ex_156214.htm

EX-99.1 2 ex_156214.htm EXHIBIT 99.1 ex_156214.htm

Exhibit 99.1

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 reports second quarter 2019 net loss of $1.66 million; Assets Up 5% as loans and deposits expand & SBA lending business grows; Declares quarterly dividend

STAMFORD, CT – August 23, 2019 (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 a pre-tax loss of $2.29 million, and net loss of $1.66 million, or $0.42 per fully diluted share for the quarter ended June 30, 2019, even as bank assets, loans, deposits and investment in its retail and SBA lending network continues to expand.

The quarterly loss results from an increase in the provision for loan losses of $2.9 million in the quarter and $3.1 million, year-to-date, largely associated with a $2.3 million charge-off on a single non-performing commercial loan. This resulted in a year-to-date net loss of $1.33 million, or $0.34 per fully diluted share, as compared to a net income of $2.1 million, or $0.54 per fully diluted shares in the prior year.

The second quarter and full-year results also reflect an increase in operating expenses associated with the organic build-up and expansion of the Bank’s SBA lending business, deposit initiatives, and costs incurred in conjunction with strengthened institutional infrastructure, processes, controls and documentation to address regulatory requirements.

During the quarter, loans receivable increased $23.2 million (up 3%) as new loan originations continued at a strong pace, and total deposits increased $14.7 million (up 2%). Patriot recognized a gain on the sale of SBA loans of $367,000, compared with $456,000 in the prior quarter and $66,000 in the second quarter of 2018. The Bank continues to maintain strong capital ratios and earnings which are expected to return to normalized levels in future periods.

Richard Muskus, Patriot’s President stated: “The results for the quarter reflect the impact of a single customer credit problem that we have fully charged off. We have taken a prudent, proactive approach with this non-performing loan at this point and are moving forward to pursue all available options to obtain a recovery on this credit and the assets it is securitized by.

In 2019 Patriot instituted enhanced governance policies, procedures and practices, invested in strengthened institutional infrastructure, expanded banking locations into the New Haven and Orange, Connecticut markets and made material advancements in building out its SBA business. These activities are intended to bolster performance in future quarters by investing in the Bank’s future growth.”

Mr. Muskus added: “Patriot’s continued retail location expansion into urban centers across southern Connecticut has now resulted in the Bank having a presence in every major community along the busy I-95 corridor, from downtown Greenwich to downtown New Haven, Connecticut, plus a quite dynamic market in the community of Scarsdale, NY. Patriot’s investment in repositioning and adding to its now 12-retail and four SBA lending locations, better positions the institution to cater to busy, youthful downtown environments and customers who want banking options that match their active lifestyle.”

Growth in loan originations continued, as evidenced by total loans outstanding reaching $812 million, a 3% increase from the prior quarter and 7% higher than the second quarter of 2018. Contributions from SBA operations were significant for the last two consecutive quarters and new depositor initiatives in the second half are expected to reduce funding costs and strengthen operating performance.

Patriot also announced today the declaration of its ninth consecutive quarterly dividend of $0.01 per share. The record date for this quarterly dividend will be September 3, 2019, with a dividend payment date of September 13, 2019.

Financial Results

As of June 30, 2019, total assets were $977.8 million, as compared to $953.1 million at March 31, 2019 and $930.2 million at June 30, 2018, for a total asset growth of 5% over the past 12 months. Net loans receivable totaled $803.3 million, up 3% over $780.7 million at March 31, 2019, and up 7% over $750.8 million at June 30, 2018. Deposits continued to grow to $767.6 million at June 30, 2019, as compared to $752.8 million at March 31, 2019 and $712.3 million at June 30, 2018.

Net interest income was $6.5 million in the second quarter of 2019, an increase of 3% from the prior quarter, and a decline of 7% from the second quarter of 2018. For the year-to-date period, the net interest income was $12.9 million, a decrease of 9% from the prior year. The recent decline in net interest income was due to higher deposit costs, the impact of non-performing and reduced rate loans, lower loan fees, and the impact of subordinated debt costs raised in June of 2018.

Net interest margin was 2.93% for the second quarter of 2019, as compared to 2.87% in the prior quarter and 3.34% for the second quarter of 2018.

The provision for loan losses in the second quarter of 2019 was $2.9 million, as compared to $165,000 in the prior quarter and $50,000 for the second quarter of 2018. The year-to-date provision for loan losses was $3.1 million, as compared to $235,000 for the prior year. The increase in provision for loan losses in the second quarter of 2019 was primarily due to a large provision booked in the quarter associated with a single loan stemming from operating cash flow weaknesses and collateral shortfall.

Non-interest income was $829,000 in the second quarter of 2019, 1% higher than the prior quarter, and 115% higher than the second quarter of 2018. The year-to-date non-interest income was $1.7 million in 2019, 133% higher than the prior year. The increase in non-interest income was primarily due to realized gains on the sale of SBA loans.

Non-interest expense was $6.7 million in the second quarter of 2019, 3% higher than the last quarter, and 13% higher than the second quarter of 2018. The year-to-date non-interest expense was $13.2 million, 13% higher than the prior year.

The increase in 2019 was primarily due to an increase in salaries and benefits associated with the build-up of the SBA lending team, the completion of the acquisition of Prime Bank expanding Patriot’s presence in New Haven County, and increased headcount supporting new deposit initiatives and the expansion of credit, finance and compliance support functions.

The income tax benefit was $632,000 in the second quarter of 2019, represented an effective tax rate of 28%.

As of June 30, 2019, shareholders’ equity was $68.3 million, a decrease of $1.4 million as compared to March 31, 2019. Patriot’s book value per share decreased to $17.41 at June 30, 2019, as compared to $17.77 at March 31, 2019.

The Bank’s capital ratios continue to be strong, as the Bank maintains its “well capitalized” regulatory status. As of June 30, 2019, the Bank’s Tier 1 leverage ratio was 9.61%, Tier 1 risk-based capital ratio was 10.66% and total risk-based capital ratio was 11.65%.

Patriot Bank is headquartered in Stamford and operates 12 locations: in Scarsdale, NY; and Darien, Fairfield, Greenwich, Milford, Norwalk, Orange, Stamford, Westport, with Express Banking locations at Bridgeport/ Housatonic Community College, downtown New Haven and Trumbull at Westfield Mall. It also maintains SBA lending offices in Atlanta, Jacksonville, Indianapolis, and Stamford.

* * * * *

About the Company

Founded in 1994, and now celebrating its 25^th 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 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.

PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

(Unaudited)

Dollars in thousands	June 30, 2019			March 31, 2019			June 30, 2018

Assets
Cash and due from banks:
Noninterest bearing deposits and cash	$	5,578		$	6,661		$	4,839
Interest bearing deposits		45,538			49,971			80,290
Total cash and cash equivalents		51,116			56,632			85,129
Investment securities:
Available-for-sale securities, at fair value		43,839			40,275			23,982
Other investments, at cost		4,963			4,963			4,962
Total investment securities		48,802			45,238			28,944

Federal Reserve Bank stock, at cost		2,922			2,892			2,564
Federal Home Loan Bank stock, at cost		4,513			4,513			5,807

Gross loans receivable		811,777			788,536			757,329
Allowance for loan losses		(8,458	)		(7,823	)		(6,525	)
Net loans receivable		803,319			780,713			750,804

Loans held for sale		4,283			-			-
Accrued interest and dividends receivable		3,678			3,621			3,306
Premises and equipment, net		35,249			35,335			35,715
Other real estate owned		1,954			2,945			991
Deferred tax asset, net		11,132			10,357			11,085
Goodwill		1,107			1,107			2,100
Core deposit intangible, net		661			680			534
Other assets		9,031			9,075			3,256
Total assets	$	977,767		$	953,108		$	930,235

Liabilities
Deposits:
Noninterest bearing deposits	$	84,295		$	82,248		$	83,808
Interest bearing deposits		683,271			670,573			628,504
Total deposits		767,566			752,821			712,312

Federal Home Loan Bank and correspondent bank borrowings		100,000			90,000			110,000
Senior notes, net		11,815			11,796			11,740
Subordinated debt, net		9,738			9,731			9,576
Junior subordinated debt owed to unconsolidated trust, net		8,098			8,096			8,090
Note payable		1,291			1,339			1,484
Advances from borrowers for taxes and insurance		3,239			1,922			2,876
Accrued expenses and other liabilities		7,730			7,754			5,796
Total liabilities		909,477			883,459			861,874

Commitments and Contingencies

Shareholders' equity
Preferred stock		-			-			-
Common stock		40			40			40
Additional paid-in capital		107,198			107,143			106,982
Accumulated deficit		(37,210	)		(35,517	)		(36,808	)
Treasury stock, at cost		(1,179	)		(1,179	)		(1,179	)
Accumulated other comprehensive loss		(559	)		(838	)		(674	)
Total shareholders' equity		68,290			69,649			68,361

Total liabilities and shareholders' equity	$	977,767		$	953,108		$	930,235

PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(Unaudited)

	Three Months Ended							Six Months Ended
Dollars in thousands, except per share data	June 30, 2019			March 31, 2019		June 30, 2018		June 30, 2019			June 30, 2018

Interest and Dividend Income
Interest and fees on loans	$	10,274		$	9,741	$	9,201	$	20,015		$	17,975
Interest on investment securities		398			379		291		777			557
Dividends on investment securities		114			118		128		232			249
Other interest income		237			333		270		570			421
Total interest and dividend income		11,023			10,571		9,890		21,594			19,202

Interest Expense
Interest on deposits		3,533			3,264		1,997		6,797			3,654
Interest on Federal Home Loan Bank borrowings		426			439		502		865			759
Interest on senior debt		228			229		228		457			457
Interest on subordinated debt		279			289		112		568			211
Interest on note payable and other		8			6		10		14			17
Total interest expense		4,474			4,227		2,849		8,701			5,098

Net interest income		6,549			6,344		7,041		12,893			14,104

Provision for loan losses		2,937			165		50		3,102			235

Net interest income after provision for loan losses		3,612			6,179		6,991		9,791			13,869

Non-interest Income
Loan application, inspection and processing fees		28			14		12		42			20
Deposit fees and service charges		116			127		132		243			266
Gains on sale of loans		367			456		66		823			66
Rental income		192			130		83		322			167
Other income		126			95		93		221			189
Total non-interest income		829			822		386		1,651			708

Non-interest Expense
Salaries and benefits		3,608			3,184		2,854		6,792			5,623
Occupancy and equipment expenses		744			917		776		1,661			1,517
Data processing expenses		361			370		322		731			639
Professional and other outside services		803			771		457		1,574			1,029
Project Expenses		(15	)		80		592		65			1,115
Advertising and promotional expenses		77			115		59		192			137
Loan administration and processing expenses		43			14		30		57			43
Regulatory assessments		395			315		298		710			550
Insurance expenses		54			41		53		95			108
Material and communications		131			134		110		265			223
Other operating expenses		527			569		410		1,096			768
Total non-interest expense		6,728			6,510		5,961		13,238			11,752

(Loss) income before income taxes		(2,287	)		491		1,416		(1,796	)		2,825

(Benefit) provision for Income Taxes		(632	)		168		380		(464	)		724
Net (loss) income	$	(1,655	)	$	323	$	1,036	$	(1,332	)	$	2,101

Basic (loss) earnings per share	$	(0.42	)	$	0.08	$	0.27	$	(0.34	)	$	0.54
Diluted (loss) earnings per share	$	(0.42	)	$	0.08	$	0.26	$	(0.34	)	$	0.54

FINANCIAL RATIOS AND OTHER DATA

	Three Months Ended									Six Months Ended
	June 30, 2019			March 31, 2019			June 30, 2018			June 30, 2019			June 30, 2018

Quarterly Performance Data:
Net (loss) income	$	(1,655	)	$	323		$	1,036		$	(1,332	)	$	2,101
Return on average assets		-0.69	%		0.14	%		0.46	%		-0.28	%		0.48	%
Return on average equity		-9.44	%		1.87	%		6.06	%		-3.82	%		6.21	%
Net interest margin		2.93	%		2.87	%		3.34	%		2.90	%		3.44	%
Efficiency ratio		91.19	%		90.85	%		80.27	%		91.02	%		79.34	%
Efficiency ratio excluding project costs		91.39	%		89.73	%		72.30	%		90.57	%		71.81	%
% increase loans		2.95	%		1.05	%		4.52	%		4.02	%		5.24	%
% increase deposits		1.96	%		1.28	%		8.72	%		3.27	%		11.76	%

Asset Quality:
Nonaccrual loans	$	19,405		$	28,029		$	6,464		$	19,405		$	6,464
Other real estate owned	$	1,954		$	2,945		$	991		$	1,954		$	991
Total nonperforming assets	$	21,359		$	30,974		$	7,455		$	21,359		$	7,455

Nonaccrual loans / loans		2.39	%		3.55	%		0.85	%		2.39	%		0.85	%
Nonperforming assets / assets		2.18	%		3.25	%		0.80	%		2.18	%		0.80	%
Allowance for loan losses	$	8,458		$	7,823		$	6,525		$	8,458		$	6,525
Valuation reserve	$	1,416		$	1,384		$	1,702		$	1,416		$	1,702
Allowance for loan losses with valuation reserve	$	9,874		$	9,207		$	8,227		$	9,874		$	8,227

Allowance for loan losses / loans		1.04	%		0.99	%		0.86	%		1.04	%		0.86	%
Allowance / nonaccrual loans		43.59	%		27.91	%		100.94	%		43.59	%		100.94	%
Allowance for loan losses and valuation reserve / loans		1.21	%		1.17	%		1.08	%		1.21	%		1.08	%
Allowance for loan losses and valuation reserve / nonaccrual loans		50.88	%		32.85	%		127.27	%		50.88	%		127.27	%

Gross loan charge-offs	$	2,307		$	-		$	13		$	2,307		$	13
Gross loan (recoveries)	$	(5	)	$	(49	)	$	(3	)	$	(54	)	$	(6	)
Net loan charge-offs (recoveries)	$	2,302		$	(49	)	$	10		$	2,253		$	7

Capital Data and Capital Ratios
Book value per share (1)	$	17.41		$	17.77		$	17.51		$	17.41		$	17.51
Shares outstanding		3,922,610			3,919,610			3,904,578			3,922,610			3,904,578
Bank Capital Ratios:
Leverage ratio		9.61	%		9.79	%		10.03	%		9.61	%		10.03	%
Tier 1 capital		10.66	%		10.99	%		11.05	%		10.66	%		11.05	%
Total risk based capital		11.65	%		11.91	%		11.85	%		11.65	%		11.85	%

(1) Book value per share represents shareholders' equity divided by outstanding shares.