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Patriot National Bancorp continues growth trend, Second quarter 2018 Net Income is $1.0 Million; Loans and deposits continue to expand with Prime acquisition; Declares quarterly dividend

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STAMFORD, Conn., Aug. 06, 2018 (GLOBE NEWSWIRE) -- Patriot National Bancorp, Inc. ("Patriot", "Bancorp") (NASDAQ:PNBK), the parent company of Patriot Bank, N.A. (the "Bank"), today announced quarterly pre-tax earnings of $1.4 million and quarterly net income of $1.0 million, or $0.26 per fully diluted share for the quarter ended June 30, 2018.

Patriot's second quarter net income includes $592 thousand of expenses related to the acquisition costs associated with Prime Bank and Hana Small Business Lending ("Hana SBL") and, as a result, was essentially unchanged from the $1.1 million, $0.27 per fully diluted share, reported in the first quarter.  Net income for the quarter was 29% higher than the $804 thousand, $0.21 per share, reported for the same quarter a year ago.  For the six months ended June 30, 2018, net income was $2.1 million, or $0.54 per fully diluted share, as compared with $2.5 million, or $0.65 per fully diluted share, for the first half of 2017.

The year-to date net income is not comparable to the same period last year due to a material credit recovery that was recognized in the first quarter of 2017 and material non-recurring acquisition-related expenses recognized in the current year. Pre-tax earnings reported for the second and first quarter 2018 included non-recurring transaction expenses of $592 thousand and $523 thousand, respectively, which were associated with the Prime acquisition closed in May 2018 and the Hana SBL acquisition that is underway. These non-recurring expenses will cease once the acquisitions are consummated and the acquired companies are fully integrated.

On May 10, 2018 Patriot completed its acquisition of Prime Bank. The closing of the transaction adds a new Patriot branch located in the Town of Orange, New Haven County, Connecticut.  In addition, on July 2nd, 2018 Patriot announced the successful completion of a $10 million subordinated debt offering, which closed on June 29, 2018.  The funds were raised in connection with the pending Hana SBL acquisition and for general corporate purposes.

CEO Michael Carrazza stated: "We are pleased with the execution of our planned initiatives for the first half of 2018, while core earnings and assets continue to grow.  We have followed 2017, the best earnings year in Patriot's history, with a very strong first half of 2018.  Quarterly income includes material transaction-related costs, which will taper off; we are confident these investments will bear much fruit into the second half of 2018 and then the full year of 2019 and beyond."   

Mr. Carrazza added: "The results show the strategies we have been implementing since mid-2016, including key additions to our executive team and a re-focusing on our core strengths in commercial lending and retail banking, are the right initiatives for Patriot, enabling the Bank to achieve a pattern of consistent earnings improvement."

Richard Muskus, Patriot's President, added: "The successful completion of the Prime transaction represents another critical step in further building Patriot into a leading community bank.  We look forward to executing additional growth strategies, including the expansion into a national SBA lending platform, and the continued building of our retail banking presence."  

Patriot also announced today the declaration of its fifth consecutive quarterly dividend of $0.01 per fully diluted share. The record date for this quarterly dividend will be August 17, 2018 with a dividend payment date of August 24, 2018.

Financial Results

As of June 30, 2018, total assets increased to $930 million, as compared to $870 million at March 31, 2018 and $773 million at June 30, 2017, for a total asset growth of 20% in the one-year period.  Net loans receivable totaled $751 million, up 5% over $718 million at March 31, 2018, and up 12% over $673 million at June 30, 2017. Deposits continued to grow to $712 million at June 30, 2018, as compared to $655 million at March 31, 2018 and $562 million at June 30, 2017.

All of these balance sheet categories were positively impacted by the completed merger with Prime Bank, which added total assets of $61.6 million, deposits of $46.2 million and loans of $21.6 million as of the acquisition date.

Net interest income was $7.0 million in the quarter, essentially unchanged from the prior quarter and up 12% over $733 thousand from the corresponding 2017 period. Net interest income of $14.1 million in the year-to-date period was 19% higher than the $11.8 million in the six month period ended June 30, 2017.

Net interest margin was 3.34% for the second quarter of 2018, as compared to 3.55% in the prior quarter and 3.61% for the second quarter of 2017.

The provision for loan losses in the quarter was $50 thousand, as compared to $260 thousand in the prior quarter of 2017. The year-to-date provision for loan losses was $235 thousand, as compared to a net credit for loan losses of $1.5 million, which reflected the previously noted recovery.

Non-interest income was $386 thousand in the quarter, 20% higher than the prior quarter.  The current quarter included $66 thousand from the gain on sale of SBA loans as Patriot's internal SBA initiative began to contribute to earnings growth.  Year-to-date non-interest income of $708 thousand was 13% higher than the prior year, primarily due to a loss on security sales recognized in the first half of 2017 and gains on the sale of loans recognized in the second quarter of 2018.

Non-interest expense increased $170 thousand over the prior quarter, and increased $947 thousand over the second quarter of 2017. The expenses were impacted by non-recurring project costs associated with the acquisition of Prime Bank and pending acquisition of Hana SBL, and an income tax related consulting project.  These costs totaled $592 thousand and $1.1 million for the second quarter and year-to-date period, respectively. The first half of 2017 non-interest expense did not include any non-recurring project costs.

The income tax provision in the second quarter of $380 thousand represented an effective tax rate of 27% and reflects the positive impact of the tax rate changes enacted in the fourth quarter of 2017.

As of June 30, 2018 shareholders' equity was $68.4 million, an increase of $3.1 million from a year ago.  Patriot's book value per share increased to $17.51 at June 30, 2018, as compared to $16.77 a year ago.

The Bank's capital ratios continue to be strong, as the Bank maintained its "well capitalized" regulatory status.  The capital ratios improved from the first quarter 2018 level as the result of the subordinated debt issuance completed at the end of the quarter.  A material amount of the proceeds from the debt issuance were down-streamed to the Bank.  As of June 30, 2018, Tier 1 leverage ratio was 10.03%, Tier 1 risk based capital was 11.05% and total risk based capital was 11.85%.

About the Company
Founded in 1994, Patriot National Bancorp, Inc. ("Patriot" or "Bancorp") is the parent holding company of Patriot Bank N.A. ("Patriot"), 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 business 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 Bancorp's interest earning assets and the interest paid on its interest bearing liabilities, (2) the timing of repricing of Bancorp's interest earning assets and interest bearing liabilities, (3) the effect of changes in governmental monetary policy, (4) the components of Bancorp's periodic earnings and assets, (5) the fact that certain of the income recognized by Bancorp in any quarter may not be repeated in future periods, (6) the effect of changes in regulations applicable to Bancorp and the Bank and the conduct of its business, (7) changes in competition among financial service companies, including possible further encroachment of non-banks on services traditionally provided by banks, (8) the ability of competitors that are larger than Bancorp to provide products and services which it is impracticable for Bancorp to provide, (9) the state of the economy and real estate values in Bancorp's market areas, and the consequent effect on the quality of Bancorp's loans, (10) 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 Bancorp, (11) 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 Bancorp, (12) the application of generally accepted accounting principles, consistently applied, (13) the fact that one period of reported results may not be indicative of future periods, (14) the state of the economy in the greater New York metropolitan area and its particular effect on Bancorp customers, vendors and communities and other such factors, including risk factors, as may be described in Bancorp's other filings with the SEC.

Contacts:
Patriot Bank, N.A. Richard Muskus Joseph Perillo Michael Carrazza
900 Bedford Street President Chief Financial Officer CEO and Chairman
Stamford, CT 06901 203-252-5939 203-252-5954 203-251-8230
www.BankPatriot.com      
       


PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARY          
CONSOLIDATED BALANCE SHEETS          
(Unaudited)          
Dollars in thousands June 30,
 2018
  March 31,
 2018
  June 30,
 2017
               
Assets            
               
Noninterest bearing deposits and cash $   4,589     $   3,865     $   3,185  
Interest bearing deposits     81,052         58,127         7,658  
  Total cash and cash equivalents     85,641         61,992         10,843  
               
Available-for-sale securities, at fair value     23,982         24,793         24,981  
Other investments, at cost     4,450         4,450         4,450  
  Total investment securities     28,432         29,243         29,431  
               
FRB & FHLB stock, at cost     8,371         8,415         8,257  
               
Gross loans receivable     757,329         724,555         679,088  
Allowance for loan losses     (6,525 )       (6,485 )       (5,944 )
  Net loans receivable     750,804         718,070         673,144  
               
Accrued interest and dividends receivable     3,306         3,505         3,208  
Premises and equipment, net     35,715         35,638         34,471  
Other real estate owned     991         -          851  
Deferred tax asset, net      11,085         11,335         11,212  
Goodwill     2,100         -          -   
Core deposit intangible, net     534         -          -   
Other assets     3,256         2,219         2,003  
  Total assets $    930,235     $    870,417     $    773,420  
               
Liabilities and Shareholders' Equity          
               
Deposits          
  Noninterest bearing deposits $   83,808     $   71,736     $   77,778  
  Interest bearing deposits     628,504         583,562         484,261  
          712,312         655,298         562,039  
               
Federal Home Loan Bank and correspondent bank borrowings     110,000         120,000         120,000  
Senior  notes, net     11,740         11,722         11,666  
Subordinated debt, net     9,576         -          -   
Junior subordinated debt owed to unconsolidated trust     8,090         8,088         8,082  
Note payable     1,484         1,532         1,675  
Advances from borrowers for taxes and insurance     2,876         1,904         3,111  
Accrued expenses and other liabilities     5,796         4,268         1,547  
    Total liabilities     861,874         802,812         708,120  
               
          -              -   
Common stock     40         40         40  
Additional paid-in capital     106,982         106,928         106,797  
Accumulated deficit     (36,808 )       (37,805 )       (40,368 )
Treasury stock, at cost     (1,179 )       (1,179 )       (1,177 )
Accumulated other comprehensive (loss) gain     (674 )       (379 )       8  
    Total Shareholders' Equity     68,361         67,605         65,300  
               
  Total Liabilities and Shareholders' Equity $    930,235     $    870,417     $    773,420  
               

 

PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARY                  
CONSOLIDATED STATEMENTS OF INCOME                   
(Unaudited) Three Months Ended   Six Months Ended
Dollars in thousands, except per share data June 30,
2018
  March 31,
2018
  June 30,
2017
  June 30,
2018
  June 30,
2017
                       
Interest and Dividend Income                  
  Interest and fees on  loans $   9,201   $   8,774   $   7,591   $   17,975   $   14,198  
  Interest on investment securities     291       266       242       557       413  
  Dividends on investment securities     128       121       93       249       175  
  Other interest income     270       151       19       421       83  
    Total interest and dividend income     9,890       9,312       7,945       19,202       14,869  
                       
Interest Expense                  
  Interest on deposits     1,997       1,657       1,129       3,654       2,118  
  Interest on Federal Home Loan Bank borrowings     502       257       183       759       261  
  Interest on senior debt     228       229       228       457       457  
  Interest on subordinated debt     112       99       89       211       174  
  Interest on note payable     10       7       8       17       17  
    Total interest expense     2,849       2,249       1,637       5,098       3,027  
                       
    Net interest income     7,041       7,063       6,308       14,104       11,842  
                       
Provision (credit) for loan losses     50       185       260       235       (1,489 )
                       
    Net interest income after provision (credit) for loan losses     6,991       6,878       6,048       13,869       13,331  
                       
Non-interest Income                  
  Loan application, inspection and processing fees     12       8       15       20       36  
  Deposit fees and service charges     132       134       146       266       295  
  Gains on sale of loans     66       -        -        66       -   
  Rental income     83       84       91       167       185  
  Loss on sale of investment securities     -        -        -        -        (78 )
  Other income     93       96       97       189       188  
    Total non-interest income     386       322       349       708       626  
                       
Non-interest Expense                  
  Salaries and benefits     2,854       2,769       2,497       5,623       4,927  
  Occupancy and equipment expense     776       741       807       1,517       1,582  
  Data processing expense     322       317       326       639       446  
  Professional and other outside services     457       572       550       1,029       1,202  
  Merger/tax initiative project expenses     592       523       -        1,115       -   
  Advertising and promotional expenses     59       78       111       137       185  
  Loan administration and processing expenses     30       13       14       43       23  
  Regulatory assessments     298       252       163       550       342  
  Insurance expenses     53       55       56       108       115  
  Material and communications     110       113       103       223       190  
  Other operating expenses     410       358       387       768       696  
    Total non-interest expense     5,961       5,791       5,014       11,752       9,708  
                       
    Income before income taxes     1,416       1,409       1,383       2,825       4,249  
                       
Provision for Income Taxes     380       344       579       724       1,715  
    Net income $    1,036   $    1,065   $    804   $    2,101   $    2,534  
                       
    Basic earnings per share  $   0.27   $   0.27   $   0.21   $   0.54   $   0.65  
    Diluted earnings per share $   0.26   $   0.27   $   0.21   $   0.54   $   0.65  
                       
       

 

PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARY        
FINANCIAL RATIOS AND OTHER DATA          
(Unaudited)          
Dollars in thousands, except shares outstanding and per share data        
                 
        Quarter Ended
        June 30,
 2018
  March 31,
2018
  June 30,
 2017
                 
Quarterly Performance Data:          
    Net Income $   1,036     $   1,065     $   804  
    Return on Average Assets   0.46 %     0.51 %     0.43 %
    Return on Average Equity   6.06 %     6.37 %     4.95 %
    Net Interest Margin   3.34 %     3.55 %     3.61 %
    Efficiency Ratio   80.3 %     78 %     75 %
    Qtr % increase loans   5 %     1 %     8 %
    Qtr % increase deposits   9 %     3 %     0 %
                 
Asset Quality:          
    Nonaccrual loans $   6,577     $   5,036     $   1,859  
    Other real estate owned     991         -          851  
      Total nonperforming assets $   7,568     $   5,036     $   2,710  
                 
    Nonaccrual loans / loans   0.87 %     0.70 %     0.27 %
    Nonperforming assets / assets   0.81 %     0.58 %     0.35 %
    Allowance for loan losses $   6,525     $   6,485     $   5,944  
    Valuation reserve     1,717         -          -   
    Allowance for loan losses with valuation reserve $   8,242     $   6,485     $   5,944  
                 
    Allowance for loan losses / loans   0.86 %     0.90 %     0.88 %
    Allowance / nonaccrual loans   99.2 %     128.8 %     319.7 %
    Allowance for loan losses and valuation reserve / loans   1.09 %     0.90 %     0.88 %
    Allowance for loan losses and valuation reserve / nonaccrual loans   125.3 %     128.8 %     319.7 %
                 
    Gross loan charge-offs for the quarter $   13     $   -      $   13  
    Gross loan (recoveries) for the quarter $   (3 )   $   (3 )   $   -   
    Net loan charge-offs (recoveries) for the quarter $   10     $   (3 )   $   13  
                 
Capital Data and Capital Ratios          
    Book value per share (1) $   17.51     $   17.32     $   16.77  
    Shares outstanding     3,904,578         3,902,610         3,894,128  
Bank Capital Ratios:          
    Leverage Ratio   10.03 %     9.72 %     9.97 %
    Tier 1 Capital   11.05 %     10.90 %     10.73 %
    Total Risk Based Capital   11.85 %     11.76 %     11.59 %
                 
(1)  Book value per share represents shareholders' equity divided by outstanding shares.    
                 


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