BankProv is back – at least in New Hampshire.
Only two years ago, the Amesbury, Massachusetts-based BankProv was hit by a $35 million loss in a cryptocurrency mining loan portfolio, leading to the resignation of then-CEO Dave Mansfield and an annual loss for the bank of $21 million.
Joe Reilly, then the bank’s board chair, and Carol Houle, the bank’s chief financial officer when Mansfield resigned, then stepped into the breech as co-presidents and CEOs to stabilize operations and reassure investors that the publicly traded BankProv was indeed “well-capitalized and on sound financial footing,” as Reilly put it in a statement at the time.
Despite a rocky 2023 that saw most banks across New England struggle with rising interest rates, the commercial BankProv, finished last year with net income of $11 million, up from the previous $21 million loss in 2022.
Now it looks like BankProv’s shift to focus more on commercial real estate lending is paying off.
Fastest-Growing Lender
According to recent mortgage data compiled by The Registry Review, a unit of The Warren Group, BankProv grew its production of Granite State commercial real estate loans the fastest out of all comers in the first half of 2024, with $70.1 million in total CRE loans.
That’s up an astonishing 5,231 percent over the $1.3 million in CRE loans BankProv secured in New Hampshire during the same period of 2023.
Massachusetts’ Newburyport Bank ranked second in CRE loan growth in the first half of the year lending $41.3 million, up 1,200 percent compared to the same period in 2023, according to Registry Review data.
With four branches in New Hampshire, BankProv’s CRE loan performance was all the more impressive because overall CRE purchase mortgages were off in the state during the first six months of 2024, down to $475 million from $999 million in 2023, according to data.
Reilly, who became sole CEO earlier this year after Houle’s departure, credited his bank’s impressive CRE loan gain to a strong lending team and a very deliberate decision to focus more on commercial real estate, rather than on commercial-and-industrial (C&I) lending.
“We just made a strategic shift,” Reilly said. “We saw a little tempering in the C&I market. Commercial mortgages were [previously] not as big a focus for us, but we changed that in 2024.”
A Full Crypto Exit
The banks’ increase in CRE loans was achieved with current staff reassigned from C&I to commercial real estate lending, said Reilly, a veteran New England banker and former president of the New Hampshire Bankers Association. He previously co-founded and then sold off Bedford-based Centrix Bank to Boston-based Eastern Bank in 2014.
Another strategic BankProv action that began in 2023 and ended in 2024: eliminating its digital-currency holdings.
Not some of them. All of them. And as fast as reasonably possible.
“We spent 2023 unwinding that holding,” said Reilly. “The prior leadership felt there was an opportunity to enter that market. It obviously didn’t turn out well.”
He called the prior cryptocurrency strategy and ultimate collapse “unfortunate” and “crippling.”
But this past spring BankProv announced that it had exited its “remaining digital asset lending relationship, fully eliminating our lending exposure in this area.”
In an interview, Reilly made it emphatically clear: BankProv now has “zero” of its past cryptocurrency-related loan holdings.
Funding Costs Hold Down Earnings
While BankProv has seen positive financial progress of late, it’s still been a financially up-and-down year for the bank.
For the first quarter of 2024, the bank reported net income of $5 million, but in the second quarter it reported a net loss of $3.3 million, according to filings.
In the bank’s second-quarter results announcement, Reilly reported that his bank’s financials were “overshadowed by a large reserve booked in our enterprise value portfolio and, coupled with the prevailing interest rate environment putting continued pressure on funding costs, resulted in a net loss for the quarter.”
He expressed confidence, though, that BankProv remained strong and on the right strategic track.
Despite recent challenges, BankProv’s total assets and deposits have remained largely steady, at $1.6 billion and $1.2 billion, respectively.
“We’ve worked very, very hard to maintain deposits,” said Reilly.
Wall Street doesn’t seem overly impressed with BankProv’s overall performance as of late. Then again, it doesn’t seem overly alarmed either.
Shares of BankProv holding company Provident Bancorp were trading in the $10.52 range at the start of last week, with a 52-week trading range of $7.36 to $12.32.
In an interview, Reilly said all bank stocks, not just BankProv shares, have been struggling amid high interest rates, despite the Fed’s recent 50-basis-point cut in its short-term benchmark rate.
‘The Deal Flow Is Pretty Strong’
He noted that the key Federal Home Loan Banks’ rates have yet to change. As a result, many potential loan customers are waiting for further rate cuts before acting on new business initiatives.
“The deal flow is pretty strong,” Reilly said. But “a lot of projects are in the conceptual stage.”
And many of those projects, both actual and conceptual, are generated via BankProv’s New Hampshire operations, which now accounts for 60 percent of the bank’s overall business, even though it is headquartered in Massachusetts.
In addition to Reilly becoming sole CEO earlier this year, BankProv has made a number of other key personnel changes to its staff, including the spring hiring of Ken Fisher as the bank’s new CFO. Fisher is the former treasurer and CFO at East Boston Savings.
Meanwhile, Provident Bancorp and BankProv have added fresh faces to their boards of directors: Julienne Cassarino, founder of Sycamore Analytics and co-creator of VirtualBankConference.com, and Dennis Pollack, most recently president and CEO of Prudential Bank in Philadelphia.
“The [personnel moves] are helping us shift away from our dark moments in 2022,” said Reilly. “We are very confident we have a strong leadership team.”