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

Stamford, Connecticut, UNITED STATES


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.


PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIES     
CONSOLIDATED BALANCE SHEETS (Unaudited)      
         
         
(In thousands)March 31, 2021 December 31, 2020 March 31, 2020 
         
Assets       
Cash and due from banks:      
Noninterest bearing deposits and cash$2,593  $3,006  $1,806  
Interest bearing deposits 81,681   31,630   50,350  
  Total cash and cash equivalents 84,274   34,636   52,156  
Investment securities:      
Available-for-sale securities, at fair value 57,893   49,262   44,830  
Other investments, at cost 4,450   4,450   4,450  
  Total investment securities 62,343   53,712   49,280  
         
Federal Reserve Bank stock, at cost 2,744   2,783   2,897  
Federal Home Loan Bank stock, at cost 4,503   4,503   4,477  
         
Gross loans receivable 676,676   730,180   818,841  
Allowance for loan losses (10,426)  (10,584)  (10,916) 
 Net loans receivable 666,250   719,596   807,925  
         
SBA loans held for sale 2,829   1,217   17,996  
Accrued interest and dividends receivable 6,270   6,620   3,801  
Premises and equipment, net 33,128   33,423   34,312  
Other real estate owned 1,216   1,906   2,400  
Deferred tax asset, net 11,274   11,496   11,989  
Goodwill 1,107   1,107   1,107  
Core deposit intangible, net 331   343   605  
Other assets 9,919   9,387   10,634  
 Total assets$ 886,188  $ 880,729  $ 999,579  
         
Liabilities      
Deposits:      
 Noninterest bearing deposits$173,520  $158,676  $83,583  
 Interest bearing deposits 519,358   526,980   719,631  
  Total deposits 692,878   685,656   803,214  
         
Federal Home Loan Bank and correspondent bank borrowings 90,000   90,000   90,000  
Senior notes, net 11,946   11,927   11,871  
Subordinated debt, net 9,789   9,782   9,760  
Junior subordinated debt owed to unconsolidated trust, net 8,112   8,110   8,104  
Note payable 943   994   1,143  
Advances from borrowers for taxes and insurance 2,158   3,786   2,637  
Accrued expenses and other liabilities 6,425   7,255   8,227  
  Total liabilities 822,251   817,510   934,956  
         
Commitments and Contingencies -   -   -  
         
Shareholders' equity      
Preferred stock -   -   -  
Common stock 106,363   106,329   106,213  
Accumulated deficit (41,738)  (42,592)  (39,845) 
Accumulated other comprehensive loss (688)  (518)  (1,745) 
  Total shareholders' equity 63,937   63,219   64,623  
         
 Total liabilities and shareholders' equity$ 886,188  $ 880,729  $ 999,579  
         



PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIES    
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)    
        
   Three Months Ended
(In thousands, except per share amounts)March 31, 2021 December 31, 2020 March 31, 2020
        
Interest and Dividend Income     
 Interest and fees on loans$7,743 $8,113  $10,033 
 Interest on investment securities 310  326   416 
 Dividends on investment securities 34  86   138 
 Other interest income 24  22   135 
  Total interest and dividend income 8,111  8,547   10,722 
        
Interest Expense     
 Interest on deposits 785  1,134   3,200 
 Interest on Federal Home Loan Bank borrowings 733  708   697 
 Interest on senior debt 229  229   229 
 Interest on subordinated debt 234  235   268 
 Interest on note payable and other 4  4   5 
  Total interest expense 1,985  2,310   4,399 
        
  Net interest income 6,126  6,237   6,323 
        
Provision for loan losses -  371   804 
        
  Net interest income after provision for loan losses 6,126  5,866   5,519 
        
Non-interest Income     
 Loan application, inspection and processing fees 63  76   53 
 Deposit fees and service charges 65  68   114 
 Gains on sale of loans 94  102   12 
 Rental income 130  130   131 
 Other income 90  89   111 
  Total non-interest income 442  465   421 
        
Non-interest Expense     
 Salaries and benefits 2,216  3,357   3,861 
 Occupancy and equipment expenses 920  833   949 
 Data processing expenses 350  377   390 
 Professional and other outside services 852  691   784 
 Project expenses, net 10  664   94 
 Advertising and promotional expenses 62  77   147 
 Loan administration and processing expenses 24  39   24 
 Regulatory assessments 228  318   440 
 Insurance expenses 60  70   70 
 Communications, stationary and supplies 145  105   120 
 Other operating expenses 528  708   492 
  Total non-interest expense 5,395  7,239   7,371 
        
  Income (loss) before income taxes 1,173  (908)  (1,431)
        
Provision (benefit) for income taxes 319  474   (359)
  Net income (loss)$854 $(1,382) $(1,072)
        
  Basic earnings (loss) per share$0.22 $(0.35) $(0.27)
  Diluted earnings (loss) per share$0.22 $(0.35) $(0.27)
        



           
           
FINANCIAL RATIOS AND OTHER DATA       
           
           
        
   (Dollars in thousands) March 31, 2021 December 31, 2020 March 31, 2020 
           
Quarterly Performance Data:       
           
  Net (loss) income $854  $(1,382) $(1,072) 
  Return on Average Assets  0.39%  -0.61%  -0.44% 
  Return on Average Equity  5.42%  -8.41%  -6.37% 
  Net Interest Margin  2.99%  2.93%  2.72% 
  Efficiency Ratio  82.14%  108.04%  109.38% 
  Efficiency Ratio excluding project costs  81.99%  98.58%  107.99% 
  % (decrease) increase in loans  -7.33%  -2.81%  0.82% 
  % increase in deposits excluding brokered deposits  4.66%  1.25%  7.08% 
           
Asset Quality:       
  Nonaccrual loans $24,587  $20,005  $16,450  
  Other real estate owned $1,216  $1,906  $2,400  
  Total nonperforming assets $25,803  $21,911  $18,850  
           
  Nonaccrual loans / loans  3.63%  2.74%  2.01% 
  Nonperforming assets / assets  2.91%  2.49%  1.89% 
  Allowance for loan losses $10,426  $10,584  $10,916  
  Valuation reserve $477  $482  $1,100  
  Allowance for loan losses with valuation reserve $10,903  $11,066  $12,016  
           
  Allowance for loan losses / loans  1.54%  1.45%  1.33% 
  Allowance / nonaccrual loans  42.40%  52.91%  66.36% 
  Allowance for loan losses and valuation reserve / loans  1.61%  1.51%  1.47% 
  Allowance for loan losses and valuation reserve / nonaccrual loans  44.34%  55.32%  73.05% 
           
  Gross loan charge-offs $272  $968  $44  
  Gross loan (recoveries) $(114) $(10) $(41) 
  Net loan charge-offs (recoveries) $158  $958  $3  
           
Capital Data and Capital Ratios       
  Book value per share (1) $16.21  $16.03  $16.43  
  Shares outstanding  3,944,272   3,943,572   3,932,841  
           
Bank Capital Ratios:       
  Leverage Ratio  10.12%  9.80%  9.16% 
  Tier 1 Capital  12.07%  11.25%  10.51% 
  Total Risk Based Capital  13.32%  12.50%  11.76% 
           
(1) Book value per share represents shareholders' equity divided by outstanding shares.   
           
           
Deposits:       
   (In thousands)       
     March 31, 2021 December 31, 2020 March 31, 2020 
 Non-interest bearing:       
 Non-interest bearing $104,766  $99,344  $83,583  
 Prepaid DDA  68,754   59,332   -  
  Total non-interest bearing  173,520   158,676   83,583  
           
 Interest bearing:       
 NOW  34,433   30,529   28,265  
 Savings  103,025   98,635   59,567  
 Money market  131,844   146,389   132,629  
 Certificates of deposit, less than $250,000  165,130   160,968   205,311  
 Certificates of deposit, $250,000 or greater  66,470   49,172   68,444  
 Brokered deposits  18,456   41,287   225,415  
  Total Interest bearing  519,358   526,980   719,631  
           
  Total Deposits $692,878  $685,656  $803,214  
           

 

Contacts:   
Patriot Bank, N.A. Joseph Perillo Robert Russell Michael Carrazza 
900 Bedford Street Chief Financial Officer President & CEOChairman
Stamford, CT 06901   203-252-5954   203-252-5939 203-251-8230
www.BankPatriot.com