STAMFORD, Conn., Nov. 15, 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 $1.0 million and quarterly net income of $769 thousand, or $0.20 per fully diluted share for the quarter ended September 30, 2018, as assets were up 11% over the same period in 2017, and deposits grew 19%.
Patriot’s third quarter net income includes $653 thousand of expenses primarily related to the acquisition costs associated with Prime Bank and Hana Small Business Lending (“Hana SBL”). As a result, the third quarter net income was reduced 26% from the $1.0 million, $0.26 per fully diluted share, reported in the second quarter, and was 24% lower than the $1.0 million, $0.26 per share, reported for the same quarter a year ago. For the nine months ended September 30, 2018, net income was $2.9 million, or $0.73 per fully diluted share, as compared with $3.5 million, or $0.91 per fully diluted share, for the nine months ended September 30, 2017.
The year-to-date net income is not comparable to the same period last year due to a $2.8 million 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 three quarters of 2018 included non-recurring transaction expenses of $1.8 million. On May 10, 2018 Patriot completed its acquisition of Prime Bank. The closing of the transaction added a new Patriot branch located in the Town of Orange, New Haven County, Connecticut.
CEO Michael Carrazza stated: “This past quarter was highlighted by our investment in building out the SBA product category for Patriot. Quarterly results reflect the impact of material regulatory and transaction costs associated with the pending acquisition of Hana SBL and broadening overall compliance and oversight as our presence in SBA expands. The onboarding of former SBA and FDIC regulator, Brent Ciurlino, as announced on October 31, 2018, along with the continued investment in the building of our SBA business, were significant accomplishments during the quarter, which is expected to enhance Patriot’s performance in future periods”.
Patriot became an approved SBA lender at the end of 2017 and was designated a “preferred lender” by the SBA earlier in this year, enabling it to approve loans to small businesses and entrepreneurs more quickly and efficiently. In 2018 Patriot opened SBA Business Development offices in Stamford, CT and Atlanta, GA and plans to open in Jacksonville, FL later this month.
Mr. Carrazza added: “We have followed 2017, the best earnings year in Patriot’s history, with encouraging results for the first nine months of 2018, which include material transaction-related costs that are not expected to continue into 2019. Excluding these costs and a credit associated with a non-recurring credit recovery in 2017, pre-tax and net income have dramatically improved year over year, demonstrating our strong earnings momentum.”
Richard Muskus, Patriot’s President, added: “The first three quarters of 2018 have seen many positive and encouraging developments at Patriot as we continue our growth as a leading community bank. We will continue to build upon these most recent achievements with the expansion into a national SBA lending platform, and the continued expansion of our retail banking presence.”
Patriot also announced today the declaration of its sixth consecutive quarterly dividend of $0.01 per fully diluted share. The record date for this quarterly dividend will be November 26, 2018 with a dividend payment date of December 4, 2018.
Financial Results
As of September 30, 2018, total assets were $915.3 million, as compared to $930.2 million at June 30, 2018 and $826.7 million at September 30, 2017, for a total asset growth of 11% in the one-year period. Net loans receivable totaled $756.6 million, up 1% over $750.8 million at June 30, 2018, and up 7% over $703.9 million at September 30, 2017. Deposits continued to grow to $719.5 million at September 30, 2018, as compared to $712.3 million at June 30, 2018 and $605.4 million at September 30, 2017.
Net interest income was $6.8 million in the quarter, decreased 4% from both the prior quarter and the corresponding 2017 period. The year-to-date net interest income of $20.9 million was 11% higher than the $18.9 million in the nine month period ended September 30, 2017.
Net interest margin was 3.11% for the third quarter of 2018, as compared to 3.34% in the prior quarter and 3.65% for the third quarter of 2017. The decline in net interest margin in the current quarter reflects the impact of subordinated debt added June 29, 2018 and increasing deposit costs associated with higher rates paid on retail deposits and an increased reliance on more expensive wholesale funding sources.
The provision for loan losses in the quarter was $50 thousand, as compared to $545 thousand in the third quarter of 2017. The year-to-date provision for loan losses was $285 thousand, as compared to a net credit for loan losses of $944 thousand, which reflected the previously noted recovery.
Non-interest income was $354 thousand in the quarter, 8% lower than the prior quarter. Year-to-date non-interest income of $1.1 million was 5% higher than the prior year, primarily due to a loss on security sales recognized in the same period of 2017 and gains on the sale of SBA loans recognized in 2018.
Non-interest expense increased $86 thousand over the prior quarter, and increased $825 thousand over the third quarter of 2017. The expenses were impacted by non-recurring project costs. These costs totaled $653 thousand and $1.8 million for the third quarter and year-to-date period, respectively.
The income tax provision in the third quarter of $276 thousand represented an effective tax rate of 26% and reflects the positive impact of the tax rate changes enacted in the fourth quarter of 2017.
As of September 30, 2018 shareholders’ equity was $68.9 million, an increase of $2.6 million from a year ago. Patriot’s book value per share increased to $17.64 at September 30, 2018, as compared to $17.02 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 September 30, 2018, Tier 1 leverage ratio was 9.92%, Tier 1 risk based capital was 10.61% and total risk based capital was 11.38%.
About the Company
Founded in 1994, 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 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. 900 Bedford Street Stamford, CT 06901 www.BankPatriot.com | Richard Muskus President 203-252-5939 | Joseph Perillo Chief Financial Officer 203-252-5954 | Michael Carrazza CEO and Chairman 203-251-8230 |
| PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARY | |||||||||||||
| CONSOLIDATED BALANCE SHEETS | |||||||||||||
| (Unaudited) | |||||||||||||
| Dollars in thousands | September 30, 2018 | June 30, 2018 | September 30, 2017 | ||||||||||
| Assets | |||||||||||||
| Noninterest bearing deposits and cash | $ | 5,596 | $ | 4,589 | $ | 3,312 | |||||||
| Interest bearing deposits | 43,636 | 81,052 | 25,100 | ||||||||||
| Total cash and cash equivalents | 49,232 | 85,641 | 28,412 | ||||||||||
| Available-for-sale securities, at fair value | 40,264 | 23,982 | 29,586 | ||||||||||
| Other investments, at cost | 4,450 | 4,450 | 4,450 | ||||||||||
| Total investment securities | 44,714 | 28,432 | 34,036 | ||||||||||
| FRB & FHLB stock, at cost | 7,761 | 8,371 | 8,813 | ||||||||||
| Gross loans receivable | 763,254 | 757,329 | 710,118 | ||||||||||
| Allowance for loan losses | (6,605 | ) | (6,525 | ) | (6,222 | ) | |||||||
| Net loans receivable | 756,649 | 750,804 | 703,896 | ||||||||||
| Accrued interest and dividends receivable | 3,612 | 3,306 | 3,501 | ||||||||||
| Premises and equipment, net | 35,487 | 35,715 | 34,713 | ||||||||||
| Other real estate owned | 991 | 991 | 851 | ||||||||||
| Deferred tax asset, net | 10,907 | 11,085 | 10,686 | ||||||||||
| Goodwill | 1,944 | 2,100 | - | ||||||||||
| Core deposit intangible,net | 717 | 534 | - | ||||||||||
| Other assets | 3,272 | 3,256 | 1,823 | ||||||||||
| Total assets | $ | 915,286 | $ | 930,235 | $ | 826,731 | |||||||
| Liabilities and Shareholders' Equity | |||||||||||||
| Deposits | |||||||||||||
| Noninterest bearing deposits | $ | 81,687 | $ | 83,808 | $ | 76,875 | |||||||
| Interest bearing deposits | 637,845 | 628,504 | 528,539 | ||||||||||
| Total deposits | 719,532 | 712,312 | 605,414 | ||||||||||
| Federal Home Loan Bank and correspondent bank borrowings | 90,000 | 110,000 | 130,000 | ||||||||||
| Senior notes, net | 11,759 | 11,740 | 11,684 | ||||||||||
| Subordinated debt, net | 9,720 | 9,576 | - | ||||||||||
| Junior subordinated debt owed to unconsolidated trust | 8,092 | 8,090 | 8,085 | ||||||||||
| Note payable | 1,436 | 1,484 | 1,627 | ||||||||||
| Advances from borrowers for taxes and insurance | 1,659 | 2,876 | 1,799 | ||||||||||
| Accrued expenses and other liabilities | 4,167 | 5,796 | 1,812 | ||||||||||
| Total liabilities | 846,365 | 861,874 | 760,421 | ||||||||||
| Preferred stock | - | - | - | ||||||||||
| Common stock | 40 | 40 | 40 | ||||||||||
| Additional paid-in capital | 107,038 | 106,982 | 106,834 | ||||||||||
| Accumulated deficit | (36,078 | ) | (36,808 | ) | (39,394 | ) | |||||||
| Treasury stock, at cost | (1,179 | ) | (1,179 | ) | (1,179 | ) | |||||||
| Accumulated other comprehensive (loss) gain | (900 | ) | (674 | ) | 9 | ||||||||
| Total Shareholders' Equity | 68,921 | 68,361 | 66,310 | ||||||||||
| Total Liabilities and Shareholders' Equity | $ | 915,286 | $ | 930,235 | $ | 826,731 | |||||||
| PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARY | ||||||||||||||||||
| CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||||
| (Unaudited) | Three Months Ended | Nine Months Ended | ||||||||||||||||
| Dollars in thousands, except per share data | September 30, 2018 | June 30, 2018 | September 30, 2017 | September 30, 2018 | September 30, 2017 | |||||||||||||
| Interest and Dividend Income | ||||||||||||||||||
| Interest and fees on loans | $ | 9,413 | $ | 9,201 | $ | 8,522 | $ | 27,388 | $ | 22,720 | ||||||||
| Interest on investment securities | 364 | 291 | 275 | 921 | 688 | |||||||||||||
| Dividends on investment securities | 125 | 128 | 105 | 374 | 280 | |||||||||||||
| Other interest income | 342 | 270 | 65 | 763 | 148 | |||||||||||||
| Total interest and dividend income | 10,244 | 9,890 | 8,967 | 29,446 | 23,836 | |||||||||||||
| Interest Expense | ||||||||||||||||||
| Interest on deposits | 2,457 | 1,997 | 1,339 | 6,111 | 3,457 | |||||||||||||
| Interest on Federal Home Loan Bank borrowings | 486 | 502 | 248 | 1,245 | 509 | |||||||||||||
| Interest on senior debt | 229 | 228 | 229 | 686 | 686 | |||||||||||||
| Interest on subordinated debt | 278 | 112 | 92 | 489 | 266 | |||||||||||||
| Interest on note payable | 6 | 10 | 7 | 23 | 24 | |||||||||||||
| Total interest expense | 3,456 | 2,849 | 1,915 | 8,554 | 4,942 | |||||||||||||
| Net interest income | 6,788 | 7,041 | 7,052 | 20,892 | 18,894 | |||||||||||||
| Provision (credit) for loan losses | 50 | 50 | 545 | 285 | (944 | ) | ||||||||||||
| Net interest income after provision (credit) for loan losses | 6,738 | 6,991 | 6,507 | 20,607 | 19,838 | |||||||||||||
| Non-interest Income | ||||||||||||||||||
| Loan application, inspection and processing fees | 16 | 12 | 25 | 36 | 61 | |||||||||||||
| Deposit fees and service charges | 126 | 132 | 149 | 392 | 444 | |||||||||||||
| Gains on sale of loans | 3 | 66 | - | 69 | - | |||||||||||||
| Rental income | 115 | 83 | 117 | 282 | 302 | |||||||||||||
| Loss on sale of investment securities | - | - | - | - | (78 | ) | ||||||||||||
| Other income | 94 | 93 | 95 | 283 | 283 | |||||||||||||
| Total non-interest income | 354 | 386 | 386 | 1,062 | 1,012 | |||||||||||||
| Non-interest Expense | ||||||||||||||||||
| Salaries and benefits | 2,794 | 2,854 | 2,741 | 8,417 | 7,668 | |||||||||||||
| Occupancy and equipment expense | 829 | 776 | 796 | 2,346 | 2,378 | |||||||||||||
| Data processing expense | 333 | 322 | 340 | 972 | 786 | |||||||||||||
| Professional and other outside services | 565 | 457 | 410 | 1,594 | 1,612 | |||||||||||||
| Merger and tax initiative project expenses | 653 | 592 | 39 | 1,768 | 39 | |||||||||||||
| Advertising and promotional expenses | 57 | 59 | 81 | 194 | 266 | |||||||||||||
| Loan administration and processing expenses | 25 | 30 | 22 | 68 | 45 | |||||||||||||
| Regulatory assessments | 275 | 298 | 230 | 825 | 572 | |||||||||||||
| Insurance (income) expenses | (56 | ) | 53 | 66 | 52 | 181 | ||||||||||||
| Material and communications | 146 | 110 | 97 | 369 | 287 | |||||||||||||
| Other operating expenses | 426 | 410 | 400 | 1,194 | 1,096 | |||||||||||||
| Total non-interest expense | 6,047 | 5,961 | 5,222 | 17,799 | 14,930 | |||||||||||||
| Income before income taxes | 1,045 | 1,416 | 1,671 | 3,870 | 5,920 | |||||||||||||
| Provision for Income Taxes | 276 | 380 | 658 | 1,000 | 2,373 | |||||||||||||
| Net income | $ | 769 | $ | 1,036 | $ | 1,013 | $ | 2,870 | $ | 3,547 | ||||||||
| Basic earnings per share | $ | 0.20 | $ | 0.27 | $ | 0.26 | $ | 0.74 | $ | 0.91 | ||||||||
| Diluted earnings per share | $ | 0.20 | $ | 0.26 | $ | 0.26 | $ | 0.73 | $ | 0.91 | ||||||||
| PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARY | |||||||||||||
| FINANCIAL RATIOS AND OTHER DATA | |||||||||||||
| (Unaudited) | |||||||||||||
| Dollars in thousands, except shares outstanding and per share data | |||||||||||||
| Quarter Ended | |||||||||||||
| September 30, 2018 | June 30, 2018 | September 30, 2017 | |||||||||||
| Quarterly Performance Data: | |||||||||||||
| Net Income | $ | 769 | $ | 1,036 | $ | 1,013 | |||||||
| Return on Average Assets | 0.33 | % | 0.46 | % | 0.49 | % | |||||||
| Return on Average Equity | 4.40 | % | 6.06 | % | 6.05 | % | |||||||
| Net Interest Margin | 3.11 | % | 3.34 | % | 3.65 | % | |||||||
| Efficiency Ratio | 85 | % | 80 | % | 70 | % | |||||||
| Qtr % increase loans | 1 | % | 5 | % | 5 | % | |||||||
| Qtr % increase deposits | 1 | % | 9 | % | 8 | % | |||||||
| Asset Quality: | |||||||||||||
| Nonaccrual loans | $ | 6,479 | $ | 6,577 | $ | 2,051 | |||||||
| Other real estate owned | 991 | 991 | 851 | ||||||||||
| Total nonperforming assets | $ | 7,470 | $ | 7,568 | $ | 2,902 | |||||||
| Nonaccrual loans / loans | 0.85 | % | 0.87 | % | 0.29 | % | |||||||
| Nonperforming assets / assets | 0.82 | % | 0.81 | % | 0.35 | % | |||||||
| Allowance for loan losses | $ | 6,605 | $ | 6,525 | $ | 6,222 | |||||||
| Valuation reserve | $ | 1,684 | $ | 1,717 | $ | - | |||||||
| Allowance for loan losses with valuation reserve | $ | 8,289 | $ | 8,242 | $ | 6,222 | |||||||
| Allowance for loan losses / loans | 0.87 | % | 0.86 | % | 0.88 | % | |||||||
| Allowance / nonaccrual loans | 101.94 | % | 99.21 | % | 303.36 | % | |||||||
| Allowance for loan losses and valuation reserve / loans | 1.09 | % | 1.09 | % | 0.88 | % | |||||||
| Allowance for loan losses and valuation reserve / nonaccrual loans | 127.94 | % | 125.32 | % | 303.36 | % | |||||||
| Gross loan charge-offs for the quarter | $ | 5 | $ | 13 | $ | 275 | |||||||
| Gross loan (recoveries) for the quarter | $ | (35 | ) | $ | (3 | ) | $ | (8 | ) | ||||
| Net loan charge-offs (recoveries) for the quarter | $ | (30 | ) | $ | 10 | $ | 267 | ||||||
| Capital Data and Capital Ratios | |||||||||||||
| Book value per share (1) | $ | 17.64 | $ | 17.51 | $ | 17.02 | |||||||
| Shares outstanding | 3,906,966 | 3,904,578 | 3,895,720 | ||||||||||
| Bank Capital Ratios: | |||||||||||||
| Leverage Ratio | 9.92 | % | 10.03 | % | 9.57 | % | |||||||
| Tier 1 Capital | 10.61 | % | 11.05 | % | 10.69 | % | |||||||
| Total Risk Based Capital | 11.38 | % | 11.85 | % | 11.55 | % | |||||||
| (1) Book value per share represents shareholders' equity divided by outstanding shares. | |||||||||||||