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Patriot Reports Minimal Net Loss of $87 thousand ($.02 per share) for third quarter 2020 – Loan Loss Provisions lowered; Net Interest and Non-interest Income Improve

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STAMFORD, Conn., Dec. 01, 2020 (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 a net loss of $87,000, or $0.02 basic and diluted loss per share for the quarter ended September 30, 2020, compared with a net loss of $1.3 million reported in the second quarter of 2020. The improvement compared with the second quarter of 2020 resulted from a lower provision for loan losses and higher net interest and non-interest income.

The net loss for the nine-month period ended September 30, 2020 was $2.4 million, or $0.62 per fully diluted share, as compared to a net loss of $1.3 million, or $0.33 per fully diluted shares, during the same period in the prior year. The 2020 results to date, reflect lower net interest income and non-interest income.

As of September 30, 2020, total assets decreased 5.8% to $922.9 million, as compared to the second quarter of 2020. The Bank’s net loan portfolio by $41.3 million, to $740.1 million, while total deposits decreased $55.7 million or 7.1%, to $727.4 million in the third quarter of 2020. The decline in loans represented an intentional slow-down in new loan originations as the impact of the pandemic on the local economy was better understood. The decrease in total deposits during the quarter is primarily the result of declines in the use of wholesale brokered deposits and higher-cost certificates of deposits, partially offset by growth in deposits gathered from the prepaid debit card business.

Excluding that change in brokered deposits, total deposits increased $71.0 million or 12.5% since the end of the third quarter in 2019. In July 2020, the Company completed the purchase of prepaid debit card deposits from a prominent national provider and processor of prepaid debit cards for corporate, consumer and government clients. The prepaid debit card deposits totaled approximately $60.0 million as of September 30, 2020.

As far as the impact of COVID-19, Patriot has kept all branches open with customers re-directed to non-contact ATM’s and Live Banker ATMs as on-line banking services continue to be optimized with expanded customer call center staffing. Its multi-year investment to enhance customer’s technological banking experience has been well tested during the pandemic, as from January 1 to September 30, 2020, Patriot’s mobile deposits were up 98%, use of its mobile app banking was up 33%, monthly average log-ins rose 8% and the number of customers completely new to digital banking rose by 30%.

The Bank had provided CARES Act payment relief on loans of approximately $244.4 million. The Bank received some very positive indications of the strength of its borrowers as a significant percentage of the loans deferred as a result of the CARES Act have now resumed normal payments. The majority of the modifications granted to customers expired in November of 2020, the balance of loans modified in conjunction with the CARES Act had declined from the high of $244.4 million to $59.1 million

Patriot President & CEO Robert Russell stated: “Many of the changes implemented during the second and third quarters are showing signs of success and are reflected in the positive profitability trends. The Bank continues to reshape its leadership team and its balance sheet and has strengthened its capital position to prepare for future growth and profitability of the organization. As the pandemic continues, Patriot remains prepared to deliver the tools and service required to remain a strong partner with the communities we serve”. Mr. Russell added: “we are very pleased that loans on deferral as a result of the Cares Act have declined from $244.4 million to $59.1 million.”

Financial Results:

As of September 30, 2020, total assets were $922.9 million, as compared to $979.5 million at June 30, 2020 and $972.0 million at September 30, 2019. Net loans receivable totaled $740.1 million, as compared to $781.4 million at June 30, 2020 and $791.9 million at September 30, 2019. Deposits totaled $727.4 million at September 30, 2020, as compared to $783.1 million at June 30, 2020 and $762.1 million at September 30, 2019.

The decline in loans and total assets represents the intentional downsizing of the Bank’s balance sheet as the current economic uncertainties associated with the COVID-19 pandemic are assessed. The Company continues to originate loans, but at a slower pace than in the past, and has seen loan maturities and loan payoffs outpace loan originations during the nine-month period of September 30, 2020.

Total deposits declined $55.7 million during the third quarter of 2020, this was due to a decline of $69.9 million in wholesale brokered deposits, a decline of $51.0 million in certificate of deposits as higher rate non-relationship deposits were allowed to run off, and a decline of $22.7 million in money market deposits, which was partially offset by an increase of $60.0 million in prepaid debit card deposits.

Net interest income was $5.9 million in the third quarter of 2020, an increase of 3.9% from the second quarter of 2020, and a decline of 5.4% from the third quarter of 2019. The year-to-date September 30, 2020 net interest income was $17.9 million, a decrease of 6.8% over the year-to-date September 2019.

Net interest margin was 2.61% in the third quarter of 2020, as compared to 2.46% in the second quarter of 2020 and 2.70% in the third quarter of 2019.

Compared to the prior year, net interest income was negatively impacted by a lower average loan balance, and an increase in the rate paid on FHLB borrowings associated with the conversion of certain borrowings from a low variable teaser rate to higher fixed rate. The decline also reflects the impact of lower interest rates connected with a decline in market interest rates in late first quarter of 2020 connected to the COVID-19 pandemic.

The provision for loan losses in the third quarter of 2020 was $85,000, as compared to $910,000 in the second quarter of 2020 and $100,000 in the third quarter of 2019. The Allowance for Loan losses on September 30, 2020 totals 1.49% of total loans compared with 1.41% on June 30, 2020 and 1.05% on September 30, 2019. The increase in the Allowance as a percent of loans reflects additional provisions in the second and third quarter associated with the estimated impact of the COVID pandemic on the economy and local business community

Non­interest income was $704,000 in the third quarter of 2020, 81.0% higher than the second quarter of 2020, and 23.3% higher than the third quarter of 2019. The increase was primarily due to gains on sale of SBA loans of $421,000 in the third quarter of 2020. The year-to-date September 30, 2020 non-interest income was $1.5 million, a decline of 27.0% over the year-to-date September 30, 2019. The decrease in non­interest income for the year-to-date period was primarily due to lower realized gains on the sale of SBA loans associated with delays in executing the sale of those loans in 2020.

Non­interest expense was $6.6 million in the third quarter of 2020, 3.9% lower than the second quarter of 2020, and 0.9% lower than the third quarter of 2019. The year-to-date September 30, 2020 non-interest expense was $20.9 million, 5.2% higher than the prior year. The increase in non-interest expense for the year-to-date period was primarily driven by an increase of $694,000 in salaries and benefits and an increase of $297,000 in regulatory assessments expenses in 2020.

The income tax benefit was $6,000 in the third quarter of 2020, representing an effective tax rate of 6.5%. The income tax benefit was $811,000 in the nine-month period ended September 30, 2020, representing an effective tax rate of 25.0%.

As of September 30, 2020, shareholders’ equity was $64.5 million, as compared to $64.2 million at June 30, 2020. Patriot’s book value per share was $16.39 at September 30, 2020, as compared to $16.30 at June 30, 2020. The Bank’s capital ratios continue to be strong, maintaining its “well capitalized” regulatory status. As of September 30, 2020, the Bank’s Tier 1 leverage ratio was 9.35%, Tier 1 risk-based capital ratio was 11.08% and total risk-based capital ratio was 12.33%.

Patriot has currently suspended its quarterly dividend due to the uncertainties surrounding the pandemic however, the Bank hopes to resume when the current economic uncertainties are settled.

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 Jacksonville and Stamford, along with a Rhode Island operations center.

About the Company:
Founded in 1994, and now celebrating its 26th 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, except share data)

September 30,
2020

June 30,
2020

September 30,
2019

Assets

Cash and due from banks:

Noninterest bearing deposits and cash

$

3,231

$

1,616

$

3,157

Interest bearing deposits

46,405

64,280

46,844

Total cash and cash equivalents

49,636

65,896

50,001

Investment securities:

Available-for-sale securities, at fair value

47,823

46,624

50,057

Other investments, at cost

4,450

4,450

4,963

Total investment securities

52,273

51,074

55,020

Federal Reserve Bank stock, at cost

2,783

2,897

2,889

Federal Home Loan Bank stock, at cost

4,503

4,503

4,477

Gross loans receivable

751,298

792,500

800,314

Allowance for loan losses

(11,171

)

(11,148

)

(8,405

)

Net loans receivable

740,127

781,352

791,909

SBA loans held for sale

6,824

7,579

4,103

Accrued interest and dividends receivable

6,834

5,624

3,538

Premises and equipment, net

33,632

33,962

34,883

Other real estate owned

1,954

2,400

2,400

Deferred tax asset, net

12,066

12,180

11,495

Goodwill

1,107

1,107

1,107

Core deposit intangible, net

567

586

642

Other assets

10,623

10,384

9,521

Total assets

$

922,929

$

979,544

$

971,985

Liabilities

Deposits:

Noninterest bearing deposits

$

161,871

$

97,360

$

80,772

Interest bearing deposits

565,560

685,728

681,284

Total deposits

727,431

783,088

762,056

Federal Home Loan Bank and correspondent bank borrowings

90,000

90,000

100,000

Senior notes, net

11,909

11,890

11,834

Subordinated debt, net

9,774

9,767

9,745

Junior subordinated debt owed to unconsolidated trust, net

8,108

8,106

8,100

Note payable

1,044

1,094

1,242

Advances from borrowers for taxes and insurance

2,492

3,773

2,182

Accrued expenses and other liabilities

7,634

7,654

8,647

Total liabilities

858,392

915,372

903,806

Commitments and Contingencies

-

-

-

Shareholders' equity

Preferred stock

-

-

-

Common stock

106,293

106,251

106,118

Accumulated deficit

(41,210

)

(41,123

)

(37,222

)

Accumulated other comprehensive loss

(546

)

(956

)

(717

)

Total shareholders' equity

64,537

64,172

68,179

Total liabilities and shareholders' equity

$

922,929

$

979,544

$

971,985


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,
2020

June 30,
2020

September 30,
2019

September 30,
2020

September 30,
2019

Interest and Dividend Income

Interest and fees on loans

$

8,578

$

9,111

$

10,245

$

27,722

$

30,345

Interest on investment securities

340

378

430

1,134

1,207

Dividends on investment securities

85

90

112

313

344

Other interest income

28

24

225

187

795

Total interest and dividend income

9,031

9,603

11,012

29,356

32,691

Interest Expense

Interest on deposits

2,028

2,792

3,655

8,020

10,452

Interest on Federal Home Loan Bank borrowings

628

638

602

1,963

1,467

Interest on senior debt

229

228

229

686

686

Interest on subordinated debt

235

253

277

756

845

Interest on note payable and other

5

5

6

15

20

Total interest expense

3,125

3,916

4,769

11,440

13,470

Net interest income

5,906

5,687

6,243

17,916

19,221

Provision for Loan Losses

85

910

100

1,799

3,202

Net interest income after provision for loan losses

5,821

4,777

6,143

16,117

16,019

Non-interest Income

Loan application, inspection and processing fees

54

40

32

147

74

Deposit fees and service charges

73

66

123

253

366

Gains on sale of loans

380

72

188

464

864

Rental income

131

131

137

393

459

Other income

66

80

91

257

312

Total non-interest income

704

389

571

1,514

2,075

Non-interest Expense

Salaries and benefits

3,460

3,645

3,480

10,966

10,272

Occupancy and equipment expenses

810

921

937

2,680

2,598

Data processing expenses

433

371

357

1,194

1,088

Professional and other outside services

627

726

721

2,137

2,233

Project expenses, net

6

54

212

154

277

Advertising and promotional expenses

107

123

63

377

255

Loan administration and processing expenses

75

36

44

135

101

Regulatory assessments

355

364

152

1,159

862

Insurance expenses

67

78

65

215

160

Communications, stationary and supplies

118

133

118

371

383

Other operating expenses

560

439

530

1,491

1,626

Total non-interest expense

6,618

6,890

6,679

20,879

19,855

(Loss) income before income taxes

(93

)

(1,724

)

35

(3,248

)

(1,761

)

(Benefit) provision for income taxes

(6

)

(446

)

8

(811

)

(456

)

Net (loss) income

$

(87

)

$

(1,278

)

$

27

$

(2,437

)

$

(1,305

)

Basic (loss) earnings per share

$

(0.02

)

$

(0.32

)

$

0.01

$

(0.62

)

$

(0.33

)

Diluted (loss) earnings per share

$

(0.02

)

$

(0.32

)

$

0.01

$

(0.62

)

$

(0.33

)


FINANCIAL RATIOS AND OTHER DATA

Three Months Ended

Nine Months Ended

(Dollars in thousands)

September 30,
2020

June 30,
2020

September 30,
2019

September 30,
2020

September 30,
2019

Quarterly Performance Data:

Net (loss) income

$

(87

)

$

(1,279

)

$

26

$

(2,437

)

$

(1,305

)

Return on Average Assets

-0.04

%

-0.52

%

0.01

%

-0.33

%

-0.08

%

Return on Average Equity

-0.53

%

-7.89

%

0.15

%

-4.96

%

-1.07

%

Net Interest Margin

2.61

%

2.46

%

2.70

%

2.61

%

1.22

%

Efficiency Ratio

100.12

%

113.41

%

98.02

%

107.46

%

93.24

%

Efficiency Ratio excluding project costs

100.03

%

112.51

%

94.92

%

106.66

%

91.94

%

% increase loans

-5.20

%

-3.22

%

-1.41

%

-7.49

%

2.55

%

% increase deposits

-7.11

%

-2.51

%

-0.72

%

-5.47

%

2.53

%

Asset Quality:

Nonaccrual loans

$

20,440

$

21,593

$

19,183

$

20,440

$

19,183

Other real estate owned

$

1,954

$

2,400

$

2,400

$

1,954

$

2,400

Total nonperforming assets

$

22,394

$

23,993

$

21,583

$

22,394

$

21,583

Nonaccrual loans / loans

2.72

%

2.72

%

2.40

%

2.72

%

2.40

%

Nonperforming assets / assets

2.43

%

2.45

%

2.22

%

2.43

%

2.22

%

Allowance for loan losses

$

11,171

$

11,148

$

8,405

$

11,171

$

8,405

Valuation reserve

$

492

$

485

$

1,252

$

492

$

1,252

Allowance for loan losses with valuation reserve

$

11,663

$

11,633

$

9,657

$

11,663

$

9,657

Allowance for loan losses / loans

1.49

%

1.41

%

1.05

%

1.49

%

1.05

%

Allowance / nonaccrual loans

54.65

%

51.63

%

43.81

%

54.65

%

43.81

%

Allowance for loan losses and valuation reserve / loans

1.55

%

1.47

%

1.20

%

1.55

%

1.20

%

Allowance for loan losses and valuation reserve / nonaccrual loans

57.06

%

53.87

%

50.34

%

57.06

%

50.34

%

Gross loan charge-offs

$

75

$

691

$

282

$

810

$

2,589

Gross loan (recoveries)

$

(13

)

$

(13

)

$

(128

)

$

(67

)

$

(183

)

Net loan charge-offs (recoveries)

$

62

$

678

$

154

$

743

$

2,406

Capital Data and Capital Ratios

Book value per share (1)

$

16.39

$

16.30

$

17.37

$

16.39

$

17.37

Shares outstanding

3,937,041

3,935,841

3,925,002

3,937,041

3,925,002

Bank Capital Ratios:

Leverage Ratio

9.35

%

9.03

%

9.47

%

9.35

%

9.47

%

Tier 1 Capital

11.08

%

10.52

%

10.82

%

11.08

%

10.82

%

Total Risk Based Capital

12.33

%

11.77

%

11.81

%

12.33

%

11.81

%

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

Deposits:

September 30,

June 30,

September 30,

(In thousands)

2020

2020

2019

Non-interest bearing:

Non-interest bearing

$

102,004

$

95,932

$

80,772

Prepaid DDA

59,867

1,428

-

Total non-interest bearing

161,871

97,360

80,772

Interest bearing:

NOW

29,518

26,941

23,675

Savings

91,169

70,230

57,390

Money market

142,909

165,658

125,934

Certificates of deposit, less than $250,000

133,754

160,258

170,814

Certificates of deposit, $250,000 or greater

44,042

60,066

62,702

Listed Deposits

33,173

41,690

44,140

Brokered deposits

90,995

160,885

196,629

Total Interest bearing

565,560

685,728

681,284

Total Deposits

$

727,431

$

783,088

$

762,056


Contacts:

Patriot Bank, N.A.

Joseph Perillo

Robert Russell

Michael Carrazza

900 Bedford Street

Chief Financial Officer

President & CEO

Chairman

Stamford, CT 06901

203-252-5954

203-252-5939

203-251-8230

www.BankPatriot.com