Joseph Reilly
About Joseph Reilly
Joseph B. Reilly, age 68, is President and Chief Executive Officer of Provident Bancorp, Inc. (BankProv) and has served as a director since inception; he became Interim Co-President and Co-CEO in January 2023, Co-CEO in February 2023, and sole President and CEO in February 2024 . In 2024, pay-for-performance outcomes reflected mixed operating execution: adjusted ROAA came in at 0.46% vs a 0.56% target and the efficiency ratio at 81.59% vs a 78.46% target, leading the Compensation Committee to award 45% of target bonuses; TSR for a fixed $100 investment improved to $61.76 in 2024 from $54.55 in 2023 while net income declined to $7.3 million from $11.0 million . The Board is chaired by an independent director (Laurie H. Knapp), addressing CEO/Chair dual-role concerns; Reilly previously served as Board Chair in 2019 until stepping into executive roles in 2023 .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Centrix Bank | Co-Founder; President/CEO (merged with Eastern Bank in 2014) | Until 2014 | Built and exited a NH community bank via sale to Eastern Bank . |
| Bank of New Hampshire; TD Bank; Centerpoint Bank; Fleet Bank | Various banking roles | — | Deep regional banking and operating experience in New Hampshire markets . |
| NH Bankers Association; ABA (Team 21 captain; Government Relations Council) | Chair/Director; Gov’t relations roles | — | Policy, advocacy, and industry leadership network . |
External Roles
| Organization | Position | Years | Relevance |
|---|---|---|---|
| New Hampshire Bankers Association | Former Chair and Director | — | Policy influence; strengthens stakeholder engagement . |
| American Bankers Association | State Captain, Team 21; Gov’t Relations Council member | — | Insight into regulatory landscape impacting strategy and risk . |
| Various non-profits | Board leadership roles | — | Community ties in BankProv’s footprint . |
Fixed Compensation
| Metric | 2023 | 2024 |
|---|---|---|
| Base Salary ($) | 454,567 | 472,750 . |
| Target Annual Bonus (% of salary) | 35% | 35% . |
| All Other Compensation ($) | 30,145 | 41,579 (401k match $20,700; ESOP allocation $20,879) . |
| CEO Employment Agreement Term | — | 3 years from Oct 25, 2024 (initial) . |
Performance Compensation
- 2024 Annual Incentive Design (CEO target 35% of base): Metrics included ROAA (40%), Strategic Goals (30%), Efficiency Ratio (15%), Team/Individual (15%) . Results: ROAA 0.46% vs 0.56% target; Efficiency 81.59% vs 78.46% target; Committee awarded 45% of target bonus (CEO payout 15.75% of salary; $74,458) .
| Metric | Weighting | Target | Actual | Payout as % of Target | CEO Cash Bonus ($) |
|---|---|---|---|---|---|
| ROAA | 40% | 0.56% | 0.46% | — | — . |
| Strategic Goals | 30% | Qualitative | Achieved key initiatives (leadership transition, deposit growth, expense reduction, digital-asset exit, HQ sale/leaseback) | — | — . |
| Efficiency Ratio | 15% | 78.46% | 81.59% | — | — . |
| Team/Individual | 15% | Qualitative | As assessed | — | — . |
| Total | 100% | — | — | 45% of target | 74,458 . |
- Long-Term Incentives: Time-vested options and restricted stock (no PSUs disclosed); historic grants vest 1/5 annually; no 2024 equity grant to CEO .
Equity Ownership & Alignment
- Beneficial Ownership: Reilly owns 119,314 shares (<1% of outstanding 17,788,543), including 52,773 in a revocable trust and 3,471 via ESOP; holds 44,998 exercisable options and 2,042 unvested RS; none of the listed shares are indicated as pledged .
- Stock Ownership Guidelines: CEO required to hold 3x base salary; all continuing NEOs/directors either met guidelines or within the 5-year phase-in as of 12/31/2024 .
- Anti-Pledging/Hedging: Hedging prohibited; pledging prohibited absent rare pre-approval; clawback policy adopted Oct 2023 under Dodd-Frank .
- Vesting/Selling Pressure: Remaining 1/5 tranches for the 11/24/2021 grant vest on 11/24/2025 for 5,100 options (exercise price $10.40) and 2,042 RS, creating a potential selling window post-vesting .
- Option In-the-Money (12/31/2024): At $11.40 stock price, the 10.40 strike grant is $1.00 ITM; 20,400 exercisable options = ~$20,400 intrinsic value; the 13.46 strike grant is OTM .
| Component | Amount |
|---|---|
| Shares outstanding | 17,788,543 . |
| CEO beneficial shares | 119,314 (includes ESOP 3,471; trust 52,773; 2,042 unvested RS; 44,998 exercisable options) . |
| Ownership % | ~0.67% (computed from above; reported as “<1%”) . |
| Options (exercisable) | 24,598 @ $13.46 exp 08/01/2028; 20,400 @ $10.40 exp 11/24/2030 . |
| Options (unexercisable) | 5,100 @ $10.40 (1/5 tranches beginning 11/24/2021) . |
| Unvested RS | 2,042 (1/5 tranches beginning 11/24/2021) . |
| Pledging status | None indicated; pledging generally prohibited . |
Employment Terms
| Term | Detail |
|---|---|
| Position | President & CEO of BankProv (and Company CEO) . |
| Effective dates | Interim Co-CEO Jan 2023; Co-CEO Feb 2023; CEO Feb 2024 . |
| Agreement term | 3-year initial term effective Oct 25, 2024; Board may extend in 3-year increments with notice ≥30 days before expiration . |
| Base salary | Minimum $472,750; eligible for increases . |
| Target bonus | 35% of salary under short-term plan . |
| Severance (no cause/good reason) | Lump sum equal to base salary plus average bonus for the remaining contract term; up to 12 months COBRA paid if elected . |
| Change-in-control (termination “in connection with” CIC) | Lump sum equal to 3x base salary; up to 12 months COBRA paid if elected; no excise tax gross-up . |
| Restrictive covenants | Non-solicitation for one year post-termination . |
Board Governance
- Role and Independence: Reilly is a management director (not independent); the Board Chair is independent (Laurie H. Knapp). Reilly previously served as Board Chair (2019) until assuming executive roles in 2023, mitigating current CEO/Chair concentration risks .
- Committees: Audit, Compensation, and Nominating/Corporate Governance committees are fully independent; Reilly is not listed as serving on these committees .
- Attendance and Effectiveness: The Board held eight regular meetings in 2024 plus eight independent-director sessions; no director attended fewer than 75% of meetings .
- Declassification Initiative: The Board proposed declassifying over three years beginning 2026, targeting annual elections by 2028, requiring 80% approval; reflects responsiveness to governance trends and investor feedback .
- Activism/Settlement: Agreement with Stilwell Group added Dennis S. Pollack to the Board; agreement remains effective through the 2025 annual meeting .
Director Compensation (context for dual-role analysis)
- Non-employee directors receive cash retainers and equity; CEO directors do not receive director retainers. Chairs receive additional retainers; in 2024 the Board Chair received a $50,000 retainer .
- Stock ownership guidelines for directors: 5x annual board retainer; directors either met or were within the five-year phase-in period as of 12/31/2024 .
Compensation Structure Analysis
- Mix and Risk: CEO compensation skews to cash and time-based equity (options/RS) rather than PSUs, raising questions on long-term performance alignment; clawback, anti-hedging, and ownership guidelines partially mitigate risk .
- Targets vs Outcomes: Annual plan used diversified metrics (ROAA, efficiency, strategic, team/individual). Underperformance vs ROAA and efficiency targets led to 45% of target payout, evidencing downward responsiveness to results .
- Governance Enhancements: Adoption of clawback (Oct 2023), majority voting policy (Mar 2024), stock ownership guidelines, and Board declassification proposal indicate improved alignment and responsiveness to shareholder input (2024 say-on-pay support ~92% vs ~63% prior year) .
- No tax gross-ups; no single-trigger equity vesting upon CIC, and no option repricing without stockholder approval—shareholder-friendly practices .
Performance & Track Record
| Indicator | 2022 | 2023 | 2024 |
|---|---|---|---|
| Company TSR (Value of $100) | 39.44 | 54.55 | 61.76 . |
| Net Income ($M) | (21.5) | 11.0 | 7.3 . |
| CEO status | — | Interim/Co-CEO (from Jan/Feb 2023) | Sole CEO (from Feb 2024) . |
- 2024 Achievements cited: leadership transition; traditional deposit growth above peers/budget; reduced operating expenses; completed exit from digital asset lending; negotiated HQ sale-leaseback—key steps to stabilize earnings and funding profile after prior digital-asset lending issues (also noted via incremental audit fees) .
- Say-on-Pay: Approval improved to ~92% in 2024 from ~63% in 2023, reflecting investor support for plan changes and governance improvements .
Related-Party and Compliance Notes
- Insider Trading Policy in place; Section 16(a) compliance largely met in 2024; late Forms 4 reported for other insiders, not for Reilly .
- Director/executive loans are on market terms and regulatory-compliant; Board/Audit Committee review related transactions per policy .
Risk Indicators & Red Flags
- No pledging or hedging: mitigates alignment risks; clawback policy in place .
- Equity is mostly time-based (no PSUs), which can weaken pay-performance sensitivity; however, 2024 bonus outcomes showed discipline vs targets .
- Activist involvement (Stilwell) and Board declassification proposal signal elevated governance scrutiny and potential for strategic changes .
- Historical digital-asset lending exit completed; residual reputation/audit scrutiny noted; ongoing execution focus on core community banking .
Compensation Peer Group (for benchmarking context)
- Peer set includes exchange-listed community banks with assets roughly 50–200% of PVBC’s size (e.g., Bank7 Corp, Capital Bancorp, Esquire Financial, Meridian, Pathfinder, etc.) and surveys via Pearl Meyer; Committee retains discretion to deviate based on role and performance .
Say-on-Pay & Shareholder Feedback
- 2024 say-on-pay passed with ~92% support after outreach to institutions holding ~36% ahead of 2024 meeting and ~43% ahead of 2025 meeting; actions included ownership guidelines, majority voting, clawback, and the declassification proposal in 2025 .
Investment Implications
- Alignment and Retention: CEO holds meaningful stock/options and is subject to rigorous anti-pledging and ownership guidelines; 3-year contract with robust severance (remaining term) and 3x base salary CIC multiple reduces near-term departure risk, but could be costly in a sale scenario .
- Near-term Selling Pressure: A final 1/5 tranche of RS (2,042 shares) and options (5,100, strike $10.40) is scheduled to vest on 11/24/2025, implying modest incremental supply potential; in-the-money options (10.40 strike) had ~$20,400 intrinsic value at 12/31/2024 .
- Governance Trajectory: Independent chair and declassification proposal, improved say-on-pay, and activist settlement point to stronger oversight and shareholder alignment—supports multiple and risk premium improvement if execution continues .
- Execution Risk: 2024 net income declined YoY as the bank completed exit from digital-asset lending; continued deposit mix improvement and expense control are critical; bonus down-adjustment shows compensation discipline amid under-target ROAA/efficiency .
- Trading Signals: Governance upgrades and vesting calendar are watch items; monitor insider Form 4s around November 2025 for potential sales tied to vesting and any 8-K 5.02 changes to CEO terms that could signal retention or succession dynamics .