Provident Bancorp in Massachusetts stung by cryptocurrency weakness

Provident Bancorp in Amesbury, Massachusetts, is grappling with a large cryptocurrency hit that it expects will end in a third-quarter loss.

The $1.8 billion-asset financial institution this week delayed its newest earnings submitting however estimated a third-quarter lack of $27.5 million associated to loans to a cryptocurrency miner. That will evaluate with internet revenue of $5.1 million reported for the third quarter of 2021.

Provident cautioned in a regulatory submitting Tuesday the official loss might exceed its estimates. It cited the extremely publicized meltdown of the cryptocurrency mining trade in current months.

The “volatility in Bitcoin and rising power prices known as into query the monetary stability of the corporate’s debtors who maintain digital asset mining loans,” Provident stated. “The collectability of all principal and curiosity associated to those loans, in addition to the worth of the cryptocurrency mining rigs that function the underlying collateral,” are questionable, it stated within the submitting.

The corporate stated its anticipated loss is linked to a partial writedown on cryptocurrency mining rigs that have been repossessed in change for the forgiveness of a $27.4 million mortgage. Excluding that mortgage, Provident stated its digital-asset mining mortgage portfolio totaled $76.5 million on the shut of the third quarter.

The corporate has reviewed that portfolio and estimated “a majority to be impaired.” It positioned the impaired loans on nonaccrual standing and stated it put aside “vital associated particular reserves” for attainable losses.