Categories: Wire Stories

Patriot Reports First Quarter 2022 Net Income of $800,000; continued growth in loans and deposits

STAMFORD, Conn., May 05, 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 $800,000, or $0.20 basic and diluted earnings per share for the quarter ended March 31, 2022, compared to a net income of $854,000, or $0.22 basic and diluted earnings per share reported in the first quarter of 2021. The prior year first quarter results included the recognition of an employee retention tax credit (ERC) of $843,000, while no ERC was recognized in the first quarter of 2022.

Along with reporting a substantial improvement net interest income and strong earnings, the Bank reported loan growth of 4.6% and deposit growth of 4.2% for the quarter. Net interest margin improved to 3.06% for the first quarter of 2022. The Bank’s prepaid debit card program continues to be an increasing, low-cost funding source and has nearly tripled in size to $146.8 million as of March 31, 2022, from the $50.0 million in July 2020. The portfolio growth provides a substantial improvement to the Bank’s net interest margin and overall funding costs.  

Patriot President & CEO Robert Russell stated: “The Bank experienced strong earnings and asset generation in the first quarter of 2022. Additionally, margin expansion and continued improvement in nonperforming assets contributed to the outcome for the quarter. The Bank continues to focus on solid asset generation and its cost of funds as we navigate the current economic cycle.”

Michael Carrazza, Patriot’s Chairman added, “Patriot is on a strong earnings trajectory as exhibited by the demonstrable improvement in business line growth and pre-tax income. The financial performance and internal preparation are supportive toward the pending merger transaction with American Challenger Development Corp (“American Challenger”), which is nearing the final stages of its process. The merger transaction remains subject to regulatory and shareholder approvals.”

Financial Results:

As of March 31, 2022, total assets increased $27.0 million to $975.5 million, as compared to $948.5 million on December 31, 2021, primarily due to increase in net loans which increased from $729.6 million on December 31, 2021, to $763.6 million on March 31, 2022. Total deposits increased from $748.6 million on December 31, 2021, to 779.8 million on March 31, 2022.

Net interest income for the quarter ended March 31, 2022, was $6.8 million, versus $6.1 million for the quarter ended March 31, 2021, with the increase 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 3.06% for the quarter ended March 31, 2022, compared with 2.99% for the first quarter of 2021.

No provision for loan losses was recorded for the quarter ended March 31, 2022 and 2021, due to stability and improvement in classified loans. As of March 31, 2022, the allowance for loan losses was 1.26% of total loans, compared with 1.34% on December 31, 2021.

Non-interest income for the quarter ended March 31, 2022, was $814,000, versus $442,000 for the quarter ended March 31, 2021. The increase in the current quarter was primarily attributable to gains from sales of SBA loans totaled $208,000 along with higher non-interest income from the prepaid card program.

Non-interest expense for the quarter ended March 31, 2022, was $6.4 million, versus $5.4 million for the quarter ended March 31, 2021. The 2021 first quarter included an employee retention credit in the amount of $843,000. The organization was no longer eligible for the Employee Retention Credits under the CARES Act program in 2022.

For the quarter ended March 31, 2022, a provision for income taxes of $311,000 was recorded, compared to a provision for income taxes of $319,000 for the quarter ended March 31, 2021.

As of March 31, 2022, shareholders’ equity was $62.7 million, compared with $67.3 million on December 31, 2021. Patriot’s book value per share was $15.84 on March 31, 2022, compared with $17.02 on December 31, 2021. The change was attributable to a decline in the market value of the Bank’s investment portfolio during the quarter associated with rising market interest rates.

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, Mississippi, along with a Rhode Island operations center.

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. 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 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 businesses, 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 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; (25) our compensation expense associated with equity allocated or awarded to our employees, (26) the occurrence of any event, change or other circumstances that could give rise to the right of one or both of the parties to terminate the Merger Agreement, as amended, between the Company and American Challenger, or the Investment Agreements between the Company and the investors in the capital raise, (27) the failure to obtain the necessary approvals of the Company’s shareholders, (28) the outcome of any legal proceedings that may be instituted against the Company and/or American Challenger, (29) the failure to obtain required governmental approvals or a delay in obtaining such approvals, (30) the failure of any of the closing conditions in the Merger Agreement, as amended or Investment Agreements related to the capital raise, to be satisfied on a timely basis or at all, (31) delays in closing the proposed Merger or capital raise, (32) the possibility that the proposed Merger and capital raise may be more expensive to complete than anticipated, including as a result of unexpected factors or events, and (33) the dilution caused by the Company’s issuance of additional shares of its capital stock in connection with the proposed transactions.

Additional Information and Where to Find It

In connection with the proposed Merger and capital raise, the Company will file a proxy statement and other relevant documents with the SEC. SHAREHOLDERS ARE ADVISED TO READ THE PROXY STATEMENT WHEN IT BECOMES AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Shareholders may obtain a free copy of the proxy statement (when available) and other documents filed by the Company at the SEC’s Web site at http://www.sec.gov. The proxy statement and such other documents may also be obtained for free from the Company by directing such request to the Company at 900 Bedford Street, Stamford, CT, 06901, Attention: Michael Carrazza, telephone: (203) 251-8230.

Participants in the Solicitation

The Company and its directors, executive officers and other members of its management and employees may be deemed to be participants in the solicitation of proxies from its shareholders in connection with the Merger and capital raise. A list of the names of such directors and executive officers and information concerning such participants’ ownership of Company common stock is set forth in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021, as modified or supplemented by any Form 3 or Form 4 filed with the SEC since the date of such Annual Report. Additional information about the interests of those participants may be obtained from reading the proxy statement relating to the Merger and capital raise when it becomes available, or by directing a request to the Company at 900 Bedford Street, Stamford, CT, 06901, Attention: Michael Carrazza, telephone: (203) 251-8230.

American Challenger and its directors and executive officers may also be deemed to be participants in the solicitation of proxies from the Company’s shareholders in connection with the Merger and capital raise. A list of the names of such directors and executive officers and information regarding their interests in the Merger will be contained in the proxy statement when available.

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

PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIES        
CONSOLIDATED BALANCE SHEETS (Unaudited)          
               
               
(In thousands) March 31, 2022   December 31, 2021   March 31, 2021
               
Assets            
Cash and due from banks:          
Noninterest bearing deposits and cash $ 9,026     $ 3,264     $ 2,593  
Interest bearing deposits   35,290       43,781       81,681  
    Total cash and cash equivalents   44,316       47,045       84,274  
Investment securities:          
Available-for-sale securities, at fair value   83,260       94,341       57,893  
Other investments, at cost   4,450       4,450       4,450  
    Total investment securities   87,710       98,791       62,343  
               
Federal Reserve Bank stock, at cost   2,869       2,843       2,744  
Federal Home Loan Bank stock, at cost   4,184       4,184       4,503  
               
Gross loans receivable   773,339       739,488       676,676  
Allowance for loan losses   (9,737 )     (9,905 )     (10,426 )
  Net loans receivable   763,602       729,583       666,250  
               
SBA loans held for sale   5,820       3,129       2,829  
Accrued interest and dividends receivable   5,596       5,822       6,270  
Premises and equipment, net   31,269       31,500       33,128  
Other real estate owned               1,216  
Deferred tax asset   13,755       12,146       11,274  
Goodwill   1,107       1,107       1,107  
Core deposit intangible, net   284       296       331  
Other assets   14,992       12,035       9,919  
  Total assets $ 975,504     $ 948,481     $ 886,188  
               
Liabilities          
Deposits:          
  Noninterest bearing deposits $ 237,825     $ 226,713     $ 173,520  
  Interest bearing deposits   542,024       521,849       519,358  
    Total deposits   779,849       748,562       692,878  
               
Federal Home Loan Bank and correspondent bank borrowings   90,000       90,000       90,000  
Senior notes, net   12,000       12,000       11,946  
Subordinated debt, net   9,818       9,811       9,789  
Junior subordinated debt owed to unconsolidated trust, net   8,121       8,119       8,112  
Note payable   740       791       943  
Advances from borrowers for taxes and insurance   2,574       1,101       2,158  
Accrued expenses and other liabilities   9,719       10,753       6,425  
    Total liabilities   912,821       881,137       822,251  
               
Commitments and Contingencies                
               
Shareholders’ equity          
Preferred stock                
Common stock   106,500       106,479       106,363  
Accumulated deficit   (36,698 )     (37,498 )     (41,738 )
Accumulated other comprehensive loss   (7,119 )     (1,637 )     (688 )
    Total shareholders’ equity   62,683       67,344       63,937  
               
  Total liabilities and shareholders’ equity $ 975,504     $ 948,481     $ 886,188  
               

PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIES        
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)        
               
      Three Months Ended
(In thousands, except per share amounts) March 31, 2022   December 31, 2021   March 31, 2021
               
Interest and Dividend Income          
  Interest and fees on loans $ 7,664   $ 7,916     $ 7,743
  Interest on investment securities   570     502       310
  Dividends on investment securities   65     73       34
  Other interest income   21     22       24
    Total interest and dividend income   8,320     8,513       8,111
               
Interest Expense          
  Interest on deposits   409     387       785
  Interest on Federal Home Loan Bank borrowings   737     756       733
  Interest on senior debt   210     227       229
  Interest on subordinated debt   234     233       234
  Interest on note payable and other   4     3       4
    Total interest expense   1,594     1,606       1,985
               
    Net interest income   6,726     6,907       6,126
               
(Credit) provision for loan losses       (200 )    
               
    Net interest income after provision for loan losses   6,726     7,107       6,126
               
Non-interest Income          
  Loan application, inspection and processing fees   87     54       63
  Deposit fees and service charges   64     61       65
  Gains on sale of loans   208     1,534       94
  Rental income   192     143       130
  Loss on sale of investment securities       (43 )    
  Other income   263     556       90
    Total non-interest income   814     2,305       442
               
Non-interest Expense          
  Salaries and benefits   3,346     3,583       2,216
  Occupancy and equipment expenses   836     900       920
  Data processing expenses   330     363       350
  Professional and other outside services   789     956       852
  Project expenses, net   52     1,867       10
  Advertising and promotional expenses   68     39       62
  Loan administration and processing expenses   105     73       24
  Regulatory assessments   174     258       228
  Insurance expenses   77     66       60
  Communications, stationary and supplies   135     154       145
  Other operating expenses   517     520       528
    Total non-interest expense   6,429     8,779       5,395
               
    Income before income taxes   1,111     633       1,173
               
Provision (benefit) for income taxes   311     (1,262 )     319
    Net income $ 800   $ 1,895     $ 854
               
    Basic earnings per share $ 0.20   $ 0.48     $ 0.22
    Diluted earnings per share $ 0.20   $ 0.48     $ 0.22
               

FINANCIAL RATIOS AND OTHER DATA            
                   
          Three Months Ended
      (Dollars in thousands)   March 31, 2022   December 31, 2021   March 31, 2021
                   
Quarterly Performance Data:            
                   
    Net income   $ 800     $ 1,895     $ 854  
    Return on Average Assets     0.34 %     0.79 %     0.39 %
    Return on Average Equity     4.88 %     11.21 %     5.42 %
    Net Interest Margin     3.06 %     3.05 %     2.99 %
    Efficiency Ratio     85.27 %     95.30 %     82.14 %
    Efficiency Ratio excluding project costs     84.58 %     75.03 %     81.99 %
    % increase (decrease) in loans     4.58 %     3.49 %     -7.33 %
    % increase in deposits     4.18 %     1.89 %     1.05 %
    % increase in deposits excluding brokered deposits     1.83 %     3.38 %     4.66 %
                   
Asset Quality:            
    Nonaccrual loans   $ 23,466     $ 23,095     $ 24,587  
    Other real estate owned   $     $     $ 1,216  
    Total nonperforming assets   $ 23,466     $ 23,095     $ 25,803  
                   
    Nonaccrual loans / loans     3.03 %     3.12 %     3.63 %
    Nonperforming assets / assets     2.41 %     2.43 %     2.91 %
    Allowance for loan losses   $ 9,737     $ 9,905     $ 10,426  
                   
    Allowance for loan losses / loans     1.26 %     1.34 %     1.54 %
    Allowance / nonaccrual loans     41.49 %     42.89 %     42.40 %
                   
    Gross loan charge-offs   $ 185     $     $ 272  
    Gross loan (recoveries)   $ (17 )   $ (25 )   $ (114 )
    Net loan charge-offs (recoveries)   $ 168     $ (25 )   $ 158  
                   
Capital Data and Capital Ratios            
    Book value per share (1)   $ 15.84     $ 17.02     $ 16.21  
                   
    Shares outstanding     3,956,492       3,956,492       3,944,272  
                   
    Bank Leverage Ratio     9.94 %     9.86 %     10.12 %
                   
  (1) Book value per share represents shareholders’ equity divided by outstanding shares.        
                   
                   
                   
Deposits:            
      (In thousands)            
          March 31, 2022   December 31, 2021   March 31, 2021
  Non-interest bearing:            
  Non-interest bearing   $ 120,835     $ 127,420     $ 104,766  
  Prepaid DDA     116,990       99,293       68,754  
    Total non-interest bearing     237,825       226,713       173,520  
                   
  Interest bearing:            
  NOW     42,272       34,741       34,433  
  Savings     105,871       109,744       103,025  
  Money market     117,049       113,428       128,069  
  Money market – prepaid deposits     29,770       51,090       3,775  
  Certificates of deposit, less than $250,000     158,625       142,246       165,130  
  Certificates of deposit, $250,000 or greater     53,513       53,584       66,470  
  Brokered deposits     34,924       17,016       18,456  
    Total Interest bearing     542,024       521,849       519,358  
                   
    Total Deposits   $ 779,849     $ 748,562     $ 692,878  
                   
    Total Prepaid deposits   $ 146,760     $ 150,383     $ 72,529  
                   
      Total deposits excluding brokered deposits   $ 744,925     $ 731,546     $ 674,422  
                   

Alex

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