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, 2023

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 August 4, 2023, there were 17,685,720 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.	Financial Statements	2
	Consolidated Balance Sheets as of June 30, 2023 (unaudited) and December 31, 2022	2
	Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2023 and 2022 (unaudited)	3
	Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2023 and 2022 (unaudited)	4
	Consolidated Statements of Changes in Shareholders’ Equity for the Three and Six Months Ended June 30, 2023 and 2022 (unaudited)	5
	Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2023 and 2022 (unaudited)	7
	Notes to Consolidated Financial Statements (unaudited)	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operation	32
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	44
Item 4.	Controls and Procedures	44
Part II.	Other Information	45
Item 1.	Legal Proceedings	45
Item 1A.	Risk Factors	45
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	45
Item 3.	Defaults upon Senior Securities	45
Item 4.	Mine Safety Disclosures	45
Item 5.	Other Information	45
Item 6.	Exhibits	46
Signatures		47

Part I.Financial Information

Item 1.Financial Statements

PROVIDENT BANCORP, INC.

CONSOLIDATED BALANCE SHEETS

	At		At
	June 30,		December 31,
	2023		2022
(Dollars in thousands)	(unaudited)
Assets
Cash and due from banks	$	32,254	$	42,923
Short-term investments		265,604		37,706
Cash and cash equivalents		297,858		80,629
Debt securities available-for-sale (at fair value)		27,656		28,600
Federal Home Loan Bank stock, at cost		3,309		4,266
Loans, net of allowance for credit losses of $23,981, and $28,069 as of
June 30, 2023 and December 31, 2022, respectively		1,333,564		1,416,047
Bank owned life insurance		44,153		43,615
Premises and equipment, net		13,400		13,580
Other repossessed assets		—		6,051
Accrued interest receivable		5,007		6,597
Right-of-use assets		3,861		3,942
Deferred tax asset, net		15,722		16,793
Other assets		17,057		16,261
Total assets	$	1,761,587	$	1,636,381
Liabilities and Shareholders' Equity
Deposits:
Noninterest-bearing	$	404,012	$	520,226
Interest-bearing		1,044,074		759,356
Total deposits		1,448,086		1,279,582
Borrowings:
Short-term borrowings		70,000		108,500
Long-term borrowings		9,763		18,329
Total borrowings		79,763		126,829
Operating lease liabilities		4,227		4,282
Other liabilities		14,439		18,146
Total liabilities		1,546,515		1,428,839
Shareholders' equity:
Preferred stock; authorized 50,000 shares:
no shares issued and outstanding		—		—
Common stock, $0.01 par value, 100,000,000 shares authorized;
17,684,720 and 17,669,698 shares issued and outstanding
at June 30, 2023 and December 31, 2022, respectively		177		177
Additional paid-in capital		123,444		122,847
Retained earnings		100,894		94,630
Accumulated other comprehensive loss		(1,891)		(2,200)
Unearned compensation - ESOP		(7,552)		(7,912)
Total shareholders' equity		215,072		207,542
Total liabilities and shareholders' equity	$	1,761,587	$	1,636,381

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

2

PROVIDENT BANCORP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended				Six Months Ended
	June 30,		June 30,		June 30,		June 30,
(Dollars in thousands, except per share data)	2023		2022		2023		2022
Interest and dividend income:
Interest and fees on loans	$	19,652	$	18,558	$	39,658	$	36,770
Interest and dividends on debt securities available-for-sale		246		194		484		373
Interest on short-term investments		2,978		400		3,361		459
Total interest and dividend income		22,876		19,152		43,503		37,602
Interest expense:
Interest on deposits		7,670		476		11,571		931
Interest on short-term borrowings		230		—		1,054		—
Interest on long-term borrowings		74		71		160		141
Total interest expense		7,974		547		12,785		1,072
Net interest and dividend income		14,902		18,605		30,718		36,530
Credit loss (benefit) expense - loans		(740)		1,005		2,195		1,088
Credit loss (benefit) expense - off-balance sheet credit exposures		(327)		36		(1,483)		36
Total credit loss (benefit) expense		(1,067)		1,041		712		1,124
Net interest and dividend income after credit loss (benefit) expense		15,969		17,564		30,006		35,406
Noninterest income:
Customer service fees on deposit accounts		769		619		1,748		1,200
Service charges and fees - other		527		452		978		828
Bank owned life insurance income		272		258		538		514
Gain on loans sold, net		—		187		—		284
Other income		134		36		385		46
Total noninterest income		1,702		1,552		3,649		2,872
Noninterest expense:
Salaries and employee benefits		8,109		7,322		16,653		14,511
Occupancy expense		421		398		842		837
Equipment expense		151		143		295		281
Deposit insurance		368		154		646		305
Data processing		374		344		735		679
Marketing expense		161		70		244		197
Professional fees		919		709		2,322		1,437
Directors' compensation		164		267		364		521
Software depreciation and implementation		483		327		900		621
Insurance expense		450		448		902		895
Service fees		281		225		517		433
Write down of other assets and receivables		—		—		—		395
Other		870		900		1,542		1,606
Total noninterest expense		12,751		11,307		25,962		22,718
Income before income tax expense		4,920		7,809		7,693		15,560
Income tax expense		1,459		2,190		2,129		4,416
Net income	$	3,461	$	5,619	$	5,564	$	11,144
Earnings per share:
Basic	$	0.21	$	0.34	$	0.34	$	0.68
Diluted		0.21	$	0.33	$	0.34	$	0.66
Weighted Average Shares:
Basic		16,568,664		16,460,248		16,549,751		16,488,941
Diluted		16,570,017		16,882,933		16,550,666		16,957,186

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,
	2023		2022		2023		2022
(In thousands)
Net income	$	3,461	$	5,619	$	5,564	$	11,144
Other comprehensive income:
Unrealized holding (losses) gains arising during the period on debt securities available-for-sale		(419)		(1,340)		400		(3,001)
Unrealized (loss) gain		(419)