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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, 2022September 30, 2022December 31, 2021
Assets
Cash and due from banks:
Noninterest bearing deposits and cash$5,182$4,319$3,264
Interest bearing deposits33,31126,86543,781
Total cash and cash equivalents38,49331,18447,045
Investment securities:
Available-for-sale securities, at fair value84,52085,91794,341
Other investments, at cost4,4504,4504,450
Total investment securities88,97090,36798,791
Federal Reserve Bank stock, at cost2,6272,6712,843
Federal Home Loan Bank stock, at cost3,8745,4744,184
Gross loans receivable848,316862,870739,488
Allowance for loan losses(10,310)(9,952)(9,905)
� � �Net loans receivable838,006852,918729,583
SBA loans held for sale5,2118,7483,129
Accrued interest and dividends receivable7,2676,5045,822
Premises and equipment, net30,64130,86131,500
Deferred tax asset15,52716,05712,146
Goodwill1,1071,1071,107
Core deposit intangible, net249261296
Other assets11,38712,83912,035
Total assets$1,043,359$1,058,991$948,481
Liabilities
Deposits:
Noninterest bearing deposits$269,635$247,704$226,713
Interest bearing deposits590,811586,691521,849
Total deposits860,446834,395748,562
Federal Home Loan Bank and correspondent bank borrowings85,000125,00090,000
Senior notes, net11,64012,00012,000
Subordinated debt, net9,8409,8329,811
Junior subordinated debt owed to unconsolidated trust, net8,1288,1258,119
Note payable585637791
Advances from borrowers for taxes and insurance8862,2621,101
Accrued expenses and other liabilities7,2518,73610,753
Total liabilities983,7761,000,987881,137
Commitments and Contingencies
Shareholders' equity
Preferred stock
Common stock106,565106,542106,479
Accumulated deficit(31,337)(33,107)(37,498)
Accumulated other comprehensive loss(15,645)(15,431)(1,637)
Total shareholders' equity59,58358,00467,344
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 EndedYear Ended
(In thousands, except per share amounts)December 31, 2022September 30, 2022December 31, 2021December 31, 2022December 31, 2021
Interest and Dividend Income
Interest and fees on loans$12,865$11,250$7,916$40,823$30,115
Interest on investment securities6725555022,3071,924
Dividends on investment securities1559973384223
Other interest income2741352249889
Total interest and dividend income13,96612,0398,51344,01232,351
Interest Expense
Interest on deposits2,6411,4933875,3002,243
Interest on Federal Home Loan Bank borrowings1,1858067563,4752,986
Interest on senior debt228218227866913
Interest on subordinated debt3052762331,066933
Interest on note payable and other37334615
Total interest expense4,3962,7961,60610,7537,090
Net interest income9,5709,2436,90733,25925,261
Provision (credit) for loan losses1,410200(200)1,885(500)
Net interest income after provision (credit) for loan losses8,1609,0437,10731,37425,761
Non-interest Income
Loan application, inspection and processing fees10810254386257
Deposit fees and service charges656761256251
Gains on sale of loans7701821,5341,4611,886
Rental income118124143566543
(Loss) gain on sale of investment securities(43)76
Other income2781795569361,410
Total non-interest income1,3396542,3053,6054,423
Non-interest Expense
Salaries and benefits4,0674,3303,58315,50611,089
Occupancy and equipment expenses8498629003,4283,430
Data processing expenses2752973631,1851,451
Professional and other outside services7755419562,6643,155
Project expenses, net2501,8671331,882
Advertising and promotional expenses415039232235
Loan administration and processing expenses503773234134
Regulatory assessments219245258817907
Insurance expenses645466271280
Communications, stationary and supplies134208154616604
Other operating expenses6015405202,1362,004
Total non-interest expense7,0777,2148,77927,22225,171
Income before income taxes2,4222,4836337,7575,013
Provision (benefit) for income taxes652157(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 EndedYear Ended
(Dollars in thousands)December 31, 2022September 30, 2022December 31, 2021December 31, 2022December 31, 2021
Quarterly Performance Data:
Net income$1,770$2,326$1,895$6,161$5,094
Return on Average Assets0.66%0.87%0.79%0.60%0.55%
Return on Average Equity11.72%15.00%11.21%9.87%7.75%
Net Interest Margin3.77%3.68%3.05%3.46%2.92%
Efficiency Ratio64.88%72.89%95.30%73.84%84.80%
Efficiency Ratio excluding project costs64.86%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 deposits3.12%-1.46%1.89%14.95%9.17%
Asset Quality:
Nonaccrual loans$18,593$19,182$23,095$18,593$23,095
Nonaccrual loans / loans2.19%2.22%3.12%2.19%3.12%
Nonaccrual loans / assets1.78%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 / loans1.22%1.15%1.34%1.22%1.34%
Allowance / nonaccrual loans55.45%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 outstanding3,965,1863,957,2693,956,4923,965,1863,956,492
Bank Leverage Ratio9.26%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, 2022September 30, 2022December 31, 2021
Non-interest bearing:
Non-interest bearing$118,541$125,396$127,420
Prepaid DDA151,095122,30899,293
Total non-interest bearing269,636247,704226,713
Interest bearing:
NOW34,44038,43534,741
Savings71,00287,443109,744
Money market164,827133,947113,428
Money market - prepaid deposits46,17346,82551,090
Certificates of deposit, less than $250,000165,793180,253142,246
Certificates of deposit, $250,000 or greater59,87765,36253,584
Brokered deposits48,69834,42617,016
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 EndedYear Ended
(Dollars in thousands)December 31, 2022December 31, 2021December 31, 2022December 31, 2021
Net Income excluding Employee retention Credit (ERC) and project expenses:
Net Income reported$1,770$1,895$6,161$5,094
Provision (benefit) for income taxes652(1,262)1,596(81)
Income before income taxes reported2,4226337,7575,013
Employee Retention Credit(2,896)
Project expenses related to merger with American Challenger1,8511,851
Pre-tax income excluding ERC and project expenses$ 2,422$ 2,484$ 7,757$ 3,968
(Dollars in thousands)December 31, 2022September 30, 2022December 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 outstanding3,965,1863,957,2693,956,492
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$65,941
Other comprehensive loss15,64515,4311,637
Tangible book value excluding other comprehensive loss$ 73,872$ 72,067$ 67,578
Shares outstanding3,965,1863,957,2693,956,492
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��

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