Provident Bancorp, Inc. reported its financial results for the three and nine months ended September 30, 2024, highlighting significant changes in revenue, profitability, and strategic developments compared to the previous fiscal period.

For the third quarter of 2024, net income decreased to $716,000, or $0.04 per diluted share, down from $2.5 million, or $0.15 per diluted share, in the same quarter of 2023, marking a 71% decline. The nine-month net income also fell to $2.4 million from $8.0 million year-over-year. The decrease in profitability was attributed to a higher provision for credit losses, which rose to $2.6 million from $556,000 in the prior year, largely due to an $8.8 million reserve related to an enterprise value loan.

Total interest and dividend income for the third quarter was $22.4 million, a decrease of 3.4% from $23.2 million in Q3 2023. The net interest margin slightly declined to 3.38% from 3.44%. Interest expense increased to $10.0 million, up 7.3% from the previous year, driven by rising costs associated with borrowings and deposits. For the nine months, total interest expense rose to $29.5 million, a 33.3% increase from $22.1 million in 2023.

Total loans increased to $1.41 billion as of September 30, 2024, up 5% from $1.34 billion at the end of 2023. This growth was primarily driven by a 75.8% increase in mortgage warehouse loans and a 17.1% rise in commercial real estate loans. However, there were notable decreases in enterprise value loans and construction loans, reflecting strategic shifts in the loan portfolio.

Total deposits decreased by 3.2% to $1.29 billion, influenced by a significant drop in listing service deposits and brokered deposits. The company reported a total shareholders' equity of $226.2 million, a slight increase from $221.9 million at the end of 2023.

Strategically, Provident Bancorp has ceased originating new loans to cryptocurrency companies since October 2022, following a material weakness in financial controls and ongoing scrutiny from the SEC. The company received a Wells Notice from the SEC regarding potential violations related to disclosures about loans to cryptocurrency companies, which may lead to enforcement actions.

Overall, Provident Bancorp's financial performance reflects challenges in profitability and strategic adjustments in its lending practices, particularly in response to market conditions and regulatory scrutiny.