Provident Bancorp Reports Decline in Net Income and Assets in Q1 2025

Provident Bancorp, Inc. reported its financial results for the first quarter of 2025, revealing a net income of $2.2 million, or $0.13 per diluted share, a decline from $5.0 million, or $0.30 per diluted share, in the same period last year. The company's return on average assets was 0.58%, down from 1.26% a year earlier, while the return on average equity decreased to 3.71% from 8.93%. Total interest and dividend income fell to $20.6 million, a decrease of 6.6% compared to the prior year, primarily due to lower average loan balances and yields.

Total assets decreased by $39.2 million, or 2.5%, to $1.55 billion as of March 31, 2025, driven mainly by a significant reduction in cash and cash equivalents, which fell by 26.1% to $125.0 million. The bank's loan portfolio showed a slight increase, with net loans rising to $1.31 billion, up 0.4% from the previous quarter, largely due to growth in commercial loans. However, the enterprise value loan segment saw a notable decline of 15.3%, reflecting the bank's strategic shift away from riskier lending practices.

Deposits also experienced a significant drop, decreasing by $124.4 million, or 9.5%, to $1.18 billion, attributed to reductions in specialty deposits and brokered deposits. In response to the decline in deposits, total borrowings surged by 186.2% to $127.5 million, indicating the bank's reliance on external funding sources to meet liquidity needs. Shareholders' equity increased slightly to $234.0 million, bolstered by the net income for the quarter.

The bank's allowance for credit losses for loans rose to $21.2 million, reflecting increased reserves related to specific enterprise value loans. Non-performing loans increased to $31.4 million, or 2.36% of total loans, primarily due to a significant enterprise value loan relationship that was placed on non-accrual status. The bank continues to monitor its loan portfolio closely, particularly in light of the ongoing economic conditions and potential impacts on credit quality.

Looking ahead, Provident Bancorp remains focused on its strategy to transform into a traditional community bank, which includes reducing exposure to higher-risk segments while enhancing operational efficiency. The bank's management is optimistic about its ability to navigate current market challenges and capitalize on growth opportunities, although they acknowledge the uncertainties posed by economic conditions and regulatory environments.