Patriot Reports Second Quarter 2021 Net Income of $1.0 Million

7/29, 3:00 PM (Source: GlobeNewswire)

STAMFORD, Conn., July 29, 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 net income of $1.0 million, or $0.26 basic and diluted earnings per share for the quarter ended June 30, 2021, compared to a net loss of $1.3 million, or $0.32 basic and diluted loss per share reported in the second quarter of 2020. On a year-to-date basis, net income was $1.9 million, or $0.48 per fully diluted share, compared to a net loss of $2.4 million, or $0.60 fully diluted loss per share during the same year to date period in 2020.

The Bank continued to show improved net interest margins, core deposit growth, and lower operating expenses. The prepaid portfolio continues to be a low-cost funding source for the Bank and has increased substantially to $137.8 million as of June 30, 2021 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. In addition, during the first half of 2021 the Bank recognized a gross payroll tax credit of $2.0 million under the Employee Retention Credit program of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). Pre-tax income was $1.4 million and $2.6 million for the three months ended and six months ended June 30, 2021, respectively. Excluding the employee tax credit, pre-tax income was $257,000 and $587,000 for the three months and six months periods, respectively.

Since 2020, the Bank had provided payment deferrals on approximately $232.7 million of loans as permitted under the CARES Act. A significant percentage of those loans deferred have now resumed normal payments. Loans remaining on deferral in conjunction with the CARES Act declined to $21.3 million at June 30, 2021.

Patriot President & CEO Robert Russell stated: “The Bank’s focus on improving its funding sources, asset quality and loan growth continues to have a positive impact on the Bank’s financial condition. Key additions to staff and ongoing process improvements will contribute to continued advancement of our pursuit of performance. We are pleased with the progress that we have made so far even in what remains a challenging economic environment.”

Financial Results:

As of June 30, 2021, total assets increased to $963.1 million, as compared to $880.7 million at December 31, 2020. Net loans totaled $660.5 million versus $719.6 million as of December 31, 2020. Total deposits increased from $685.7 million at December 31, 2020 to $761.2 million at June 30, 2021.

The Bank has substantially improved its deposit and funding mix over the past year. During the past six months, brokered deposits declined by $28.5 million while growth in core funding of $40.5 million and prepaid deposits of $63.5 million combined to produce growth in total deposits of 11% or $75.5 million for the six-month period. Excluding the planned reduction of brokered deposits, total deposits increased $104.0 million during the first half of 2021.

Net interest income for the three months ended June 30, 2021, was $5.9 million, an increase of $251,000 or 4.4% from the comparable period in 2020. Net interest income for the six months ended June 30, 2021 was $12.1 million, an increase of $54,000 or 0.4% from the first half of 2020.

The Bank’s net interest margin showed strong improvement and was 2.90% for the six months ended June 30, 2021 compared with 2.59% for the comparable 2020 period. As economic activity continues to expand, loan balances are expected to grow, and coupled with reductions in funding costs, the Bank expects further improvements in net interest income.

The recovering economy, lower loan balances and lower pooled reserves resulted in no additions to the Bank’s allowance for loan and lease losses as compared to $1.7 million that was recognized in the first half of 2020. The majority of the provision in the first six-months of 2020 was primarily attributable to conditions and the uncertainty created by the COVID-19 pandemic. As of June 30, 2021, the allowance for loan losses was 1.54% of total loans, compared with 1.45% at December 31, 2020.

Non-interest income was $753,000 and $389,000 for the second quarter of 2021 and 2020, respectively. Non-interest income was $1.2 million and $810,000 for the six months ended June 30, 2021 and 2020, respectively. The increase was primarily attributable to an increase in gains on sales of SBA loans in 2021.

Non-interest expense was $5.3 million and $6.9 million for the second quarter of 2021 and 2020, respectively. Non-interest expense was $10.7 million and $14.3 million for the year-to-date 2021 and 2020 periods, respectively. The decrease in non-interest expense in the first half of 2021 was primarily driven by an Employee Retention Credit of $2.0 million under the Employee Retention Credit program of the CARES Act and a reduction of $368,000 in regulatory assessments expense.

For the first half of 2021, a provision for income taxes of $702,000 was recorded, compared to a benefit for income taxes of $805,000 for the first half of 2020.

As of June 30, 2021, shareholders’ equity was $65.9 million, compared with $63.2 million at December 31, 2020. Patriot’s book value per share rose to $16.69 at June 30, 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 June 30, 2021, the Bank’s Tier 1 leverage ratio was 10.10%, Tier 1 risk-based capital ratio was 12.04% and total risk-based capital ratio was 13.29%.

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)June 30, 2021 December 31, 2020 June 30, 2020 
         
Assets       
Cash and due from banks:      
Noninterest bearing deposits and cash$2,397  $3,006  $1,616  
Interest bearing deposits 113,794   31,630   64,280  
  Total cash and cash equivalents 116,191   34,636   65,896  
Investment securities:      
Available-for-sale securities, at fair value 108,612   49,262   46,624  
Other investments, at cost 4,450   4,450   4,450  
  Total investment securities 113,062   53,712   51,074  
         
Federal Reserve Bank stock, at cost 2,744   2,783   2,897  
Federal Home Loan Bank stock, at cost 4,185   4,503   4,503  
         
Gross loans receivable 670,896   730,180   792,500  
Allowance for loan losses (10,362)  (10,584)  (11,148) 
 Net loans receivable 660,534   719,596   781,352  
         
SBA loans held for sale 2,636   1,217   7,579  
Accrued interest and dividends receivable 6,207   6,620   5,624  
Premises and equipment, net 32,824   33,423   33,962  
Other real estate owned 1,216   1,906   2,400  
Deferred tax asset, net 10,560   11,496   12,180  
Goodwill 1,107   1,107   1,107  
Core deposit intangible, net 319   343   586  
Other assets 11,469   9,387   10,384  
 Total assets$ 963,054  $ 880,729  $ 979,544  
         
Liabilities      
Deposits:      
 Noninterest bearing deposits$218,374  $158,676  $97,360  
 Interest bearing deposits 542,824   526,980   685,728  
  Total deposits 761,198   685,656   783,088  
         
Federal Home Loan Bank and correspondent bank borrowings 90,000   90,000   90,000  
Senior notes, net 11,965   11,927   11,890  
Subordinated debt, net 9,796   9,782   9,767  
Junior subordinated debt owed to unconsolidated trust, net 8,114   8,110   8,106  
Note payable 893   994   1,094  
Advances from borrowers for taxes and insurance 3,607   3,786   3,773  
Accrued expenses and other liabilities 11,619   7,255   7,654  
  Total liabilities 897,192   817,510   915,372  
         
Commitments and Contingencies -   -   -  
         
Shareholders' equity      
Preferred stock -   -   -  
Common stock 106,409   106,329   106,251  
Accumulated deficit (40,716)  (42,592)  (41,123) 
Accumulated other comprehensive loss 169   (518)  (956) 
  Total shareholders' equity 65,862   63,219   64,172  
         
 Total liabilities and shareholders' equity$ 963,054  $ 880,729  $ 979,544  
         


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, 2021 March 31, 2021 June 30, 2020 June 30, 2021 June 30, 2020 
             
Interest and Dividend Income          
 Interest and fees on loans$7,267 $7,743 $9,111  $15,010 $19,144  
 Interest on investment securities 420  310  378   730  794  
 Dividends on investment securities 57  34  90   91  228  
 Other interest income 23  24  24   47  159  
  Total interest and dividend income 7,767  8,111  9,603   15,878  20,325  
             
Interest Expense          
 Interest on deposits 623  785  2,792   1,408  5,992  
 Interest on Federal Home Loan Bank borrowings 741  733  638   1,474  1,335  
 Interest on senior debt 228  229  228   457  457  
 Interest on subordinated debt 233  234  253   467  521  
 Interest on note payable and other 4  4  5   8  10  
  Total interest expense 1,829  1,985  3,916   3,814  8,315  
             
  Net interest income 5,938  6,126  5,687   12,064  12,010  
             
Provision for loan losses -  -  910   -  1,714  
             
  Net interest income after provision for loan losses 5,938  6,126  4,777   12,064  10,296  
             
Non-interest Income          
 Loan application, inspection and processing fees 61  63  40   124  93  
 Deposit fees and service charges 64  65  66   129  180  
 Gains on sale of loans 258  94  72   352  84  
 Rental income 140  130  131   270  262  
 Gain on sale of investment securities 93  -  -   93  -  
 Other income 137  90  80   227  191  
  Total non-interest income 753  442  389   1,195  810  
             
Non-interest Expense          
 Salaries and benefits 2,447  2,216  3,645   4,663  7,506  
 Occupancy and equipment expenses 778  920  921   1,698  1,870  
 Data processing expenses 362  350  371   712  761  
 Professional and other outside services 714  852  726   1,566  1,510  
 Project expenses, net 1  10  54   11  148  
 Advertising and promotional expenses 77  62  123   139  270  
 Loan administration and processing expenses 14  24  36   38  60  
 Regulatory assessments 208  228  364   436  804  
 Insurance expenses 75  60  78   135  148  
 Communications, stationary and supplies 144  145  133   289  253  
 Other operating expenses 466  528  439   994  931  
  Total non-interest expense 5,286  5,395  6,890   10,681  14,261  
             
  Income (loss) before income taxes 1,405  1,173  (1,724)  2,578  (3,155) 
             
Provision (benefit) for income taxes 383  319  (446)  702  (805) 
  Net income (loss)$1,022 $854 $(1,278) $1,876 $(2,350) 
             
  Basic earnings (loss) per share$0.26 $0.22 $(0.32) $0.48 $(0.60) 
  Diluted earnings (loss) per share$0.26 $0.22 $(0.32) $0.48 $(0.60) 
             


FINANCIAL RATIOS AND OTHER DATA          
              
              
     Three Months Ended  Six Months Ended
   (Dollars in thousands) June 30, 2021 March 31, 2021 June 30, 2020 June 30, 2021 June 30, 2020
              
 Performance Data:          
              
  Net income (loss) $1,023  $854  $(1,279) $1,876  $(2,350)
  Return on Average Assets  0.46%  0.39%  -0.52%  0.42%  -0.48%
  Return on Average Equity  6.35%  5.39%  -7.89%  5.87%  -7.11%
  Net Interest Margin  2.82%  2.99%  2.46%  2.90%  2.59%
  Efficiency Ratio  78.99%  82.14%  113.41%  80.56%  111.24%
  Efficiency Ratio excluding project costs  78.98%  81.99%  112.49%  80.47%  110.08%
  % (decrease) increase in loans  -0.85%  -7.33%  -3.22%  -8.12%  -2.42%
  % increase in deposits excluding brokered deposits  10.96%  4.66%  7.68%  16.14%  15.30%
              
Asset Quality:          
  Nonaccrual loans $24,524  $24,587  $21,593  $24,524  $21,593 
  Other real estate owned $1,216  $1,216  $2,400  $1,216  $2,400 
  Total nonperforming assets $25,740  $25,803  $23,993  $25,740  $23,993 
              
  Nonaccrual loans / loans  3.66%  3.63%  2.72%  3.66%  2.72%
  Nonperforming assets / assets  2.67%  2.91%  2.45%  2.67%  2.45%
  Allowance for loan losses $10,362  $10,426  $11,148  $10,362  $11,148 
  Valuation reserve $469  $477  $485  $469  $485 
  Allowance for loan losses with valuation reserve $10,831  $10,903  $11,633  $10,831  $11,633 
              
  Allowance for loan losses / loans  1.54%  1.54%  1.41%  1.54%  1.41%
  Allowance / nonaccrual loans  42.25%  42.40%  51.63%  42.25%  51.63%
  Allowance for loan losses and valuation reserve / loans  1.61%  1.61%  1.47%  1.61%  1.47%
  Allowance for loan losses and valuation reserve / nonaccrual loans  44.16%  44.34%  53.87%  44.16%  53.87%
              
  Gross loan charge-offs $80  $272  $691  $352  $735 
  Gross loan (recoveries) $(17) $(114) $(13) $(129) $(54)
  Net loan charge-offs $63  $158  $678  $223  $681 
              
Capital Data and Capital Ratios          
  Book value per share (1) $16.69  $16.21  $16.30  $16.69  $16.30 
  Shares outstanding  3,947,276   3,944,272   3,935,841   3,947,276   3,935,841 
              
Bank Capital Ratios:          
  Leverage Ratio  10.10%  10.12%  9.03%  10.10%  9.03%
  Tier 1 Capital  12.04%  12.07%  10.52%  12.06%  10.52%
  Total Risk Based Capital  13.29%  13.32%  11.77%  13.31%  11.77%
              
(1) Book value per share represents shareholders' equity divided by outstanding shares.      
              
              
Deposits:          
   (In thousands)          
     June 30, 2021 December 31, 2020 June 30, 2020    
 Non-interest bearing:          
 Non-interest bearing $135,477  $99,344  $97,360     
 Prepaid DDA  82,897   59,332   -     
  Total non-interest bearing  218,374   158,676   97,360     
              
 Interest bearing:          
 NOW  36,085   30,529   26,941     
 Savings  99,264   98,635   70,230     
 Money market  123,327   131,378   165,658     
 Money market - prepaid deposits  54,922   15,011   -     
 Certificates of deposit, less than $250,000  152,700   160,968   194,388     
 Certificates of deposit, $250,000 or greater  63,690   49,172   67,626     
 Brokered deposits  12,836   41,287   160,885     
  Total Interest bearing  542,824   526,980   685,728     
              
  Total Deposits $761,198  $685,656  $783,088     
              
  Total Prepaid deposits $137,819  $74,343  $-     
              
 Total deposits excluding brokered deposits$748,362  $644,369  $622,203     
              


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

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