A close-up photograph of a computer used to mine cryptocurrency, also called a "mining rig." Photo by MoneyBright | CC BY 2.0
Amesbury-based BankProv has more than $70 million in lines of credit secured by digital currencies but has no exposure to collapsed cryptocurrency exchange FTX, according to a recent securities disclosure.
The disclosure came a week after BankProv’s parent company, Provident Bancorp, revealed problems with its digital asset mining portfolio and estimated that it could see a third quarter net loss of $27.5 million.
The bank has not yet finalized its third quarter results and notified the Securities and Exchange Commission last week that its quarterly report, Form 10-Q, would not be filed on time, pointing to uncertainty in the digital asset mining portfolio.
BankProv, also known by its formal name The Provident Bank, had agreed in September to forgive a borrower’s $27.4 million digital asset mining loan and repossess cryptocurrency mining rigs, which the bank partially wrote down, according to last week’s filing.
After forgiving the loan, the bank said it did a detailed review of this portfolio and estimated that a majority of the portfolio amount is impaired. The bank added that the impaired amount would be placed on non-accrual status, resulting in significant specific reserves.
In a Regulation FD disclosure yesterday, the bank said it had $76.5 million in loans secured by digital asset mining rigs, representing 5.2 percent of its loan portfolio as of Sept. 30.
But the FTX collapse has not affected BankProv, according to the disclosure.
“The Company has no outstanding loans to, investments in, or deposits from, and has not partnered with, FTX, the cryptocurrency exchange that has filed for bankruptcy protection,” the disclosure said.
BankProv does have $71 million in lines of credit secured by Bitcoin and Ethereum, the disclosure said, with $35 million outstanding. The lines of credit represent 4.8 percent of the bank’s portfolio, and the outstanding amount is 2.4 percent of the portfolio as of Sept. 30, according to the disclosure. BankProv said it has no lines of credit secured by other cryptocurrencies or cryptocurrency assets.
The bank had $214.4 million in U.S. dollar deposits from digital asset customers on Sept. 30, 14.5 percent of its total deposits.
The bank also said yesterday that it had received a delinquency notification letter from the Nasdaq stock market because it had not yet filed Form 10-Q with the SEC. The bank has until mid-January to notify Nasdaq about its plan to address the missed filing and could request an extension.
“The Company’s management is working diligently to complete the Form 10-Q, and intends to file the Form 10-Q as soon as practicable,” the bank said in a press release yesterday.
