- Amesbury, Massachusetts-based BankProv will no longer offer loans collateralized by machines that mine cryptocurrencies, the bank said in its fourth quarter earnings report last week.
- The bank’s decision to end the loans comes as the firm reported $47.9 million in net charge-offs last year, the majority of which it said were loans secured by cryptocurrency mining rigs.
- The $1.6 billion-asset firm said it reduced its crypto-mining loan portfolio by nearly 50% to $41.2 million during the quarter ending Dec. 31, a decrease the bank attributed to the sale of a portion of its impaired loans as well as the paydown of an outstanding line of credit. BankProv said the portfolio "will continue to decline as the bank is no longer originating this type of loan.”
Carol Houle, BankProv’s interim co-president and co-CEO said the firm is eager to take the lessons it learned in 2022 and “emerge 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 CFO. “The remaining sectors of our loan portfolio continue to perform in accordance with our historical experience, and it is in large part due to our long-term strategy of portfolio diversification that we have been able to weather recent volatility and losses.”
The bank’s digital-asset mining loan portfolio totaled $76.5 million at the end of September, several months before the bank revealed in a November SEC filing that it was bracing for a third quarter net loss of $27.5 million due to its exposure to the space.
In the filing, BankProv said it took a partial write-down on cryptocurrency mining rigs that it repossessed in exchange for the forgiveness of a $27.4 million loan.
That write-down, coupled with stressors facing the crypto mining industry, such as rising energy prices and a drop in Bitcoin value, triggered the bank to undergo a review of its portfolio of loans collateralized by crypto mining rigs.
The bank’s efforts to distance itself from the troubled crypto mining sector come as it searches for new leadership.
CEO Dave Mansfield stepped down on Dec. 20, a move the bank’s board and the former chief executive called a “mutual decision.”
BankProv named Houle and Joe Reilly, the bank’s chair, as interim co-CEOs and co-presidents.
A bank spokesperson, who did not give a reason for Mansfield’s departure, said Mansfield and the bank’s board believed it was time for new leadership.
“We will be forming a search committee and will spend the time necessary to identify the best candidates and choose a leader who is capable of continuing BankProv’s tradition of serving the community and providing innovative banking solutions,” the spokesperson said. “We’re confident that Carol and Joe will provide excellent leadership and an important sense of continuity in the interim.”