Provident Bancorp Swings to Profit Amidst Pending Merger

TL;DR

**Provident Bancorp's turnaround is real, but the merger is the main event – take the cash or ride the NB Bancorp stock.**

AI Summary

Provident Bancorp, Inc. reported a significant turnaround in its financial performance for the three and six months ended June 30, 2025. Net income for the three months ended June 30, 2025, surged to $2.824 million, a substantial improvement from a net loss of $3.308 million in the same period of 2024. For the six months ended June 30, 2025, net income reached $4.994 million, up from $1.673 million in the prior year. This improvement was primarily driven by a credit loss benefit of $378 thousand for the three months ended June 30, 2025, compared to a credit loss expense of $6.458 million in the prior year, and a credit loss benefit of $390 thousand for the six months ended June 30, 2025, versus an expense of $877 thousand in 2024. Total assets decreased to $1.540 billion at June 30, 2025, from $1.593 billion at December 31, 2024, largely due to a reduction in cash and cash equivalents by $40.233 million. Deposits also declined to $1.257 billion from $1.308 billion over the same period. A key strategic development is the pending merger with NB Bancorp, Inc., announced on June 5, 2025, where shareholders can elect to receive either 0.691 shares of NB Bancorp's common stock or $13.00 in cash per share, subject to proration. This merger is subject to shareholder and regulatory approvals.

Why It Matters

This filing is critical for investors as Provident Bancorp, Inc. has dramatically improved its net income, largely due to a significant reduction in credit loss expenses. The pending merger with NB Bancorp, Inc. offers shareholders a clear exit strategy with a choice of stock or cash, providing liquidity and potential upside in a larger entity. For employees and customers, the merger signals a transition to a new corporate structure, potentially impacting branch operations and service offerings. In the broader market, this consolidation reflects ongoing trends in the banking sector, where smaller regional banks are merging to achieve scale and competitive advantages against larger institutions and fintech disruptors.

Risk Assessment

Risk Level: medium — The risk level is medium due to the pending merger with NB Bancorp, Inc. While the merger offers a clear path forward, it is subject to shareholder and regulatory approvals, which introduces uncertainty. Additionally, the company experienced a $40.233 million net decrease in cash and cash equivalents for the six months ended June 30, 2025, and a $51 million decrease in total deposits from December 31, 2024, to June 30, 2025, indicating some liquidity and funding pressures.

Analyst Insight

Investors should carefully evaluate the terms of the NB Bancorp, Inc. merger, specifically the 0.691 shares of stock or $13.00 cash election, considering their individual risk tolerance and outlook on NB Bancorp's future performance. Given the positive shift in net income and the credit loss benefit, current shareholders might consider holding for the merger, but new investors should weigh the acquisition premium against the inherent risks of a pending transaction.

Financial Highlights

debt To Equity

0.14

revenue

$13,527

operating Margin

N/A

total Assets

$1,540,881

total Debt

$34,495

net Income

$2,824

eps

N/A

gross Margin

N/A

cash Position

$128,909

revenue Growth

+13.2%

Revenue Breakdown

Key Numbers

• $2.824M — Net income for Q2 2025 (Significant improvement from a $3.308M net loss in Q2 2024)
• $4.994M — Net income for H1 2025 (Increased from $1.673M in H1 2024)
• $378K — Credit loss benefit for Q2 2025 (Contrasts with a $6.458M credit loss expense in Q2 2024)
• $390K — Credit loss benefit for H1 2025 (Contrasts with an $877K credit loss expense in H1 2024)
• $1.540B — Total assets at June 30, 2025 (Decreased from $1.593B at December 31, 2024)
• $1.257B — Total deposits at June 30, 2025 (Decreased from $1.308B at December 31, 2024)
• $40.233M — Net decrease in cash and cash equivalents for H1 2025 (Indicates reduced liquidity)
• 0.691 — Shares of Buyer's common stock per share (Stock consideration option in the merger)
• $13.00 — Cash consideration per share (Cash option in the merger)
• 50% — Proration threshold for stock consideration (Ensures half of shares receive stock consideration in merger)

Key Players & Entities

• Provident Bancorp, Inc. (company) — Registrant and target in merger
• NB Bancorp, Inc. (company) — Buyer in the merger agreement
• BankProv (company) — Wholly owned subsidiary of Provident Bancorp, Inc.
• Needham Bank (company) — Wholly-owned subsidiary of NB Bancorp, Inc.
• Merger Sub (company) — Wholly owned subsidiary of NB Bancorp, Inc. formed to facilitate the merger
• Securities and Exchange Commission (regulator) — Regulates financial filings
• NASDAQ Stock Market LLC (regulator) — Exchange where PVBC common stock is registered
• Financial Accounting Standards Board (regulator) — Issued Accounting Standards Update No. 2023-09
• Provident Security Corporation (company) — Wholly owned subsidiary of BankProv
• 5 Market Street Security Corporation (company) — Wholly owned subsidiary of BankProv

FAQ

Risk Factors

• Merger Approvals [high — regulatory]: The pending merger with NB Bancorp, Inc. is subject to shareholder and regulatory approvals. Delays or failure to obtain these approvals could negatively impact the company's strategic direction and financial performance.
• Asset and Deposit Decline [medium — financial]: Total assets decreased to $1.540 billion from $1.593 billion, and total deposits declined to $1.257 billion from $1.308 billion. This reduction, particularly in cash and cash equivalents by $40.233 million, indicates a tightening liquidity position.
• Credit Loss Expense Reversal [medium — financial]: The significant swing from a credit loss expense of $6.458 million in Q2 2024 to a benefit of $378 thousand in Q2 2025, and from $877 thousand expense to a $390 thousand benefit in H1 2025, while positive for net income, warrants scrutiny regarding the underlying economic conditions and provisioning methodology.
• Integration Risks [medium — operational]: The successful integration of Provident Bancorp with NB Bancorp post-merger presents operational challenges. Failure to integrate systems, cultures, and processes effectively could lead to disruptions and impact service delivery.

Industry Context

The banking industry is navigating a complex environment characterized by evolving interest rate policies, increased competition, and ongoing digital transformation. Regional banks like Provident Bancorp are particularly sensitive to shifts in deposit costs and loan demand. Consolidation through mergers and acquisitions remains a significant trend as institutions seek scale, technological capabilities, and diversification.

Regulatory Implications

The pending merger with NB Bancorp requires approval from various regulatory bodies, including potentially the Federal Reserve and state banking authorities. The process can be lengthy and subject to stringent review, with potential conditions imposed. Compliance with evolving banking regulations, such as capital requirements and consumer protection laws, remains a constant focus.

What Investors Should Do

1. Monitor Merger Progress
2. Analyze Credit Quality Trends
3. Evaluate Asset and Deposit Trends
4. Understand Merger Consideration Options

Key Dates

• 2025-06-05: Announcement of Merger Agreement with NB Bancorp, Inc. — Marks a significant strategic shift, offering shareholders cash or stock consideration and signaling a potential change in corporate structure.
• 2025-06-30: End of Second Quarter and First Half — Reporting period for the improved financial results, including a substantial increase in net income driven by credit loss benefits.
• 2024-06-30: End of Second Quarter and First Half (Prior Year) — Comparison period showing a net loss for Q2 2024 and a lower net income for H1 2024, highlighting the significant year-over-year improvement.
• 2025-03-31: Filing of Annual Report on Form 10-K — Provides the basis for comparison for the current 10-Q filing and contains the prior year's full financial statements.

Glossary

Credit loss benefit

A reduction in expenses recognized when the estimated future credit losses on loans and other receivables are lower than previously anticipated, or when previously provisioned losses are recovered. (A significant credit loss benefit of $378 thousand in Q2 2025 and $390 thousand in H1 2025 contributed substantially to the reported net income improvement.)

Stock Consideration

The portion of the merger consideration paid to shareholders in the form of the acquiring company's stock. (Shareholders of Provident Bancorp can elect to receive 0.691 shares of NB Bancorp's common stock as part of the merger consideration.)

Cash Consideration

The portion of the merger consideration paid to shareholders in the form of cash. (Shareholders of Provident Bancorp can elect to receive $13.00 in cash per share as part of the merger consideration.)

Proration

A process in mergers and acquisitions where if too many shareholders elect one form of consideration (e.g., cash), the allocation is adjusted proportionally to meet the agreed-upon split between different forms of consideration. (In the NB Bancorp merger, proration ensures that 50% of Provident Bancorp's shares receive stock consideration, impacting the actual mix of cash and stock received by individual shareholders.)

Net interest and dividend income

The difference between the interest and dividend income earned on assets and the interest expense paid on liabilities. (This is a key driver of profitability for banks. It increased to $13.527 million in Q2 2025 from $11.953 million in Q2 2024.)

Year-Over-Year Comparison

Provident Bancorp has shown a significant turnaround in profitability, with net income for Q2 2025 reaching $2.824 million compared to a $3.308 million loss in Q2 2024. This improvement is largely attributed to a reversal in credit loss provisioning, moving from a substantial expense to a benefit. However, total assets and deposits have decreased, indicating a contraction in the balance sheet, and the company is navigating the complexities of a pending merger with NB Bancorp.

Key Financial Figures

• $0.01 — hares of the Registrant's common stock, $0.01 par value per share, outstanding. Tabl
• $6.0 million — 4 . Securities with carrying amounts of$6.0 million and $ 6.6 million were pledged to secur

Filing Documents

• pvbc20250630_10q.htm (10-Q) — 3422KB
• ex_817470.htm (EX-31.1) — 13KB
• ex_817471.htm (EX-31.2) — 13KB
• ex_817472.htm (EX-32) — 7KB
• 0001437749-25-026940.txt ( ) — 14999KB
• pvbc-20250630.xsd (EX-101.SCH) — 66KB
• pvbc-20250630_cal.xml (EX-101.CAL) — 68KB
• pvbc-20250630_def.xml (EX-101.DEF) — 548KB
• pvbc-20250630_lab.xml (EX-101.LAB) — 459KB
• pvbc-20250630_pre.xml (EX-101.PRE) — 586KB
• pvbc20250630_10q_htm.xml (XML) — 3976KB

Financial Statements

Financial Statements 2 Consolidated Balance Sheets as of June 30, 2025 (unaudited) and December 31, 2024 2 Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2025 and 2024 (unaudited) 3 Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2025 and 2024 (unaudited) 4 Consolidated Statements of Changes in Shareholders' Equity for the Three and Six Months Ended June 30, 2025 and 2024 (unaudited) 5 Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2025 and 2024 (unaudited) 7

Notes to Consolidated Financial Statements (unaudited)

Notes to Consolidated Financial Statements (unaudited) 8 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operation

Management's Discussion and Analysis of Financial Condition and Results of Operation 30 Item 3.

Quantitative and Qualitative Disclosures about Market Risk

Quantitative and Qualitative Disclosures about Market Risk 41 Item 4.

Controls and Procedures

Controls and Procedures 41 Part II. Other Information 42 Item 1.

Legal Proceedings

Legal Proceedings 42 Item 1A.

Risk Factors

Risk Factors 42 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 42 Item 3. Defaults upon Senior Securities 42 Item 4. Mine Safety Disclosures 42 Item 5. Other Information 42 Item 6. Exhibits 43

Signatures

Signatures 44 Table of Contents

Financial Information

Part I. Financial Information

Financial Statements

Item 1. Financial Statements PROVIDENT BANCORP, INC. CONSOLIDATED BALANCE SHEETS (Dollars in thousands) At June 30, 2025 At December 31, 2024 (unaudited) Assets Cash and due from banks $ 21,700 $ 27,536 Short-term investments 107,209 141,606 Cash and cash equivalents 128,909 169,142 Debt securities available-for-sale (at fair value) 24,534 25,693 Federal Home Loan Bank stock, at cost 2,242 2,697 Total loans 1,314,265 1,326,595 Allowance for credit losses for loans ( 20,796 ) ( 21,087 ) Net loans 1,293,469 1,305,508 Bank owned life insurance 46,679 46,017 Premises and equipment, net 10,127 10,188 Accrued interest receivable 4,877 5,296 Right-of-use assets 5,488 3,429 Deferred tax asset, net 12,631 13,808 Other assets 11,925 11,392 Total assets $ 1,540,881 $ 1,593,170 Deposits: Noninterest-bearing $ 287,927 $ 351,528 Interest-bearing 970,051 957,432 Total deposits 1,257,978 1,308,960 Borrowings: Short-term borrowings 25,000 35,000 Long-term borrowings 9,495 9,563 Total borrowings 34,495 44,563 Operating lease liabilities 5,939 3,862 Commitments and contingencies 350 — Other liabilities 4,748 4,698 Total liabilities 1,303,510 1,362,083 Shareholders' equity: Preferred stock, $ 0.01 par value, 50,000 shares authorized; no shares issued and outstanding — — Common stock, $ 0.01 par value, 100,000,000 shares authorized; 17,785,538 and 17,788,543 shares issued and outstanding at June 30, 2025 and December 31, 2024 178 178 Additional paid-in capital 126,329 125,446 Retained earnings 118,555 113,561 Accumulated other comprehensive loss ( 1,578 ) ( 1,625 ) Unearned compensation - ESOP ( 6,113 ) ( 6,473 ) Total shareholders' equity 237,371 231,087 Total liabilities and shareholders' equity $ 1,540,881 $ 1,593,170 The accompanying notes are an integral part of the unaudited consolidated financial statements. 2 Table of Contents PROVIDENT BANCORP, INC. CONSOLIDAT

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements (Unaudited) ( 1 ) Basis of Presentation The accompanying unaudited financial statements of Provident Bancorp, Inc. (the "Company") were prepared in accordance with the instructions for Form 10 -Q and with Regulation S- X and do not include information or footnotes necessary for a complete presentation of the financial condition, results of operations, and cash flows in conformity with U.S. generally accepted accounting principles ("GAAP"). However, in the opinion of management, all adjustments (consisting only of normal and recurring adjustments) necessary for a fair presentation of the financial statements have been included. The results of operations for the three and six months ended June 30, 2025 are not necessarily indicative of the results that may be expected for future periods, including the entire fiscal year. These financial statements should be read in conjunction with the annual financial statements and notes thereto included in the annual report on Form 10 -K the Company filed with the Securities and Exchange Commission (the "SEC") on March 31, 2025. The consolidated financial statements include the accounts of the Company, its wholly owned subsidiary BankProv (the "Bank"), and the Bank's wholly owned subsidiaries, Provident Security Corporation, and 5 Market Street Security Corporation. Provident Security Corporation and 5 Market Street Security Corporation were established to buy, sell, and hold investments for their own account. ( 2 ) Merger On June 5, 2025, NB Bancorp, Inc. (the "Buyer"), Needham Bank, a wholly-owned subsidiary of the Buyer, 1828 MS, Inc., a wholly owned subsidiary of the Buyer formed solely to facilitate the transaction (the "Merger Sub" and together with the Buyer and Needham Bank, "Needham"), the Company and the Bank, entered into an Agreement and Plan of Merger (the "Merger Agreement"). Pursuant to the terms and subject to the conditions set forth in the Merger Agreement, Needh

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