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Patriot Reports Third Quarter 2022 Net Income of $2.3 million, $0.59 per share; continued growth in loans and deposits

Tom Slater hired as Chief Credit Officer

Payment Card Business Triples Since Inception, as Bank Assets Approach $1.1 Billion

STAMFORD, Conn., Nov. 10, 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 $2.3 million, or $0.59 basic and diluted earnings per share for the quarter ended September 30, 2022.

These results reflect an increase as compared to $1.3 million, or $0.32 per basic and diluted earnings per share for the second quarter of 2022 and net income of $1.3 million, or $0.34 basic and diluted earnings per share reported in the third quarter of 2021. The 2021 third quarter included the benefit of a non-recurring employee retention tax credit (“ERC”) of $906,000.

For the nine months ended September 30, 2022, net income was $4.4 million, or $1.11 basic and diluted earnings per share, compared to a net income of $3.2 million, or $0.81 basic and diluted earnings per share for the nine months ended September 30, 2021. The nine months ended September 30, 2021, included the recognition of an ERC of $2.9 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 16.7% and deposit growth of 11.5% compared to December 31, 2021. Net interest margin improved to 3.68% for the quarter and 3.35% for the first three quarters of 2022, up from 2.87% for the first three quarters of 2021. The Bank’s prepaid debit card program continues to be an increasing, low-cost funding source. This relatively new funding silo has grown from $50 million in July 2020 to $169.1 million as of September 30, 2022. Growth in the prepaid portfolio is expected to increasingly contribute to the Bank’s funding strategy and improve the Bank’s net interest margin and overall funding costs.

Patriot President & CEO Robert Russell stated: “We are very pleased with the results for the quarter which reflect continued strong growth in our balance sheet and continued improvement in our asset quality even in the current economic conditions. Net interest margin expanded to 3.68% in the quarter while return on average equity, fueled in part by tax benefits related to the terminated transaction, was 15% for the quarter. Cost control and substantial improvement in the Bank’s net interest margin contributed to the improvement in the efficiency ratio to 73% in the third quarter of 2022.” Mr. Russell added, “The Bank continues to navigate the ever-changing interest rate landscape and remains well positioned for continued growth and improvement.”

Mr. Russell added: “We are also pleased to announce today the hiring of Thomas E. Slater as our new Executive Vice President-Chief Credit Officer. Mr. Slater takes on this new role following his tenure as Senior Vice President and Senior Credit Officer at Investors Bank. Mr. Slater has extensive experience in commercial real estate, as well as commercial and industrial lending, and has led teams successfully through growth and change. I am pleased to add someone of Tom’s caliber and pedigree to the Bank’s leadership team. Tom brings a strong and diverse background to the Bank, and I look forward to his contributions.”

Financial Results:

Total assets increased $110.5 million to $1.1 billion, as of September 30, 2022, as compared to $948.5 million on December 31, 2021, primarily due to the increase in net loans from $729.6 million to $852.9 million on September 30, 2022. Total deposits increased from $748.6 million on December 31, 2021, to $834.4 million on September 30, 2022.

Net interest income for the three months ended September 30, 2022, was $9.2 million, an increase of $2.9 million or 46.9% from the third quarter of 2021. Net interest income for the nine months ended September 30, 2022, was $23.7 million, an increase of $5.3 million or 29.1% from the nine months ended September 30, 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 3.68% in the quarter and 3.35% for the nine months ended September 30, 2022, compared with 2.82% and 2.87% for the three and nine months ended September 30, 2021, respectively.

For the three and nine months ended September 30, 2022, provision for loan losses of $200,000 and $475,000 was recorded, respectively. For the three and nine months ended September 30, 2021, a credit for loans losses of $300,000 was recorded. As of September 30, 2022, the allowance for loan losses was 1.15% of total loans, compared with 1.34% on December 31, 2021.

Non-interest income for the quarter ended September 30, 2022, and 2021 was $654,000 and $923,000, respectively. Non-interest income for the nine months ended September 30, 2022, and 2021, was $2.3 million and $2.1 million, respectively. The higher non-interest income for the quarter ended September 30, 2021, was primarily attributable to a non-recurring gain on the termination of a cash flow interest rate swap of $512,000 recognized in the third quarter of 2021. The increase in non-interest income for the nine months ended September 30, 2022, compared to the same period in 2021 was primarily attributable to gains from sales of SBA loans totaling $691,000 along with higher non-interest income from the payments division.

Non-interest expenses for the quarter ended September 30, 2022, and 2021, were $7.2 million and $5.7 million, respectively. Non-interest expenses for the nine months ended September 30, 2022, and 2021, were $20.1 million and $16.4 million, respectively. During the first three quarters of 2021 the Company recognized an ERC 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 nine months ended September 30, 2022, a provision for income taxes of $944,000 was recorded, compared to a provision for income taxes of $1.2 million for the nine months ended September 30, 2021. The effective tax rate in 2022 was 6.3% for the third quarter, and 17.6% in the year-to-date period, compared with 26.5% and 26.9% in the corresponding 2021 periods. The lower effective tax rates in 2022 were due to the tax treatment of merger-related expenses incurred in 2021 deemed deductible in the third quarter of 2022 due to the previously announced termination of the merger agreement.

As of September 30, 2022, shareholders’ equity was $58.0 million, compared with $67.3 million on December 31, 2021. Patriot’s book value per share was $14.66 on September 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 Held for Sale investment portfolio (HFS) during the quarter associated with rising market interest rates. Excluding the net impact of the valuation of the HFS portfolio, book value per share was $18.21, compared with $17.61 in the second quarter of 2022 and $16.62 on September 30, 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)September 30,
2022
 December 31,
2021
 September 30,
2021
 
         
Assets       
Cash and due from banks:      
Noninterest bearing deposits and cash$4,319  $3,264  $5,298  
Interest bearing deposits 26,865   43,781   40,967  
  Total cash and cash equivalents 31,184   47,045   46,265  
Investment securities:      
Available-for-sale securities, at fair value 85,917   94,341   124,103  
Other investments, at cost 4,450   4,450   4,450  
  Total investment securities 90,367   98,791   128,553  
         
Federal Reserve Bank stock, at cost 2,671   2,843   2,843  
Federal Home Loan Bank stock, at cost 5,474   4,184   5,009  
         
Gross loans receivable 862,870   739,488   714,538  
Allowance for loan losses (9,952)  (9,905)  (10,079) 
 Net loans receivable 852,918   729,583   704,459  
         
SBA loans held for sale 8,748   3,129   4,128  
Accrued interest and dividends receivable 6,504   5,822   6,186  
Premises and equipment, net 30,861   31,500   32,638  
Other real estate owned -   -   -  
Deferred tax asset 16,057   12,146   10,352  
Goodwill 1,107   1,107   1,107  
Core deposit intangible, net 261   296   308  
Other assets 12,839   12,035   10,498  
 Total assets$ 1,058,991  $ 948,481  $ 952,346  
         
Liabilities      
Deposits:      
 Noninterest bearing deposits$247,704  $226,713  $207,941  
 Interest bearing deposits 586,691   521,849   526,732  
  Total deposits 834,395   748,562   734,673  
         
Federal Home Loan Bank and correspondent bank borrowings 125,000   90,000   110,000  
Senior notes, net 12,000   12,000   11,983  
Subordinated debt, net 9,832   9,811   9,803  
Junior subordinated debt owed to unconsolidated trust, net 8,125   8,119   8,116  
Note payable 637   791   842  
Advances from borrowers for taxes and insurance 2,262   1,101   2,253  
Accrued expenses and other liabilities 8,736   10,753   7,976  
  Total liabilities 1,000,987   881,137   885,646  
         
Commitments and Contingencies -   -   -  
         
Shareholders' equity      
Preferred stock -   -   -  
Common stock 106,542   106,479   106,439  
Accumulated deficit (33,107)  (37,498)  (39,393) 
Accumulated other comprehensive loss (15,431)  (1,637)  (346) 
  Total shareholders' equity 58,004   67,344   66,700  
         
 Total liabilities and shareholders' equity$ 1,058,991  $ 948,481  $ 952,346  
         

PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIES         
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)         
             
   Three Months Ended Nine Months Ended 
(In thousands, except per share amounts)September 30,
2022
 June 30,
2022
 September 30,
2021
 September 30,
2022
 September 30,
2021
 
             
Interest and Dividend Income          
 Interest and fees on loans$11,250 $9,044 $7,189  $27,958 $22,199  
 Interest on investment securities 555  510  692   1,635  1,422  
 Dividends on investment securities 99  65  59   229  150  
 Other interest income 135  68  20   224  67  
  Total interest and dividend income 12,039  9,687  7,960   30,046  23,838  
             
Interest Expense          
 Interest on deposits 1,493  757  448   2,659  1,856  
 Interest on Federal Home Loan Bank borrowings 806  747  756   2,290  2,230  
 Interest on senior debt 218  210  229   638  686  
 Interest on subordinated debt 276  251  233   761  700  
 Interest on note payable and other 3  2  4   9  12  
  Total interest expense 2,796  1,967  1,670   6,357  5,484  
             
  Net interest income 9,243  7,720  6,290   23,689  18,354  
             
Provision (credit) for loan losses 200  275  (300)  475  (300) 
             
  Net interest income after provision (credit) for loan losses 9,043  7,445  6,590   23,214  18,654  
             
Non-interest Income          
 Loan application, inspection and processing fees 102  89  79   278  203  
 Deposit fees and service charges 67  60  61   191  190  
 Gains on sale of loans 182  301  -   691  352  
 Rental income 124  132  130   448  400  
 Loss on sale of investment securities -  -  26   -  119  
 Other income 179  216  627   658  854  
  Total non-interest income 654  798  923   2,266  2,118  
             
Non-interest Expense          
 Salaries and benefits 4,330  3,763  2,843   11,439  7,506  
 Occupancy and equipment expenses 862  881  832   2,579  2,530  
 Data processing expenses 297  283  376   910  1,088  
 Professional and other outside services 541  559  633   1,889  2,199  
 Project expenses, net 50  29  4   131  15  
 Advertising and promotional expenses 50  73  57   191  196  
 Loan administration and processing expenses 37  42  23   184  61  
 Regulatory assessments 245  179  213   598  649  
 Insurance expenses 54  76  79   207  214  
 Communications, stationary and supplies 208  139  161   482  450  
 Other operating expenses 540  478  490   1,535  1,484  
  Total non-interest expense 7,214  6,502  5,711   20,145  16,392  
             
  Income before income taxes 2,483  1,741  1,802   5,335  4,380  
             
Provision for income taxes 157  476  479   944  1,181  
  Net income$2,326 $1,265 $1,323  $4,391 $3,199  
             
  Basic earnings per share$0.59 $0.32 $0.34  $1.11 $0.81  
  Diluted earnings per share$0.59 $0.32 $0.34  $1.11 $0.81  
             

FINANCIAL RATIOS AND OTHER DATA          
              
              
     Three Months Ended Nine Months Ended
   (Dollars in thousands) September 30,
2022
 June 30,
2022
 September 30,
2021
 September 30,
2022
 September 30,
2021
              
Quarterly Performance Data:          
  Net income (loss) $2,326  $1,265  $1,323  $4,391  $3,199 
  Return on Average Assets  0.87%   0.50%   0.56%   0.58%   0.47% 
  Return on Average Equity  15.00%   8.20%   7.86%   9.28%   6.56% 
  Net Interest Margin  3.68%   3.27%   2.82%   3.35%   2.87% 
  Efficiency Ratio  72.89%   76.33%   79.18%   77.61%   80.07% 
  Efficiency Ratio excluding project costs  72.39%   76.00%   79.12%   77.11%   80.00% 
  % increase (decrease) in loans  0.44%   11.09%   6.51%   16.68%   -2.14% 
  % increase (decrease) in deposits  -1.46%   8.58%   -3.48%   11.47%   7.15% 
              
Asset Quality:          
  Nonaccrual loans $19,182  $23,324  $28,046  $19,182  $28,046 
  Nonaccrual loans / loans  2.22%   2.71%   3.93%   2.22%   3.93% 
  Nonaccrual loans / assets  1.81%   2.22%   2.94%   1.81%   2.94% 
              
  Allowance for loan losses $9,952  $9,929  $10,079  $9,952  $10,079 
  Allowance for loan losses / loans  1.15%   1.16%   1.41%   1.15%   1.41% 
  Allowance / nonaccrual loans  51.88%   42.57%   35.94%   51.88%   35.94% 
              
  Loan charge-offs $366  $100  $6  $651  $358 
  Loan (recoveries) $(189) $(17) $(23) $(223) $(153)
  Net loan charge-offs (recoveries) $177  $83  $(17) $428  $205 
              
Capital Data and Capital Ratios          
  Book value per share (1) $14.66  $15.11  $16.89  $14.66  $16.89 
  Tangible book value per share (2) $14.31  $14.76  $16.54  $14.31  $16.54 
  Tangible book value excluding other comprehensive loss per share (3)$18.21  $17.61  $16.62  $18.21  $16.62 
              
  Shares outstanding  3,957,269   3,957,269   3,947,976   3,957,269   3,947,976 
              
  Bank Leverage Ratio  9.23%   9.44%   9.88%   9.23%   9.88% 
              
 (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)          
     September 30,
2022
 June 30,
2022
 September 30,
2021
    
 Non-interest bearing:          
 Non-interest bearing $125,396  $137,320  $114,820     
 Prepaid DDA  122,308   133,845   93,121     
  Total non-interest bearing  247,704   271,165   207,941     
              
 Interest bearing:          
 NOW  38,435   35,973   34,528     
 Savings  87,443   99,686   102,365     
 Money market  133,947   151,212   116,318     
 Money market - prepaid deposits  46,825   32,891   49,353     
 Certificates of deposit, less than $250,000  180,253   169,690   142,141     
 Certificates of deposit, $250,000 or greater  65,362   51,491   54,991     
 Brokered deposits  34,426   34,675   27,036     
  Total Interest bearing  586,691   575,618   526,732     
              
  Total Deposits $834,395  $846,783  $734,673     
              
  Total Prepaid deposits $169,133  $166,736  $142,474     
              
   Total deposits excluding brokered deposits $799,969  $812,108  $707,637     
              

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 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 due to the temporary nature of the change in AFS securities which is a result of the current interest rate environment, providing the Book value per share data excluding the Other Comprehensive Loss associated with the valuation of AFS securities provides investors with information useful in understanding our financial position. The 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):      
          
(Dollars in thousands)  September 30,
2022
 June 30,
2022
 September 30,
2021
          
Tangible book value per share       
 Total shareholders' equity $58,004  $59,802  $66,700 
 Goodwill    (1,107)  (1,107)  (1,107)
 Core deposit intangible, net  (261)  (273)  (308)
 Tangible book value $ 56,636  $ 58,422  $ 65,285 
          
 Shares outstanding    3,957,269   3,957,269   3,947,976 
 Tangible book value per share $ 14.31  $ 14.76  $ 16.54 
          
          
Tangible book value excluding other comprehensive loss per share      
 Tangible book value  $56,636  $58,422  $65,285 
 Other comprehensive loss  15,431   11,285   346 
 Tangible book value excluding other comprehensive loss $ 72,067  $ 69,707  $ 65,631 
          
 Shares outstanding    3,957,269   3,957,269   3,947,976 
 Tangible book value excluding other comprehensive loss per share   $ 18.21  $ 17.61  $ 16.62 
          

 

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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