<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, 1997 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, outstanding at April 30, 1997 is 41,040,444.
Please address all correspondence to:
John R. Farrenkopf
Vice President and Chief Financial Officer
Provident Bancorp, Inc.
One East Fourth Street
Cincinnati, Ohio 45202
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<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,
1997 1996
(Unaudited)
ASSETS
<S> <C> <C>
Cash and Noninterest Bearing Deposits $203,635 $208,097
Federal Funds Sold and Reverse Repurchase Agreements 261,829 70,650
Investment Securities Available for Sale
(amortized cost - $1,032,566 and $1,026,784) 1,027,452 1,032,907
Loans and Leases (Net of Unearned Income):
Commercial Lending:
Commercial and Financial 2,392,135 2,404,890
Mortgage 495,203 475,882
Construction 284,543 283,673
Lease Financing 245,744 239,064
Consumer Lending:
Instalment 890,241 924,561
Residential - Held for Sale 134,193 73,545
Residential - Portfolio - 318,070
Lease Financing 629,653 591,763
Total Loans and Leases 5,071,712 5,311,448
Reserve for Loan and Lease Losses (68,371) (66,693)
Net Loans and Leases 5,003,341 5,244,755
Premises and Equipment 143,447 145,641
Other Assets 140,647 127,038
$6,780,351 $6,829,088
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits:
Noninterest Bearing $528,452 $554,262
Interest Bearing 4,294,335 4,042,218
Total Deposits 4,822,787 4,596,480
Short-Term Debt 467,657 599,540
Long-Term Debt 766,170 949,913
Accrued Interest and Other Liabilities 183,068 166,350
Total Liabilities 6,239,682 6,312,283
Shareholders' Equity:
Preferred Stock, 5,000,000 Shares Authorized,
Series D, 70,272 Issued 7,000 7,000
Common Stock, No Par Value, $.30 Stated Value, 60,000,000
Shares Authorized, 41,027,352 and 40,655,916 Issued 12,081 11,973
Capital Surplus 171,019 160,586
Retained Earnings 346,893 326,599
Reserve for Retirement of Capital Securities 7,000 6,667
Unrealized Gains (Losses) on Marketable Securities
(net of deferred income tax) (3,324) 3,980
Total Shareholders' Equity 540,669 516,805
$6,780,351 $6,829,088
</TABLE>
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<TABLE>
PROVIDENT BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
(In Thousands, Except Per Share Amounts)
<CAPTION>
Three Months Ended
March 31,
1997 1996
<S> <C> <C>
Interest Income:
Interest and Fees on Loans and Leases $119,701 $110,400
Interest on Investment Securities:
Taxable 17,314 15,017
Exempt From Federal Income Taxes 55 103
17,369 15,120
Interest on Federal Funds Sold and
Reverse Repurchase Agreements 216 278
Total Interest Income 137,286 125,798
Interest Expense:
Interest on Deposits:
Savings and Demand Deposits 4,789 5,262
Time Deposits 47,044 41,660
Total Interest on Deposits 51,833 46,922
Interest on Short-Term Debt 7,651 8,981
Interest on Long-Term Debt 14,269 12,431
Total Interest Expense 73,753 68,334
Net Interest Income 63,533 57,464
Provision for Loan and Lease Losses 11,000 10,000
Net Interest Income After Provision
for Loan and Lease Losses 52,533 47,464
Noninterest Income:
Service Charges on Deposit Accounts 5,578 4,865
Other Service Charges and Fees 9,233 9,227
Gain on Sales of Loans and Leases 14,908 974
Security Gains 2,223 -
Other 4,850 3,742
Total Noninterest Income 36,792 18,808
Noninterest Expense:
Compensation:
Salaries 18,729 15,642
Benefits 3,439 2,808
Profit Sharing 1,559 976
Occupancy 2,646 2,373
Equipment Expense 3,267 2,359
Professional Fees 3,048 1,826
Charges and Fees 3,433 1,473
Other 11,149 8,815
Total Noninterest Expense 47,270 36,272
Earnings Before Income Taxes 42,055 30,000
Applicable Income Taxes 14,748 10,325
Net Earnings $27,307 $19,675
Net Earnings Per Common Share:
Primary $.64 $.48
Fully Diluted .63 .47
Average Primary Shares 42,205 40,589
Average Fully Diluted Shares 43,193 41,660
</TABLE>
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<TABLE>
PROVIDENT BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in Thousands)
<CAPTION>
Three Months Ended March 31,
1997 1996
<S> <C> <C>
Operating Activities:
Net Earnings $27,307 $19,675
Adjustments to Reconcile Net Earnings to
Net Cash Provided by Operating Activities:
Provision for Loan and Lease Losses 11,000 10,000
Amortization of Goodwill 381 283
Amortization of Unearned Income and Other (17,536) (9,911)
Depreciation of Premises and Equipment 6,269 3,535
Realized Investment Security Gains (2,223) -
Proceeds from Sale of Loans Held for Sale 409,287 41,408
Origination of Loans Held for Sale (151,873) (40,847)
Realized Gains on Loans Held for Sale (13,729) (561)
Realized Gains on Sale of Other Loans and Leases (1,179) (413)
(Increase) Decrease in Interest Receivable 18 (2,756)
(Increase) Decrease in Other Assets (10,774) 8,680
Increase in Interest Payable 15,420 10,402
Increase (Decrease) in Other Liabilities 5,231 (968)
Net Cash Provided By Operating Activities 277,599 38,527
Investing Activities:
Investment Securities Available for Sale:
Proceeds from Sales 109,714 -
Proceeds from Maturities and Prepayments 34,099 155,387
Purchases (133,429) (96,190)
Net Increase in Loans and Leases (8,653) (66,913)
Net Increase in Premises and Equipment (4,075) (6,194)
Acquisition 3,918 -
Net Cash Provided By (Used In) Investing Activities 1,574 (13,910)
Financing Activities:
Net Increase in Deposits 226,307 23,052
Net Decrease in Short-Term Debt (131,883) (11,058)
Principal Payments on Long-Term Debt (183,589) (374)
Proceeds From Issuance of Long-Term Debt - 248
Cash Dividends Paid (6,680) (4,948)
Proceeds from Sale of Common Stock 3,389 442
Net Increase in Other Equity Items - 40
Net Cash Provided By (Used In) Financing Activities (92,456) 7,402
Increase in Cash and Cash Equivalents 186,717 32,019
Cash and Cash Equivalents at Beginning of Period 278,747 213,594
Cash and Cash Equivalents at End of Period $465,464 $245,613
Supplemental Disclosures of Cash Flow Information:
Cash Paid for:
Interest $58,333 $57,932
Income Taxes - -
Non-Cash Activity:
Transfer of Loans and Premises and Equipment to
Other Real Estate 4,882 7,776
Securitization of Residential Loans - 64,025
Residual Interest Securities Created from the
Sale of Residential Loans 13,737 -
Common Stock Issued To Acquire Business 7,152 -
</TABLE>
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<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 1996 annual report on Form 10-K filed
with the Securities and Exchange Commission.
All data relating to Provident Bancorp's Common Stock and per Common
Share information has been adjusted for 3-for-2 common stock splits
effective May 24, 1996 and December 19, 1996.
Basis of Presentation
The consolidated financial statements include the accounts of
Provident Bancorp, Inc. and its subsidiaries, 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 No. 125,
"Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities" as amended by Statement No. 127,
"Deferral of the Effective Date of Certain Provisions of FASB
Statement No. 125, an amendment of FASB Statement No. 125" on January
1, 1997. This Statement provides standards for distinguishing
transfers of financial assets that are sales from transfers that are
secured borrowings. Under this Statement, a company would remove from
the balance sheet those assets it no longer controls and liabilities
it has satisfied. The adoption of SFAS No. 125 had no material impact
on Bancorp's financial position or results of operations.
Statement No. 128, "Earnings per Share" establishes revised standards
for computing and presenting earnings per share. It replaces the
presentation of primary and fully diluted earnings per share with a
presentation of basic and diluted earnings per share. Basic earnings
per share excludes dilution and is computed by dividing income
available to common stockholders by the weighted-average number of
common shares outstanding for the period. Diluted earnings per share
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<PAGE>
reflects the potential dilution that could occur if securities or
other contracts to issue common stock were exercised or converted into
common stock that then shared in the earnings of the entity. This
Statement is effective for financial statements for both interim and
annual periods ending after December 15, 1997. Bancorp's pro forma
basic and diluted earnings per share would not have differed
materially from primary and fully diluted earnings per share.
Stock Options
Options to purchase 48,000 shares of Bancorp Common Stock were granted
during the first three months of 1997. The options have exercise
prices ranging from $36.10 to $37.76.
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,
1997, these off-balance sheet instruments consisted of standby letters
of credit of $115.1 million, commitments to extend credit of $1.8
billion and interest rate swaps with a notional amount of $2.2
billion.
Acquisition
On February 12, 1997, Bancorp completed its previously announced
acquisition of South Hillsborough Community Bank. South Hillsborough,
which had $40 million in assets at the time of merger, is a Florida
state chartered bank having three offices in Hillsborough County,
Florida. This transaction was accounted for as a purchase, and
accordingly, the assets acquired and liabilities assumed were recorded
at estimated fair value. South Hillsborough's shareholders received
189,259 shares of Bancorp Common Stock having an aggregate value of
$7,151,900 as a result of the merger.
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<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 1997 were $27.3
million compared to $19.7 million for the first quarter of 1996. Net
interest income increased by $6.1 million, or 11%, over the comparable
period in 1996. Interest income increased by $11.5 million, or 9%,
which more than offset the $5.4 million, or 8%, increase in interest
expense. The provision for loan and lease losses was $11.0 million, an
increase of $1.0 million from the first quarter in 1996. Noninterest
income increased $18.0 million, or 96%, due primarily to gains
recognized on the sale of loans and leases. Noninterest expense
increased $11.0 million, or 30%, primarily as a result of the
restructuring of retail banking's delivery channels and lending
functions, the national expansion of Provident Consumer Financial
Services ("PCFS") and the continued development of the MeritValu
division.
As noted above, the recognition of gains on the sale of loans and
leases made a significant contribution to Bancorp's net income during
the first quarter of 1997. Of the $14.9 million gain recorded during
this period, $10.5 million was realized from the sale of $140.1
million of residential closed-end nonconforming home equity loans
originated by PCFS. The following is a summary of selected operational
data for PCFS for the past five quarters (in millions):
<TABLE>
<CAPTION>
Quarter Ended
Mar. 1997 Dec. 1996 Sept. 1996 June 1996 March 1996
<S> <C> <C> <C> <C> <C>
Loan Originations $143.3 $130.2 $111.4 $76.7 $41.4
Loan Sales 140.1 110.0 204.0 - -
Gain on Sale of Loans 10.5 9.5 14.5 - -
Interest and Fees on Loans 4.2 2.5 4.2 2.8 1.3
</TABLE>
The following ratios compare Bancorp's returns on average assets and
average equity for the first three months of 1997 and for the year
1996.
<TABLE>
<CAPTION>
Three Months Ended Year Ended
March 31, 1997 December 31, 1996
<S> <C> <C>
Net Earnings to Average Assets(1) 1.62% 1.28%
Net Earnings to Average Shareholders' Equity(1) 20.76% 17.67%
<FN>
(1)Net earnings for the three months ended March 31, 1997 have been annualized.
</TABLE>
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<PAGE>
The ratio of noninterest expense to tax equivalent revenue
("efficiency ratio") was 48.1% for the first three months of 1997
compared to 47.5% for the first three months of 1996. For purposes of
calculating the efficiency ratio, noninterest expense excludes non-
recurring expenses. Tax equivalent revenue includes tax equivalent net
interest income and noninterest income but excludes non-recurring
income, and security gains or losses.
Nonperforming assets as of March 31, 1997 increased $5.9 million
compared to December 31, 1996, but decreased $7.8 million compared to
March 31, 1996. The ratio of nonperforming loans to total loans and
leases was .47% at March 31, 1997, compared to .41% at December 31,
1996 and .66% at March 31, 1996. The ratio of nonperforming assets to
total loans, leases and other real estate owned was .68% at March 31,
1997, compared to .54% at December 31, 1996 and .86% at March 31,
1996.
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.
Net interest income on a tax equivalent basis increased approximately
$6.0 million for the first three months of 1997 over the comparable
period in 1996. This increase resulted from a $3.6 million increase
due to changes in volume and a $2.4 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 4.04% for the first three
months of 1997 as compared to 3.95% for the comparable period in 1996.
The improvement in the net interest margin during this period reflects
the increase in the average rate received on interest earning assets
of 9 basis points, more than offsetting the increase in the average
rate paid on interest bearing liabilities of 5 basis points. The
increase in Bancorp's overall rate on interest earning assets was due
to the increase in the rate received on equipment leases. The increase
in the average rate paid on interest bearing liabilities was due to a
higher average rate paid on demand deposits and long-term debt.
Interest rate swaps increased the net interest margin by 27 basis
points and 17 basis points during the first three months of 1997 and
1996, respectively.
In preparing the net interest margin tables, nonaccrual loan balances
are included in the average balances for loans and leases. Fees
included in interest and fees on loans and leases during the first
quarter of 1997 and 1996 were $3.9 million and $5.0 million,
respectively.
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<PAGE>
Noninterest Income
Noninterest income increased $18.0 million during the first quarter of
1997 compared to the same quarter in 1996. Service charges on deposit
accounts increased primarily as a result of increased fees received on
corporate demand deposit accounts. Gain on sales of loans and leases
increased primarily as a result of $10.5 million in gains on the sale
of non-conforming home equity loans by PCFS and $2.8 million in gains
on the sale of seasoned residential loans. Security gains of $2.2
million were recognized primarily from the sale of mortgage-backed
securities. The increase in other income was due primarily to
additional revenues from operating leases resulting from the
acquisition of Information Leasing Corporation.
Noninterest Expense
Noninterest expense increased $11.0 million during the first quarter
of 1997 when compared to 1996. Compensation expense increased
primarily as a result of the acquisition of Information Leasing, the
expansion of PCFS and MeritValu, and the restructuring of consumer
lending and retail distribution. Equipment expense increased due
primarily to the depreciation of expanded telebanking and computer
equipment. Professional fees increased due primarily to increased
management consulting fees. Charges and fees increased primarily as a
result of a $1.0 million charge-off on other real estate owned and
increased loan origination costs. Marketing expense and franchise
taxes were the primary reasons for the increase in other expense.
Financial Condition
Short-Term Investments
Federal funds sold and reverse repurchase agreements increased $191.2
million during 1997. 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. The higher level
of federal funds sold at March 31, 1997 was a result of having
additional funds available from the sale of residential loans at the
end of the quarter.
Loans and Leases
Total loans and leases decreased $239.7 million during 1997. The
decrease was due primarily to the sale of $409.3 million in
residential loans during the first three months of 1997.
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<PAGE>
The following table shows the composition of the commercial and
financial loan category by industry type at March 31, 1997 (dollars in
millions):
Amount on
Type Amount % Nonaccrual
Construction $89.4 4 $1.2
Manufacturing 537.8 22 3.9
Transportation/Utilities 155.3 6 3.5
Wholesale Trade 207.4 9 2.0
Retail Trade 254.3 11 .5
Finance & Insurance 109.6 5 .4
Real Estate Operators/Investment 299.2 12 .8
Service Industries 353.1 15 .7
Automobile Dealers 118.6 5 -
Other(1) 267.4 11 1.6
Total $2,392.1 100 $14.6
(1) Includes various kinds of loans, such as small business loans
and loans with balances under $100,000.
The composition of the commercial mortgage and construction loan
categories by property type at March 31, 1997 is shown in the
following table (dollars in millions):
Amount on
Type Amount % Nonaccrual
Apartments $124.9 16 $-
Office/Warehouse 163.6 21 -
Residential Development 90.6 12 .2
Shopping/Retail 191.2 24 -
Land 42.2 5 -
Industrial Plants 15.2 2 -
Hotels/Motels 29.0 4 -
Health Facilities 4.4 1 -
Auto Sales and Service 26.0 3 -
Churches 12.2 2 -
Mobile Home Parks 7.8 1 -
Other Commercial Properties 72.6 9 -
Total $779.7 100 $.2
Bancorp maintains a reserve 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.
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The following table shows the progression of the reserve for loan and
lease losses (dollars in thousands):
1997 1996
Balance at January 1 $66,693 $60,235
Provision for Loan and Lease Losses 11,000 10,000
Loans and Leases Charged Off (11,572) (10,002)
Recoveries 2,250 733
Balance at March 31 $68,371 $60,966
Net charge-offs totaled $9.3 million for both the first quarter of
1997 and 1996. During the first quarter of 1997, net charge-offs for
commercial lending were $1.2 million which was primarily caused by the
charge-off of one commercial mortgage loan. Net charge-offs for
consumer lending were $8.1 million which consisted principally of auto
loans and credit cards. As a percentage of total loans and leases
outstanding, the reserve was 1.35% at March 31, 1997 compared to 1.26%
at December 31, 1996 and 1.25% at March 31, 1996. The increase in the
ratio reflects the sale of low risk seasoned residential loans during
the first quarter of 1997.
Table 3 shows a comparison of the major components of nonperforming
assets over the past five quarters along with various asset quality
ratios. Nonperforming assets have increased $5.9 million during the
first three months of 1997. Nonaccrual loans increased $2.2 million
due primarily to one loan and two leases being added during the first
three months of 1997. Other real estate increased $4.0 million due
primarily to foreclosing on one commercial property. At March 31,
1997, nonperforming assets as a percentage of total loans, leases and
other real estate was .68% which compares favorably to Bancorp's most
recent five-year average of .85%.
Short-Term Debt
Short-term debt decreased $131.9 million, or 22%, to $467.7 million
during the first quarter of 1997. The decrease was due primarily to
the reduction of overnight federal funds.
Long-Term Debt
During the first three months of 1997, long-term debt decreased $183.7
million, or 19%, reflecting the repayment of debt, primarily to the
Federal Home Loan Bank.
Capital Resources and Adequacy
During the first three months of 1997, shareholders' equity increased
$23.9 million, or 5%, to $540.7 million. Dividends of $6.5 million on
common stock and $158,000 on preferred stock were paid in the first
quarter of 1997. Unrealized gains/losses on marketable securities, net
of deferred income taxes, decreased $7.3 million during the first
three months of 1997.
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<PAGE>
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, 1997 December 31, 1996
<S> <C> <C>
Average Shareholders' Equity to Average Assets 7.78% 7.23%
Preferred Dividend Payout to Net Earnings .58 .66
Common Dividend Payout to Net Earnings 23.88 26.40
Tier 1 Leverage Ratio 9.11 9.02
Tier 1 Capital to Risk-Weighted Assets 9.48 9.23
Total Risk-Based Capital To Risk-Weighted Assets 13.25 13.05
</TABLE>
Capital expenditures planned by Bancorp for building improvements and
furniture and equipment in 1997 are currently estimated to be
approximately $9 million. Included in this amount are projected
capital expenditures for the purchase or construction of system
applications, data processing equipment, ATMs and branches. Through
March 31, 1997, approximately $2.7 million of these expenditures have
been made.
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, deposits with other banks and federal funds sold. Another source
is the generation of new deposits. Bancorp may borrow both short-term
and long-term funds. Bancorp has an additional $687.5 million
available for borrowing under a $1 billion bank notes program.
Additional sources of liquidity include the sale of investment
securities and the sale of commercial and consumer loans and leases.
The major source of liquidity for Bancorp on a parent-only basis ("the
Parent") is dividends paid to it by its subsidiaries. Pursuant to
Federal Reserve and state banking regulations, the maximum amount
available for dividend distribution to the Parent at March 31, 1997 by
its banking subsidiaries was approximately $128.3 million. The Parent
has not received dividends from its subsidiaries during the first
quarter of 1997.
At March 31, 1997, the Parent had $133.2 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 the Parent to support its
commercial paper borrowings. Also, the Parent has $40 million in
general purpose lines of credit. These lines had not been used at
March 31, 1997. The Parent had approximately $231.0 million in cash
and interest earning deposits at March 31, 1997.
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<PAGE>
<TABLE>
Provident Bancorp, Inc. and Subsidiaries
Condensed Consolidated Statements Of Earnings
(unaudited)
(In Thousands, Except Per Share Amounts)
Table 1.
<CAPTION>
Quarter Ended
Mar. Mar.
1997 1996
<S> <C> <C>
Total Interest Income $137,286 $125,798
Taxable Equivalent Adjustment 78 115
Taxable Equivalent Interest Income 137,364 125,913
Total Interest Expense 73,753 68,334
Net Interest Income 63,611 57,579
Provision for Loan and Lease Losses 11,000 10,000
Taxable Equivalent Net Interest Income After
Provision for Loan and Lease Losses 52,611 47,579
Noninterest Income 36,792 18,808
Noninterest Expense 47,270 36,272
Taxable Equivalent Earnings Before Income Taxes 42,133 30,115
Applicable Income Taxes 14,748 10,325
Taxable Equivalent Adjustment 78 115
Net Earnings $27,307 $19,675
Net Earnings Applicable to Common Stock $27,149 $19,554
</TABLE>
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<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
Mar. 31, 1997 Mar. 31, 1996
Average Avg Average Avg
Balance Rate Balance Rate
<S> <C> <C> <C> <C>
Assets:
Loans and Leases (Net of Unearned Income):
Commercial Lending:
Commercial and Financial $2,392 9.21% $2,224 9.59%
Mortgage 481 9.39 441 8.93
Construction 280 8.69 263 9.09
Lease Financing 241 11.07 124 7.29
Consumer Lending:
Instalment 909 9.67 1,004 9.32
Residential 425 7.98 474 8.04
Lease Financing 615 7.69 360 7.46
Total Loans and Leases 5,343 9.09 4,890 9.08
Investment Securities:
Taxable 1,018 6.90 936 6.45
Tax-Exempt 8 4.45 11 5.97
Total Investment Securities 1,026 6.88 947 6.45
Federal Funds Sold and Reverse
Repurchase Agreements 15 5.78 22 5.17
Total Earning Assets 6,384 8.73 5,859 8.64
Cash and Noninterest Bearing Deposits 169 139
Other Assets 208 125
Total Assets $6,761 $6,123
Liabilities and Shareholders' Equity:
Deposits:
Demand Deposits $246 2.39 $252 1.94
Savings Deposits 491 2.76 601 2.71
Time Deposits 3,375 5.65 2,817 5.95
Total Deposits 4,112 5.11 3,670 5.14
Short-Term Debt:
Federal Funds Purchased and
Repurchase Agreements 441 5.24 519 5.34
Commercial Paper 142 5.51 152 5.48
Short-Term Notes Payable 1 5.96 1 6.91
Total Short-Term Debt 584 5.31 672 5.37
Long-Term Debt 878 6.59 820 6.10
Total Interest Bearing Liabilities 5,574 5.37 5,162 5.32
Noninterest Bearing Deposits 489 397
Other Liabilities 172 129
Shareholders' Equity 526 435
Total Liabilities and Shareholders' Equity $6,761 $6,123
Net Interest Spread 3.36% 3.32%
Net Interest Margin 4.04% 3.95%
</TABLE>
-14-
<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.
1997 1996 1996 1996 1996
<S> <C> <C> <C> <C> <C>
Nonaccrual Loans: (1)
Commercial Lending:
Commercial and Financial $14,597 $14,164 $18,024 $14,283 $26,749
Mortgage 103 103 48 300 1,162
Construction 71 71 71 71 78
Lease Financing 4,980 3,973 2,653 2,720 2,664
Consumer Lending:
Instalment - - - - -
Residential 3,583 2,805 2,008 1,489 1,296
Lease Financing - - - - -
Total Nonaccrual Loans 23,334 21,116 22,804 18,863 31,949
Renegotiated Loans (2) 526 786 787 551 558
Total Nonperforming Loans 23,860 21,902 23,591 19,414 32,507
Other Real Estate and Equipment Owned:
Commercial 5,191 6,102 6,477 7,341 7,460
Closed bank branches - - - - -
Residential 3,752 475 480 897 989
Multifamily - - - - 588
Land 1,615 15 660 661 663
Total 10,558 6,592 7,617 8,899 9,700
Total Nonperforming Assets $34,418 $28,494 $31,208 $28,313 $42,207
Loans 90 Days Past Due Still Accruing $11,848 $18,751 $19,989 $25,426 $31,178
Total Loans and Leases 5,071,712 5,311,448 5,047,441 4,996,007 4,890,020
Reserve for Loan and Lease Losses 68,371 66,693 63,665 61,169 60,966
Total Assets 6,780,351 6,829,088 6,483,920 6,428,464 6,243,785
Reserve for Loan and Lease Losses as a Percent of:
Nonperforming Loans 286.55% 304.51% 269.87% 315.08% 187.55%
Nonperforming Assets 198.65% 234.06% 204.00% 216.05% 144.45%
Total Loans and Leases 1.35% 1.26% 1.26% 1.22% 1.25%
Nonperforming Loans as a % of Total
Loans and Leases .47% .41% .47% .39% .66%
Nonperforming Assets as a Percent of:
Total Loans, Leases and Other Real Estate .68% .54% .62% .57% .86%
Total Assets .51% .42% .48% .44% .68%
<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>
-15-
<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.
-16-
<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 7, 1997 \s\ John R. Farrenkopf
John R. Farrenkopf
Vice President and
Chief Financial Officer
-17-
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from Provident
Bancorp, Inc.'s 10-Q for March 31, 1997 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-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 203,635
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 261,829
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 1,027,452
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 5,071,712
<ALLOWANCE> 68,371
<TOTAL-ASSETS> 6,780,351
<DEPOSITS> 4,822,787
<SHORT-TERM> 467,657
<LIABILITIES-OTHER> 183,068
<LONG-TERM> 766,170
0
7,000
<COMMON> 12,081
<OTHER-SE> 521,588
<TOTAL-LIABILITIES-AND-EQUITY> 6,780,351
<INTEREST-LOAN> 119,701
<INTEREST-INVEST> 17,369
<INTEREST-OTHER> 216
<INTEREST-TOTAL> 137,286
<INTEREST-DEPOSIT> 51,833
<INTEREST-EXPENSE> 73,753
<INTEREST-INCOME-NET> 63,533
<LOAN-LOSSES> 11,000
<SECURITIES-GAINS> 2,223
<EXPENSE-OTHER> 47,270
<INCOME-PRETAX> 42,055
<INCOME-PRE-EXTRAORDINARY> 27,307
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 27,307
<EPS-PRIMARY> .64
<EPS-DILUTED> .63
<YIELD-ACTUAL> 4.04
<LOANS-NON> 23,334
<LOANS-PAST> 11,848
<LOANS-TROUBLED> 526
<LOANS-PROBLEM> 68,684
<ALLOWANCE-OPEN> 66,693
<CHARGE-OFFS> 11,572
<RECOVERIES> 2,250
<ALLOWANCE-CLOSE> 68,371
<ALLOWANCE-DOMESTIC> 68,371
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
