BankProv no longer offers loans secured by crypto mining rigs

Diving brief:

• BankProv, based in Amesbury, Mass., will no longer offer loans secured by machines that mine cryptocurrencies, the bank said in its fourth quarter earnings report Last week.
• The bank’s decision to terminate loans comes as the company reported $47.9 million in net write-offs last year, the majority of which were loans secured by cryptocurrency mining platforms.
• The $1.6 billion asset firm said it reduced its portfolio of crypto-mining loans by nearly 50% to $41.2 million in the quarter ending Dec. 31, a decrease the company said. bank attributed to the sale of some of its impaired loans as well as the repayment. an existing line of credit. BankProv said the portfolio “will continue to decline as the bank no longer offers this type of loan.”

Overview of the dive:

Carol Houle, interim co-president and co-chief executive of BankProv, said the company is looking forward to learning the lessons it learned in 2022 and “emerging a better, stronger bank.”

“Despite our 2022 losses, we enter 2023 well capitalized and well diversified. During the fourth quarter, we took decisive action to reduce our exposure to loans secured by cryptocurrency mining rigs,” said Houle, who is also the bank’s chief financial officer. “The remaining areas of our loan portfolio continue to perform in line with our historical experience, and it is largely thanks to our long-term strategy of portfolio diversification that we have been able to weather the recent volatility and losses.”

The bank’s portfolio of digital asset mining loans totaled $76.5 million at the end of September, several months before the bank revealed in a Filing with the SEC in November that he was preparing for a net loss of $27.5 million in the third quarter due to its exposure to space.

In the filing, BankProv said it took a partial write-down on cryptocurrency mining rigs it took over in exchange for forgiving a $27.4 million loan.

This depreciation, coupled with the stressors facing the crypto mining industry, such as rising energy prices and a decline in the value of Bitcoin, prompted the bank to conduct a review of its portfolio of loans secured by crypto-mining platforms.

The bank’s efforts to distance itself from the troubled crypto mining sector come as it seeks new leadership.

CEO Dave Mansfield resigned on December 20, a decision by the bank’s board and the former chief executive called it a “mutual decision.”

BankProv named Houle and Joe Reilly, the bank’s chairman, co-CEOs and interim co-chairmen.

A bank spokesman, who did not give a reason for Mansfield’s departure, said Mansfield and the bank’s board believed it was time for a change of direction.

“We will form a search committee and dedicate the time necessary to identify the best candidates and select a leader who can continue BankProv’s tradition of serving the community and providing innovative banking solutions,” the spokesperson said. “We are confident that Carol and Joe will provide excellent leadership and an important sense of continuity in the interim.”