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Patriot Returns to Profitability and Reports First Quarter 2021 Net Income of $854 thousand

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STAMFORD, Conn., May 13, 2021 (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 pre-tax income of $1.2 million and net income of $854 thousand, or $0.22 basic and diluted earnings per share for the quarter ended March 31, 2021, compared to a net loss of $1.1 million reported in the first quarter of 2020.

Profitability in the first quarter was achieved as the Bank demonstrated improved net interest margins, core deposit growth, lower operating expenses, and a lower loan loss provision. In addition, during the quarter the Bank recognized a payroll tax credit of $843 thousand under the Employee Retention Credit program of the CARES Act. These factors were partially offset by a lower loan balance as loan payoffs outpaced new loan originations. Further improvements in profitability are projected as loan balances begin to grow and SBA loan and sale activity resumes.

Since 2020, the Bank had provided CARES Act payment deferrals on approximately $232.7 million of loans. A significant percentage of the loans deferred as a result of the CARES Act have now resumed normal payments. The balance of loans remaining on deferral in conjunction with the CARES Act had declined to $37.7 million at March 31, 2021.

Patriot President & CEO Robert Russell stated: “The Bank continues to make progress in the areas of income creation and expense management during challenging operational circumstances. Staff remain focused on service and process improvements to help Patriot become an efficient and high performing organization. We remain steadfast in our pursuit of efficiency and performance. The leadership team has expanded with experienced banking professionals now added to our team to help us achieve our goals and strengthen the Bank’s accountability culture.” Mr. Russell added: “we believe the changes and our culture have us on the right path of success for us, our customers and our communities.”

Financial Results:

As of March 31, 2021, total assets increased to $886.2 million, as compared to $880.7 million at December 31, 2020. Net loans totaled $666.3 million versus $719.6 million as of December 31, 2020. Total deposits increased from $685.7 million at December 31, 2020 to $692.9 million at March 31, 2021.

Excluding the decline in brokered deposits, total deposits increased $23.8 million during the quarter due to stronger retail banking activity in the first quarter along with a $9.4 million growth in the prepaid debit card business during the first quarter of 2021.

These balance sheet changes have significantly strengthened the Bank’s capital ratios and at the same time improved its net interest margin. These foundational changes position Patriot for continued growth in profitability in 2021 as net interest margins are expected to continue to improve and as business activity rebounds from the impact of the pandemic and returns to more normalized levels.

In the first quarter of 2021, net interest income was $6.1 million and declined $197 thousand, or 3.1% from the first quarter of 2020. Net interest margin showed strong improvement and resulted in a 2.99% margin in the first quarter of 2021, compared with 2.72% for the first quarter of 2020. The impact of the improving net interest margin was mitigated by the lower loan balance associated with a cautious approach to lending during the pandemic. As economic activity expands, loan balances are expected to grow, further improving net interest income.

The provision for loan losses for the first quarter of 2021 was zero, compared to $804 thousand for the first quarter of 2020. No provision was required for the first quarter of 2021 due to the declining loan balance and the need for lower pooled reserves as the economic recovery accelerates. In the first quarter of 2020, the provision for loan losses was primarily due to an additional reserve attributable to COVID-19 pandemic.

The Allowance for Loan Losses at March 31, 2021 totaled 1.54% of total loans, compared with 1.45% at December 31, 2020.

Non-interest income was $442 thousand and $421 thousand for the first quarter of 2021 and 2020, respectively. The increase was primarily attributable to an increase in gains on sales of SBA loans from the first quarter of 2021.

Non-interest expense was $5.4 million and $7.4 million for the first quarter of 2021 and 2020, respectively. The decrease in non-interest expense in 2021 was primarily driven by an Employee Retention Credit of $843 thousand under the Employee Retention Credit program of the CARES Act, a reduction of $800 thousand in compensation and benefits due to staffing adjustments made during 2020, and a reduction of $212 thousand in regulatory assessments expense.

For the first quarter of 2021, a provision for income taxes of $319 thousand was recorded, compared to a benefit for income taxes of $359 thousand for the first quarter of 2020.

As of March 31, 2021, shareholders’ equity was $63.9 million, compared with $63.2 million at December 31, 2020. Patriot’s book value per share was $16.21 at March 31, 2021, compared with $16.03 at December 31, 2020. The Bank’s capital ratios continue to be strong, maintaining its “well capitalized” regulatory status. As of March 31, 2021, the Bank’s Tier 1 leverage ratio was 10.12%, Tier 1 risk-based capital ratio was 12.07% and total risk-based capital ratio was 13.32%.

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 27th 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)

March 31, 2021

December 31, 2020

March 31, 2020

Assets

Cash and due from banks:

Noninterest bearing deposits and cash

$

2,593

$

3,006

$

1,806

Interest bearing deposits

81,681

31,630

50,350

Total cash and cash equivalents

84,274

34,636

52,156

Investment securities:

Available-for-sale securities, at fair value

57,893

49,262

44,830

Other investments, at cost

4,450

4,450

4,450

Total investment securities

62,343

53,712

49,280

Federal Reserve Bank stock, at cost

2,744

2,783

2,897

Federal Home Loan Bank stock, at cost

4,503

4,503

4,477

Gross loans receivable

676,676

730,180

818,841

Allowance for loan losses

(10,426

)

(10,584

)

(10,916

)

Net loans receivable

666,250

719,596

807,925

SBA loans held for sale

2,829

1,217

17,996

Accrued interest and dividends receivable

6,270

6,620

3,801

Premises and equipment, net

33,128

33,423

34,312

Other real estate owned

1,216

1,906

2,400

Deferred tax asset, net

11,274

11,496

11,989

Goodwill

1,107

1,107

1,107

Core deposit intangible, net

331

343

605

Other assets

9,919

9,387

10,634

Total assets

$

886,188

$

880,729

$

999,579

Liabilities

Deposits:

Noninterest bearing deposits

$

173,520

$

158,676

$

83,583

Interest bearing deposits

519,358

526,980

719,631

Total deposits

692,878

685,656

803,214

Federal Home Loan Bank and correspondent bank borrowings

90,000

90,000

90,000

Senior notes, net

11,946

11,927

11,871

Subordinated debt, net

9,789

9,782

9,760

Junior subordinated debt owed to unconsolidated trust, net

8,112

8,110

8,104

Note payable

943

994

1,143

Advances from borrowers for taxes and insurance

2,158

3,786

2,637

Accrued expenses and other liabilities

6,425

7,255

8,227

Total liabilities

822,251

817,510

934,956

Commitments and Contingencies

-

-

-

Shareholders' equity

Preferred stock

-

-

-

Common stock

106,363

106,329

106,213

Accumulated deficit

(41,738

)

(42,592

)

(39,845

)

Accumulated other comprehensive loss

(688

)

(518

)

(1,745

)

Total shareholders' equity

63,937

63,219

64,623

Total liabilities and shareholders' equity

$

886,188

$

880,729

$

999,579



PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

Three Months Ended

(In thousands, except per share amounts)

March 31, 2021

December 31, 2020

March 31, 2020

Interest and Dividend Income

Interest and fees on loans

$

7,743

$

8,113

$

10,033

Interest on investment securities

310

326

416

Dividends on investment securities

34

86

138

Other interest income

24

22

135

Total interest and dividend income

8,111

8,547

10,722

Interest Expense

Interest on deposits

785

1,134

3,200

Interest on Federal Home Loan Bank borrowings

733

708

697

Interest on senior debt

229

229

229

Interest on subordinated debt

234

235

268

Interest on note payable and other

4

4

5

Total interest expense

1,985

2,310

4,399

Net interest income

6,126

6,237

6,323

Provision for loan losses

-

371

804

Net interest income after provision for loan losses

6,126

5,866

5,519

Non-interest Income

Loan application, inspection and processing fees

63

76

53

Deposit fees and service charges

65

68

114

Gains on sale of loans

94

102

12

Rental income

130

130

131

Other income

90

89

111

Total non-interest income

442

465

421

Non-interest Expense

Salaries and benefits

2,216

3,357

3,861

Occupancy and equipment expenses

920

833

949

Data processing expenses

350

377

390

Professional and other outside services

852

691

784

Project expenses, net

10

664

94

Advertising and promotional expenses

62

77

147

Loan administration and processing expenses

24

39

24

Regulatory assessments

228

318

440

Insurance expenses

60

70

70

Communications, stationary and supplies

145

105

120

Other operating expenses

528

708

492

Total non-interest expense

5,395

7,239

7,371

Income (loss) before income taxes

1,173

(908

)

(1,431

)

Provision (benefit) for income taxes

319

474

(359

)

Net income (loss)

$

854

$

(1,382

)

$

(1,072

)

Basic earnings (loss) per share

$

0.22

$

(0.35

)

$

(0.27

)

Diluted earnings (loss) per share

$

0.22

$

(0.35

)

$

(0.27

)



FINANCIAL RATIOS AND OTHER DATA

(Dollars in thousands)

March 31, 2021

December 31, 2020

March 31, 2020

Quarterly Performance Data:

Net (loss) income

$

854

$

(1,382

)

$

(1,072

)

Return on Average Assets

0.39

%

-0.61

%

-0.44

%

Return on Average Equity

5.42

%

-8.41

%

-6.37

%

Net Interest Margin

2.99

%

2.93

%

2.72

%

Efficiency Ratio

82.14

%

108.04

%

109.38

%

Efficiency Ratio excluding project costs

81.99

%

98.58

%

107.99

%

% (decrease) increase in loans

-7.33

%

-2.81

%

0.82

%

% increase in deposits excluding brokered deposits

4.66

%

1.25

%

7.08

%

Asset Quality:

Nonaccrual loans

$

24,587

$

20,005

$

16,450

Other real estate owned

$

1,216

$

1,906

$

2,400

Total nonperforming assets

$

25,803

$

21,911

$

18,850

Nonaccrual loans / loans

3.63

%

2.74

%

2.01

%

Nonperforming assets / assets

2.91

%

2.49

%

1.89

%

Allowance for loan losses

$

10,426

$

10,584

$

10,916

Valuation reserve

$

477

$

482

$

1,100

Allowance for loan losses with valuation reserve

$

10,903

$

11,066

$

12,016

Allowance for loan losses / loans

1.54

%

1.45

%

1.33

%

Allowance / nonaccrual loans

42.40

%

52.91

%

66.36

%

Allowance for loan losses and valuation reserve / loans

1.61

%

1.51

%

1.47

%

Allowance for loan losses and valuation reserve / nonaccrual loans

44.34

%

55.32

%

73.05

%

Gross loan charge-offs

$

272

$

968

$

44

Gross loan (recoveries)

$

(114

)

$

(10

)

$

(41

)

Net loan charge-offs (recoveries)

$

158

$

958

$

3

Capital Data and Capital Ratios

Book value per share (1)

$

16.21

$

16.03

$

16.43

Shares outstanding

3,944,272

3,943,572

3,932,841

Bank Capital Ratios:

Leverage Ratio

10.12

%

9.80

%

9.16

%

Tier 1 Capital

12.07

%

11.25

%

10.51

%

Total Risk Based Capital

13.32

%

12.50

%

11.76

%

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

Deposits:

(In thousands)

March 31, 2021

December 31, 2020

March 31, 2020

Non-interest bearing:

Non-interest bearing

$

104,766

$

99,344

$

83,583

Prepaid DDA

68,754

59,332

-

Total non-interest bearing

173,520

158,676

83,583

Interest bearing:

NOW

34,433

30,529

28,265

Savings

103,025

98,635

59,567

Money market

131,844

146,389

132,629

Certificates of deposit, less than $250,000

165,130

160,968

205,311

Certificates of deposit, $250,000 or greater

66,470

49,172

68,444

Brokered deposits

18,456

41,287

225,415

Total Interest bearing

519,358

526,980

719,631

Total Deposits

$

692,878

$

685,656

$

803,214

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