<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15 (d) of
the Securities Exchange Act of 1934
For the Quarterly Period Ended Commission File
March 31, 1996 No. 1-8019
P R O V I D E N T B A N C O R P , I N C .
Incorporated under IRS Employer I.D.
the Laws of Ohio No. 31-0982792
One East Fourth Street, Cincinnati, Ohio 45202
Phone: 513-579-2000
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days.
Yes X No ______
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date: Common
stock, without par value, at April 30, 1996 is 17,559,392.
Please address all correspondence to:
John R. Farrenkopf
Vice President and Chief Financial Officer
Provident Bancorp, Inc.
One East Fourth Street
Cincinnati, Ohio 45202
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
PROVIDENT BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
<CAPTION>
March 31, December 31,
1996 1995
ASSETS (Unaudited)
<S> <C> <C>
Cash and Noninterest Bearing Deposits $170,613 $213,594
Federal Funds Sold and Reverse Repurchase Agreements 75,000 -
Investment Securities Available for Sale
(amortized cost - $898,493 and $955,994) 902,860 959,904
Loans and Leases (Net of Unearned Income):
Commercial Lending:
Commercial and Financial 2,245,696 2,250,542
Mortgage 446,459 448,906
Construction 254,019 266,354
Lease Financing 125,812 128,686
Consumer Lending:
Instalment 997,213 1,000,940
Residential 502,223 466,422
Lease Financing 384,193 334,226
Total Loans and Leases 4,955,615 4,896,076
Reserve for Loan and Lease Losses (60,966) (60,235)
Net Loans and Leases 4,894,649 4,835,841
Premises and Equipment 93,635 90,976
Other Assets 107,028 105,036
$6,243,785 $6,205,351
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits:
Noninterest Bearing $467,199 $523,631
Interest Bearing 3,734,404 3,654,920
Total Deposits 4,201,603 4,178,551
Short-Term Debt 626,182 637,240
Long-Term Debt 820,003 820,083
Accrued Interest and Other Liabilities 147,032 136,940
Total Liabilities 5,794,820 5,772,814
Shareholders' Equity:
Preferred Stock, 5,000,000 Shares Authorized,
Series D, 70,272 Issued 7,000 7,000
Common Stock, No Par Value, $.67 Stated Value, 60,000,000
Shares Authorized, 17,557,692 and 17,544,411 Issued 11,712 11,703
Capital Surplus 137,729 137,313
Retained Earnings 279,263 265,017
Reserve for Retirement of Capital Securities 9,500 9,000
Treasury Stock, - Shares and 1,126 Shares - (38)
Unrealized Gains on Marketable Securities
(net of deferred income tax) 3,761 2,542
Total Shareholders' Equity 448,965 432,537
$6,243,785 $6,205,351
</TABLE>
<PAGE>
<TABLE>
PROVIDENT BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
(In Thousands, Except Per Share Amounts)
<CAPTION>
Three Months Ended
March 31,
1996 1995
<S> <C> <C>
Interest Income:
Interest and Fees on Loans and Leases $110,801 $95,893
Interest on Investment Securities:
Taxable 14,616 9,305
Exempt From Federal Income Taxes 103 95
14,719 9,400
Interest on Federal Funds Sold and
Reverse Repurchase Agreements 278 671
Total Interest Income 125,798 105,964
Interest Expense:
Interest on Deposits:
Savings and Demand Deposits 5,262 7,055
Time Deposits 41,660 40,391
Total Interest on Deposits 46,922 47,446
Interest on Short-Term Debt 8,981 5,792
Interest on Long-Term Debt 12,431 6,610
Total Interest Expense 68,334 59,848
Net Interest Income 57,464 46,116
Provision for Loan and Lease Losses 10,000 2,000
Net Interest Income After Provision
for Loan and Lease Losses 47,464 44,116
Noninterest Income:
Service Charges on Deposit Accounts 4,865 3,771
Other Service Charges and Fees 9,227 3,785
Gain on Sales of Loans and Leases 974 1,802
Security Gains - -
Other 3,742 1,437
Total Noninterest Income 18,808 10,795
Noninterest Expense:
Compensation:
Salaries 15,642 13,288
Benefits 2,808 2,450
Profit Sharing 976 806
Occupancy 2,373 2,147
Equipment Expense 2,359 2,303
Deposit Insurance 887 2,177
Professional Fees 1,826 1,371
Other 9,401 7,800
Total Noninterest Expense 36,272 32,342
Earnings Before Income Taxes 30,000 22,569
Applicable Income Taxes 10,325 7,569
Net Earnings $19,675 $15,000
Net Earnings Per Common Share:
Primary $1.07 $.90
Fully Diluted 1.05 .82
Average Primary Shares 18,302 16,025
Average Fully Diluted Shares 18,770 18,346
</TABLE>
<PAGE>
<TABLE>
PROVIDENT BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in Thousands)
<CAPTION>
Three Months Ended March 31,
1996 1995
<S> <C> <C>
Operating Activities:
Net Earnings $19,675 $15,000
Adjustments to Reconcile Net Earnings to
Net Cash Provided by Operating Activities:
Provision for Loan and Lease Losses 10,000 2,000
Provision for Depreciation and Amortization 3,818 2,721
Amortization of Investment Security Discounts (1,685) (63)
Amortization of Unearned Income (8,113) (4,850)
Net Increase in Trading Securities (53) (55)
Proceeds from Sale of Loans Held for Sale 41,408 14,107
Origination of Loans Held for Sale (40,847) (13,387)
Realized Gains on Loans Held for Sale (561) (110)
Realized Gains on Sale of Loans and Leases (413) (1,692)
(Increase) Decrease in Interest Receivable (2,756) 1,809
(Increase) Decrease in Accounts Receivable and Other Assets 4,606 (6,260)
Increase in Interest Payable 10,402 6,802
Increase in Accounts Payable and Other Liabilities 452 1,843
Other 156 207
Net Cash Provided By Operating Activities 36,089 18,072
Investing Activities:
Investment Securities Available for Sale:
Proceeds from Maturities and Prepayments 155,387 41,036
Purchases (96,190) (46,925)
Investment Securities Held to Maturity:
Proceeds from Maturities and Prepayments - 850
Purchases - (1,533)
Net Increase in Loans and Leases (69,776) (79,767)
Proceeds from Sale of Other Real Estate 4,118 1,538
Purchases of Premises and Equipment (5,061) (8,062)
Proceeds from Sales of Premises and Equipment 90 182
Net Cash Used In Investing Activities (11,432) (92,681)
Financing Activities:
Net Decrease in Demand and Savings Deposits (83,895) (104,830)
Net Increase in Certificates of Deposit 106,947 109,258
Net Decrease in Short-Term Debt (11,058) (125,855)
Principal Payments on Long-Term Debt (374) (17,049)
Proceeds From Issuance of Long-Term Debt 248 -
Cash Dividends Paid (4,948) (4,487)
Proceeds from Sale of Common and Treasury Stock 442 1,476
Repurchase of Common Stock - (5,860)
Net Cash Provided By (Used In) Financing Activities 7,362 (147,347)
Increase (Decrease) in Cash and Cash Equivalents 32,019 (221,956)
Cash and Cash Equivalents at Beginning of Period 213,594 424,575
Cash and Cash Equivalents at End of Period $245,613 $202,619
Supplemental Disclosures of Cash Flow Information:
Cash Paid for:
Interest $57,932 $53,046
Income Taxes - -
Non-Cash Activity:
Additions to Other Real Estate in Settlement
of Loans and Leases 7,776 377
Reclassification of Finance Leases to Operating Leases (net) 1,293 4,202
</TABLE>
<PAGE>
PROVIDENT BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In the opinion of management, the accompanying unaudited consolidated
financial statements contain all adjustments (consisting of only
normal recurring accruals) necessary for fair presentation. The
results of operations for interim periods are not necessarily
indicative of the results to be expected for the full year.
The financial statements presented herein should be read in
conjunction with the financial statements and notes thereto included
in Provident Bancorp, Inc.'s 1995 annual report on Form 10-K filed
with the Securities and Exchange Commission.
On April 22, 1996, Provident Bancorp, Inc. announced a 3 for 2 stock
split to shareholders of record as of the close of business on May 7,
1996, payable on May 24, 1996. Financial information presented in this
report is on a pre-split basis. Additionally, the quarterly dividend
rate is being increased from $.275 per share to $.315 per share
beginning with the second quarter dividend.
Basis of Presentation
The consolidated financial statements include the accounts of
Provident Bancorp, Inc. and its subsidiaries ("Bancorp"), all of which
are wholly owned. All significant intercompany balances and
transactions have been eliminated. Certain reclassifications have been
made to conform to the current year presentation.
The accompanying financial statements have been prepared in accordance
with the instructions to Form 10-Q and therefore do not include all
information and footnotes necessary to be in conformity with generally
accepted accounting principles.
Bancorp adopted Statement of Financial Accounting Standards ("SFAS")
No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of" on January 1, 1996. This
statement requires that long-lived assets be segregated into two
categories, those to be held and used and those to be disposed of.
Long-lived assets to be held and used are reviewed for impairment
whenever circumstances indicate that the carrying value may not be
recoverable. An impairment loss is recorded when the sum of the
expected future cash flows is less than the carrying amount of the
assets. In this situation, an impairment loss is recorded in the
amount of the difference between the carrying amount and the fair
value of the asset. Assets to be disposed of that are subject to the
reporting requirements of Accounting Principles Board ("APB") Opinion
No. 30, "Reporting the Results of Operations -- Reporting the Effects
of Disposal of a Segment of a Business, and Extraordinary, Unusual and
Infrequently Occurring Events and Transactions" are to be measured at
the lower of carrying amount or net realizable value. Long-lived
<PAGE>
assets to be disposed of that are not subject to APB Opinion No. 30
requirements are to be accounted for at the lower of carrying amount
or fair value less cost to sell.
SFAS No. 122, "Accounting for Mortgage Servicing Rights" was also
adopted by Bancorp on January 1, 1996. Under this statement, when
mortgage loans are originated or purchased by an institution and
subsequently sold or securitized with servicing retained, the cost of
the loan shall be allocated between the loan (without servicing) and
the fair value of the servicing. Prior to this statement, no costs of
the loan were allocated to the servicing. Additionally, the statement
specifies how mortgage servicing rights and excess servicing rights
should be evaluated for impairment.
The adoption of SFAS No. 121 and SFAS No. 122 had no material impact
on Bancorp's consolidated financial position or results of operations.
SFAS No. 123, "Accounting for Stock-Based Compensation" was issued in
October, 1995. The statement defines a fair value-based method of
accounting for stock-based employee compensation plans. It encourages
all companies to adopt this method of accounting and measure
compensation cost for stock-based awards, based on their estimated
fair value on the date of grant, and recognize such cost over the
service period. However, it also allows a company to continue to
measure compensation costs for its plans as prescribed by APB Opinion
No. 25, "Accounting for Stock Issued to Employees." Companies electing
to continue following present accounting rules under APB Opinion No.
25 will be required to provide pro-forma disclosures of what net
earnings and earnings per share would have been had the new fair value
method been used. Bancorp elected to continue its accounting in
accordance with APB Opinion No. 25, whereby, no compensation expense
is recognized for the granting of stock options. The disclosure
requirements of SFAS No. 123 will be presented in Bancorp's 1996
annual report on Form 10-K.
Stock Options
Pursuant to Bancorp's 1988 Stock Option Plan and 1992 Outside
Director's Stock Option Plan, options to purchase 197,500 shares of
Bancorp common stock were granted during the first three months of
1996. The options have exercise prices ranging from $49.50 to $52.00.
Off-Balance Sheet Financial Agreements
In the normal course of business, Bancorp uses various financial
instruments with off-balance sheet risk to manage its interest rate
risk and to meet the financing needs of its customers. At March 31,
1996, these off-balance sheet instruments consisted of standby letters
of credit of $96.7 million, commitments to extend credit of $1.5
billion and interest rate swaps with a notional amount of $2.0
billion.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Results of Operations
Summary
Bancorp's net earnings for the first quarter of 1996 were $19.7
million compared to $15.0 million for the first quarter of 1995. Net
interest income increased by $11.3 million, or 25%, over the
comparable period in 1995. Interest income increased by $19.8 million,
or 19%, which more than offset the $8.5 million, or 14%, increase in
interest expense. The provision for loan and lease losses increased
$8.0 million, or 400%, to cover an increase in the balances of total
loans and leases and expected net charge-offs in 1996. Noninterest
income increased $8.0 million, or 74%, due primarily to the increase
in other service charges and fees. Noninterest expense increased $3.9
million, or 12%, due primarily to increases in compensation expense.
The following ratios compare returns on average assets and average
equity for the first three months of 1996 and for the year 1995.
<TABLE>
<CAPTION>
Three Months Ended Year Ended
March 31, 1996 December 31, 1995
<S> <C> <C>
Net Earnings to Average Assets(1) 1.29% 1.29%
Net Earnings to Average Shareholders' Equity(1) 18.08% 18.37%
<FN>
(1)Net earnings for the three months ended March 31, 1996 have been annualized.
</TABLE>
The ratio of noninterest expense to tax equivalent revenue
("efficiency ratio") was 47.48% for the first three months of 1996
compared to 56.71% for the first three months of 1995. Tax equivalent
revenue includes tax equivalent net interest income and noninterest
income but excludes non-recurring gains and security gains or losses.
The improvement in the efficiency ratio was due primarily to increased
noninterest income which grew at a proportionately greater rate than
noninterest expense.
Nonperforming assets as of March 31, 1996 decreased $5.7 million
compared to December 31, 1995, but increased $22.7 million compared to
March 31, 1995. The ratio of nonperforming loans to total loans and
leases was .66% at March 31, 1996, compared to .86% at December 31,
1995 and .40% at March 31, 1995. The ratio of nonperforming assets to
total loans, leases and other real estate owned was .85% at March 31,
1996, compared to .98% at December 31, 1995 and .45% at March 31,
1995.
Net Interest Income
See Table 1 for net interest income on a tax equivalent basis and
Table 2 for consolidated average balances, average rates and net
interest margin.
<PAGE>
Net interest income on a tax equivalent basis increased approximately
$11.3 million for the first three months of 1996 over the comparable
period in 1995. This increase resulted from a $6.5 million increase
due to changes in volume and a $4.8 million increase which was caused
by changes in rates. Volume changes are caused by changes in the
average balances of interest earning assets and interest bearing
liabilities. The net interest margin was 4.00% for the first three
months of 1996 as compared to 3.80% for the comparable period in 1995.
The improvement in the net interest margin during this period reflects
the decrease in the average rate paid on interest bearing liabilities
of 19 basis points, and the increase in the average rate received on
interest earning assets of 1 basis point. Decreases in the rate paid
on savings deposits and long-term debt, offset somewhat by the
increase in the balance of long-term debt, were the primary reasons
for the decrease in Bancorp's overall rate on interest bearing
liabilities. An increase in the balance of commercial and financial
loans combined with an increase in the average rate earned on consumer
instalment loans were the primary reasons for the increase in the
average rate earned on interest earning assets. The average federal
fund and prime interest rates have been decreasing over the last ten
months. As interest rates have decreased, Bancorp's interest bearing
liabilities have reacted more quickly than its interest earning
assets, causing the net interest margin to increase. The decrease in
interest rates was the primary reason that interest rate swaps
increased the net interest margin by 17 basis points during the first
three months of 1996. During the first three months of 1995, interest
rate swaps decreased the net interest margin by 25 basis points.
In preparing the net interest margin tables, nonaccrual loan balances
are included in the average balances for loans and leases. Loan and
lease fees are included in loan and lease revenue as follows: first
quarter 1996 - $5.0 million and first quarter 1995 - $4.6 million.
Provision for Loan and Lease Losses
For the first quarter of 1996 and 1995, the provision for loan and
lease losses was $10 million and $2 million, respectively. The
increase in the provision was the result of two factors. Total loans
and leases have increased by $700 million, or 16%, over the last
twelve months. Additionally, a higher level of charge-offs and lower
level of recoveries are expected in 1996 compared to 1995.
Noninterest Income
Noninterest income increased $8.0 million during the first quarter of
1996 compared to the same quarter in 1995. Service charges on deposit
accounts increased primarily due to additional fees received on
corporate deposit accounts and increased fee rates on nonsufficient
funds. The increase in other service charges and fees was principally
the result of gains and fees related to commercial lending, trust and
brokerage services. Gain on sales of loans and leases decreased due to
the recording of a large gain from the sale of a commercial lease
during the first quarter of 1995. Other increased primarily as a
result of the receipt of additional consideration related to a loan
<PAGE>
that had previously been restructured and, subsequent to the
restructuring, fully recovered as to principal and interest.
Noninterest Expense
Noninterest expense increased $3.9 million during the first quarter of
1996 when compared to 1995. Compensation expense, primarily in the
areas of general administration, commercial and consumer lending,
securities brokerage, and electronic delivery systems, increased as a
result of merit and promotion increases, increases in incentives and
increased personnel. The decline in deposit insurance expense was due
to the lowering of the FDIC insurance rate. Professional fees
increased primarily due to management consulting and loan subservicing
expenses. Increases in marketing expense, franchise taxes and credit
card processing were the primary reasons for the increase in other.
Financial Condition
Investment Securities and Short-Term Investments
Federal funds sold and reverse repurchase agreements increased $75.0
million during 1996. The amount of federal funds sold changes daily as
cash is managed to meet reserve requirements and customer needs. After
funds have been allocated to meet lending and investment requirements,
the remainder is placed in overnight federal funds. Investment
securities decreased $57.0 million during the first three months of
1996.
Loans and Leases
Total loans and leases increased $59.5 million during 1996. The
increase was primarily due to growth in consumer lease financing as
automobile leasing continues to grow.
The following table shows the composition of the commercial and
financial loan category by industry type at March 31, 1996 (dollars in
millions):
<TABLE>
<CAPTION>
Amount on
Type Amount % Nonaccrual
<S> <C> <C> <C>
Construction $77.1 3 $1.3
Manufacturing 484.2 22 7.3
Transportation/Utilities 150.2 7 5.7
Wholesale Trade 217.8 10 1.2
Retail Trade 253.1 11 7.4
Finance & Insurance 100.9 4 .1
Real Estate Operators/Investment 281.5 13 .6
Service Industries 336.9 15 1.2
Automobile Dealers 100.4 4 -
Other(1) 243.6 11 1.9
Total $2,245.7 100 $26.7
<FN>
(1) Includes various kinds of loans, such as small business loans and loans with
balances under $100,000.
</TABLE>
<PAGE>
The composition of the commercial mortgage and construction loan
categories by property type at March 31, 1996 is shown in the
following table (dollars in millions):
<TABLE>
<CAPTION>
Amount on
Type Amount % Nonaccrual
<S> <C> <C> <C>
Apartments $92.7 13 $-
Office/Warehouse 150.4 21 .4
Residential Development 98.3 14 .1
Shopping/Retail 165.7 24 -
Land 36.3 5 -
Industrial Plants 17.2 2 -
Hotel/Motel 36.9 5 -
Health Facilities 4.6 1 -
Auto Sales and Service 22.6 3 -
Churches 12.3 2 -
Mobile Home Parks 10.8 2 -
Other Commercial Properties 52.7 8 .7
Total $700.5 100 $1.2
</TABLE>
Bancorp maintains a reserve for losses to absorb potential losses in
its loan and lease portfolio. Management's determination of the
adequacy of the reserve is based on reviews of specific loans and
leases, credit loss experience, general economic conditions and other
pertinent factors. Loans and leases deemed uncollectible are charged
off and deducted from the reserve and recoveries on loans and leases
previously charged off are added to the reserve. Management considers
the present reserve to be appropriate and adequate to cover potential
losses inherent in the loan and lease portfolio based on the current
economic environment. However, future economic changes cannot be
predicted. Deterioration in general economic conditions could result
in an increase in the risk characteristics of the loan and lease
portfolio and an increase in the provision for loan and lease losses.
The following table shows the progression of the reserve for loan and
lease losses (dollars in thousands):
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Balance at January 1 $60,235 $51,979
Provision for Loan and Lease Losses 10,000 2,000
Loans and Leases Charged Off (10,002) (1,945)
Recoveries 733 1,953
Balance at March 31 $60,966 $53,987
</TABLE>
Three loans comprised $5.6 million of the $10.0 million charged off in
the first quarter of 1996. One of these loans, which had been
renegotiated, was partially charged off to bring the balance to its
fair market value prior to being sold. As a percentage of total loans
and leases outstanding, the reserve was 1.23% at March 31, 1996 and
December 31, 1995 and 1.26% at March 31, 1995.
Table 3 shows a comparison of the major components of nonperforming
assets over the past five quarters along with various asset quality
ratios. Nonaccrual loans decreased $5.5 million during the first three
months of 1996. Significant nonaccrual loan activity includes the
<PAGE>
addition of a $5.2 million loan, the transfer of two loans totaling
$6.6 million to other real estate and the partial charge-off of two
loans totaling $3.8 million. Additionally, $1.5 million in principal
payments were received on nonaccrual loans during the quarter. The
decrease in renegotiated loans of $4.2 million was primarily due to
the sale of one loan. Other real estate and equipment increased $4.1
million primarily due to the two nonaccrual loans being transferred to
other real estate and the sale of $3.8 million in other equipment. The
cumulative net effect of nonaccrual loans, renegotiated loans and
other real estate and equipment resulted in nonperforming assets
decreasing by $5.7 million during the first quarter of 1996.
Nonperforming assets as a percentage of loans and total assets at
March 31, 1996 are at a level that is consistent with historical
averages.
Capital Resources and Adequacy
During the first three months of 1996, shareholders' equity increased
$16.4 million, or 4%, to $449.0 million. Dividends of $4.8 million on
common stock and $120,000 on preferred stock were paid in the first
three months of 1996. Unrealized gains on marketable securities, net
of deferred income taxes, increased $1.2 million during the first
three months of 1996.
The following table of ratios is important to the analysis of the
adequacy of capital resources.
<TABLE>
<CAPTION>
Three Months Ended Year Ended
March 31, 1996 December 31, 1995
<S> <C> <C>
Average Shareholders' Equity to Average Assets 7.11% 7.02%
Preferred Dividend Payout to Net Earnings 0.61(1) 3.39
Common Dividend Payout to Net Earnings 24.53(1) 22.78
Tier 1 Leverage Ratio 7.12 7.13
Tier 1 Capital to Risk-Weighted Assets 7.71 7.52
Total Risk-Based Capital To Risk-Weighted Assets 11.93 11.77
<FN>
(1)Net earnings and dividend payouts for the three months ended March 31, 1996 have
been annualized.
</TABLE>
Bancorp's quarterly dividend on its common stock will increase from
$.275 per share to $.315 per share effective with the dividend paid in
the second quarter of 1996. This dividend rate increase should cause
the common dividend payout ratio to increase in the future.
Capital expenditures planned by Bancorp for building improvements and
furniture and equipment in 1996 are currently estimated to be
approximately $16 million. Included in this amount are projected
capital expenditures for improvements of data processing capabilities
and improvement of the branch banking network, with emphasis being
placed on enhancing the branches located in local supermarkets and
placement of additional ATMs. Bancorp also intends to expand and
improve its telephone banking operations. Through March 31, 1996,
approximately $3.1 million of these expenditures have been made.
Management believes that currently available funds and funds provided
by normal operations will be sufficient to meet capital requirements.
<PAGE>
Liquidity
Adequate liquidity is necessary to meet the borrowing needs and
deposit withdrawal requirements of customers as well as to satisfy
liabilities, fund operations and support asset growth. Bancorp has a
number of sources to provide for liquidity needs. First, liquidity
needs can be met by the liquid assets on its balance sheet such as
cash and deposits due from banks. Another source is the generation of
new deposits. Bancorp may borrow both short-term and long-term funds.
Bancorp has an additional $137.5 million available for borrowing under
a medium-term bank note program. Additional sources of liquidity
include the sale of investment securities and the sale of commercial
and consumer loans.
The major source of liquidity for Bancorp on a parent-only basis is
dividends paid to it by its subsidiaries. Pursuant to Federal Reserve
and state banking regulations, the maximum amount available for
dividend distribution to Bancorp at March 31, 1996 by its banking
subsidiaries was approximately $94.5 million. Bancorp has not received
dividends from its subsidiaries during the first three months of 1996.
At March 31, 1996, the parent had $135.3 million of short-term
commercial paper outstanding. A portion of commercial paper proceeds
was used to fund short-term loans. Contractual lines of credit
totaling $175 million have been obtained by Bancorp to support its
commercial paper borrowings. These lines had not been used at March
31, 1996. The parent had approximately $81.9 million in cash and
interest earning deposits at March 31, 1996.
<PAGE>
<TABLE>
Provident Bancorp, Inc. and Subsidiaries
Condensed Consolidated Statements Of Earnings
(unaudited)
(In Thousands)
Table 1.
<CAPTION>
Quarter Ended
March March
1996 1995
<S> <C> <C>
Total Interest Income $125,798 $105,964
Taxable Equivalent Adjustment 115 122
Taxable Equivalent Interest Income 125,913 106,086
Total Interest Expense 68,334 59,848
Net Interest Income 57,579 46,238
Provision for Loan and Lease Losses 10,000 2,000
Taxable Equivalent Net Interest Income After
Provision for Loan and Lease Losses 47,579 44,238
Noninterest Income 18,808 10,795
Noninterest Expense 36,272 32,342
Taxable Equivalent Earnings Before Income Taxes 30,115 22,691
Applicable Income Taxes 10,325 7,569
Taxable Equivalent Adjustment 115 122
Net Earnings $19,675 $15,000
Net Earnings Applicable to Common Stock $19,554 $14,420
</TABLE>
<PAGE>
<TABLE>
Provident Bancorp, Inc. and Subsidiaries
Consolidated Average Balances, Rates and Yields
On a Fully Taxable Equivalent Basis
(unaudited)
(Dollars In Millions)
Table 2.
<CAPTION>
Quarter Ended
March 31, 1996 March 31, 1995
Average Average Average Average
Balance Rate Balance Rate
<S> <C> <C> <C> <C>
Assets:
Loans and Leases (Net of Unearned Income):
Commercial Lending:
Commercial and Financial $2,224 9.59% $1,908 10.06%
Mortgage 441 8.93 422 9.20
Construction 263 9.09 181 9.52
Lease Financing 124 7.29 103 7.65
Consumer Lending:
Instalment 1,004 9.32 926 8.49
Residential 480 8.28 502 8.17
Lease Financing 360 7.46 197 6.91
Total Loans 4,896 9.11 4,239 9.18
Reserve for Loan and Lease Losses (64) (55)
Net Loans and Leases 4,832 9.23 4,184 9.30
Investment Securities:
Taxable 930 6.32 687 5.49
Tax-Exempt 11 5.97 10 5.86
Total Investment Securities 941 6.32 697 5.50
Federal Funds Sold and Reverse
Repurchase Agreements 22 5.17 48 5.68
Total Earning Assets 5,795 8.74 4,929 8.73
Cash and Noninterest Bearing Deposits 139 145
Other Assets 189 144
Total Assets $6,123 $5,218
Liabilities and Shareholders' Equity:
Deposits:
Demand Deposits $252 1.94 $262 2.22
Savings Deposits 601 2.71 671 3.39
Time Deposits 2,817 5.95 2,691 6.09
Total Deposits 3,670 5.14 3,624 5.31
Short-Term Debt:
Federal Funds Purchased and
Repurchase Agreements 519 5.34 281 5.74
Commercial Paper 152 5.48 123 5.89
Short-Term Notes Payable 1 6.91 1 5.69
Total Short-Term Debt 672 5.37 405 5.79
Long-Term Debt 820 6.10 375 7.15
Total Interest Bearing Liabilities 5,162 5.32 4,404 5.51
Noninterest Bearing Deposits 397 368
Other Liabilities 129 80
Shareholders' Equity 435 366
Total Liabilities and Shareholders' Equity $6,123 $5,218
Net Interest Spread 3.42% 3.22%
Net Interest Margin 4.00% 3.80%
</TABLE>
<PAGE>
<TABLE>
Provident Bancorp, Inc. and Subsidiaries
Consolidated Quarterly Nonperforming Assets
(unaudited)
(Dollars In Thousands)
Table 3.
<CAPTION>
Quarter Ended
Mar. Dec. Sept. June Mar.
1996 1995 1995 1995 1995
<S> <C> <C> <C> <C> <C>
Nonaccrual Loans: (1)
Commercial Lending:
Commercial and Financial $26,749 $26,190 $12,231 $14,655 $13,173
Mortgage 1,162 6,716 1,521 2,465 1,868
Construction 78 78 78 78 78
Lease Financing 2,664 2,605 - - -
Consumer Lending:
Instalment - 230 30 - -
Residential 1,296 1,678 1,367 1,388 1,327
Lease Financing - - - - -
Total Nonaccrual Loans 31,949 37,497 15,227 18,586 16,446
Renegotiated Loans (2) 558 4,753 4,886 5,721 896
Total Nonperforming Loans 32,507 42,250 20,113 24,307 17,342
Other Real Estate and Equipment Owned:
Commercial 7,460 3,714 - - 84
Closed bank branches - 189 189 189 189
Residential 989 468 292 265 271
Multifamily 588 594 601 607 740
Land 663 663 734 724 857
Total 9,700 5,628 1,816 1,785 2,141
Total Nonperforming Assets $42,207 $47,878 $21,929 $26,092 $19,483
Loans 90 Days Past Due Still Accruing $31,178 $26,578 $6,309 $4,717 $4,858
Total Loans and Leases 4,955,615 4,896,076 4,646,366 4,394,802 4,285,665
Reserve for Loan and Lease Losses 60,966 60,235 55,830 54,275 53,987
Total Assets 6,243,785 6,205,351 5,955,257 5,607,455 5,298,327
Reserve for Loan and Lease Losses
as a Percent of:
Nonperforming Loans 187.55% 142.57% 277.58% 223.29% 311.31%
Nonperforming Assets 144.45% 125.81% 254.59% 208.01% 277.10%
Total Loans and Leases 1.23% 1.23% 1.20% 1.23% 1.26%
Nonperforming Loans as a % of
Total Loans and Leases .66% .86% .43% .55% .40%
Nonperforming Assets as a Percent of:
Total Loans, Leases and Other Real Estate .85% .98% .47% .59% .45%
Total Assets .68% .77% .37% .47% .37%
<FN>
(1) Bancorp generally stops accruing interest on loans and leases when the payment of principal
and/or interest is past due 90 days or more.
(2) Loans renegotiated to provide a reduction or deferral of interest or principal because of a
deterioration in the financial position of the borrower.
</TABLE>
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit filed:
Exhibit 27 - Financial Data Schedule
All other items required in Part II of this form have been omitted
since they are not applicable or not required.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
Provident Bancorp, Inc.
Registrant
Date: May 14, 1996 \s\ John R. Farrenkopf
John R. Farrenkopf
Vice President and
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from
Provident Bancorp, Inc.'s 10-Q for March 31, 1996 and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 170,613
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 75,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 902,860
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 4,955,615
<ALLOWANCE> 60,966
<TOTAL-ASSETS> 6,243,785
<DEPOSITS> 4,201,603
<SHORT-TERM> 626,182
<LIABILITIES-OTHER> 147,032
<LONG-TERM> 820,003
0
7,000
<COMMON> 11,712
<OTHER-SE> 430,253
<TOTAL-LIABILITIES-AND-EQUITY> 6,243,785
<INTEREST-LOAN> 110,801
<INTEREST-INVEST> 14,719
<INTEREST-OTHER> 278
<INTEREST-TOTAL> 125,798
<INTEREST-DEPOSIT> 46,922
<INTEREST-EXPENSE> 68,334
<INTEREST-INCOME-NET> 57,464
<LOAN-LOSSES> 10,000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 36,272
<INCOME-PRETAX> 30,000
<INCOME-PRE-EXTRAORDINARY> 19,675
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 19,675
<EPS-PRIMARY> 1.07
<EPS-DILUTED> 1.05
<YIELD-ACTUAL> 4.00
<LOANS-NON> 31,949
<LOANS-PAST> 31,178
<LOANS-TROUBLED> 558
<LOANS-PROBLEM> 14,697
<ALLOWANCE-OPEN> 60,235
<CHARGE-OFFS> 10,002
<RECOVERIES> 733
<ALLOWANCE-CLOSE> 60,966
<ALLOWANCE-DOMESTIC> 60,966
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
