Both the coronavirus pandemic and loans tied to a community bank network affected The Provident Bank’s first quarter earnings. The Amesbury-based bank had first quarter net income of $1.2 million, or $0.07 per diluted share, compared to $2.2 million, or $0.12 per diluted share, for the same time period last year, a 45 percent drop.

“I am deeply saddened by the devastating toll the COVID-19 crisis has placed on the health and well-being of our communities, including the effects on small businesses,” David Mansfield, The Provident Bank’s CEO, said in a statement. “These businesses are the backbone of our communities – they create jobs, lead innovation, reflect America’s diversity, help our communities flourish and represent our friends and neighbors. In these grave and uncertain times, it is critical that we do everything we can to help our local businesses continue to operate.”

Mansfield added that provisions for loan losses could increase and fee income could decrease as the bank works with customers on stabilizing their businesses.

“With the successful second-step conversion in 2019, the company has a strong capital position, and we believe it is well positioned to withstand the potential losses due to the pandemic,” Mansfield said.

The provisions for loan losses were $3.1 million in the first quarter compared to $1.5 million for the same period in 2019. The allowance for loan losses as a percentage of total loans was 1.46 percent on March 31 compared to 1.42 percent on Dec. 31.

The bank had an $18.6 million commercial real estate loan relationship that became impaired in 2019, with a troubled debt restructuring completed in 2020. Reserves of $1.4 million were allocated for this loan in the first quarter.

The Provident Bank also has an impaired loan relationship totaling $1.9 million through its participation in the BancAlliance network, a group of about 250 community banks that together provide middle-market commercial and industrial loans as a way to diversify commercial portfolios. The bank in the first quarter allocated reserves of $131,000 for this loan.

The Provident Bank in the first quarter also had a charge-off tied to the BancAlliance Network. The bank accepted a short-sale on a $490,000 loan through the network, resulting in a $97,000 charge-off.

The bank in 2019 had accepted the short-sale of a $1.2 million loan from the network, resulting in a $589,000 charge-off. A commercial and industrial loan from the network totaling $917,000 was charged off as well last year.

The bank has five remaining BancAlliance loan relationships totaling $6.7 million, according to the first quarter earnings statement. Three of these loans have a pass rating and total $3.3 million. The bank said that its last BancAlliance loan origination was in February 2017 and added that it did not anticipate originating any new loans through the network.

The Provident Bank did see a first quarter net increase in loans of $170 million, or 17.7 percent, to $1.13 billion compared to $959.3 million at the end of 2019. Commercial loans increased $179.7 million, or 39.8 percent, and construction and land development loans were up $1.6 million, or 3.3 percent. The bank saw a decrease in commercial real estate loans of $2.6 million, or 0.6 percent.