Digital asset lending helped drive second quarter loan growth at Amesbury-based BankProv, but concerns about risk led the bank to close a couple of deposit accounts for digital asset customers.
BankProv’s parent company, Provident Bancorp Inc. had second quarter net income of $5.6 million, or $0.33 per diluted share, compared $3.2 million, or $0.18 per diluted share, in the second quarter of 2021. The bank had first quarter 2022 net income of $5.5 million, or $0.32 per diluted share.
BankProv CEO Dave Mansfield said in the bank’s second quarter earnings statement that he was pleased with the bank’s momentum.
“We are partnering with some of the most innovative Fintech companies in the nation, and when the crypto market is experiencing a downturn, it provides digital asset companies with the opportunity to build a better experience for their clients,” Mansfield said. “Because of this, we are experiencing an increased demand for Banking as a Service related service offerings and have positioned the Company as the premier Banking as a Service bank for the digital asset industry. We are onboarding clients to our BankProv APIs in collaboration with our technology partners and have increased adoption of the ProvXchange network. We continue to advance our goals and strategic initiatives in the most safe and sound manner.”
BankProv’s total assets were about $1.79 billion in the second quarter, down $4 million from the first quarter.
Net loans increased by 5.3 percent in the second quarter to $1.51 billion, up from $1.44 billion at the end of the first quarter.
The second quarter increase was due in part to commercial loan growth. Commercial loans were up $43.1 million, or 5.7 percent.
Much of that growth came from the bank’s specialty lending. The digital asset portfolio increased $26.7 million, or 23.9 percent, and the enterprise value portfolio increased $24 million, or 6.7 percent. The bank did see a second quarter decline in its renewable energy portfolio, which was down $2.8 million, or 4.4 percent. Commercial real estate loans declined in the second quarter, decreasing by $7.7 million, or 1.8 percent. Consumer loans decreased in the quarter by $302,000, or 29.5 percent.
The bank saw deposits drop in the second quarter, driven by activity with digital asset customers. Deposits were $1.44 billion at the end of the second quarter, down $82.4 million, or 5.4 percent, from the first quarter.
Deposits related to digital asset customers fell by $74.7 million, or 41.6 percent.
“This decrease is primarily related to two customer accounts that were closed after they were deemed to fall outside of the Bank’s risk tolerance related to the war in Ukraine,” BankProv said in the statement.