Patriot Returns to Profitability and Reports First Quarter 2021 Net Income of $854 thousand

STAMFORD, Conn., May 13, 2021 (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 pre-tax income of $1.2 million and net income of $854 thousand, or $0.22 basic and diluted earnings per share for the quarter ended March 31, 2021, compared to a net loss of $1.1 million reported in the first quarter of 2020.

Profitability in the first quarter was achieved as the Bank demonstrated improved net interest margins, core deposit growth, lower operating expenses, and a lower loan loss provision. In addition, during the quarter the Bank recognized a payroll tax credit of $843 thousand under the Employee Retention Credit program of the CARES Act. These factors were partially offset by a lower loan balance as loan payoffs outpaced new loan originations. Further improvements in profitability are projected as loan balances begin to grow and SBA loan and sale activity resumes.

Since 2020, the Bank had provided CARES Act payment deferrals on approximately $232.7 million of loans. A significant percentage of the loans deferred as a result of the CARES Act have now resumed normal payments. The balance of loans remaining on deferral in conjunction with the CARES Act had declined to $37.7 million at March 31, 2021.

Patriot President & CEO Robert Russell stated: “The Bank continues to make progress in the areas of income creation and expense management during challenging operational circumstances. Staff remain focused on service and process improvements to help Patriot become an efficient and high performing organization. We remain steadfast in our pursuit of efficiency and performance. The leadership team has expanded with experienced banking professionals now added to our team to help us achieve our goals and strengthen the Bank’s accountability culture.” Mr. Russell added: “we believe the changes and our culture have us on the right path of success for us, our customers and our communities.”

Financial Results:

As of March 31, 2021, total assets increased to $886.2 million, as compared to $880.7 million at December 31, 2020. Net loans totaled $666.3 million versus $719.6 million as of December 31, 2020. Total deposits increased from $685.7 million at December 31, 2020 to $692.9 million at March 31, 2021.

Excluding the decline in brokered deposits, total deposits increased $23.8 million during the quarter due to stronger retail banking activity in the first quarter along with a $9.4 million growth in the prepaid debit card business during the first quarter of 2021.

These balance sheet changes have significantly strengthened the Bank’s capital ratios and at the same time improved its net interest margin. These foundational changes position Patriot for continued growth in profitability in 2021 as net interest margins are expected to continue to improve and as business activity rebounds from the impact of the pandemic and returns to more normalized levels.

In the first quarter of 2021, net interest income was $6.1 million and declined $197 thousand, or 3.1% from the first quarter of 2020. Net interest margin showed strong improvement and resulted in a 2.99% margin in the first quarter of 2021, compared with 2.72% for the first quarter of 2020. The impact of the improving net interest margin was mitigated by the lower loan balance associated with a cautious approach to lending during the pandemic. As economic activity expands, loan balances are expected to grow, further improving net interest income.

The provision for loan losses for the first quarter of 2021 was zero, compared to $804 thousand for the first quarter of 2020. No provision was required for the first quarter of 2021 due to the declining loan balance and the need for lower pooled reserves as the economic recovery accelerates. In the first quarter of 2020, the provision for loan losses was primarily due to an additional reserve attributable to COVID-19 pandemic.   

The Allowance for Loan Losses at March 31, 2021 totaled 1.54% of total loans, compared with 1.45% at December 31, 2020.

Non-interest income was $442 thousand and $421 thousand for the first quarter of 2021 and 2020, respectively.   The increase was primarily attributable to an increase in gains on sales of SBA loans from the first quarter of 2021.

Non-interest expense was $5.4 million and $7.4 million for the first quarter of 2021 and 2020, respectively. The decrease in non-interest expense in 2021 was primarily driven by an Employee Retention Credit of $843 thousand under the Employee Retention Credit program of the CARES Act, a reduction of $800 thousand in compensation and benefits due to staffing adjustments made during 2020, and a reduction of $212 thousand in regulatory assessments expense.

For the first quarter of 2021, a provision for income taxes of $319 thousand was recorded, compared to a benefit for income taxes of $359 thousand for the first quarter of 2020.

As of March 31, 2021, shareholders’ equity was $63.9 million, compared with $63.2 million at December 31, 2020. Patriot’s book value per share was $16.21 at March 31, 2021, compared with $16.03 at December 31, 2020. The Bank’s capital ratios continue to be strong, maintaining its “well capitalized” regulatory status. As of March 31, 2021, the Bank’s Tier 1 leverage ratio was 10.12%, Tier 1 risk-based capital ratio was 12.07% and total risk-based capital ratio was 13.32%.

About the Company:

Patriot Bank is headquartered in Stamford and operates 9 branch locations: in Scarsdale, NY; and Darien, Fairfield, Greenwich, Milford, Norwalk, Orange, Stamford, Westport, CT 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 Stamford, Connecticut, Florida, Georgia, Ohio, along with a Rhode Island operations center.

Founded in 1994, and now celebrating its 27th 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 the Company’s interest earning assets and the interest paid on its interest bearing liabilities; (2) the timing of re-pricing of the Company’s interest earning assets and interest bearing liabilities; (3) the effect of changes in governmental monetary policy; (4) the effect of changes in regulations applicable to the Company and the Bank and the conduct of its business; (5) changes in competition among financial service companies, including possible further encroachment of non-banks on services traditionally provided by banks; (6) the ability of competitors that are larger than the Company to provide products and services which it is impracticable for the Company to provide; (7) the state of the economy and real estate values in the Company’s market areas, and the consequent effect on the quality of the Company’s loans; (8) demand for loans and deposits in our market area; (9) 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 Company; (10) 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 the Company; (11) the application of generally accepted accounting principles, consistently applied; (12) the fact that one period of reported results may not be indicative of future periods; (13) the state of the economy in the greater New York metropolitan area and its particular effect on the Company's customers, vendors and communities and other such factors, including risk factors, as may be described in the Company’s other filings with the Securities and Exchange Commission (the “SEC”); (14) political, social, legal and economic instability, civil unrest, war, catastrophic events, acts of terrorism; (15) widespread outbreaks of infectious diseases, including the ongoing novel coronavirus (COVID-19) outbreak; (16) changes in the level and direction of loan delinquencies and write-offs and changes in estimates of the adequacy of the allowance for loan losses; (17) our ability to access cost-effective funding; (18) our ability to implement and change our business strategies; (19) changes in the quality or composition of our loan or investment portfolios; (20) technological changes that may be more difficult or expensive than expected; (21) our ability to manage market risk, credit risk and operational risk in the current economic environment; (22) our ability to enter new markets successfully and capitalize on growth opportunities; (23) changes in consumer spending, borrowing and savings habits; (24) our ability to retain key employees; and (25) our compensation expense associated with equity allocated or awarded to our employees.