Provident Bancorp in Amesbury, Mass., returned to profitability and slashed its exposure to the cryptocurrency industry during the fourth quarter.
The $1.6 billion-asset company said in a press release that its crypto portfolio shrank by 66% in the fourth quarter from a year earlier, to $41.2 million, largely due to the sale of impaired loans backed by crypto mining rigs and payments on outstanding lines of credit.
Loans backed by crypto mining rigs fell by 46% from a year earlier, to $26.7 million. Provident in the third quarter repossessed and partially charged off some rigs in exchange for forgiving a $27.4 million loan relationship.
Provident said its portfolio of loans backed by crypto mining rigs will continue to decline because it is no longer making those types of loans.
Loans backed by mining rigs accounted for most of the $46.2 million of net chargeoffs it had in the fourth quarter.
“As we reflect on 2022, we are eager to take its lessons and emerge a better, stronger bank,” Carol Houle, the company’s interim co-president and co-CEO, said in the release. “Despite our 2022 losses, we enter 2023 well capitalized and well diversified.”
Overall, Provident earned $2.7 million in the fourth quarter, a positive swing after it lost $35.3 million a quarter earlier as it came to terms with its exposure to crypto-related borrowers.
The company lost $21.5 million in 2022, a reversal from the $16.1 million it earned a year earlier.
Provident disclosed in October that repossessing the mining rigs triggered a review of its crypto portfolio. The review revealed that “a majority” of the loans in the portfolio were likely “impaired” and needed to be placed on nonaccrual status.
A few weeks later, the company disclosed that Dave Mansfield had stepped down as president and CEO. Houle, Provident’s chief financial officer, and Joe Reilly, the chairman, were named co-president and co-CEO. Laurie Knapp, the board’s audit committee chair, succeeded Reilly as chairman.