While Amesbury-based The Provident Bank saw second quarter income decline slightly compared to last year, specialty lending and income from customers operating Bitcoin machines helped boost profits.

Also known as BankProv, The Provident Bank had second quarter net income of $3.2 million, or $0.18 per diluted share, compared to $3.3 million, or $0.18 per diluted share, in the second quarter of 2020. Net income for the first six months of 2021 was $7.5 million, or $0.43 per diluted share, compared to $4.5 million, or $0.25 per diluted share, in the six months of 2020.

“The development of new technologies and the changing needs of customers has put immense pressure on the banking industry to evolve,” The Provident Bank’s CEO Dave Mansfield said in the second quarter earnings statement. “Over the past few years our institution has focused on embracing innovation and leveraging new technologies to deliver a better banking experience to businesses who seek digital solutions. By forming new relationships with several digital asset companies and implementing newly developed digital services, we have seen financial benefits in the form of increased non-interest bearing deposits and fee income as well as an expansion in our specialty lending portfolio. Our bank is excited to be an active participant in the evolution of our industry as we continue to seek new ways to challenge the traditional processes of today to transform the customer experience of tomorrow.”

Fees that last year had been waived for customers affected by COVID-19 helped increase noninterest income in the second quarter. The bank’s noninterest income increased 56.7 percent to $1.1 million in the second quarter compared to $704,000 in the second quarter last year. Customer service fees on deposit accounts increased by $169,000, or 64, percent compared to last year.

In addition to an increase in fee income related to COVID-19, the bank said it also had an increase in fees generated from the cash vault services for customers who operate Bitcoin ATMs.

Salaries and benefits pushed noninterest expenses higher in the second quarter. Noninterest expenses increased 14 percent to $9.5 million compared to $8.4 million in the second quarter of 2020. The bank said the increase was primarily due to higher salaries and employee benefits, professional fees, data processing fees and directors’ compensation. Salaries and benefits increased $905,000, or 15.6 percent, primarily due to increased stock-based compensation expenses and more sales and operations positions compared to the same period last year. Professional fees went up $102,000, or 27.8 percent, primarily because of costs for third-party vendors for program assistance and increased legal, and audit and compliance costs, the bank said.

The Provident Bank had total assets of $1.59 billion, up from $1.51 billion at the end of 2020. Total deposits were $1.32 billion in the second quarter, up $84.4 million from Dec. 31.

Net loans were $1.33 billion as of June 30, up $19.8 million since Dec. 31 The bank said it saw increases in commercial loans as well as construction and land development loans. The bank’s specialty lending portfolios helped drive commercial loan activity, including renewable energy loans and loans to crypto companies.

The Provident Bank has COVID-19 loan modifications remaining on $18.9 million in loans, or 1.4 percent of total loans. This is down from $44 million, or 3.3 percent of loans, at the end of 2020.