683
Earnings per share:
Basic	$	0.31	$	0.18	$	0.74	$	0.42
Diluted	$	0.30	$	0.18	$	0.72	$	0.42
Weighted Average Shares:
Basic		16,637,852		18,185,995		16,870,674		18,149,745
Diluted		17,235,852		18,222,766		17,344,147		18,184,550

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				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
(In thousands)
Net income	$	5,087	$	3,202	$	12,550	$	7,683
Other comprehensive income:
Unrealized holding (losses) gains arising during the period on debt securities available-for-sale		(88)		79		(172)		810
Unrealized (loss) gain		(88)		79		(172)		810
Income tax effect		22		(22)		47		(209)
Total other comprehensive (loss) income		(66)		57		(125)		601
Comprehensive income	$	5,021	$	3,259	$	12,425	$	8,284

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

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4

PROVIDENT BANCORP, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited)

	For the three months ended September 30, 2021 and 2020
									Accumulated
	Shares of				Additional				Other		Unearned
	Common		Common		Paid-in		Retained		Comprehensive		Compensation
(In thousands, except share data)	Stock		Stock		Capital		Earnings		Income (Loss)		ESOP		Total
Balance, June 30, 2021		18,246,136	$	182	$	128,666	$	110,752	$	999	$	(8,991)	$	231,608
Net income		—		—		—		5,087		—		—		5,087
Dividends declared ($0.04 per share)		—		—		—		(676)