STAMFORD, Conn., Aug. 11, 2023 (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 loss of $546 thousand, or $(0.14) basic and diluted loss per share for the quarter ended June 30, 2023.

These results compared to net loss of $53 thousand, or $(0.01) per basic and diluted loss per share for the first quarter of 2023 and net income of $1.3 million, or $0.32 basic and diluted earnings per share reported in the second quarter of 2022.

For the six months ended June 30, 2023, net loss was $599 thousand, or $(0.15) basic and diluted loss per share, compared to a net income of $2.1 million, or $0.52 basic and diluted earnings per share for the six months ended June 30, 2022.

The first half year of 2023 financial results were adversely impacted by increasing reserves, which resulted in an elevated provision for credit losses of $2.6 million, compared to provision for loan losses of $275 thousand recorded for the same period of 2022; and the impact of lower net interest margin which was impacted by the higher funding costs resulting from the recent uncertainty in the banking sector.

The Bank reported steady loan growth of almost 6% in the second quarter of 2023, as compared to the prior quarter. Net interest margin decreased slightly, but remained strong at 2.96%.

Commenting on the results, Patriot President & CEO David Lowery, stated: “The Bank continued to invest in its long-term strategic plan and numerous value-add initiatives during the second quarter of 2023, which, combined with higher loan loss reserves and increased interest expense, from the extraordinary actions taken to combat inflation, resulted in a loss for the quarter.   We believe that as the Bank fully ramps up its many initiatives, particularly the Digital Payments Division, the Bank will have the tools necessary for long-term sustained growth, even during challenged markets.

Though the speed of recent interest rate increases may have knock-on effects that require further reserve increases, fresh market signals indicate the need for continued increases may be slowing.   Over the long term, the Bank’s in-process investments are expected to more than offset impacts from increased rates, driven by low-cost deposit and fee income generators.

In the near term, as these programs continue to build out, the Bank will refocus efforts on credit quality and continue to manage non-interest expense. Additionally, the Bank continues to actively pursue a number of strategic actions that will position us for further growth opportunities.”

Financial Results:

Total assets increased to $1.2 billion, as of June 30, 2023, as compared to $1.0 billion on December 31, 2022. This was primarily due to an increase in loans from $848.3 million at December 31, 2022, to $930.7 million as of June 30, 2023. Total deposits for the quarter remained stable at $863.4 million as of June 30, 2023, relative to $860.4 million as of December 31, 2022.

Net interest income for the three months ended June 30, 2023, was $7.7 million, which was consistent with the net interest income of $7.7 million reported in the second quarter of 2022 and a decline from $8.0 million reported in the first quarter of 2023. The decline from the first quarter of 2023 was due to narrower net interest margin due to higher deposit costs and an increase in wholesale borrowings. Net interest income for the six months ended June 30, 2023 was $15.7 million, an increase of $1.3 million or 8.9% from the first half of 2022. These increases were primarily attributable to the growth in the loan portfolio over the past year.

The Bank’s net interest margin was 2.96% for the three months ended June 30, 2023, compared with 3.29% for the three months ended March 31, 2023 and 3.27% for the three months ended June 30, 2022. For the six months ended June 30, 2023 and 2022, the net interest margin was 3.12% and 3.17%, respectively.

A provision for credit losses of $1.2 million and $2.6 million was recorded for the three and six months ended June 30, 2023, respectively. For the three and six months ended June 30, 2022, a provision for loan losses of $275 thousand was recorded. The allowance and provision for the three and six months ended June 30, 2023 are not comparable to prior periods due to adoption of the current expected credit loss methodology.

Non-interest income was $829 thousand and $798 thousand for the three months ended June 30, 2023 and 2022, respectively. For the six months ended June 30, 2023 and 2022, the non-interest income was $1.7 million and $1.6 million, respectively. The higher non-interest income for the first half of 2023, was primarily attributable to higher non-interest income from the Bank’s Deposit Strategies Division.

Non-interest expenses for the quarter ended June 30, 2023, and 2022, were $8.1 million and $6.5 million, respectively. Non-interest expenses for the six months ended June 30, 2023, and 2022, were $15.6 million and $12.9 million, respectively.

In 2023, a benefit for income taxes of $206 thousand and $225 thousand was recorded for the three and six months ended June 30, 2023, respectively, compared to a provision for income taxes of $476 thousand and $787 thousand for the three and six months ended June 30, 2022, respectively. The effective tax rate for the six months ended June 30, 2023 and 2022 was 27.3% and 27.6%, respectively.

About the Company:

Founded in 1994, and now celebrating its 29th 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)

 June 30, 
2023		 December 31, 
2022		 June 30, 
2022
Assets     
Cash and due from banks:     
Noninterest bearing deposits and cash$2,320  $5,182  $4,507 
Interest bearing deposits 68,489   33,311   33,009 
Total cash and cash equivalents 70,809   38,493   37,516 
Investment securities:     
Available-for-sale securities, at fair value 90,547   84,520   76,971 
Other investments, at cost 4,450   4,450   4,450 
Total investment securities 94,997   88,970   81,421 
      
Federal Reserve Bank stock, at cost 2,523   2,627   2,762 
Federal Home Loan Bank stock, at cost 8,072   3,874   4,474 
      
Gross loans receivable 930,734   848,316   859,107 
Allowance for credit losses (16,858)  (10,310)  (9,929)
Net loans receivable 913,876   838,006   849,178 
      
SBA loans held for sale 5,860   5,211   7,556 
Accrued interest and dividends receivable 7,628   7,267   5,727 
Premises and equipment, net 30,262   30,641   31,128 
Deferred tax asset 18,169   15,527   14,910 
Goodwill 1,107   1,107   1,107 
Core deposit intangible, net 226   249   273 
Other assets 9,202   11,387   13,128 
Total assets$1,162,731  $1,043,359  $1,049,180 
      
Liabilities     
Deposits:     
Noninterest bearing deposits$127,817  $269,636  $271,165 
Interest bearing deposits 735,562   590,810   575,618 
Total deposits 863,379   860,446   846,783 
      
Federal Home Loan Bank and correspondent bank borrowings 207,000   85,000   100,000 
Senior notes, net 11,653   11,640   12,000 
Subordinated debt, net 9,854   9,840   9,825 
Junior subordinated debt owed to unconsolidated trust, net 8,132   8,128   8,123 
Note payable 481   585   689 
Advances from borrowers for taxes and insurance 3,094   886   2,967 
Accrued expenses and other liabilities 6,693   7,251   8,991 
Total liabilities 1,110,286   983,776   989,378 
      
Commitments and Contingencies -   -   - 
      
Shareholders' equity     
Preferred stock -   -   - 
Common stock 106,611   106,565   106,520 
Accumulated deficit (38,127)  (31,337)  (35,433)
Accumulated other comprehensive loss (16,039)  (15,645)  (11,285)
Total shareholders' equity 52,445   59,583   59,802 
      
Total liabilities and shareholders' equity$1,162,731  $1,043,359  $1,049,180 

PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

 Three Months Ended Six Months Ended
(In thousands, except per share amounts)June 30, 
2023		 March 31, 
2023		 June 30, 
2022		 June 30, 
2023		 June 30, 
2022
Interest and Dividend Income         
Interest and fees on loans$14,052  $12,550  $9,044 $26,602  $16,708
Interest on investment securities 687   680   510  1,367   1,080
Dividends on investment securities 171   135   65  306   130
Other interest income 399   281   68  680   89
Total interest and dividend income 15,309   13,646   9,687  28,955   18,007
          
Interest Expense         
Interest on deposits 5,248   3,579   757  8,827   1,166
Interest on Federal Home Loan Bank and correspondent bank borrowings 1,723   1,436   747  3,159   1,484
Interest on senior debt 289   290   210  579   420
Interest on subordinated debt 333   326   251  659   485
Interest on note payable 3   2   2  5   6
Total interest expense 7,596   5,633   1,967  13,229   3,561
          
Net interest income 7,713   8,013   7,720  15,726   14,446
          
Provision for credit losses 1,231   1,336   275  2,567   275
          
Net interest income after provision for credit losses 6,482   6,677   7,445  13,159   14,171
          
Non-interest Income         
Loan application, inspection and processing fees 121   123   89  244   176
Deposit fees and service charges 74   68   60  142   124
Gains on sale of loans 85   81   301  166   509
Rental income 105   119   132  224   324
Gain on sale of investment securities -   24   —  24   —
Other income 444   420   216  864   479
Total non-interest income 829   835   798  1,664   1,612
          
Non-interest Expense         
Salaries and benefits 4,661   4,267   3,763  8,928   7,109
Occupancy and equipment expenses 839   884   881  1,723   1,717
Data processing expenses 316   294   283  610   613
Professional and other outside services 727   914   559  1,641   1,348
Project expenses, net 66   27   29  93   81
Advertising and promotional expenses 77   85   73  162   141
Loan administration and processing expenses 103   51   42  154   147
Regulatory assessments 317   182   179  499   353
Insurance expenses 68   77   76  145   153
Communications, stationary and supplies 241   191   139  432   274
Other operating expenses 648   612   478  1,260   995
Total non-interest expense 8,063   7,584   6,502  15,647   12,931
          
(Loss) income before income taxes (752)  (72)  1,741  (824)  2,852
          
(Benefit) provision for income taxes (206)  (19)  476  (225)  787
Net (loss) income$(546) $(53) $1,265 $(599) $2,065
Basic (loss) earnings per share$(0.14) $(0.01) $0.32 $(0.15) $0.52
Diluted (loss) earnings per share$(0.14) $(0.01) $0.32 $(0.15) $0.52

FINANCIAL RATIOS AND OTHER DATA

 Three Months Ended Year Ended
(Dollars in thousands)June 30,
2023		 March 31,
2023		 June 30,
2022		 June 30,
2023		 June 30,
2022
Quarterly Performance Data:         
Net (loss) income$(546) $(53) $1,265  $(599) $2,065 
Return on Average Assets -0.20%  -0.02%  0.50%  -0.11%  0.42%
Return on Average Equity -3.93%  -0.39%  8.20%  -2.18%  6.49%
Net Interest Margin 2.96%  3.29%  3.27%  3.12%  3.17%
Efficiency Ratio 94.39%  85.72%  76.33%  89.98%  80.53%
Efficiency Ratio excluding project costs 94.32%  85.42%  76.00%  89.79%  80.03%
% increase in loans 5.91%  3.59%  11.09%  9.72%  16.18%
% increase (decrease) in deposits 0.81%  -0.46%  8.58%  0.34%  13.12%
          
Asset Quality:         
Nonaccrual loans$20,634  $23,769  $23,324  $20,634  $23,324 
Nonaccrual loans / loans 2.22%  2.70%  2.71%  2.22%  2.71%
Nonaccrual loans / assets 1.77%  2.16%  2.22%  1.77%  2.22%
          
Allowance for loan losses$16,858  $17,801  $9,929  $16,858  $9,929 
Allowance for loan losses / loans 1.81%  2.03%  1.16%  1.81%  1.16%
Allowance / nonaccrual loans 81.70%  74.89%  42.57%  81.70%  42.57%
          
Loan charge-offs$2,670  $1,798  $100  $4,468  $285 
Loan (recoveries)$(280) $(180) $(17) $(460) $(34)
Net loan charge-offs$2,390  $1,618  $83  $4,008  $251 
          
Capital Data and Capital Ratios         
Book value per share (1)$13.23  $13.77  $15.11  $13.23  $15.11 
Non-GAAP Tangible book value per share (2)$12.89  $13.43  $14.76  $12.89  $14.76 
Non-GAAP Tangible book value excluding other comprehensive loss per share (3)$16.94  $17.06  $17.61  $16.94  $17.61 
          
Shares outstanding 3,965,186   3,965,186   3,957,269   3,965,186   3,957,269 
          
Bank Leverage Ratio 8.70%  9.29%  9.44%  8.70%  9.44%

 

(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)June 30,
2023		 December 31,
2022		 June 30,
2022
Non-interest bearing:     
Non-interest bearing$104,413  $118,541  $137,320 
Prepaid DDA 23,404   151,095   133,845 
Total non-interest bearing 127,817   269,636   271,165 
      
Interest bearing:     
NOW 37,970   34,440   35,973 
Savings 50,981   71,002   99,686 
Money market 163,982   164,827   151,212 
Money market - prepaid deposits 134,735   46,173   32,891 
Certificates of deposit, less than $250,000 182,680   165,793   169,690 
Certificates of deposit, $250,000 or greater 56,088   59,877   51,491 
Brokered deposits 109,126   48,698   34,675 
Total Interest bearing 735,562   590,810   575,618 
      
Total Deposits$863,379  $860,446  $846,783 
      
Total prepaid deposits$158,139  $197,268  $166,736 
      
Total deposits excluding prepaid deposits$705,240  $663,178  $680,047 
      
Total uninsured deposits$285,752  $343,980  $351,924 
Uninsured deposits to total deposits 33.10%  39.98%  41.56%
Uninsured deposits to total deposits excluding prepaid deposits 17.71%  22.35%  27.42%

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)June 30, 2023 March 31, 2023 June 30, 2022
      
Tangible book value per share     
Total shareholders' equity$52,445  $54,609  $59,802 
Goodwill (1,107)  (1,107)  (1,107)
Core deposit intangible, net (226)  (238)  (273)
Tangible book value$51,112  $53,264  $58,422 
      
Shares outstanding 3,965,186   3,965,186   3,957,269 
Tangible book value per share$12.89  $13.43  $14.76 
      
Tangible book value excluding other comprehensive loss per share     
Tangible book value$51,112  $53,264  $58,422 
Other comprehensive loss 16,039   14,398   11,285 
Tangible book value excluding other comprehensive loss$67,151  $67,662  $69,707 
      
Shares outstanding 3,965,186   3,965,186   3,957,269 
Tangible book value excluding other comprehensive loss per share$16.94  $17.06  $17.61 


Contacts:  
Patriot Bank, N.A.Joseph PerilloDavid Lowery
900 Bedford StreetChief Financial OfficerPresident & CEO
Stamford, CT 06901203-252-5954203-252-5959
www.BankPatriot.com  

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Source: Patriot National Bancorp Inc.

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