My business account was in this bank. I had the opportunity to get in the IPO a few years back as a long time customer.
It was doing good for a while. Now it's worth less than I paid.
Why? you ask..
Provident Bancorp (NASDAQ:PVBC) stock slid 19% in Wednesday morning trading after the company delayed its quarterly earnings filing and estimated a Q3 loss of $27.5M related to loans to a cryptocurrency miner. Stephens analyst Matt Breese downgraded his rating on the stock to Equal-Weight from Overweight.
PVBC suffered an estimated loss of $1.63 per share, a 12% reduction in tangible book value and an almost $50M increase in non-performing assets, the analyst wrote in a note to clients.
After the close on Tuesday, Provident Bancorp delayed its 10-Q filing and provided the loss estimate. Note that in mid-October, the Provident Bancorp (PVBC) said it was expecting to report a Q3 loss due to a write-down of collateral of repossessed from a crypto mining company. "The company is still evaluating the actual level of losses due to the recent decline in the cryptocurrency mining industry, and such losses may exceed this estimate," PVBC said in an SEC filing.
After the company forgave a $27.4M loan, its digital asset mining loan portfolio totaled $76.5M at Sept. 30, 2022, a majority of which it expects to be impaired and placed on non-accrual status with significant related specific reserves.
"While our initial assessment of the October news was that TBV would be down ~3%-6%, the increase in reserve and NPAs per the more recent call report suggests a wider degree of credit disruption than anticipated, with additional details in the most recent delayed 10-Q announcement," Breese said.
Provident Bancorp (PVBC) in its statement, said volatility in bitcoin (BTC-USD) prices and increasing energy costs called into question the financial stability of its crypto-mining clients as well as the mining rigs they used for collateral.
Bitcoin always seemed to me to be internet smoke and mirrors. What’s is there really backing it? Tulip bulbs maybe?
ReplyDeleteThe blockchain, patience.
DeleteIts either unchangeable, unhackable blockchains or fiat, debt based money from here on out.
Try this. Digital currency the government controls or bitcoins
I have seen in recent days where FTX was described as a ponzi scheme. If you think about it, all of the crypto currencies are basically a ponzi scheme, whether they are intended to be or not. People purchase the crypto tokens with actual currency like US dollars, hoping that the value of the tokens go up. Then, the smart people cash out their crypto tokens for actual currency at a profit while the crypto issuer still has sufficient cash to pay out in US dollars or some other non-crypto currency. There just aren't enough people or businesses conducting transactions in crypto currency for it to be practical for every day expenses, so you have to convert it to US dollars, or some other non-crypto currency, in order to pay bills, purchase groceries, etc. And because at some point, everyone who bought into the crypto currency will want to convert it to non-crypto currency, that makes it a ponzi scheme, because there won't be enough US dollars, or other non-crypto currency, on hand to give everybody their money back, much less a profit on their investment.
ReplyDelete" the company forgave a $27.4M loan"
ReplyDeleteHello, I am but a wee little crypto miner and I need a 27 million dollar loan...
I can hear the laughter from here.
What the actual fuck?
This almost defies belief!
I guess the old saying is true, if you borrow a million from a bank and can't pay it back, you have a problem.
If you borrow 27 million from a bank and can't pay it back, the bank has a problem.
I immediately caught that too, Phil. Gosh, I wish *I* could grab 25 mil and have the payback forgiven.
DeleteAlas, no such luck, or I don't have the right connections...
Think there may be a little embezzlement conspiracy going on there between the loan officer and the crypto miner? Why would a bank loan money to a crypto miner with the mining equipment as collateral and not the entire mine proceeds until the loan is paid? This just like that FTX deal. Ripe for theft. But, it's a "business transaction", so no one will be going to jail for making a bad decision. In the meantime stock holders take it in the shorts.
DeleteNemo
Nemo
The Smart Boys were chasing returns so they made these loans to the miners to buy the Smoke and Mirrors to create new value out of the air. "Proof of Work" just means you paid for the KW-hr to keep a bunch of high end graphics cards running for days or weeks. No real value was created, but a lot of energy was consumed.
ReplyDelete"Big Hand for a Little Lady" mocked the banker who wanted the milk cow in HIS paddock to prove she delivered the pounds of milk per day that made her valuable.. Too bad we don't have more old-fashioned bankers.
"Traditional savings and loan banks" are not, and should not behave as, investment banks.
ReplyDeleteIt appears the effort to "follow the money" will reveal there is none to be found, and probably never will be found.
ReplyDeleteCrypto was something that always stank to the heavens. Any banker that approved such loans should be fired and be so radioactive they can never be employed in banking again.
ReplyDelete“Wealth” will be measured in physical ounces, and powder, brass, and lead. not dollars invested in paper.
ReplyDeleteMuh 401k and the stalk markit. WTH...
CIII
I keep hearing "the Smoke and Mirrors" theme relating to crypto tokens and what comes to mind is the U.S. dollar; it's not backed by anything of value that I know about.
ReplyDeleteUS currency is backed by the full faith of the US government to tax it's citizens.
DeleteWhen the love of money becomes a business model.
ReplyDelete"had the opportunity to get in the IPO a few years back as a long time customer" = "looked like a pretty good sheep for shearing".
ReplyDeleteBusiness isn't "friendship".
Any business that f**ks over any other business, as happened here, should be treated exactly like a physical rapist would be.
Starting with shooting the bastards' genitalia off.
Literally.
That's how learning occurs, and in a way that is seldom forgotten.
It will teach a lesson like no other, and bear dividends so rich that the bond market can only dream of similar return on investment.
Change your headline to “you.greedy.mfers”. Bit more accurate. Bonuses and the like.
ReplyDeleteAsk Tom Brady for his opinion on electronic digital one's and zero's. Just proves Giselle was a gold digger. Bwahahahaha.
ReplyDeleteWaiting for the grid crash on this shit.
Bear Claw
Looked at their website and found this statement: "Protecting your Business from Imposter Scams". Really.
ReplyDeleteThe FXT losses / contagion is not been contained. This will tank the markets across the world. You have precious little time to empty your account before it ends up being worth ZERO. 6 trillion has evaporated from the markets this year alone. Bank runs are currently happening across the world. Soon it will come here. It is better to have your money to buy real assets locally than to leave it with the money changers. Emptying the system will make it much harder to bring a digital currency
ReplyDeleteSo much truth there.
DeleteYes, bank runs are starting in other countries.
Yes, pull your cash out - deposits, savings, all of it, keep a bare minimum in your checking account to cover your bills, no more.
Digital currency is coming. Period, they will impose it. It is a critical infrastructure part of their plans. Their plans won't work with a freemarket economy, they must have control of everything in order for it to work. We can resist, but know what you are preparing for, this won't be a single fight.
Crypto started out as an exercise for computer nerds. It was quickly infiltrated and corrupted into a money laundering scheme for the left and a way to fleece those stupid and gullible enough to 'invest' their hard earned savings into it.
ReplyDelete