The Provident Bank saw earnings increase in the second quarter despite modifying more than 20 percent of its loans due to the coronavirus pandemic.
The Amesbury-based bank, which last week rebranded to “BankProv.”, reported second quarter net income of $3.3 million, or $0.18 per diluted share, compared to $2.5 million, or $0.13 per diluted share, for second quarter of 2019.
Net income for the first six months of 2020 was $4.5 million, or $0.25 per diluted share, compared to $4.8 million, or $0.25 per diluted share, for the first half of 2019. The bank completed a second-step conversion and stock offering last October.
“The obstacles of the day, while serious and requiring the bank’s focus, will not hinder the entrepreneurial spirit and growth-mindset of our organization,” CEO Dave Mansfield said in a statement. “I’m happy to highlight that we just completed a successful launch of our new ‘BankProv’ brand, an initiative that began in early 2019. Our new brand embodies the bank’s 200-year evolution by connecting its deep banking roots to a future ready, technologically innovative commercial institution committed to delivering an exceptional customer experience.”
The Provident Bank during the second quarter modified 21.4 percent of its loans for $274.2 million, according to the bank’s second quarter earnings statement. The modifications included 110 commercial real estate loans totaling $133.9 million and 157 commercial loans of $116.1 million.
The provision for loan losses in the second quarter was $872,000, and for the first six months of 2020, it was $4 million.
“There remains significant uncertainty of the full impact of COVID-19 as there is no set timeline as to when our customers can return to full operations,” The Provident Bank said in the statement. “In reviewing the modifications performed as of June 30, 2020, an increased provision was recognized to address the economic uncertainties and increased unemployment that COVID-19 has had on our commercial customers.”
The bank has seen net loans increase this year by 31.9 percent to $1.27 billion on June 30 compared to $959.3 million at the end of 2019. Earlier this year the bank purchased People’s United Bank’s warehouse lending division. Loans totaling $184.8 million from the warehouse business contributed to a 68.4 percent increase in commercial loans for 2020. The Paycheck Protection Program also boosted commercial loans, with the bank processing $78 million PPP loans.
PPP loans also helped drive an increase in deposits, as The Provident Bank saw deposits increase 31.8 percent to $1.12 billion compared to the end of 2019. NOW, demand and money market deposits increased in part because of funds from PPP loans, the bank said.
Total assets increased 26.1 percent to $1.41 billion compared to $1.12 billion on Dec. 31. Second quarter net interest and dividend income increased by $2.4 million, or 23 percent, compared to the second quarter of 2019, and increased by $4.3 million, or 20.9 percent, compared to the first six months of 2019. Net interest margin in the second quarter, however, was at 4.12 percent, 38 basis points lower compared to the second quarter last years. Net interest margin for the first six months of 2020 was 4.19 percent, a decrease of 26 basis points compared to the same time period last year.
