Patriot Reports Second Quarter 2022 Net Income of $1.3 million; continued growth in loans and deposits

Stamford, Connecticut, UNITED STATES


STAMFORD, Conn., Aug. 05, 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 $1.3 million, or $0.32 basic and diluted earnings per share for the quarter ended June 30, 2022, compared to $800,000, or $0.20 per basic and diluted earnings per share for the first quarter of 2022 and net income of $1.0 million, or $0.26 basic and diluted earnings per share reported in the second quarter of 2021. The 2021 second quarter included the benefit of a non-recurring employee retention tax credit (“ERC”) of $1.1 million.

For the six months ended June 30, 2022, net income was $2.1 million, or $0.52 basic and diluted earnings per share, compared to a net income of $1.9 million, or $0.48 basic and $0.47 diluted earnings per share for the six months ended June 30, 2021. The first half of 2021 results included the recognition of an ERC of $2.0 million, while no ERC was recognized in 2022.

Along with reporting a substantial improvement in net interest income and strong earnings, the Bank reported loan growth of 16.2% and deposit growth of 13.1% compared to December 31, 2021. Net interest margin improved to 3.17% for the first half of 2022, up from 2.90% for the first half of 2021. The Bank’s prepaid debit card program continues to be an increasing, low-cost funding source and has tripled in size to $166.7 million as of June 30, 2022, from $50.0 million 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: “The Bank continued its path of strong financial performance and quality asset generation during the second quarter of 2022. Our net interest margin remained solid at 3.17%. The Bank remains focused on its balance sheet and improvement in nonperforming assets both of which had positive contributions during the quarter.

As disclosed on July 20, 2022, Patriot and American Challenger Development Corporation mutually agreed to terminate the previously announced Merger Agreement due to closing conditions that could not be attained. The parties remain in active discussions regarding the potential for a modified transaction. “Aside from our focus on meaningful strategic activities, Patriot’s organic platform and financial performance continues to grow and improve,” Russell added.

Financial Results:

As of June 30, 2022, total assets increased $100.7 million to $1.0 billion, as compared to $948.5 million on December 31, 2021, primarily due to the increase in net loans which increased from $729.6 million on December 31, 2021, to $849.2 million on June 30, 2022. Total deposits increased from $748.6 million on December 31, 2021, to $846.8 million on June 30, 2022.

Net interest income for the three months ended June 30, 2022, was $7.7 million, an increase of $1.8 million or 30.0% from the second quarter of 2021. Net interest income for the six months ended June 30, 2022 was $14.4 million, an increase of $2.3 million or 19.7% from the first half of 2021. These increases were primarily attributable to the growth in the loan portfolio over the past year.

The Bank’s net interest margin showed continued improvement, with an increase to 3.17% for the six months ended June 30, 2022, compared with 2.90% for the six months ended June 30, 2021.

A provision for loan losses of $275,000 was recorded for the three and six months ended June 30, 2022. There was no provision for loans losses recorded in the second quarter and first half of 2021. As of June 30, 2022, the allowance for loan losses was 1.16% of total loans, compared with 1.34% on December 31, 2021.

Non-interest income for the quarter ended June 30, 2022 and 2021 was $798,000 and $753,000, respectively. Non-interest income for the six months ended June 30, 2022 and 2021, was $1.6 million and $1.2 million, respectively. The increase in the first half of 2022 was primarily attributable to gains from sales of SBA loans totaling $509,000 along with higher non-interest income from the prepaid card program.

Non-interest expense for the quarter ended June 30, 2022 and 2021, was $6.5 million and $5.3 million, respectively. Non-interest expense for the six months ended June 30, 2022 and 2021, was $12.9 million and $10.7 million, respectively. The increase in the first half of 2022 was primarily due to an increase in salary and benefit expenses as the Company recognized an ERC of $2.0 million in the first half of 2021. The organization was no longer eligible for the ERC under the CARES Act program in 2022.

For the six months ended June 30, 2022, a provision for income taxes of $787,000 was recorded, compared to a provision for income taxes of $702,000 for the six months ended June 30, 2021.

As of June 30, 2022, shareholders’ equity was $59.8 million, compared with $67.3 million on December 31, 2021. Patriot’s book value per share was $15.11 on June 30, 2022, compared with $17.02 on December 31, 2021. The change was attributable to a decline in the market value of the Bank’s investment portfolio during the quarter associated with rising market interest rates.

* * * * *

About the Company:

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. The 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, Mississippi, along with a Rhode Island operations center.

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. These forward-looking statements are based on Patriot’s current expectations and assumptions regarding Patriot’s businesses, the economy, and other future conditions. Because forward-looking statements relate to future results and occurrences, they are subject to inherent risks, uncertainties, changes in circumstances and other factors that are difficult to predict. Many possible events or factors could affect Patriot’s future financial results and performance and could cause the actual results, performance, or achievements of Patriot to differ materially from any anticipated results expressed or implied by such forward-looking statements. Such risks and uncertainties include, among others: (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; (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; (25) our compensation expense associated with equity allocated or awarded to our employees; and (26) other such factors, including risk factors, as may be described in the Company’s other filings with the Securities and Exchange Commission.


PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIES     
CONSOLIDATED BALANCE SHEETS (Unaudited)      
         
         
(In thousands)June 30, 2022 December 31, 2021 June 30, 2021 
         
Assets       
Cash and due from banks:      
Noninterest bearing deposits and cash$4,507  $3,264  $2,397  
Interest bearing deposits 33,009   43,781   113,794  
  Total cash and cash equivalents 37,516   47,045   116,191  
Investment securities:      
Available-for-sale securities, at fair value 76,971   94,341   108,612  
Other investments, at cost 4,450   4,450   4,450  
  Total investment securities 81,421   98,791   113,062  
         
Federal Reserve Bank stock, at cost 2,762   2,843   2,744  
Federal Home Loan Bank stock, at cost 4,474   4,184   4,185  
         
Gross loans receivable 859,107   739,488   670,896  
Allowance for loan losses (9,929)  (9,905)  (10,362) 
 Net loans receivable 849,178   729,583   660,534  
         
SBA loans held for sale 7,556   3,129   2,636  
Accrued interest and dividends receivable 5,727   5,822   6,207  
Premises and equipment, net 31,128   31,500   32,824  
Other real estate owned -   -   1,216  
Deferred tax asset 14,910   12,146   10,560  
Goodwill 1,107   1,107   1,107  
Core deposit intangible, net 273   296   319  
Other assets 13,128   12,035   11,469  
 Total assets$ 1,049,180  $ 948,481  $ 963,054  
         
Liabilities      
Deposits:      
 Noninterest bearing deposits$271,165  $226,713  $218,374  
 Interest bearing deposits 575,618   521,849   542,824  
  Total deposits 846,783   748,562   761,198  
         
Federal Home Loan Bank and correspondent bank borrowings 100,000   90,000   90,000  
Senior notes, net 12,000   12,000   11,965  
Subordinated debt, net 9,825   9,811   9,796  
Junior subordinated debt owed to unconsolidated trust, net 8,123   8,119   8,114  
Note payable 689   791   893  
Advances from borrowers for taxes and insurance 2,967   1,101   3,607  
Accrued expenses and other liabilities 8,991   10,753   11,619  
  Total liabilities 989,378   881,137   897,192  
         
Commitments and Contingencies -   -   -  
         
Shareholders' equity      
Preferred stock -   -   -  
Common stock 106,520   106,479   106,409  
Accumulated deficit (35,433)  (37,498)  (40,716) 
Accumulated other comprehensive loss (11,285)  (1,637)  169  
  Total shareholders' equity 59,802   67,344   65,862  
         
 Total liabilities and shareholders' equity$ 1,049,180  $ 948,481  $ 963,054  
         


PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIES         
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)         
             
   Three Months Ended Six Months Ended 
(In thousands, except per share amounts)June 30, 2022 March 31, 2022 June 30, 2021 June 30, 2022 June 30, 2021 
             
Interest and Dividend Income          
 Interest and fees on loans$9,044 $7,664 $7,267 $16,708 $15,010 
 Interest on investment securities 510  570  420  1,080  730 
 Dividends on investment securities 65  65  57  130  91 
 Other interest income 68  21  23  89  47 
  Total interest and dividend income 9,687  8,320  7,767  18,007  15,878 
             
Interest Expense          
 Interest on deposits 757  409  623  1,166  1,408 
 Interest on Federal Home Loan Bank borrowings 747  737  741  1,484  1,474 
 Interest on senior debt 210  210  228  420  457 
 Interest on subordinated debt 251  234  233  485  467 
 Interest on note payable and other 2  4  4  6  8 
  Total interest expense 1,967  1,594  1,829  3,561  3,814 
             
  Net interest income 7,720  6,726  5,938  14,446  12,064 
             
Provision for loan losses 275  -  -  275  - 
             
  Net interest income after provision for loan losses 7,445  6,726  5,938  14,171  12,064 
             
Non-interest Income          
 Loan application, inspection and processing fees 89  87  61  176  124 
 Deposit fees and service charges 60  64  64  124  129 
 Gains on sale of loans 301  208  258  509  352 
 Rental income 132  192  140  324  270 
 Loss on sale of investment securities -  -  93  -  93 
 Other income 216  263  137  479  227 
  Total non-interest income 798  814  753  1,612  1,195 
             
Non-interest Expense          
 Salaries and benefits 3,763  3,346  2,447  7,109  4,663 
 Occupancy and equipment expenses 881  836  778  1,717  1,698 
 Data processing expenses 283  330  362  613  712 
 Professional and other outside services 559  789  714  1,348  1,566 
 Project expenses, net 29  52  1  81  11 
 Advertising and promotional expenses 73  68  77  141  139 
 Loan administration and processing expenses 42  105  14  147  38 
 Regulatory assessments 179  174  208  353  436 
 Insurance expenses 76  77  75  153  135 
 Communications, stationary and supplies 139  135  144  274  289 
 Other operating expenses 478  517  466  995  994 
  Total non-interest expense 6,502  6,429  5,286  12,931  10,681 
             
  Income before income taxes 1,741  1,111  1,405  2,852  2,578 
             
Provision for income taxes 476  311  383  787  702 
  Net income $1,265 $800 $1,022 $2,065 $1,876 
             
  Basic earnings per share$0.32 $0.20 $0.26 $0.52 $0.48 
  Diluted earnings per share$0.32 $0.20 $0.26 $0.52 $0.47 
             


FINANCIAL RATIOS AND OTHER DATA           
               
               
     Three Months Ended Six Months Ended 
   (Dollars in thousands) June 30, 2022 March 31, 2022 June 30, 2021 June 30, 2022 June 30, 2021 
               
Quarterly Performance Data:           
               
  Net income $1,265  $800  $1,022  $2,065  $1,876  
  Return on Average Assets  0.50%   0.34%   0.46%   0.42%   0.42%  
  Return on Average Equity  8.20%   4.88%   6.34%   6.49%   5.87%  
  Net Interest Margin  3.27%   3.06%   2.82%   3.17%   2.90%  
  Efficiency Ratio  76.33%   85.27%   78.99%   80.53%   80.56%  
  Efficiency Ratio excluding project costs  76.00%   84.58%   78.98%   80.03%   80.47%  
  % increase (decrease) in loans  11.09%   4.58%   -0.85%  16.18%   -8.12%  
  % increase in deposits  8.58%   4.18%   9.86%   13.12%   11.02%  
  % increase in deposits excluding brokered deposits 9.02%   1.83%   10.96%   11.01%   16.14%  
               
Asset Quality:           
  Nonaccrual loans $23,324  $23,466  $24,524  $23,324  $24,524  
  Other real estate owned $-  $-  $1,216  $-  $1,216  
  Total nonperforming assets $23,324  $23,466  $25,740  $23,324  $25,740  
               
  Nonaccrual loans / loans  2.71%   3.03%   3.66%   2.71%   3.66%  
  Nonperforming assets / assets  2.22%   2.41%   2.67%   2.22%   2.67%  
  Allowance for loan losses $9,929  $9,737  $10,362  $9,929  $10,362  
               
  Allowance for loan losses / loans  1.16%   1.26%   1.54%   1.16%   1.54%  
  Allowance / nonaccrual loans  42.57%   41.49%   42.25%   42.57%   42.25%  
               
  Loan charge-offs $100  $185  $80  $285  $352  
  Loan recoveries $(17) $(17) $(16) $(34) $(130) 
  Net loan charge-offs $83  $168  $64  $251  $222  
               
Capital Data and Capital Ratios           
  Book value per share (1) $15.11  $15.84  $16.69  $15.11  $16.69  
               
  Shares outstanding  3,957,269   3,956,492   3,947,276   3,957,269   3,947,276  
               
  Bank Leverage Ratio  9.44%   9.94%   10.10%   9.44%   10.10%  
               
 (1) Book value per share represents shareholders' equity divided by outstanding shares.       
               
               
               
Deposits:           
   (In thousands)           
     June 30, 2022 March 31, 2022 June 30, 2021     
 Non-interest bearing:           
 Non-interest bearing $137,320  $120,835  $135,477      
 Prepaid DDA  133,845   116,990   82,897      
  Total non-interest bearing  271,165   237,825   218,374      
               
 Interest bearing:           
 NOW  35,973   42,272   36,085      
 Savings  99,686   105,871   99,264      
 Money market  151,212   117,049   123,327      
 Money market - prepaid deposits  32,891   29,770   54,922      
 Certificates of deposit, less than $250,000  169,690   158,625   152,700      
 Certificates of deposit, $250,000 or greater  51,491   53,513   63,690      
 Brokered deposits  34,675   34,924   12,836      
  Total Interest bearing  575,618   542,024   542,824      
               
  Total Deposits $846,783  $779,849  $761,198      
               
  Total Prepaid deposits $166,736  $146,760  $137,819      
               
   Total deposits excluding brokered deposits $812,108  $744,925  $748,362      


Contacts:  
Patriot Bank, N.A.Joseph PerilloRobert Russell
900 Bedford StreetChief Financial OfficerPresident & CEO
Stamford, CT 06901203-252-5954203-252-5939
www.BankPatriot.com