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

Rhea-AI Summary

Patriot National Bancorp reported a pre-tax income of $1.2 million and a net income of $854,000 for Q1 2021, reversing a loss from the previous year. Key improvements included enhanced net interest margins, core deposit growth, and lower operating expenses. The Bank recognized an $843,000 payroll tax credit, but loan balances decreased due to higher payoffs than originations. Total assets increased to $886.2 million, with deposits rising to $692.9 million. The net interest margin improved to 2.99%, while the provision for loan losses was zero, highlighting a cautious lending approach.

Positive

• Pre-tax income increased to $1.2 million, net income of $854,000.
• Improved net interest margin at 2.99%, up from 2.72% year-over-year.
• Total assets rose to $886.2 million, and total deposits increased to $692.9 million.
• Provision for loan losses was zero, compared to $804,000 in Q1 2020.
• Employee Retention Credit contributed $843,000 to lower operational costs.

Negative

• Net loans decreased to $666.3 million from $719.6 million.
• Higher loan payoffs outpaced new loan originations, impacting overall loan growth.

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

FAQ

What were Patriot National Bancorp's financial results for Q1 2021?

Patriot National Bancorp reported a pre-tax income of $1.2 million and net income of $854,000 for Q1 2021.

How did the net interest margin change for Patriot National Bancorp?

The net interest margin improved to 2.99% in Q1 2021, compared to 2.72% in Q1 2020.

What was the total asset value for Patriot National Bancorp at the end of Q1 2021?

Total assets increased to $886.2 million as of March 31, 2021.

How did the provision for loan losses change in Q1 2021 for PNBK?

The provision for loan losses was zero in Q1 2021, significantly down from $804,000 in Q1 2020.

What impact did the Employee Retention Credit have on Patriot National Bancorp's expenses?

The Employee Retention Credit contributed $843,000 towards reducing operational costs in Q1 2021.