Patriot Reports Fourth Quarter 2022 Net Income of $1.8 million, $0.45 per share; Full Year Net Income of $6.2 million, $1.56 per share

Pre-tax Income and Net Interest Margin buoyed by exceptional loan and deposit growth


STAMFORD, Conn., March 07, 2023 (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 $1.8 million, or $0.45 basic and diluted earnings per share for the quarter ended December 31, 2022. These results compare to net income of $2.3 million, or $0.59 basic and diluted earnings per share for the third quarter of 2022 and net income of $1.9 million, or $0.48 basic and diluted earnings per share reported in the fourth quarter of 2021.

Net income for the full year ended December 31, 2022 was $6.2 million, or $1.56 basic and $1.55 diluted earnings per share, compared to a net income of $5.1 million, or $1.29 basic and diluted earnings per share for the year ended December 31, 2021. For the year ended December 31, 2021, pre-tax income included the recognition of an Employee Retention Credit (“ERC”) of $2.9 million and non-recurring merger related costs of $1.9 million. Pre-tax income for the year ended 2022 of $7.8 million increased $3.8 million or 95% from the full year 2021 results, exclusive of non-recurring items. There were no non-recurring items in 2022 pre-tax income.

Along with reporting a substantial improvement in net interest income and strong earnings, the Bank reported loan growth of 14.7% and deposit growth of 14.9% at December 31, 2022 compared to December 31, 2021. The Bank’s average net interest margin increased significantly to 3.77% for the quarter and 3.46% for the full year ended December 31, 2022, up from 3.05% and 2.92% for the quarter and full year ended December 31, 2021, respectively. The Bank’s Payments division has increasingly been contributing to the Bank’s lower-cost funding sources. This new Group is keenly focused on expanding unique deposit gathering channels, while continuing to widen the Bank’s net interest margin.

Patriot President & CEO Robert Russell stated: “Despite the myriad impacts related to the changing interest rate environment, we are proud of the increasing operational and financial results achieved for the fourth quarter and full year 2022. Operational and business unit initiatives are gaining good traction, and we are seeing the results expressed in increasing earnings and widening net interest margin.” Mr. Russell added “Our efficiency ratio has improved significantly in the fourth quarter to 64.88%.

Michael Carrazza, Patriot’s Chairman commented, “Patriot remains aggressively committed to completing one or more transformational events that will elevate the scale of Patriot and its digital forward capabilities. Strategic discussions are actively underway; such event(s) will be coupled with the organic roll-out of initiatives on the digital deposit gathering and asset generating sides of the balance sheet.”

In December 2022, Patriot successfully completed its refinancing of its $12.0 million senior debt facility that was scheduled to mature in December 2022.

Financial Results:
Total assets increased $94.9 million to $1.0 billion as of December 31, 2022, as compared to $948.5 million at December 31, 2021, primarily due to the increase in net loans from $729.6 million at December 31, 2021 to $838.0 million at December 31, 2022. Total deposits increased from $748.6 million on December 31, 2021 to $860.4 million as of December 31, 2022.

Net interest income for the three months ended December 31, 2022 was $9.6 million, an increase of $2.7 million or 38.6% from the fourth quarter of 2021. Net interest income for the year ended December 31, 2022 was $33.3 million, an increase of $8.0 million or 31.7% from the year ended December 31, 2021. These increases were primarily attributable to the growth in the loan portfolio and growth in prepaid deposits from the Payments division.

The Bank’s net interest margin showed continued improvement, with an increase to 3.77% for the quarter and 3.46% for the full year ended December 31, 2022. This compares with 3.05% and 2.92% for the fourth quarter of 2021 and the full year ended December 31, 2021, respectively.

For the three months ended and year ended December 31, 2022, additional provisions for loan losses of $1.4 million and $1.9 million were recorded, respectively. As of December 31, 2022, the allowance for loan losses was $10.3 million (1.22%) of total loans, compared with $9.9 million (1.34%) on December 31, 2021.

Non-interest income for the three months ended and year ended December 31, 2022 was $1.3 million and $3.6 million, respectively. Non-interest income for the three months ended and year ended December 31, 2021 was $2.3 million and $4.4 million, respectively. The decrease in non-interest income for the year ended December 31, 2022, compared to the same period in 2021 was primarily attributable to lower gains from sales of SBA loans resulting from lower market premiums.

Non-interest expenses for the quarter ended and year ended December 31, 2022 were $7.1 million and $27.2 million, respectively. Non-interest expenses for the quarter ended and year ended December 31, 2021 were $8.8 million and $25.2 million, respectively, net of the ERC recognized by the Company in 2021 of $2.9 million. The Company was no longer eligible for the ERC under the CARES Act program after the third quarter of 2021.

For the year ended December 31, 2022, a provision for income taxes of $1.6 million was recorded, compared to a benefit for income taxes of $81,000 for the year ended December 31, 2021. The benefit for income taxes in 2021 was primarily due to a full $1.9 million reversal of the valuation reserve for deferred tax assets, which decreased the income tax provision in 2021.

As of December 31, 2022, shareholders’ equity was $59.6 million, as compared with $67.3 million on December 31, 2021. While Patriot achieved a material increase in operating and earnings performance in 2022, its equity account declined as a result of market value accounting applied to the Bank’s available-for-sale investment portfolio (“AFS”) during the period; this market value adjustment is directly correlated to the fluctuation of interest rates and does not represent a permanent impairment in value as the Company holds such investment grade securities to maturity Accordingly, on a GAAP basis, Patriot’s book value per share was $15.03 on December 31, 2022, as compared with $17.02 on December 31, 2021. Excluding the net impact of the valuation of the AFS portfolio, non-GAAP tangible book value per share was $18.63, as compared with $18.21 in the third quarter of 2022 and $17.08 on December 31, 2021.

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. The 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 business, 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)December 31, 2022 September 30, 2022 December 31, 2021 
Assets      
Cash and due from banks:      
Noninterest bearing deposits and cash$5,182  $4,319  $3,264  
Interest bearing deposits 33,311   26,865   43,781  
Total cash and cash equivalents   38,493   31,184   47,045  
Investment securities:      
Available-for-sale securities, at fair value 84,520   85,917   94,341  
Other investments, at cost 4,450   4,450   4,450  
Total investment securities   88,970   90,367   98,791  
         
Federal Reserve Bank stock, at cost 2,627   2,671   2,843  
Federal Home Loan Bank stock, at cost 3,874   5,474   4,184  
         
Gross loans receivable 848,316   862,870   739,488  
Allowance for loan losses (10,310)  (9,952)  (9,905) 
     Net loans receivable   838,006   852,918   729,583  
         
SBA loans held for sale 5,211   8,748   3,129  
Accrued interest and dividends receivable 7,267   6,504   5,822  
Premises and equipment, net 30,641   30,861   31,500  
Deferred tax asset 15,527   16,057   12,146  
Goodwill 1,107   1,107   1,107  
Core deposit intangible, net 249   261   296  
Other assets 11,387   12,839   12,035  
Total assets  $1,043,359  $1,058,991  $948,481  
         
Liabilities      
Deposits:      
Noninterest bearing deposits $269,635  $247,704  $226,713  
Interest bearing deposits  590,811   586,691   521,849  
Total deposits   860,446   834,395   748,562  
         
Federal Home Loan Bank and correspondent bank borrowings 85,000   125,000   90,000  
Senior notes, net 11,640   12,000   12,000  
Subordinated debt, net 9,840   9,832   9,811  
Junior subordinated debt owed to unconsolidated trust, net   8,128   8,125   8,119  
Note payable 585   637   791  
Advances from borrowers for taxes and insurance 886   2,262   1,101  
Accrued expenses and other liabilities 7,251   8,736   10,753  
Total liabilities   983,776   1,000,987   881,137  
         
Commitments and Contingencies         
         
Shareholders' equity      
Preferred stock         
Common stock 106,565   106,542   106,479  
Accumulated deficit (31,337)  (33,107)  (37,498) 
Accumulated other comprehensive loss (15,645)  (15,431)  (1,637) 
Total shareholders' equity   59,583   58,004   67,344  
         
Total liabilities and shareholders' equity  $1,043,359  $1,058,991  $948,481  
         



PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIES       
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)       
             
   Three Months Ended Year Ended 
(In thousands, except per share amounts)December 31, 2022 September 30, 2022 December 31, 2021 December 31, 2022 December 31, 2021 
             
Interest and Dividend Income          
 Interest and fees on loans$12,865 $11,250 $7,916  $40,823 $30,115  
 Interest on investment securities 672  555  502   2,307  1,924  
 Dividends on investment securities 155  99  73   384  223  
 Other interest income 274  135  22   498  89  
 Total interest and dividend income  13,966  12,039  8,513   44,012  32,351  
             
Interest Expense          
 Interest on deposits 2,641  1,493  387   5,300  2,243  
 Interest on Federal Home Loan Bank borrowings  1,185  806  756   3,475  2,986  
 Interest on senior debt 228  218  227   866  913  
 Interest on subordinated debt 305  276  233   1,066  933  
 Interest on note payable and other 37  3  3   46  15  
 Total interest expense  4,396  2,796  1,606   10,753  7,090  
             
 Net interest income  9,570  9,243  6,907   33,259  25,261  
             
Provision (credit) for loan losses 1,410  200  (200)  1,885  (500) 
             
 Net interest income after provision (credit) for loan losses  8,160  9,043  7,107   31,374  25,761  
             
Non-interest Income          
 Loan application, inspection and processing fees  108  102  54   386  257  
 Deposit fees and service charges 65  67  61   256  251  
 Gains on sale of loans 770  182  1,534   1,461  1,886  
 Rental income 118  124  143   566  543  
 (Loss) gain on sale of investment securities     (43)    76  
 Other income 278  179  556   936  1,410  
 Total non-interest income  1,339  654  2,305   3,605  4,423  
             
Non-interest Expense          
 Salaries and benefits 4,067  4,330  3,583   15,506  11,089  
 Occupancy and equipment expenses 849  862  900   3,428  3,430  
 Data processing expenses 275  297  363   1,185  1,451  
 Professional and other outside services 775  541  956   2,664  3,155  
 Project expenses, net 2  50  1,867   133  1,882  
 Advertising and promotional expenses 41  50  39   232  235  
 Loan administration and processing expenses  50  37  73   234  134  
 Regulatory assessments 219  245  258   817  907  
 Insurance expenses 64  54  66   271  280  
 Communications, stationary and supplies 134  208  154   616  604  
 Other operating expenses 601  540  520   2,136  2,004  
 Total non-interest expense  7,077  7,214  8,779   27,222  25,171  
             
 Income before income taxes  2,422  2,483  633   7,757  5,013  
             
Provision (benefit) for income taxes 652  157  (1,262)  1,596  (81) 
 Net income $1,770 $2,326 $1,895  $6,161 $5,094  
             
 Basic earnings per share $0.45 $0.59 $0.48  $1.56 $1.29  
 Diluted earnings per share $0.45 $0.59 $0.48  $1.55 $1.29  
             



FINANCIAL RATIOS AND OTHER DATA             
                 
     Three Months Ended Year Ended   
   (Dollars in thousands) December 31, 2022 September 30, 2022 December 31, 2021 December 31, 2022 December 31, 2021   
Quarterly Performance Data:             
  Net income $1,770  $2,326  $1,895  $6,161  $5,094    
  Return on Average Assets  0.66%  0.87%  0.79%  0.60%  0.55%   
  Return on Average Equity  11.72%  15.00%  11.21%  9.87%  7.75%   
  Net Interest Margin  3.77%  3.68%  3.05%  3.46%  2.92%   
  Efficiency Ratio  64.88%  72.89%  95.30%  73.84%  84.80%   
  Efficiency Ratio excluding project costs  64.86%  72.39%  75.03%  73.48%  78.46%   
  % (decrease) increase in loans  -1.69%  0.44%  3.49%  14.72%  1.27%   
  % increase (decrease) in deposits  3.12%  -1.46%  1.89%  14.95%  9.17%   
                 
Asset Quality:             
  Nonaccrual loans $18,593  $19,182  $23,095  $18,593  $23,095    
  Nonaccrual loans / loans  2.19%  2.22%  3.12%  2.19%  3.12%   
  Nonaccrual loans / assets  1.78%  1.81%  2.43%  1.78%  2.43%   
                 
  Allowance for loan losses $10,310  $9,952  $9,905  $10,310  $9,905    
  Allowance for loan losses / loans  1.22%  1.15%  1.34%  1.22%  1.34%   
  Allowance / nonaccrual loans  55.45%  51.88%  42.89%  55.45%  42.89%   
                 
  Loan charge-offs $1,177  $366  $  $1,828  $358    
  Loan (recoveries) $(125) $(189) $(25) $(348) $(179)   
  Net loan charge-offs (recoveries) $1,052  $177  $(25) $1,480  $179    
                 
Capital Data and Capital Ratios             
  Book value per share (1) $15.03  $14.66  $17.02  $15.03  $17.02    
  Non-GAAP Tangible book value per share (2) $14.68  $14.31  $16.67  $14.68  $16.67    
  Non-GAAP Tangible book value excluding other comprehensive loss per share (3) $18.63  $18.21  $17.08  $18.63  $17.08    
                 
  Shares outstanding  3,965,186   3,957,269   3,956,492   3,965,186   3,956,492    
                 
  Bank Leverage Ratio  9.26%  9.23%  9.86%  9.26%  9.86%   
                 
 (1) Book value per share represents shareholders' equity divided by outstanding shares.         
 (2) Tangible book value per share represents tangible assets divided by outstanding shares.         
 (3) Tangible book value excluding other comprehensive loss per share represents tangible assets excluding unrealized loss on investments, net of income tax divided by outstanding shares. 
                 
                 
Deposits:              
                 
   (In thousands) December 31, 2022 September 30, 2022 December 31, 2021       
 Non-interest bearing:             
 Non-interest bearing $118,541  $125,396  $127,420        
 Prepaid DDA  151,095   122,308   99,293        
  Total non-interest bearing  269,636   247,704   226,713        
                 
 Interest bearing:             
 NOW  34,440   38,435   34,741        
 Savings  71,002   87,443   109,744        
 Money market  164,827   133,947   113,428        
 Money market - prepaid deposits  46,173   46,825   51,090        
 Certificates of deposit, less than $250,000  165,793   180,253   142,246        
 Certificates of deposit, $250,000 or greater  59,877   65,362   53,584        
 Brokered deposits  48,698   34,426   17,016        
  Total Interest bearing $590,810  $586,691  $521,849        
                 
  Total Deposits $860,446  $834,395  $748,562        
                 
  Total Prepaid deposits $197,268  $169,133  $150,383        
                 
   Total deposits excluding brokered deposits $811,748  $799,969  $731,546        
                 



Non-GAAP Financial Measures:         
           
In addition to evaluating the Company's financial performance in accordance with U.S. generally accepted accounting principles ("GAAP"), management may evaluate certain non-GAAP financial measures, such as pre-tax income excluding Employee Retention Credit and project expenses, and per share numbers that exclude intangible assets and exclude the net reduction in Book equity resulting from the change in value of its Available for Sale investment securities (AFS). A computation and reconciliation of non-GAAP financial measures used for these purposes is contained in the accompanying Reconciliation of GAAP to Non-GAAP Measures tables. We believe that providing certain non-GAAP financial measures provides investors with information useful in understanding our financial performance, our performance trends and financial position. These non-GAAP financial measures should not be considered a substitute for GAAP basis measures and results, and we strongly encourage investors to review our consolidated financial statements in their entirety and not to rely on any single financial measure. 
           
Reconciliation of GAAP to Non-GAAP Measures (unaudited):         
   Three Months Ended Year Ended 
(Dollars in thousands) December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2021 
           
Net Income excluding Employee retention Credit (ERC) and project expenses:       
 Net Income reported $1,770  $1,895  $6,161  $5,094  
 Provision (benefit) for income taxes  652   (1,262)  1,596   (81) 
 Income before income taxes reported  2,422   633   7,757   5,013  
 Employee Retention Credit           (2,896) 
 Project expenses related to merger with American Challenger     1,851      1,851  
 Pre-tax income excluding ERC and project expenses $ 2,422  $ 2,484  $ 7,757  $ 3,968  
           
           
(Dollars in thousands) December 31, 2022 September 30, 2022 December 31, 2021   
           
Tangible book value per share         
 Total shareholders' equity $59,583  $58,004  $67,344    
 Goodwill  (1,107)  (1,107)  (1,107)   
 Core deposit intangible, net  (249)  (261)  (296)   
 Tangible book value $ 58,227  $ 56,636  $ 65,941    
           
 Shares outstanding  3,965,186   3,957,269   3,956,492    
 Tangible book value per share $ 14.68  $ 14.31  $ 16.67    
           
           
Tangible book value excluding other comprehensive loss per share        
 Tangible book value $58,227  $56,636  $65,941    
 Other comprehensive loss  15,645   15,431   1,637    
 Tangible book value excluding other comprehensive loss $ 73,872  $ 72,067  $ 67,578    
           
 Shares outstanding  3,965,186   3,957,269   3,956,492    
 Tangible book value excluding other comprehensive loss per share $ 18.63  $ 18.21  $ 17.08    
           


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