Operating Segment Reports

The Corporation operates in two business segments: community banking through the Bank and mortgage banking through Provident Bank Mortgage (“PBM”), a division of the Bank.

The following tables set forth condensed consolidated statements of operations and total assets for the Corporation’s operating segments for the quarters and nine months ended March 31, 2018 and 2017, respectively.



	For the Quarter Ended March 31, 2018
(In Thousands)	Provident Bank			Provident Bank Mortgage			Consolidated Totals
Net interest income	$	8,750		$	374		$	9,124
Recovery from the allowance for loan losses	(505		)	—			(505		)
Net interest income, after recovery from the allowance for loan losses	9,255			374			9,629

Non-interest income:
Loan servicing and other fees ⁽¹⁾	313			180			493
(Loss) gain on sale of loans, net ⁽²⁾	(1		)	3,598			3,597
Deposit account fees	529			—			529
Loss on sale and operations of real estate owned acquired in the settlement of loans, net	(19		)	—			(19		)
Card and processing fees	372			—			372
Other	238			—			238
Total non-interest income	1,432			3,778			5,210

Non-interest expense:
Salaries and employee benefits	4,763			4,045			8,808
Premises and occupancy	842			413			1,255
Operating and administrative expenses	1,050			1,326			2,376
Total non-interest expense	6,655			5,784			12,439
Income (loss) before income taxes	4,032			(1,632		)	2,400
Provision (benefit) for income taxes	1,252			(585		)	667
Net income (loss)	$	2,780		$	(1,047	)	$	1,733
Total assets, end of period	$	1,086,437		$	90,165		$	1,176,602


⁽¹⁾	Includes an inter-company charge of $222 credited to PBM by the Bank during the period to compensate PBM for originating loans held for investment.


⁽²⁾	Includes an inter-company charge of $44 credited to PBM by the Bank during the period to compensate PBM for servicing fees on loans sold on a servicing retained basis.



	For the Quarter Ended March 31, 2017
(In Thousands)	Provident Bank			Provident Bank Mortgage			Consolidated Totals
Net interest income	$	7,940		$	707		$	8,647
Recovery from the allowance for loan losses	(121		)	(44		)	(165		)
Net interest income after recovery from the allowance for loan losses	8,061			751			8,812

Non-interest income:
Loan servicing and other fees ⁽¹⁾	125			237			362
Gain on sale of loans, net ⁽²⁾	1			5,394			5,395
Deposit account fees	562			—			562
Loss on sale and operations of real estate owned acquired in the settlement of loans, net	(68		)	(6		)	(74		)
Card and processing fees	338			—			338
Other	208			—			208
Total non-interest income	1,166			5,625			6,791

Non-interest expense:
Salaries and employee benefits	4,662			5,708			10,370
Premises and occupancy	784			457			1,241
Operating and administrative expenses	1,333			824			2,157
Total non-interest expense	6,779			6,989			13,768
Income (loss) before income taxes	2,448			(613		)	1,835
Provision (benefit) for income taxes	948			(258		)	690
Net income (loss)	$	1,500		$	(355	)	$	1,145
Total assets, end of period	$	1,093,715		$	105,730		$	1,199,445


⁽¹⁾	Includes an inter-company charge of $173 credited to PBM by the Bank during the period to compensate PBM for originating loans held for investment.


⁽²⁾	Includes an inter-company charge of $48 credited to PBM by the Bank during the period to compensate PBM for servicing fees on loans sold on a servicing retained basis.



	For the Nine Months Ended March 31, 2018
(In Thousands)	Provident Bank			Provident Bank Mortgage			Consolidated Totals
Net interest income	$	25,517		$	1,476		$	26,993
Recovery from the allowance for loan losses	(347		)	—			(347		)
Net interest income, after recovery from the allowance for loan losses	25,864			1,476			27,340

Non-interest income:
Loan servicing and other fees ⁽¹⁾	468			705			1,173
Gain on sale of loans, net ⁽²⁾	21			12,740			12,761
Deposit account fees	1,623			—			1,623
Loss on sale and operations of real estate owned acquired in the settlement of loans, net	(81		)	—			(81		)
Card and processing fees	1,126			—			1,126
Other	701			—			701
Total non-interest income	3,858			13,445			17,303

Non-interest expense:
Salaries and employee benefits	13,714			12,996			26,710
Premises and occupancy	2,491			1,338			3,829
Operating and administrative expenses⁽³⁾	4,490			6,357			10,847
Total non-interest expense	20,695			20,691			41,386
Income (loss) before income taxes	9,027			(5,770		)	3,257
Provision (benefit) for income taxes⁽⁴⁾	4,595			(2,069		)	2,526
Net income (loss)	$	4,432		$	(3,701	)	$	731
Total assets, end of period	$	1,086,437		$	90,165		$	1,176,602


⁽¹⁾	Includes an inter-company charge of $561 credited to PBM by the Bank during the period to compensate PBM for originating loans held for investment.


⁽²⁾	Includes an inter-company charge of $182 credited to PBM by the Bank during the period to compensate PBM for servicing fees on loans sold on a servicing retained basis.


⁽³⁾	Includes $3.4 million of litigation settlement expenses for the first nine months of fiscal 2018 with $2.1 million allocated to PBM.


⁽⁴⁾	Includes a net tax charge of $1.9 million resulting from the revaluation of net deferred tax assets consistent with the Tax Cuts and Jobs Act for the nine months ended March 31, 2018, all charged to the Bank.



	For the Nine Months Ended March 31, 2017
(In Thousands)	Provident Bank			Provident Bank Mortgage			Consolidated Totals
Net interest income	$	23,336		$	3,484		$	26,820
Recovery from the allowance for loan losses	(431		)	(234		)	(665		)
Net interest income, after recovery from the allowance for loan losses	23,767			3,718			27,485

Non-interest income:
Loan servicing and other fees ⁽¹⁾	444			495			939
Gain on sale of loans, net ⁽²⁾	39			19,830			19,869
Deposit account fees	1,664			—			1,664
Loss on sale and operations of real estate owned acquired in the settlement of loans, net	(231		)	(9		)	(240		)
Card and processing fees	1,063			—			1,063
Other	580			—			580
Total non-interest income	3,559			20,316			23,875

Non-interest expense:
Salaries and employee benefits	14,198			17,835			32,033
Premises and occupancy	2,432			1,333			3,765
Operating and administrative expenses	3,632			4,638			8,270
Total non-interest expense	20,262			23,806			44,068
Income before income taxes	7,064			228			7,292
Provision for income taxes	2,953			96			3,049
Net income	$	4,111		$	132		$	4,243
Total assets, end of period	$	1,093,715		$	105,730		$	1,199,445


⁽¹⁾	Includes an inter-company charge of $396 credited to PBM by the Bank during the period to compensate PBM for originating loans held for investment.


⁽²⁾	Includes an inter-company charge of $216 credited to PBM by the Bank during the period to compensate PBM for servicing fees on loans sold on a servicing retained basis.