Patriot Reports Third Quarter 2022 Net Income of $2.3 million, $0.59 per share; continued growth in loans and deposits

Tom Slater hired as Chief Credit Officer

Payment Card Business Triples Since Inception, as Bank Assets Approach $1.1 Billion

STAMFORD, Conn., Nov. 10, 2022 (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 $2.3 million, or $0.59 basic and diluted earnings per share for the quarter ended September 30, 2022.

These results reflect an increase as compared to $1.3 million, or $0.32 per basic and diluted earnings per share for the second quarter of 2022 and net income of $1.3 million, or $0.34 basic and diluted earnings per share reported in the third quarter of 2021. The 2021 third quarter included the benefit of a non-recurring employee retention tax credit (“ERC”) of $906,000.

For the nine months ended September 30, 2022, net income was $4.4 million, or $1.11 basic and diluted earnings per share, compared to a net income of $3.2 million, or $0.81 basic and diluted earnings per share for the nine months ended September 30, 2021. The nine months ended September 30, 2021, included the recognition of an ERC of $2.9 million, while no ERC was recognized in 2022.

Along with reporting a substantial improvement in net interest income and strong earnings, the Bank reported loan growth of 16.7% and deposit growth of 11.5% compared to December 31, 2021. Net interest margin improved to 3.68% for the quarter and 3.35% for the first three quarters of 2022, up from 2.87% for the first three quarters of 2021. The Bank’s prepaid debit card program continues to be an increasing, low-cost funding source. This relatively new funding silo has grown from $50 million in July 2020 to $169.1 million as of September 30, 2022. Growth in the prepaid portfolio is expected to increasingly contribute to the Bank’s funding strategy and improve the Bank’s net interest margin and overall funding costs.

Patriot President & CEO Robert Russell stated: “We are very pleased with the results for the quarter which reflect continued strong growth in our balance sheet and continued improvement in our asset quality even in the current economic conditions. Net interest margin expanded to 3.68% in the quarter while return on average equity, fueled in part by tax benefits related to the terminated transaction, was 15% for the quarter. Cost control and substantial improvement in the Bank’s net interest margin contributed to the improvement in the efficiency ratio to 73% in the third quarter of 2022.” Mr. Russell added, “The Bank continues to navigate the ever-changing interest rate landscape and remains well positioned for continued growth and improvement.”

Mr. Russell added: “We are also pleased to announce today the hiring of Thomas E. Slater as our new Executive Vice President-Chief Credit Officer. Mr. Slater takes on this new role following his tenure as Senior Vice President and Senior Credit Officer at Investors Bank. Mr. Slater has extensive experience in commercial real estate, as well as commercial and industrial lending, and has led teams successfully through growth and change. I am pleased to add someone of Tom’s caliber and pedigree to the Bank’s leadership team. Tom brings a strong and diverse background to the Bank, and I look forward to his contributions.”

Financial Results:

Total assets increased $110.5 million to $1.1 billion, as of September 30, 2022, as compared to $948.5 million on December 31, 2021, primarily due to the increase in net loans from $729.6 million to $852.9 million on September 30, 2022. Total deposits increased from $748.6 million on December 31, 2021, to $834.4 million on September 30, 2022.

Net interest income for the three months ended September 30, 2022, was $9.2 million, an increase of $2.9 million or 46.9% from the third quarter of 2021. Net interest income for the nine months ended September 30, 2022, was $23.7 million, an increase of $5.3 million or 29.1% from the nine months ended September 30, 2021. These increases were primarily attributable to the growth in the loan portfolio over the past year.

The Bank’s net interest margin showed continued improvement, with an increase to 3.68% in the quarter and 3.35% for the nine months ended September 30, 2022, compared with 2.82% and 2.87% for the three and nine months ended September 30, 2021, respectively.

For the three and nine months ended September 30, 2022, provision for loan losses of $200,000 and $475,000 was recorded, respectively. For the three and nine months ended September 30, 2021, a credit for loans losses of $300,000 was recorded. As of September 30, 2022, the allowance for loan losses was 1.15% of total loans, compared with 1.34% on December 31, 2021.

Non-interest income for the quarter ended September 30, 2022, and 2021 was $654,000 and $923,000, respectively. Non-interest income for the nine months ended September 30, 2022, and 2021, was $2.3 million and $2.1 million, respectively. The higher non-interest income for the quarter ended September 30, 2021, was primarily attributable to a non-recurring gain on the termination of a cash flow interest rate swap of $512,000 recognized in the third quarter of 2021. The increase in non-interest income for the nine months ended September 30, 2022, compared to the same period in 2021 was primarily attributable to gains from sales of SBA loans totaling $691,000 along with higher non-interest income from the payments division.

Non-interest expenses for the quarter ended September 30, 2022, and 2021, were $7.2 million and $5.7 million, respectively. Non-interest expenses for the nine months ended September 30, 2022, and 2021, were $20.1 million and $16.4 million, respectively. During the first three quarters of 2021 the Company recognized an ERC 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 nine months ended September 30, 2022, a provision for income taxes of $944,000 was recorded, compared to a provision for income taxes of $1.2 million for the nine months ended September 30, 2021. The effective tax rate in 2022 was 6.3% for the third quarter, and 17.6% in the year-to-date period, compared with 26.5% and 26.9% in the corresponding 2021 periods. The lower effective tax rates in 2022 were due to the tax treatment of merger-related expenses incurred in 2021 deemed deductible in the third quarter of 2022 due to the previously announced termination of the merger agreement.

As of September 30, 2022, shareholders’ equity was $58.0 million, compared with $67.3 million on December 31, 2021. Patriot’s book value per share was $14.66 on September 30, 2022, compared with $17.02 on December 31, 2021. The change was attributable to a decline in the market value of the Bank’s Held for Sale investment portfolio (HFS) during the quarter associated with rising market interest rates. Excluding the net impact of the valuation of the HFS portfolio, book value per share was $18.21, compared with $17.61 in the second quarter of 2022 and $16.62 on September 30, 2021.

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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.