Patriot Reports 2020 Year end Results

Stamford, Connecticut, UNITED STATES


STAMFORD, Conn., April 02, 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 a net loss of $1.4 million, or $0.35 basic and diluted loss per share for the quarter ended December 31, 2020, compared to a net loss of $87 thousand reported in the third quarter of 2020. The net loss for the year ended December 31, 2020 was $3.8 million, or $0.97 per fully diluted share, as compared to a net loss of $2.8 million, or $0.72 per fully diluted shares in the fiscal year 2019. The Bank’s loan loss provision on a year over year basis is down $2.8 million, or 56.3% to $2.2 million for the twelve months ended December 31, 2020.

During the fourth quarter, Patriot recorded a $1.9 million charge associated with the establishment of a valuation allowance on its deferred tax assets and charges relating to a previous acquisition in the amount of $834 thousand. The income tax provision in the fourth quarter of 2020 was also impacted by a benefit for income taxes of $1.1 million due to reversal of an uncertain tax position.

During the COVID-19 pandemic, Patriot has kept all branches open while at the same time leveraging its non-contact ATM’s and Live Banker ATMs. Patriot continues to optimize on-line banking services and expand customer call center staffing. The investments to enhance the digital platform and the customer service experience have been well tested during 2020 and the global pandemic. Patriot’s mobile deposits were up 124% and use of its mobile app banking was up 25%.

Throughout 2020 the Bank provided CARES Act payment relief on approximately $232.4 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 $52.6 million at December 31, 2020 and subsequently declined to $37.8 million at March 30, 2021.

Patriot President & CEO Robert Russell stated: “The Bank is fortunate to have committed and dedicated employees who are resilient and resourceful. The Bank, thanks to efforts of its staff, focused on service and process improvements throughout a very challenging year. We continue to observe positive improvements related to loans previously on deferral, net interest margin and noninterest expense. The leadership team continues to evaluate and upgrade its staff and processes as evidenced by its recent upgrade to its SBA staff.” Mr. Russell added: “We believe the changes that have been implemented and a culture of accountability position the Bank for a strong 2021 and beyond. We remain focused on the delivery of excellent customer service with products that support our communities.”    

Financial Results:

As of December 31, 2020, total assets were $880.7 million compared to $979.8 million as of December 31, 2019. Net loans totaled $719.6 million versus $802.0 million as of December 31, 2019. Total deposits were $685.7 million and $769.5 million at December 31, 2020 and 2019, respectively.

The change in loans and total assets represents the intentional resizing of the Bank’s balance sheet as the current economic uncertainties associated with the COVID-19 pandemic are assessed. The Company continues to originate loans, but at a slower pace than in the past, and has seen loan maturities and loan payoffs outpace loan originations during the year ended December 31, 2020.

The Bank remains focused on its cost of funds and funding sources. The overall decline in deposits of $83.9 million was the result of a planned decline in higher cost brokered deposits of $188.6 million partially offset by an increase in core and prepaid deposits in the amount of $104.7 million.

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 a return to profitability in 2021 as margins are expected to continue to improve and the slowdown in business activity is expected to gradually rebound from the impact of the pandemic and return to more normalized levels.

Year-to-date December 31, 2020 net interest income was $24.2 million and declined $1.3 million, or 5.0% from year-to-date December 31, 2019. Net interest income for the fourth quarters of 2020 and 2019 was unchanged at $6.2 million for the respective periods. Net interest margin showed strong improvement as a lower cost of funds resulted in a 2.93% margin in the fourth quarter of 2020 compared with 2.65% for the fourth quarter of 2019.

Compared to the prior year, net interest income was negatively impacted by a lower average loan balance, and an increase in the rate paid on FHLB borrowings associated with the conversion of certain borrowings from a low variable teaser rate to higher fixed rate. Overall, net interest income reflects the impact of lower market rates connected to the COVID-19 pandemic.

Patriot recorded a provision for loan losses of $2.2 million and $5.0 million for the years ended December 31, 2020 and 2019, respectively. The year over year decline represents a decline of 56% compared to the year-to-date December 31, 2019. The decrease in provision for loan loss for the year ended 2020 was attributable to a reduced loan portfolio in 2020, stronger governance around credit administration and oversight of nonperforming assets. In addition, the 2019 provision included the impact of a single commercial loan charge-off as previously reported.   

The Allowance for Loan Losses at December 31, 2020 totaled 1.45% of total loans compared with 1.25% at December 31, 2019. The increase in the Allowance as a percent of loans in 2020 compared to 2019, reflects additional provisions associated with the estimated impact of the COVID-19 pandemic on the economy and local business community in 2020 and a slightly lower loan portfolio.

Noninterest income was $2.0 million and $2.5 million for the years ended December 31, 2020 and 2019, respectively representing a decline of 20%. The decrease in noninterest income for the year-to-date period was due largely to reduced deposit fees and charges of $171 thousand and lower levels of gains on sales of SBA loans of $325 thousand associated with delays in executing the sale of those loans in 2020.

Noninterest expense for the year ended December 31, 2020 was $28.1 million versus $26.7 million representing an increase of 5% from a year earlier. The increase was primarily due to higher project expenses and a non-cash intangible write-off aggregating $834 thousand relating to a prior period acquisition, and higher salaries and benefits costs.

The income tax benefit was $337 thousand for 2020 and reflects the establishment of a valuation allowance partially offsetting a reversal of a prior tax reserve as noted previously. The tax benefit recorded in 2019 was $899 thousand.

As of December 31, 2020, shareholders’ equity was $63.2 million, compared with $67.0 million at December 31, 2019. Patriot’s book value per share was $16.03 at December 31, 2020, compared with $17.04 at December 31, 2019. The Bank’s capital ratios continue to be strong, maintaining its “well capitalized” regulatory status. As of December 31, 2020, the Bank’s Tier 1 leverage ratio was 9.80%, Tier 1 risk-based capital ratio was 11.25% and total risk-based capital ratio was 12.50%.

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.

About the Company:
Founded in 1994, and now celebrating its 26th 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.

PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIES     
CONSOLIDATED BALANCE SHEETS (Unaudited)      
         
         
(In thousands)December 31,
2020
 September 30,
2020
 December 31,
2019
 
         
Assets       
Cash and due from banks:      
Noninterest bearing deposits and cash$3,006  $3,231  $2,693  
Interest bearing deposits 31,630   46,405   36,711  
  Total cash and cash equivalents 34,636   49,636   39,404  
Investment securities:      
Available-for-sale securities, at fair value 49,262   47,823   48,317  
Other investments, at cost 4,450   4,450   4,450  
  Total investment securities 53,712   52,273   52,767  
         
Federal Reserve Bank stock, at cost 2,783   2,783   2,897  
Federal Home Loan Bank stock, at cost 4,503   4,503   4,477  
         
Gross loans receivable 730,180   751,298   812,164  
Allowance for loan losses (10,584)  (11,171)  (10,115) 
 Net loans receivable 719,596   740,127   802,049  
         
SBA loans held for sale 1,217   6,824   15,282  
Accrued interest and dividends receivable 6,620   6,834   3,603  
Premises and equipment, net 33,423   33,632   34,568  
Other real estate owned 1,906   1,954   2,400  
Deferred tax asset, net 11,496   12,066   11,133  
Goodwill 1,107   1,107   1,107  
Core deposit intangible, net 343   567   623  
Other assets 9,387   10,623   9,526  
 Total assets$ 880,729  $ 922,929  $ 979,836  
         
Liabilities      
Deposits:      
 Noninterest bearing deposits$158,676  $161,871  $88,135  
 Interest bearing deposits 526,980   565,560   681,400  
  Total deposits 685,656   727,431   769,535  
         
Federal Home Loan Bank and correspondent bank borrowings 90,000   90,000   100,000  
Senior notes, net 11,927   11,909   11,853  
Subordinated debt, net 9,782   9,774   9,752  
Junior subordinated debt owed to unconsolidated trust, net 8,110   8,108   8,102  
Note payable 994   1,044   1,193  
Advances from borrowers for taxes and insurance 3,786   2,492   3,681  
Accrued expenses and other liabilities 7,255   7,634   8,726  
  Total liabilities 817,510   858,392   912,842  
         
Commitments and Contingencies -   -   -  
         
Shareholders' equity      
Preferred stock -   -   -  
Common stock 106,329   106,293   106,170  
Accumulated deficit (42,592)  (41,210)  (38,773) 
Accumulated other comprehensive loss (518)  (546)  (403) 
  Total shareholders' equity 63,219   64,537   66,994  
         
 Total liabilities and shareholders' equity$ 880,729  $ 922,929  $ 979,836  
         


PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIES         
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)         
             
   Three Months Ended Year Ended 
(In thousands, except per share amounts)December 31,
2020
 September 30,
2020
 December 31,
2019
 December 31,
2020
 December 31,
2019
 
             
Interest and Dividend Income          
 Interest and fees on loans$8,113  $8,578  $10,223  $35,835  $40,568  
 Interest on investment securities 326   340   460   1,460   1,667  
 Dividends on investment securities 86   85   109   399   453  
 Other interest income 22   28   161   209   956  
  Total interest and dividend income 8,547   9,031   10,953   37,903   43,644  
             
Interest Expense          
 Interest on deposits 1,134   2,028   3,533   9,154   13,985  
 Interest on Federal Home Loan Bank borrowings 708   628   708   2,671   2,175  
 Interest on senior debt 229   229   229   915   915  
 Interest on subordinated debt 235   235   273   991   1,118  
 Interest on note payable and other 4   5   5   19   25  
  Total interest expense 2,310   3,125   4,748   13,750   18,218  
             
  Net interest income 6,237   5,906   6,205   24,153   25,426  
             
Provision for loan losses 371   85   1,769   2,170   4,971  
             
  Net interest income after provision for loan losses 5,866   5,821   4,436   21,983   20,455  
             
Non-interest Income          
 Loan application, inspection and processing fees 76   54   39   223   113  
 Deposit fees and service charges 68   73   126   321   492  
 Gains on sale of loans 102   380   27   566   891  
 Rental income 130   131   130   523   589  
 Other income 89   66   86   346   398  
  Total non-interest income 465   704   408   1,979   2,483  
             
Non-interest Expense          
 Salaries and benefits 3,357   3,460   3,409   14,323   13,681  
 Occupancy and equipment expenses 833   810   923   3,513   3,521  
 Data processing expenses 377   433   375   1,571   1,463  
 Professional and other outside services 691   627   777   2,828   3,010  
 Project expenses, net 664   6   188   818   465  
 Advertising and promotional expenses 77   107   125   454   380  
 Loan administration and processing expenses 39   75   54   174   155  
 Regulatory assessments 318   355   371   1,477   1,233  
 Insurance expenses 70   67   (24)  285   136  
 Communications, stationary and supplies 105   118   135   476   518  
 Other operating expenses 708   560   466   2,199   2,092  
  Total non-interest expense 7,239   6,618   6,799   28,118   26,654  
             
  Loss before income taxes (908)  (93)  (1,955)  (4,156)  (3,716) 
             
Provision (benefit) for income taxes 474   (6)  (443)  (337)  (899) 
  Net loss$(1,382) $(87) $(1,512) $(3,819) $(2,817) 
             
  Basic loss per share$(0.35) $(0.02) $(0.39) $(0.97) $(0.72) 
  Diluted loss per share$(0.35) $(0.02) $(0.39) $(0.97) $(0.72) 
             


FINANCIAL RATIOS AND OTHER DATA          
              
              
     Three Months Ended Year Ended
   (Dollars in thousands) December 31,
2020
 September 30,
2020
 December 31,
2019
 December 31,
2020
 December 31,
2019
              
Quarterly Performance Data:          
              
  Net (loss) income $(1,382) $(87) $(1,512) $(3,819) $(2,817)
  Return on Average Assets  -0.61%  -0.04%  -0.61%  -0.40%  -0.15%
  Return on Average Equity  -8.41%  -0.53%  -8.74%  -5.82%  -2.03%
  Net Interest Margin  2.93%  2.61%  2.65%  2.68%  1.40%
  Efficiency Ratio  108.04%  100.12%  102.80%  107.60%  95.51%
  Efficiency Ratio excluding project costs  98.58%  100.03%  99.95%  104.59%  93.84%
  % increase loans  -2.81%  -5.20%  1.48%  -10.09%  4.07%
  % increase deposits  -5.74%  -7.11%  0.98%  -10.90%  3.53%
              
Asset Quality:          
  Nonaccrual loans $20,005  $20,440  $18,049  $20,005  $18,049 
  Other real estate owned $1,906  $1,954  $2,400  $1,906  $2,400 
  Total nonperforming assets $21,911  $22,394  $20,449  $21,911  $20,449 
              
  Nonaccrual loans / loans  2.74%  2.72%  2.22%  2.74%  2.22%
  Nonperforming assets / assets  2.49%  2.43%  2.09%  2.49%  2.09%
  Allowance for loan losses $10,584  $11,171  $10,115  $10,584  $10,115 
  Valuation reserve $482  $492  $1,258  $482  $1,258 
  Allowance for loan losses with valuation reserve$11,066  $11,663  $11,373  $11,066  $11,373 
              
  Allowance for loan losses / loans  1.45%  1.49%  1.25%  1.45%  1.25%
  Allowance / nonaccrual loans  52.91%  54.65%  56.04%  52.91%  56.04%
  Allowance for loan losses and valuation reserve / loans  1.51%  1.55%  1.40%  1.51%  1.40%
  Allowance for loan losses and valuation reserve / nonaccrual loans  55.32%  57.06%  63.01%  55.32%  63.01%
              
  Gross loan charge-offs $968  $75  $71  $1,778  $2,660 
  Gross loan (recoveries) $(10) $(13) $(11) $(77) $(194)
  Net loan charge-offs (recoveries) $958  $62  $60  $1,701  $2,466 
              
Capital Data and Capital Ratios          
  Book value per share (1) $16.03  $16.39  $17.04  $16.03  $17.04 
  Shares outstanding  3,943,572   3,937,041   3,930,669   3,943,572   3,930,669 
Bank Capital Ratios:          
  Leverage Ratio  9.80%  9.35%  9.28%  9.80%  9.28%
  Tier 1 Capital  11.25%  11.08%  10.64%  11.25%  10.64%
  Total Risk Based Capital  12.50%  12.33%  11.83%  12.50%  11.83%
              
(1) Book value per share represents shareholders' equity divided by outstanding shares.      
              
              
              
Deposits:          
              
 (In thousands) December 31,  September 30,  December 31,     
      2020   2020   2019     
 Non-interest bearing:          
 Non-interest bearing $99,344  $102,004  $88,135     
 Prepaid DDA  59,332   59,867   -     
  Total non-interest bearing  158,676   161,871   88,135     
              
 Interest bearing:          
 NOW  30,529   29,518   26,864     
 Savings  98,635   91,169   64,020     
 Money market  146,389   142,909   99,115     
 Certificates of deposit, less than $250,000  160,968   160,610   193,942     
 Certificates of deposit, $250,000 or greater  49,172   50,359   67,550     
 Brokered deposits  41,287   90,995   229,909     
  Total Interest bearing  526,980   565,560   681,400     
              
  Total Deposits $685,656  $727,431  $769,535     
              


Contacts:   
Patriot Bank, N.A.Joseph PerilloRobert RussellMichael Carrazza
900 Bedford StreetChief Financial OfficerPresident & CEOChairman
Stamford, CT 06901203-252-5954203-252-5939203-251-8230
www.BankPatriot.com