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
March 07, 2023 at 08:31 am EST
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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
Patriot National Bancorp, Inc. is a one-bank holding company for Patriot Bank, N.A (the Bank). The Bank has a total of nine branch offices comprised of eight branch offices located in Fairfield and New Haven Counties, Connecticut and one branch office located in Westchester County, New York. It offers commercial real estate loans, commercial business loans, small business administration (SBA) loans and a variety of consumer loans to individuals, small and medium-sized businesses and professionals. Its consumer and commercial deposit accounts offering include checking, interest-bearing negotiable order of withdrawal, money market, time certificates of deposit, savings, prepaid deposit accounts, on-line national money market accounts, certificate of deposit account registry service, individual retirement accounts and others. Other services offered by the Bank include lockbox, Internet banking, bill paying, remote deposit capture, debit cards, money orders, travelers' checks, and ATMs.