Patriot Reports Fourth Quarter 2022 Net Income of $1.8 million, $0.45 per share; Full Year Net Income of $6.2 million, $1.56 per share

Rhea-AI Summary

Patriot National Bancorp reported Q4 2022 net income of $1.8 million ($0.45 per share), down from $2.3 million in Q3 2022. Annual net income rose to $6.2 million for 2022, a 21.6% increase from 2021. Pre-tax income grew 95% to $7.8 million, excluding non-recurring items. Notable growth in loans (14.7%) and deposits (14.9%) was achieved, with net interest margin increasing to 3.77% in Q4 2022. Total assets reached $1 billion, while non-interest income declined to $3.6 million due to lower SBA loan sales. Shareholders' equity decreased to $59.6 million, resulting in a book value of $15.03 per share.

Positive

• Net income increased 21.6% year-over-year to $6.2 million.
• Pre-tax income rose 95% to $7.8 million, excluding non-recurring items.
• Loan growth of 14.7% and deposit growth of 14.9% year-over-year.
• Net interest margin improved to 3.77% in Q4 2022.

Negative

• Q4 net income decreased from $2.3 million in Q3 2022 to $1.8 million.
• Non-interest income fell to $3.6 million in 2022 from $4.4 million in 2021.
• Shareholders' equity declined to $59.6 million from $67.3 million in 2021.

Pre-tax Income and Net Interest Margin buoyed by exceptional loan and deposit growth

STAMFORD, Conn., March 07, 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 income of $1.8 million, or $0.45 basic and diluted earnings per share for the quarter ended December 31, 2022. These results compare to net income of $2.3 million, or $0.59 basic and diluted earnings per share for the third quarter of 2022 and net income of $1.9 million, or $0.48 basic and diluted earnings per share reported in the fourth quarter of 2021.

Net income for the full year ended December 31, 2022 was $6.2 million, or $1.56 basic and $1.55 diluted earnings per share, compared to a net income of $5.1 million, or $1.29 basic and diluted earnings per share for the year ended December 31, 2021. For the year ended December 31, 2021, pre-tax income included the recognition of an Employee Retention Credit (“ERC”) of $2.9 million and non-recurring merger related costs of $1.9 million. Pre-tax income for the year ended 2022 of $7.8 million increased $3.8 million or 95% from the full year 2021 results, exclusive of non-recurring items. There were no non-recurring items in 2022 pre-tax income.

Along with reporting a substantial improvement in net interest income and strong earnings, the Bank reported loan growth of 14.7% and deposit growth of 14.9% at December 31, 2022 compared to December 31, 2021. The Bank’s average net interest margin increased significantly to 3.77% for the quarter and 3.46% for the full year ended December 31, 2022, up from 3.05% and 2.92% for the quarter and full year ended December 31, 2021, respectively. The Bank’s Payments division has increasingly been contributing to the Bank’s lower-cost funding sources. This new Group is keenly focused on expanding unique deposit gathering channels, while continuing to widen the Bank’s net interest margin.

Patriot President & CEO Robert Russell stated: “Despite the myriad impacts related to the changing interest rate environment, we are proud of the increasing operational and financial results achieved for the fourth quarter and full year 2022. Operational and business unit initiatives are gaining good traction, and we are seeing the results expressed in increasing earnings and widening net interest margin.” Mr. Russell added “Our efficiency ratio has improved significantly in the fourth quarter to 64.88%.

Michael Carrazza, Patriot’s Chairman commented, “Patriot remains aggressively committed to completing one or more transformational events that will elevate the scale of Patriot and its digital forward capabilities. Strategic discussions are actively underway; such event(s) will be coupled with the organic roll-out of initiatives on the digital deposit gathering and asset generating sides of the balance sheet.”

In December 2022, Patriot successfully completed its refinancing of its $12.0 million senior debt facility that was scheduled to mature in December 2022.

Financial Results:
Total assets increased $94.9 million to $1.0 billion as of December 31, 2022, as compared to $948.5 million at December 31, 2021, primarily due to the increase in net loans from $729.6 million at December 31, 2021 to $838.0 million at December 31, 2022. Total deposits increased from $748.6 million on December 31, 2021 to $860.4 million as of December 31, 2022.

Net interest income for the three months ended December 31, 2022 was $9.6 million, an increase of $2.7 million or 38.6% from the fourth quarter of 2021. Net interest income for the year ended December 31, 2022 was $33.3 million, an increase of $8.0 million or 31.7% from the year ended December 31, 2021. These increases were primarily attributable to the growth in the loan portfolio and growth in prepaid deposits from the Payments division.

The Bank’s net interest margin showed continued improvement, with an increase to 3.77% for the quarter and 3.46% for the full year ended December 31, 2022. This compares with 3.05% and 2.92% for the fourth quarter of 2021 and the full year ended December 31, 2021, respectively.

For the three months ended and year ended December 31, 2022, additional provisions for loan losses of $1.4 million and $1.9 million were recorded, respectively. As of December 31, 2022, the allowance for loan losses was $10.3 million (1.22%) of total loans, compared with $9.9 million (1.34%) on December 31, 2021.

Non-interest income for the three months ended and year ended December 31, 2022 was $1.3 million and $3.6 million, respectively. Non-interest income for the three months ended and year ended December 31, 2021 was $2.3 million and $4.4 million, respectively. The decrease in non-interest income for the year ended December 31, 2022, compared to the same period in 2021 was primarily attributable to lower gains from sales of SBA loans resulting from lower market premiums.

Non-interest expenses for the quarter ended and year ended December 31, 2022 were $7.1 million and $27.2 million, respectively. Non-interest expenses for the quarter ended and year ended December 31, 2021 were $8.8 million and $25.2 million, respectively, net of the ERC recognized by the Company in 2021 of $2.9 million. The Company was no longer eligible for the ERC under the CARES Act program after the third quarter of 2021.

For the year ended December 31, 2022, a provision for income taxes of $1.6 million was recorded, compared to a benefit for income taxes of $81,000 for the year ended December 31, 2021. The benefit for income taxes in 2021 was primarily due to a full $1.9 million reversal of the valuation reserve for deferred tax assets, which decreased the income tax provision in 2021.

As of December 31, 2022, shareholders’ equity was $59.6 million, as compared with $67.3 million on December 31, 2021. While Patriot achieved a material increase in operating and earnings performance in 2022, its equity account declined as a result of market value accounting applied to the Bank’s available-for-sale investment portfolio (“AFS”) during the period; this market value adjustment is directly correlated to the fluctuation of interest rates and does not represent a permanent impairment in value as the Company holds such investment grade securities to maturity Accordingly, on a GAAP basis, Patriot’s book value per share was $15.03 on December 31, 2022, as compared with $17.02 on December 31, 2021. Excluding the net impact of the valuation of the AFS portfolio, non-GAAP tangible book value per share was $18.63, as compared with $18.21 in the third quarter of 2022 and $17.08 on December 31, 2021.

About the Company:

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. 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)
(In thousands)			December 31, 2022				September 30, 2022				December 31, 2021
Assets
Cash and due from banks:
Noninterest bearing deposits and cash			$	5,182			$	4,319			$	3,264
Interest bearing deposits				33,311				26,865				43,781
Total cash and cash equivalents				38,493				31,184				47,045
Investment securities:
Available-for-sale securities, at fair value				84,520				85,917				94,341
Other investments, at cost				4,450				4,450				4,450
Total investment securities				88,970				90,367				98,791
Federal Reserve Bank stock, at cost				2,627				2,671				2,843
Federal Home Loan Bank stock, at cost				3,874				5,474				4,184
Gross loans receivable				848,316				862,870				739,488
Allowance for loan losses				(10,310	)			(9,952	)			(9,905	)
Net loans receivable				838,006				852,918				729,583
SBA loans held for sale				5,211				8,748				3,129
Accrued interest and dividends receivable				7,267				6,504				5,822
Premises and equipment, net				30,641				30,861				31,500
Deferred tax asset				15,527				16,057				12,146
Goodwill				1,107				1,107				1,107
Core deposit intangible, net				249				261				296
Other assets				11,387				12,839				12,035
Total assets			$	1,043,359			$	1,058,991			$	948,481
Liabilities
Deposits:
Noninterest bearing deposits			$	269,635			$	247,704			$	226,713
Interest bearing deposits				590,811				586,691				521,849
Total deposits				860,446				834,395				748,562
Federal Home Loan Bank and correspondent bank borrowings				85,000				125,000				90,000
Senior notes, net				11,640				12,000				12,000
Subordinated debt, net				9,840				9,832				9,811
Junior subordinated debt owed to unconsolidated trust, net				8,128				8,125				8,119
Note payable				585				637				791
Advances from borrowers for taxes and insurance				886				2,262				1,101
Accrued expenses and other liabilities				7,251				8,736				10,753
Total liabilities				983,776				1,000,987				881,137
Commitments and Contingencies				—				—				—
Shareholders' equity
Preferred stock				—				—				—
Common stock				106,565				106,542				106,479
Accumulated deficit				(31,337	)			(33,107	)			(37,498	)
Accumulated other comprehensive loss				(15,645	)			(15,431	)			(1,637	)
Total shareholders' equity				59,583				58,004				67,344
Total liabilities and shareholders' equity			$	1,043,359			$	1,058,991			$	948,481

PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
			Three Months Ended										Year Ended
(In thousands, except per share amounts)			December 31, 2022			September 30, 2022			December 31, 2021				December 31, 2022			December 31, 2021
Interest and Dividend Income
	Interest and fees on loans		$	12,865		$	11,250		$	7,916			$	40,823		$	30,115
	Interest on investment securities			672			555			502				2,307			1,924
	Dividends on investment securities			155			99			73				384			223
	Other interest income			274			135			22				498			89
	Total interest and dividend income			13,966			12,039			8,513				44,012			32,351
Interest Expense
	Interest on deposits			2,641			1,493			387				5,300			2,243
	Interest on Federal Home Loan Bank borrowings			1,185			806			756				3,475			2,986
	Interest on senior debt			228			218			227				866			913
	Interest on subordinated debt			305			276			233				1,066			933
	Interest on note payable and other			37			3			3				46			15
	Total interest expense			4,396			2,796			1,606				10,753			7,090
	Net interest income			9,570			9,243			6,907				33,259			25,261
Provision (credit) for loan losses				1,410			200			(200	)			1,885			(500	)
	Net interest income after provision (credit) for loan losses			8,160			9,043			7,107				31,374			25,761
Non-interest Income
	Loan application, inspection and processing fees			108			102			54				386			257
	Deposit fees and service charges			65			67			61				256			251
	Gains on sale of loans			770			182			1,534				1,461			1,886
	Rental income			118			124			143				566			543
	(Loss) gain on sale of investment securities			—			—			(43	)			—			76
	Other income			278			179			556				936			1,410
	Total non-interest income			1,339			654			2,305				3,605			4,423
Non-interest Expense
	Salaries and benefits			4,067			4,330			3,583				15,506			11,089
	Occupancy and equipment expenses			849			862			900				3,428			3,430
	Data processing expenses			275			297			363				1,185			1,451
	Professional and other outside services			775			541			956				2,664			3,155
	Project expenses, net			2			50			1,867				133			1,882
	Advertising and promotional expenses			41			50			39				232			235
	Loan administration and processing expenses			50			37			73				234			134
	Regulatory assessments			219			245			258				817			907
	Insurance expenses			64			54			66				271			280
	Communications, stationary and supplies			134			208			154				616			604
	Other operating expenses			601			540			520				2,136			2,004
	Total non-interest expense			7,077			7,214			8,779				27,222			25,171
	Income before income taxes			2,422			2,483			633				7,757			5,013
Provision (benefit) for income taxes				652			157			(1,262	)			1,596			(81	)
	Net income		$	1,770		$	2,326		$	1,895			$	6,161		$	5,094
	Basic earnings per share		$	0.45		$	0.59		$	0.48			$	1.56		$	1.29
	Diluted earnings per share		$	0.45		$	0.59		$	0.48			$	1.55		$	1.29

FINANCIAL RATIOS AND OTHER DATA
					Three Months Ended												Year Ended
			(Dollars in thousands)		December 31, 2022				September 30, 2022				December 31, 2021				December 31, 2022				December 31, 2021
Quarterly Performance Data:
		Net income			$	1,770			$	2,326			$	1,895			$	6,161			$	5,094
		Return on Average Assets				0.66	%			0.87	%			0.79	%			0.60	%			0.55	%
		Return on Average Equity				11.72	%			15.00	%			11.21	%			9.87	%			7.75	%
		Net Interest Margin				3.77	%			3.68	%			3.05	%			3.46	%			2.92	%
		Efficiency Ratio				64.88	%			72.89	%			95.30	%			73.84	%			84.80	%
		Efficiency Ratio excluding project costs				64.86	%			72.39	%			75.03	%			73.48	%			78.46	%
		% (decrease) increase in loans				-1.69	%			0.44	%			3.49	%			14.72	%			1.27	%
		% increase (decrease) in deposits				3.12	%			-1.46	%			1.89	%			14.95	%			9.17	%
Asset Quality:
		Nonaccrual loans			$	18,593			$	19,182			$	23,095			$	18,593			$	23,095
		Nonaccrual loans / loans				2.19	%			2.22	%			3.12	%			2.19	%			3.12	%
		Nonaccrual loans / assets				1.78	%			1.81	%			2.43	%			1.78	%			2.43	%
		Allowance for loan losses			$	10,310			$	9,952			$	9,905			$	10,310			$	9,905
		Allowance for loan losses / loans				1.22	%			1.15	%			1.34	%			1.22	%			1.34	%
		Allowance / nonaccrual loans				55.45	%			51.88	%			42.89	%			55.45	%			42.89	%
		Loan charge-offs			$	1,177			$	366			$	—			$	1,828			$	358
		Loan (recoveries)			$	(125	)		$	(189	)		$	(25	)		$	(348	)		$	(179	)
		Net loan charge-offs (recoveries)			$	1,052			$	177			$	(25	)		$	1,480			$	179
Capital Data and Capital Ratios
		Book value per share (1)			$	15.03			$	14.66			$	17.02			$	15.03			$	17.02
		Non-GAAP Tangible book value per share (2)			$	14.68			$	14.31			$	16.67			$	14.68			$	16.67
		Non-GAAP Tangible book value excluding other comprehensive loss per share (3)			$	18.63			$	18.21			$	17.08			$	18.63			$	17.08
		Shares outstanding				3,965,186				3,957,269				3,956,492				3,965,186				3,956,492
		Bank Leverage Ratio				9.26	%			9.23	%			9.86	%			9.26	%			9.86	%
	(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)		December 31, 2022				September 30, 2022				December 31, 2021
	Non-interest bearing:
	Non-interest bearing				$	118,541			$	125,396			$	127,420
	Prepaid DDA					151,095				122,308				99,293
		Total non-interest bearing				269,636				247,704				226,713
	Interest bearing:
	NOW					34,440				38,435				34,741
	Savings					71,002				87,443				109,744
	Money market					164,827				133,947				113,428
	Money market - prepaid deposits					46,173				46,825				51,090
	Certificates of deposit, less than $250,000					165,793				180,253				142,246
	Certificates of deposit, $250,000 or greater					59,877				65,362				53,584
	Brokered deposits					48,698				34,426				17,016
		Total Interest bearing			$	590,810			$	586,691			$	521,849
		Total Deposits			$	860,446			$	834,395			$	748,562
		Total Prepaid deposits			$	197,268			$	169,133			$	150,383
			Total deposits excluding brokered deposits		$	811,748			$	799,969			$	731,546

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 pre-tax income excluding Employee Retention Credit and project expenses, and 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 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, 2022				December 31, 2021				December 31, 2022				December 31, 2021
Net Income excluding Employee retention Credit (ERC) and project expenses:
	Net Income reported		$	1,770			$	1,895			$	6,161			$	5,094
	Provision (benefit) for income taxes			652				(1,262	)			1,596				(81	)
	Income before income taxes reported			2,422				633				7,757				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		$	2,422			$	2,484			$	7,757			$	3,968
(Dollars in thousands)			December 31, 2022				September 30, 2022				December 31, 2021
Tangible book value per share
	Total shareholders' equity		$	59,583			$	58,004			$	67,344
	Goodwill			(1,107	)			(1,107	)			(1,107	)
	Core deposit intangible, net			(249	)			(261	)			(296	)
	Tangible book value		$	58,227			$	56,636			$	65,941
	Shares outstanding			3,965,186				3,957,269				3,956,492
	Tangible book value per share		$	14.68			$	14.31			$	16.67
Tangible book value excluding other comprehensive loss per share
	Tangible book value		$	58,227			$	56,636			$	65,941
	Other comprehensive loss			15,645				15,431				1,637
	Tangible book value excluding other comprehensive loss		$	73,872			$	72,067			$	67,578
	Shares outstanding			3,965,186				3,957,269				3,956,492
	Tangible book value excluding other comprehensive loss per share		$	18.63			$	18.21			$	17.08

Contacts: Patriot Bank, N.A.        900 Bedford Street        Stamford, CT 06901      www.BankPatriot.com

Joseph Perillo                            Chief Financial Officer              203-252-5954

Robert Russell President & CEO 203-252-5939

FAQ

What were the financial results for PNBK in Q4 2022?

Patriot National Bancorp reported a net income of $1.8 million for Q4 2022, down from $2.3 million in Q3 2022.

How did PNBK's net interest margin change in 2022?

PNBK's net interest margin increased to 3.77% in Q4 2022 from 3.05% in Q4 2021.

What is PNBK's book value per share as of December 31, 2022?

The GAAP book value per share for PNBK was $15.03 as of December 31, 2022.

What growth did PNBK achieve in loans and deposits?

Patriot National Bancorp reported a loan growth of 14.7% and a deposit growth of 14.9% year-over-year.

How did the non-interest income for PNBK compare year-over-year?

Non-interest income for 2022 decreased to $3.6 million from $4.4 million in 2021.