STAMFORD, Conn., Nov. 29, 2019 (GLOBE NEWSWIRE) -- Patriot National Bancorp, Inc. (“Patriot,” “Bancorp” or the “Company”) (NASDAQ: PNBK), the parent company of Patriot Bank, N.A. (the “Bank”), today announced pre­tax income of $35,000 (net income of $27,000), or $0.01 per fully diluted share for the quarter ended September 30, 2019.  The Bank also announced the declaration of its 9th consecutive quarterly dividend of $0.01 per share.  The record date for this quarterly dividend will be December 9, 2019, with a dividend payment date of December 19, 2019.

As of September 30, 2019, the Bank’s total assets were $972.0 million, up 6% as comparable to the same period last year, as both net loans receivable grew to $791.9 million, up 5%, while deposits totaled $762.1 million, an increase of $42.6 million, or 6%, over the same period one year earlier. Patriot continues to maintain strong capital ratio, with earnings expected to return to normalized levels in future periods. 

As reported in its second quarter financials, the Bank had previously taken a charge-off related to a non-performing $2.3 million loan, resulting in a net loss of $1.3 million, or $0.33 per fully diluted share, for the nine months ended September 30, 2019.  This compares to a net income of $2.9 million, or $0.73 per fully diluted shares, in the prior year. The Bank has commenced actions in effort to pursue a recovery of this loan. 

The third quarter and full year results also reflect lower net interest income and a temporary increase in operating expenses associated with the organic build­up of the SBA lending business, expansion of deposit initiatives, and significant costs incurred in conjunction with strengthening institutional infrastructure, processes, controls and documentation to address regulatory requirements and to prepare crossing the $1 billion threshold.

Patriot has prioritized the expansion of its regional retail locations into urban centers across southern Connecticut, resulting in the bank having a presence in every major I­95 corridor community, from downtown Greenwich to downtown New Haven, Connecticut, plus Scarsdale, NY.  Simultaneously it built out a new SBA lending practice, opening offices in Jacksonville, Indianapolis, Stamford, and in Dallas, Texas for a current total of 16 locations.

During the third quarter, loans receivable decreased $11.4 million (1%), and total deposits decreased $5.5 million (1%). The decline in deposits was the result of an $18.1 million drop in wholesale deposit funding, offset by branch deposits growing $12.6 million.  Patriot also recognized a gain on the sale of SBA loans of $188,000, compared with $367,000 in the prior quarter and $3,000 in the third quarter of 2018.

Richard Muskus, Patriot’s President stated: “We continue to gain significant traction and expansion across our SBA lending business and expect to see operating expenses stabilize as the resolution of regulatory matters draws closer to completion. During the last year, Patriot has expanded both our community banking and SBA lending platform into new market locations, instituted enhanced governance policies and procedures and strengthened our institutional infrastructure. We believe this important reinvestment will serve to bolster performance for the long run.”

Mr. Muskus added: “Within the heavily populated 50-mile long New Haven to Greenwich corridor of Interstate 95, Patriot Bank’s continual investment into expanding, repositioning and enhancing its local market presence truly positions the institution well to provide banking customers an array of in-demand, convenient financial products and services.”

Financial Results

As of September 30, 2019, total assets were $972.0 million, as compared to $977.8 million at June 30, 2019 and $915.3 million at September 30, 2018, for a total asset growth of 6% over the past 12 months. Net loans receivable totaled $791.9 million, down 1% from $803.3 million at June 30, 2019, and up 5% over $756.6 million at September 30, 2018. Deposits totaled $762.1 million at September 30, 2019, as compared to $767.6 million at June 30, 2019 and $719.5 million at September 30, 2018, a 5.9% increase over last year.

Net interest income was $6.2 million in the third quarter of 2019, a decrease of 5% from the prior quarter, and a decline of 8% from the third quarter of 2018. For the year-to-date period, the net interest income was $19.2 million, a decrease of 8% from the prior year. This decline was due to higher deposit costs, the impact of non­performing and reduced rate loans, lower loan fees, and the impact of subordinated debt issued in June of 2018.  Higher retail deposit rates are primarily the result of increased rate competition in Patriot’s local retail markets.  The Bank is exploring alternative lower-cost funding sources which, along with a recent decline in market interest rates, is expected to positively impact the aggregate cost of funding in future periods

Net interest margin was 2.70% for the third quarter of 2019, as compared to 2.93% in the prior quarter and 3.11% for the third quarter of 2018.  This decline reflects the higher cost of funding.  The provision for loan losses in the third quarter of 2019 was $100,000, as compared to $2.9 million in the prior quarter and $50,000 for the third quarter of 2018. Year-to-date provision for loan losses was $3.2 million, as compared to $285,000 for the prior year. The 2019 increase was primarily due to a large provision booked in the second quarter of 2019 associated with a single loan relationship.

Non­interest income was $571,000 in the third quarter of 2019, 31% lower than the prior quarter, and 61% higher than the third quarter of 2018. The year-to-date non­interest income was $2.1 million in 2019, 95% higher than the prior year. The increase in non­interest income was due to realized gains on the sale of SBA loans.  Non­interest expense was $6.7 million in the third quarter of 2019, consistent with the last quarter, and 10% higher than the third quarter of 2018. The year-to-date non­interest expense was $19.9 million, 12% higher than the prior year and the income tax provision was $8,000 in the third quarter of 2019, representing an effective tax rate of 23%.

An increase in non-interest expense in 2019 was primarily related to new staff salaries and benefits to support new deposit, credit, finance initiatives, including the expansion into New Haven County, SBA lending across five national markets and added compliance support professionals. 

As of September 30, 2019, shareholders’ equity was $68.2 million, a decrease of $111,000 as compared to June 30, 2019. Patriot’s book value per share decreased to $17.37 at September 30, 2019, as compared to $17.41 at June 30, 2019.  The Bank’s capital ratios continue to be strong, maintaining its “well capitalized” regulatory status. As of September 30, 2019, the Bank’s Tier 1 leverage ratio was 9.47%, Tier 1 risk-based capital ratio was 10.82% and total risk-based capital ratio was 11.81%.

Patriot Bank is headquartered in Stamford and operates 16 locations: in Scarsdale, NY; and Darien, Fairfield, Greenwich, Milford, Norwalk, Orange, Stamford, Westport, with Express Banking locations at Bridgeport/ Housatonic Community College, downtown New Haven and Trumbull at Westfield Mall. The Bank also maintains SBA lending offices in Jacksonville, Indianapolis, Stamford and now Dallas.

About the Company

Founded in 1994, and now celebrating its 25th year, Patriot National Bancorp, Inc. (“Patriot” or “Bancorp”) is the parent holding company of Patriot Bank N.A. (“Bank”), a nationally chartered bank headquartered in Stamford, CT. Patriot operates with full service branches in Connecticut and New York and provides lending products and services nationally. Patriot’s mission is to serve its local community and nationwide customer base by providing a growing array of banking solutions to meet the needs of individuals and small businesses owners. Patriot places great value in the integrity of its people and how it conducts business. An emphasis on building strong client relationships and community involvement are cornerstones of our philosophy as we seek to maximize shareholder value.

“Safe Harbor” Statement Under Private Securities Litigation Reform Act of 1995

Certain statements contained in Bancorp’s public statements, including this one, may be forward looking and subject to a variety of risks and uncertainties. These factors include, but are not limited to, (1) changes in prevailing interest rates which would affect the interest earned on Bancorp’s interest earning assets and the interest paid on its interest bearing liabilities, (2) the timing of repricing of Bancorp’s interest earning assets and interest bearing liabilities, (3) the effect of changes in governmental monetary policy, (4) the components of Bancorp’s periodic earnings and assets, (5) the fact that certain of the income recognized by Bancorp in any quarter may not be repeated in future periods, (6) the effect of changes in regulations applicable to Bancorp and the Bank and the conduct of its business, (7) changes in competition among financial service companies, including possible further encroachment of non­banks on services traditionally provided by banks, (8) the ability of competitors that are larger than Bancorp to provide products and services which it is impracticable for Bancorp to provide, (9) the state of the economy and real estate values in Bancorp’s market areas, and the consequent effect on the quality of Bancorp’s loans, (10) recent governmental initiatives that are expected to have a profound effect on the financial services industry and could dramatically change the competitive environment of the Bancorp, (11) other legislative or regulatory changes, including those related to residential mortgages, changes in accounting standards, and Federal Deposit Insurance Corporation (“FDIC”) premiums that may adversely affect Bancorp, (12) the application of generally accepted accounting principles, consistently applied, (13) the fact that one period of reported results may not be indicative of future periods, and (14) the state of the economy in the greater New York metropolitan area and its particular effect on Bancorp customers, vendors and communities and other such factors, including risk factors, as may be described in Bancorp’s other filings with the SEC.

Contracts:                      
Patriot Bank, N.A.
900 Bedford Street
Stamford, CT 06901
www.BankPatriot.com
 Richard Muskus
President
203-252-5939
 Joseph Perillo
Chief Financial Officer
203-252-5954
 Michael Carrazza
CEO and Chairman
203-251-8230
       


PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARY    
CONSOLIDATED BALANCE SHEETS (Unaudited)     
      
      
(In thousands, except share data)September 30, 2019 June 30, 2019 September 30, 2018
      
Cash and due from banks:     
Noninterest bearing deposits and cash$3,157  $5,578  $5,846 
Interest bearing deposits 46,844   45,538   42,873 
Total cash and cash equivalents 50,001   51,116   48,719 
Investment securities:     
Available-for-sale securities, at fair value 50,057   43,839   40,264 
Other investments, at cost 4,963   4,963   4,963 
Total investment securities 55,020   48,802   45,227 
      
Federal Reserve Bank stock, at cost 2,889   2,922   2,833 
Federal Home Loan Bank stock, at cost 4,477   4,513   4,928 
      
Gross loans receivable 800,314   811,777   763,254 
Allowance for loan losses (8,405)  (8,458)  (6,605)
Net loans receivable 791,909   803,319   756,649 
      
SBA loans held for sale 4,103   4,283   - 
Accrued interest and dividends receivable 3,538   3,678   3,612 
Premises and equipment, net 34,883   35,249   35,487 
Other real estate owned 2,400   1,954   991 
Deferred tax asset, net 11,495   11,132   10,907 
Goodwill 1,107   1,107   1,944 
Core deposit intangible, net 642   661   717 
Other assets 9,521   9,031   3,272 
Total assets$ 971,985  $ 977,767  $ 915,286 
      
Liabilities     
Deposits:     
Noninterest bearing deposits$80,772  $84,295  $81,687 
Interest bearing deposits 681,284   683,271   637,845 
Total deposits 762,056   767,566   719,532 
      
Federal Home Loan Bank and correspondent bank borrowings 100,000   100,000   90,000 
Senior notes, net 11,834   11,815   11,759 
Subordinated debt, net 9,745   9,738   9,720 
Junior subordinated debt owed to unconsolidated trust, net 8,100   8,098   8,092 
Note payable 1,242   1,291   1,436 
Advances from borrowers for taxes and insurance 2,182   3,239   1,659 
Accrued expenses and other liabilities 8,647   7,730   4,167 
Total liabilities 903,806   909,477   846,365 
      
Commitments and Contingencies -   -   - 
      
Shareholders' equity     
Preferred stock -   -   - 
Common stock 106,118   106,059   105,899 
Accumulated deficit (37,222)  (37,210)  (36,078)
Accumulated other comprehensive loss (717)  (559)  (900)
Total shareholders' equity 68,179   68,290   68,921 
      
Total liabilities and shareholders' equity$ 971,985  $ 977,767  $ 915,286 
      


PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARY      
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)      
          
 Three Months Ended Nine Months Ended
(In thousands, except per share amounts)September 30, 2019 June 30, 2019 September 30, 2018 September 30, 2019 September 30, 2018
          
Interest and Dividend Income         
Interest and fees on loans$10,245 $10,274  $9,413  $30,345  $27,388
Interest on investment securities 430  398   364   1,207   921
Dividends on investment securities 112  114   125   344   374
Other interest income 225  237   342   795   763
Total interest and dividend income 11,012  11,023   10,244   32,691   29,446
          
Interest Expense         
Interest on deposits 3,655  3,533   2,457   10,452   6,111
Interest on Federal Home Loan Bank borrowings  602  426   486   1,467   1,245
Interest on senior debt 229  228   229   686   686
Interest on subordinated debt 277  279   278   845   489
Interest on note payable and other 6  8   6   20   23
Total interest expense 4,769  4,474   3,456   13,470   8,554
          
Net interest income 6,243  6,549   6,788   19,221   20,892
          
Provision for Loan Losses 100  2,937   50   3,202   285
          
Net interest income after provision for loan losses 6,143  3,612   6,738   16,019   20,607
          
Non-interest Income         
Loan application, inspection and processing fees  32  28   16   74   36
Deposit fees and service charges 123  116   126   366   392
Gains on sale of loans 188  367   3   864   69
Rental income 137  192   115   459   282
Other income 91  126   94   312   283
Total non-interest income 571  829   354   2,075   1,062
          
Non-interest Expense         
Salaries and benefits 3,480  3,608   2,794   10,272   8,417
Occupancy and equipment expenses 937  744   829   2,598   2,346
Data processing expenses 357  361   333   1,088   972
Professional and other outside services 721  803   565   2,233   1,594
Project expenses, net 212  (15)  653   277   1,768
Advertising and promotional expenses 63  77   57   255   194
Loan administration and processing expenses 44  43   25   101   68
Regulatory assessments 152  395   275   862   825
Insurance expenses (income) 65  54   (56)  160   52
Communications, stationary and supplies 118  131   146   383   369
Other operating expenses 530  527   426   1,626   1,194
Total non-interest expense 6,679  6,728   6,047   19,855   17,799
          
Income (loss) before income taxes 35  (2,287)  1,045   (1,761)  3,870
          
Provision (benefit) for Income Taxes 8  (632)  276   (456)  1,000
Net income (loss)$27 $(1,655) $769  $(1,305) $2,870
          
Basic earnings (loss) per share$0.01 $(0.42) $0.20  $(0.33) $0.74
Diluted earnings (loss) per share$0.01 $(0.42) $0.20  $(0.33) $0.73
          


FINANCIAL RATIOS AND OTHER DATA         
          
   Three Months Ended Nine Months Ended
(Dollars in thousands) September 30, 2019 June 30, 2019 September 30, 2018 September 30, 2019 September 30, 2018
          
Quarterly Performance Data:         
Net income (loss)$27  $(1,655) $769  $(1,305) $2,870 
Return on Average Assets 0.01%  -0.69%  0.33%  -0.18%  0.43%
Return on Average Equity 0.16%  -9.44%  4.40%  -2.50%  5.60%
Net Interest Margin 2.70%  2.93%  3.11%  2.85%  3.33%
Efficiency Ratio 98.00%  91.19%  84.67%  93.24%  81.07%
Efficiency Ratio excluding project costs 94.86%  91.39%  75.53%  91.94%  73.02%
% increase (decrease) loans -1.41%  2.95%  0.78%  2.55%  6.06%
% increase (decrease) deposits -0.72%  1.96%  1.00%  2.53%  12.88%
          
Asset Quality:         
Nonaccrual loans$19,183  $19,405  $6,479  $19,183  $6,479 
Other real estate owned$2,400  $1,954  $991  $2,400  $991 
Total nonperforming assets$21,583  $21,359  $7,470  $21,583  $7,470 
          
Nonaccrual loans / loans 2.40%  2.39%  0.85%  2.40%  0.85%
Nonperforming assets / assets 2.22%  2.18%  0.82%  2.22%  0.82%
Allowance for loan losses$8,405  $8,458  $6,605  $8,405  $6,605 
Valuation reserve$1,252  $1,416  $1,684  $1,252  $1,684 
Allowance for loan losses with valuation reserve$9,657  $9,874  $8,289  $9,657  $8,289 
          
Allowance for loan losses / loans 1.05%  1.04%  0.87%  1.05%  0.87%
Allowance / nonaccrual loans 43.81%  43.59%  101.94%  43.81%  101.94%
Allowance for loan losses and valuation reserve / loans 1.20%  1.21%  1.09%  1.20%  1.09%
Allowance for loan losses and valuation reserve / nonaccrual loans 50.34%  50.88%  127.94%  50.34%  127.94%
          
Gross loan charge-offs$282  $2,307  $5  $2,589  $19 
Gross loan (recoveries)$(129) $(5) $(35) $(183) $(42)
Net loan charge-offs (recoveries)$153  $2,302  $(30) $2,406  $(23)
          
Capital Data and Capital Ratios         
Book value per share (1)$17.37  $17.41  $17.64  $17.37  $17.64 
Shares outstanding 3,925,002   3,922,610   3,906,966   3,925,002   3,906,966 
Bank Capital Ratios:         
Leverage Ratio 9.47%  9.61%  9.92%  9.47%  9.92%
Tier 1 Capital 10.82%  10.66%  10.61%  10.82%  10.61%
Total Risk Based Capital 11.81%  11.65%  11.38%  11.81%  11.38%
          

(1) Book value per share represents shareholders' equity divided by outstanding shares.