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Patriot Reports Fourth Quarter 2021 Net Income of $1.9 Million and full year Net Income of $5.1 Million; continued growth in loans and deposits

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Patriot National Bancorp Inc.
Patriot National Bancorp Inc.

STAMFORD, Conn., Feb. 16, 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 $1.9 million, or $0.48 basic and diluted earnings per share for the quarter ended December 31, 2021, compared to a net loss of $1.4 million, or $0.35 basic and diluted loss per share reported in the fourth quarter of 2020. For the year ended December 31, 2021, net income was $5.1 million, or $1.29 per fully diluted share, compared to a net loss of $3.8 million, or $0.97 fully diluted loss per share for the year ended December 31, 2020.

During the year ended December 31, 2021, the Bank recognized payroll tax credits of $2.9 million, under the Employee Retention Credit program of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). The Bank did not recognize any amounts related to the Employee Retention Credit program in the fourth quarter of 2021. During the fourth quarter of 2021, Patriot announced a transformational merger transaction with American Challenger Development Corp. (“American Challenger”). As a result of the proposed merger transaction, material, non-recurring acquisition-related expenses of $1.85 million, or $0.47 per share, were incurred in the fourth quarter. Pre-tax GAAP income for the quarter ended December 31, 2021 was $633,000; and excluding the merger related charges, pre-tax income was $2.5 million. For the full year ended December 31, 2021, pre-tax income was $5.0 million. Excluding income from the Employee Retention Credit program and merger related charges, pre-tax income for the full year ended December 31, 2021 was $4.0 million, or $1.01 per share.

The Bank reported loan growth of 3.5% and core deposit growth of 2.83% for the quarter. Net interest margin improved to 3.05% for the fourth quarter of 2021. The Bank’s prepaid debit card program continues to be an increasing, low-cost funding source for the Bank and has grown substantially in the last year and a half to $150.4 million as of December 31, 2021, from the $50.0 million acquired 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: “Throughout 2021 the Patriot team continued pursuing operational improvements, with a focus on earnings growth and profitability. The results demonstrate these wide-spread achievements throughout the Bank, including growth across all asset classes and overall net margin improvement. The Bank is positioned for continued earnings and asset growth."

Financial Results:

As of December 31, 2021, total assets increased $67.8 million to $948.5 million, as compared to $880.7 million at December 31, 2020, primarily due to increase in available-for-sale securities of $45.0 million. Net loans increased from $719.6 million as of December 31, 2020, to $729.6 million at December 31, 2021. Total deposits increased from $685.7 million at December 31, 2020, to $748.6 million at December 31, 2021.

The Bank has substantially improved its deposit and funding mix over the past year. During the past twelve months, total deposits increased $62.9 million, primarily due to growth in prepaid deposits of $76.0 million, which was partially offset by decline of $24.3 million in brokered deposits and certificates of deposits. Excluding brokered deposits, total deposits increased 13.5% during 2021.

Net interest income for the quarter ended December 31, 2021, was $6.9 million, versus $6.2 million for the quarter ended December 31, 2020. Net interest income for the year ended December 31, 2021, was $25.3 million, versus $24.2 million for the year ended December 31, 2020.

The Bank’s net interest margin showed strong improvement, with an increase to 3.05% for the quarter and 2.92% for the year ended December 31, 2021, compared with 2.93% and 2.68%, respectively, for the comparable period in 2020.

The recovering economy and improvement in classified loans resulted in a credit of provision for loan losses of $200,000 and $500,000 for the quarter and the year ended December 31, 2021, respectively. For the quarter and the year ended December 31, 2020, a provision for loan losses of $371,000 and $2.2 million was recorded, respectively. Most of the provision in 2020 was primarily attributable to conditions and the uncertainty created by the COVID-19 pandemic and a charge-off on one borrower in the fourth quarter of 2020. As of December 31, 2021, the allowance for loan losses was 1.34% of total loans, compared with 1.45% at December 31, 2020.

Non-interest income for the quarter ended December 31, 2021, was $2.3 million, versus $465,000 for the quarter ended December 31, 2020. Non-interest income for the year ended December 31, 2021, was $4.4 million, versus $2.0 million for the year ended December 31, 2020. The increase in the current quarter was primarily attributable to gains from sales of SBA loans totaled $1.5 million.

Non-interest expense for the quarter ended December 31, 2021, was $8.8 million, versus $7.2 million for the quarter ended December 31, 2020. For the year ended December 31, 2021, non-interest expense was $25.2 million, versus $28.1 million for the year ended December 31, 2020. The increase in non-interest expense in the quarter ended December 31, 2021, was primarily driven by increased project expenses of $1.85 million related to the proposed merger with American Challenger. The Employee Retention Credits of $2.9 million drove part of the reduction year-over-year.

For the year ended December 31, 2021, a benefit for income taxes of $81,000 was recorded, compared to a benefit for income taxes of $337,000 for the year ended December 31, 2020. The provision for income taxes reflected a full reversal of the valuation reserve for deferred tax assets, which decreased the income tax provision of $1.7 million in the fourth quarter of 2021.

As of December 31, 2021, shareholders’ equity was $67.3 million, compared with $63.2 million at December 31,2020. Patriot’s book value per share rose to $17.02 at December 31, 2021, compared with $16.03 at December 31, 2020.

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 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 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.



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)

December 31,
2021

September 30,
2021

December 31,
2020

Assets

Cash and due from banks:

Noninterest bearing deposits and cash

$

3,264

$

5,298

$

3,006

Interest bearing deposits

43,781

40,967

31,630

Total cash and cash equivalents

47,045

46,265

34,636

Investment securities:

Available-for-sale securities, at fair value

94,341

124,103

49,262

Other investments, at cost

4,450

4,450

4,450

Total investment securities

98,791

128,553

53,712

Federal Reserve Bank stock, at cost

2,843

2,843

2,783

Federal Home Loan Bank stock, at cost

4,184

5,009

4,503

Gross loans receivable

739,488

714,538

730,180

Allowance for loan losses

(9,905

)

(10,079

)

(10,584

)

Net loans receivable

729,583

704,459

719,596

SBA loans held for sale

3,129

4,128

1,217

Accrued interest and dividends receivable

5,822

6,186

6,620

Premises and equipment, net

31,500

32,638

33,423

Other real estate owned

-

-

1,906

Deferred tax asset, net

12,146

10,352

11,496

Goodwill

1,107

1,107

1,107

Core deposit intangible, net

296

308

343

Other assets

12,035

10,498

9,387

Total assets

$

948,481

$

952,346

$

880,729

Liabilities

Deposits:

Noninterest bearing deposits

$

226,713

$

207,941

$

158,676

Interest bearing deposits

521,849

526,732

526,980

Total deposits

748,562

734,673

685,656

Federal Home Loan Bank and correspondent bank borrowings

90,000

110,000

90,000

Senior notes, net

12,000

11,983

11,927

Subordinated debt, net

9,811

9,803

9,782

Junior subordinated debt owed to unconsolidated trust, net

8,119

8,116

8,110

Note payable

791

842

994

Advances from borrowers for taxes and insurance

1,101

2,253

3,786

Accrued expenses and other liabilities

10,753

7,976

7,255

Total liabilities

881,137

885,646

817,510

Commitments and Contingencies

-

-

-

Shareholders' equity

Preferred stock

-

-

-

Common stock

106,479

106,439

106,329

Accumulated deficit

(37,498

)

(39,393

)

(42,592

)

Accumulated other comprehensive loss

(1,637

)

(346

)

(518

)

Total shareholders' equity

67,344

66,700

63,219

Total liabilities and shareholders' equity

$

948,481

$

952,346

$

880,729


PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

Three Months Ended

Year Ended

(In thousands, except per share amounts)

December 31,
2021

September 30,
2021

December 31,
2020

December 31,
2021

December 31,
2020

Interest and Dividend Income

Interest and fees on loans

$

7,916

$

7,189

$

8,113

$

30,115

$

35,835

Interest on investment securities

502

692

326

1,924

1,460

Dividends on investment securities

73

59

86

223

399

Other interest income

22

20

22

89

209

Total interest and dividend income

8,513

7,960

8,547

32,351

37,903

Interest Expense

Interest on deposits

387

448

1,134

2,243

9,154

Interest on Federal Home Loan Bank borrowings

756

756

708

2,986

2,671

Interest on senior debt

227

229

229

913

915

Interest on subordinated debt

233

233

235

933

991

Interest on note payable and other

3

4

4

15

19

Total interest expense

1,606

1,670

2,310

7,090

13,750

Net interest income

6,907

6,290

6,237

25,261

24,153

(Credit) provision for loan losses

(200

)

(300

)

371

(500

)

2,170

Net interest income after provision for loan losses

7,107

6,590

5,866

25,761

21,983

Non-interest Income

Loan application, inspection and processing fees

54

79

76

257

223

Deposit fees and service charges

61

61

68

251

321

Gains on sale of loans

1,534

-

102

1,886

566

Rental income

143

130

130

543

523

Gain on sale of investment securities

(43

)

26

-

76

-

Other income

556

627

89

1,410

346

Total non-interest income

2,305

923

465

4,423

1,979

Non-interest Expense

Salaries and benefits

3,583

2,843

3,357

11,089

14,323

Occupancy and equipment expenses

900

832

833

3,430

3,513

Data processing expenses

363

376

377

1,451

1,571

Professional and other outside services

956

633

691

3,155

2,828

Project expenses, net

1,867

4

664

1,882

818

Advertising and promotional expenses

39

57

77

235

454

Loan administration and processing expenses

73

23

39

134

174

Regulatory assessments

258

213

318

907

1,477

Insurance expenses

66

79

70

280

285

Communications, stationary and supplies

154

161

105

604

476

Other operating expenses

520

490

708

2,004

2,199

Total non-interest expense

8,779

5,711

7,239

25,171

28,118

Income (loss) before income taxes

633

1,802

(908

)

5,013

(4,156

)

(Benefit) provision for income taxes

(1,262

)

479

474

(81

)

(337

)

Net income (loss)

$

1,895

$

1,323

$

(1,382

)

$

5,094

$

(3,819

)

Basic earnings (loss) per share

$

0.48

$

0.34

$

(0.35

)

$

1.29

$

(0.97

)

Diluted earnings (loss) per share

$

0.48

$

0.34

$

(0.35

)

$

1.29

$

(0.97

)



FINANCIAL RATIOS AND OTHER DATA

Three Months Ended

Year- To- Date

(Dollars in thousands)

December 31,
2021

September 30,
2021

December 31,
2020

December 31,
2021

December 31,
2020

Quarterly Performance Data:

Net income (loss)

$

1,895

$

1,323

$

(1,382

)

$

5,094

$

(3,819

)

Return on Average Assets

0.79

%

0.56

%

-0.61

%

0.55

%

-0.40

%

Return on Average Equity

11.21

%

7.86

%

-8.41

%

7.75

%

-5.81

%

Net Interest Margin

3.05

%

2.82

%

2.93

%

2.92

%

2.68

%

Efficiency Ratio

95.30

%

79.18

%

108.04

%

84.80

%

107.60

%

Efficiency Ratio excluding project costs

75.03

%

79.12

%

98.58

%

78.46

%

104.59

%

% increase (decrease) in loans

3.49

%

6.51

%

-2.81

%

1.27

%

-10.09

%

% increase (decrease) in deposits excluding brokered deposits

3.38

%

-5.44

%

1.25

%

13.53

%

19.41

%

Asset Quality:

Nonaccrual loans

$

23,095

$

28,046

$

20,005

$

23,095

$

20,005

Other real estate owned

$

-

$

-

$

1,906

$

-

$

1,906

Total nonperforming assets

$

23,095

$

28,046

$

21,911

$

23,095

$

21,911

Nonaccrual loans / loans

3.12

%

3.93

%

2.74

%

3.12

%

2.74

%

Nonperforming assets / assets

2.43

%

2.94

%

2.49

%

2.43

%

2.49

%

Allowance for loan losses

$

9,905

$

10,079

$

10,584

$

9,905

$

10,584

Valuation reserve

$

459

$

466

$

482

$

459

$

482

Allowance for loan losses with valuation reserve

$

10,364

$

10,545

$

11,066

$

10,364

$

11,066

Allowance for loan losses / loans

1.34

%

1.41

%

1.45

%

1.34

%

1.45

%

Allowance / nonaccrual loans

42.89

%

35.94

%

52.91

%

42.89

%

52.91

%

Allowance for loan losses and valuation reserve / loans

1.40

%

1.47

%

1.51

%

1.40

%

1.51

%

Allowance for loan losses and valuation reserve / nonaccrual loans

44.88

%

37.60

%

55.32

%

44.88

%

55.32

%

Gross loan charge-offs

$

-

$

6

$

968

$

358

$

1,778

Gross loan (recoveries)

$

(25

)

$

(23

)

$

(10

)

$

(179

)

$

(76

)

Net loan charge-offs (recoveries)

$

(25

)

$

(17

)

$

958

$

179

$

1,702

Capital Data and Capital Ratios

Book value per share (1)

$

17.02

$

16.89

$

16.03

$

17.02

$

16.03

Tangible book value per share (2)

$

16.67

$

16.54

$

15.66

$

16.67

$

15.66

Tangible book value per share-fully diluted

$

16.58

$

16.41

$

15.59

$

16.58

$

15.59

Shares outstanding

3,956,492

3,947,976

3,943,572

3,956,492

3,943,572

Bank Leverage Ratio

9.85

%

9.88

%

9.80

%

9.85

%

9.80

%

(1) Book value per share represents shareholders' equity divided by outstanding shares.

(2) Tagible book value per share represents tangible assets divided by outstanding shares.

Deposits:

(In thousands)

December 31,
2021

September 30,
2021

December 31,
2020

Non-interest bearing:

Non-interest bearing

$

127,420

$

114,850

$

99,344

Prepaid DDA

99,293

93,091

59,332

Total non-interest bearing

226,713

207,941

158,676

Interest bearing:

NOW

34,741

34,528

30,529

Savings

109,744

102,365

98,635

Money market

113,428

116,318

131,378

Money market - prepaid deposits

51,090

49,353

15,011

Certificates of deposit, less than $250,000

142,246

142,141

160,968

Certificates of deposit, $250,000 or greater

53,584

54,991

49,172

Brokered deposits

17,016

27,036

41,287

Total Interest bearing

521,849

526,732

526,980

Total Deposits

$

748,562

$

734,673

$

685,656

Total Prepaid deposits

$

150,383

$

142,444

$

74,343

Total deposits excluding brokered deposits

$

731,546

$

707,637

$

644,369



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 for merger and acquisition related project expenses, and pre-tax income excluding Employee Retention Credit and project expenses. A computation and reconciliation of certain 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 Ended

Year Ended

(Dollars in thousands)

December 31, 2021

December 31, 2021

Net Income excluding Employee retention Credit (ERC) and project expenses:

Net Income reported

$

1,895

$

5,094

(Benefit) Provision for income taxes

(1,262

)

(81

)

Income before income taxes reported

633

5,013

Employee Retention Credit

-

(2,896

)

Project expenses related to merger with American Challenger

1,851

1,851

Pre-tax income excluding ERC and project expenses

$

2,484

$

3,968

Weighted average shares outstanding

3,948,069

3,946,384

Pre-tax income excluding ERC and project expenses per share

$

0.63

$

1.01

Project expenses per share:

Project expenses related to merger with American Challenger

$

1,851

$

1,851

Weighted average shares outstanding

3,948,069

3,946,384

Project expenses per share

$

0.47

$

0.47