Amesbury, Massachusetts-based Provident Bancorp, which has been plagued by a cryptocurrency hit that led to heavy losses in the third quarter, said it has righted its boat and returned to profitability in the second half of 2022.
BankProv’s parent company with $1.6 billion in assets said in its earnings call in late January, Third quarter net loss of $35.3 million Fourth quarter net income of $2.7 million.
The rebound was notable as the company has suffered from poor lending to crypto miners. It cited a partial write-down on a crypto mining rig that was repossessed in exchange for the forgiveness of a $27.4 million loan. It totaled $76.5 million.
Provident is one of several banks to venture into the crypto space to see it collapse in 2022. Trusted to sell impaired receivables.
Interim co-president and co-CEO Carol Houle said in the earnings call: By the end of the third quarter, she “not only didn’t originate this type of loan, she cut her portfolio by almost half.”
“The remaining sectors of our loan portfolio have continued to perform based on our historical experience, and our ability to weather recent volatility and losses is largely due to our long-term portfolio diversification strategy. added Houle.
Specifically, the company said Q4 loans backed by cryptocurrency mining rigs were down more than 40% from the previous quarter to $26.7 million. We expect the portfolio to continue to shrink in 2023.
These types of loans accounted for the majority of Provident’s $46 million net charge-offs in the fourth quarter.
Bad debt costs weighed on results for the full year. Provident reported a loss of $21.5 million for the entirety of 2022. A year ago, it reported net income of $16.1 million.
Provident has previously publicized its crypto problems, and in November said it reviewed its crypto portfolio and estimated that a “majority” was undermined. Impaired loans were placed on an accrual status.
In December, then-CEO Dave Mansfield stepped down. He has headed the bank since 2013.
Provident’s chief financial officer, Houle, has joined as a temporary co-CEO, sharing the role with Joe Reilly, the company’s former chairman. Stated.
