Patriot Reports Fourth Quarter 2021 Net Income of $1.9 Million and full year Net Income of $5.1 Million; continued growth in loans and deposits

STAMFORD, Conn., Feb. 16, 2022 (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 net income of $1.9 million, or $0.48 basic and diluted earnings per share for the quarter ended December 31, 2021, compared to a net loss of $1.4 million, or $0.35 basic and diluted loss per share reported in the fourth quarter of 2020. For the year ended December 31, 2021, net income was $5.1 million, or $1.29 per fully diluted share, compared to a net loss of $3.8 million, or $0.97 fully diluted loss per share for the year ended December 31, 2020.

During the year ended December 31, 2021, the Bank recognized payroll tax credits of $2.9 million, under the Employee Retention Credit program of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). The Bank did not recognize any amounts related to the Employee Retention Credit program in the fourth quarter of 2021. During the fourth quarter of 2021, Patriot announced a transformational merger transaction with American Challenger Development Corp. (“American Challenger”). As a result of the proposed merger transaction, material, non-recurring acquisition-related expenses of $1.85 million, or $0.47 per share, were incurred in the fourth quarter. Pre-tax GAAP income for the quarter ended December 31, 2021 was $633,000; and excluding the merger related charges, pre-tax income was $2.5 million. For the full year ended December 31, 2021, pre-tax income was $5.0 million. Excluding income from the Employee Retention Credit program and merger related charges, pre-tax income for the full year ended December 31, 2021 was $4.0 million, or $1.01 per share.

The Bank reported loan growth of 3.5% and core deposit growth of 2.83% for the quarter. Net interest margin improved to 3.05% for the fourth quarter of 2021. The Bank’s prepaid debit card program continues to be an increasing, low-cost funding source for the Bank and has grown substantially in the last year and a half to $150.4 million as of December 31, 2021, from the $50.0 million acquired in July 2020. The portfolio growth provides a substantial improvement to the Bank’s net interest margin and overall funding costs.

Patriot President & CEO Robert Russell stated: “Throughout 2021 the Patriot team continued pursuing operational improvements, with a focus on earnings growth and profitability. The results demonstrate these wide-spread achievements throughout the Bank, including growth across all asset classes and overall net margin improvement. The Bank is positioned for continued earnings and asset growth."

Financial Results:

As of December 31, 2021, total assets increased $67.8 million to $948.5 million, as compared to $880.7 million at December 31, 2020, primarily due to increase in available-for-sale securities of $45.0 million. Net loans increased from $719.6 million as of December 31, 2020, to $729.6 million at December 31, 2021. Total deposits increased from $685.7 million at December 31, 2020, to $748.6 million at December 31, 2021.

The Bank has substantially improved its deposit and funding mix over the past year. During the past twelve months, total deposits increased $62.9 million, primarily due to growth in prepaid deposits of $76.0 million, which was partially offset by decline of $24.3 million in brokered deposits and certificates of deposits. Excluding brokered deposits, total deposits increased 13.5% during 2021.

Net interest income for the quarter ended December 31, 2021, was $6.9 million, versus $6.2 million for the quarter ended December 31, 2020. Net interest income for the year ended December 31, 2021, was $25.3 million, versus $24.2 million for the year ended December 31, 2020.

The Bank’s net interest margin showed strong improvement, with an increase to 3.05% for the quarter and 2.92% for the year ended December 31, 2021, compared with 2.93% and 2.68%, respectively, for the comparable period in 2020.  

The recovering economy and improvement in classified loans resulted in a credit of provision for loan losses of $200,000 and $500,000 for the quarter and the year ended December 31, 2021, respectively. For the quarter and the year ended December 31, 2020, a provision for loan losses of $371,000 and $2.2 million was recorded, respectively. Most of the provision in 2020 was primarily attributable to conditions and the uncertainty created by the COVID-19 pandemic and a charge-off on one borrower in the fourth quarter of 2020. As of December 31, 2021, the allowance for loan losses was 1.34% of total loans, compared with 1.45% at December 31, 2020.

Non-interest income for the quarter ended December 31, 2021, was $2.3 million, versus $465,000 for the quarter ended December 31, 2020.   Non-interest income for the year ended December 31, 2021, was $4.4 million, versus $2.0 million for the year ended December 31, 2020. The increase in the current quarter was primarily attributable to gains from sales of SBA loans totaled $1.5 million.

Non-interest expense for the quarter ended December 31, 2021, was $8.8 million, versus $7.2 million for the quarter ended December 31, 2020. For the year ended December 31, 2021, non-interest expense was $25.2 million, versus $28.1 million for the year ended December 31, 2020. The increase in non-interest expense in the quarter ended December 31, 2021, was primarily driven by increased project expenses of $1.85 million related to the proposed merger with American Challenger. The Employee Retention Credits of $2.9 million drove part of the reduction year-over-year.

For the year ended December 31, 2021, a benefit for income taxes of $81,000 was recorded, compared to a benefit for income taxes of $337,000 for the year ended December 31, 2020. The provision for income taxes reflected a full reversal of the valuation reserve for deferred tax assets, which decreased the income tax provision of $1.7 million in the fourth quarter of 2021.

As of December 31, 2021, shareholders’ equity was $67.3 million, compared with $63.2 million at December 31,2020. Patriot’s book value per share rose to $17.02 at December 31, 2021, compared with $16.03 at December 31, 2020.

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 28th 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 Patriot’s philosophy as it seeks 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.