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

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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 & CEO Chairman
Stamford, CT 06901    203-252-5954    203-252-5939  203-251-8230
www.BankPatriot.com      

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