Patriot National Bancorp achieves record full year pre-tax income of $7.0 million - its strongest full year operating performance ever recorded

STAMFORD, Conn., Feb. 02, 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 $1.1 million and quarterly net income of $600 thousand, or $0.15 per fully diluted share.

Full year pre-tax income in 2017 was $7.0 million, $3.9 million higher than the $3.1 million reported in 2016. For the year ended December 31, 2017, net income was $4.1 million, or $1.06 per diluted share, more than double the prior year results of $1.9 million, or $0.49 per fully diluted share.

CEO Michael Carrazza stated: “2017’s full year results represent a major earnings achievement for Patriot, and marks the strongest earnings year in Patriot’s history. This is further confirmation that the growth blueprint put in place is yielding successful, value enhancing results. We remain keenly focused on pursuing certain strategic initiatives that support growth and diversification of our banking franchise.”

Richard Muskus, Patriot’s President added, “We have a strong loan pipeline, a dedicated team of highly qualified lending and branch management professionals, and prudent underwriting standards. We will continue to add to our product lines and enhance service offerings to our customers. These are the primary areas of focus and will continue to add to our profitability and franchise value.”

The reported fourth quarter net income, which included $601 thousand of non-recurring special project costs, compares to net income of $1 million, $0.26 per fully diluted share, in the third quarter of 2017 and $1 million, $0.27 per share, for the same quarter a year ago.

With respect to income taxes, a net provision of $502 thousand was taken in the fourth quarter. This net tax provision was comprised of two significant and mostly offsetting adjustments. The provision increased by $2.81 million as a result of a reduction in value of the Company’s deferred tax asset due to the change in corporate tax rates to 21% enacted in December of 2017. At the same time, the income tax provision was reduced by $2.77 million, as a result of the recognition of deferred tax benefits due to a change in the classification of certain prior period tax losses that were previously deemed to have been subject to IRC Section 382 limitations.

As of December 31, 2017 shareholders’ equity was $66.7 million, an increase of $4.2 million from a year ago. The Company’s book value per share increased to $17.12 at December 31, 2017 as compared to $16.08 a year ago.

Patriot Bank’s deposits continued to rise and are up 20% year-over-year, with loan growth of 24% from the prior year fueling a strong growth in net interest income. Net interest income climbed 19% from the fourth quarter of 2016 and is 16% higher in the full year period.

In addition to the announcement of quarterly earnings, Patriot also announced today the declaration of its third consecutive quarterly dividend of $0.01 per share which will be paid February 16, 2018.

The comparative results for the full year 2016 and 2017 include the impact of a troubled loan that was ultimately resolved. In the second quarter of 2016, the Bank recorded a significant loan loss provision, but aggressively worked towards a recovery, which was successfully accomplished in the first quarter of 2017. Excluding the impact of the loan loss provision, which primarily consisted of losses and recoveries related to this loan, net income for the year was 6% higher than in 2016.

During the year, total assets grew by $95 million (13%), to $852 million, up from $757 million. Loans totaled $720 million as of year-end 2017, up 1% from the $710 million reported at September 30, 2017, and up 24% from the $582 million reported at December 31, 2016.

Deposits increased during the quarter to $637 million and were up 20% year-over-year as compared with $529 million at the end of 2016. Deposit growth remains a key initiative to keep pace with Patriot’s overall growth prospects.

Net interest income was $7.0 million in the quarter, essentially unchanged from the third quarter of 2017 and up 19% from the corresponding 2016 period. Net interest income of $25.9 million in the year-to-date period was 16% higher than the $22.4 million in the year ending December 31, 2016. Net interest margin was 3.51% for the quarter and 3.58% for the 2017 year-to-date period, as compared to 3.65 % in the prior quarter and 3.78% in 2016.

The provision for loan losses in the quarter was $87 thousand, with overall credit quality remaining strong. The year-to-date credit in the provision of $857 thousand reflects the previously noted recovery. The provision for loan losses was $150 thousand in the fourth quarter of 2016 and $2.5 million for the year ended December 31, 2016.

Non-interest income was $432 thousand in the quarter, 12% higher than the prior quarter. Year-to-date non-interest income of $1.4 million was 7% lower than the prior year.

Non-interest expense increased $1 million over the prior quarter and year-to-date non-interest expenses increased $2.8 million over the same period in 2016. The quarter and full year expenses were impacted by non-recurring project costs of $601 thousand in the quarter ($640 thousand for the full year) associated with the pending Prime acquisition and an income tax related consulting project.

The Bank’s capital ratios continue to be strong, as the Bank maintained its “well capitalized” regulatory status. As of December 31, 2017, Tier 1 leverage ratio was 9.36%, Tier 1 risk based capital was 10.55% and total risk based capital was 11.41%.

About the Company
Patriot National Bancorp, Inc. is headquartered in Stamford, Connecticut and the Bank has full service branches in Connecticut and New York.

Since opening its doors in 1994, the Company’s mission has been to serve our local communities by helping our neighbors and neighborhood businesses thrive. All lending is handled locally and is specific to each borrower, and the commitment to local businesses goes further to connect, support and grow businesses in both the for-profit and nonprofit sectors, along with municipalities. Patriot believes a well-connected community is a strong community—and that together, all will prosper.

“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 Company, (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 the Company, (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 the Company’s 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
December 31,
2017
September 30,
2017
December 31,
2016
Assets
Noninterest bearing deposits and cash $3,607 $3,337 $2,596
Interest bearing deposits 45,634 25,075 89,693
Total cash and cash equivalents 49,241 28,412 92,289
Available-for-sale securities, at fair value 25,576 29,586 24,428
Other investments, at cost 4,450 4,450 4,450
Total investment securities 30,026 34,036 28,878
FRB & FHLB stock, at cost 8,391 8,813 7,718
Gross loans receivable 719,647 710,118 581,657
Allowance for loan losses (6,297) (6,222) (4,675)
Net loans receivable 713,350 703,896 576,982
Accrued interest and dividends receivable 3,496 3,501 2,726
Premises and equipment, net 35,358 34,713 32,759
Other real estate owned - 851 851
Deferred tax asset, net 10,397 10,686 12,632
Other assets 1,821 1,823 1,819
Total assets
$ 852,080 $ 826,731 $ 756,654
Liabilities and Shareholders' Equity
Deposits
Noninterest bearing deposits $81,197 $76,875 $76,772
Interest bearing deposits 556,242 528,539 452,552
637,439 605,414 529,324
Federal Home Loan Bank and correspondent bank borrowings 120,000 130,000 138,000
Senior notes, net 11,703 11,684 11,628
Junior subordinated debt owed to unconsolidated trust 8,086 8,085 8,079
Note Payable 1,580 1,627 1,769
Advances from borrowers for taxes and insurance 2,829 1,799 2,676
Accrued expenses and other liabilities 3,694 1,812 2,608
Total liabilities
785,331 760,421 694,084
Common stock 40 40 40
Additional paid-in capital 106,875 106,834 106,729
Accumulated deficit (38,832) (39,394) (42,902)
Treasury stock, at cost (1,179) (1,179) (1,177)
Accumulated other comprehensive (loss) gain (155) 9 (120)
Total Shareholders' Equity
66,749 66,310 62,570
Total Liabilities and Shareholders' Equity
$ 852,080 $ 826,731 $ 756,654


PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited) Three Months Ended Twelve Months Ended
Dollars in thousands, except per share data December 31,
2017
September
30, 2017
December 31,
2016
December 31,
2017
December 31,
2016
Interest and dividend income
Interest and fees on loans $8,550 $8,522 $6,579 $31,270 $24,391
Interest on investment securities 294 275 140 982 544
Dividends on investment securities 103 105 90 383 353
Other interest income 66 65 25 214 120
Total interest and dividend income 9,013 8,967 6,834 32,849 25,408
Interest expense
Interest on deposits 1,491 1,339 724 4,948 2,242
Interest on Federal Home Loan Bank borrowings 193 248 113 702 371
Interest on Note Payable - long term senior debt 229 229 25 915 25
Interest on subordinated debt 94 92 84 360 334
Interest on other borrowings 7 7 11 31 36
Total interest expense 2,014 1,915 957 6,956 3,008
Net interest income
6,999 7,052 5,877 25,893 22,400
Provision (credit) for loan losses 87 545 150 (857) 2,464
Net interest income after provision (credit) for loan losses 6,912 6,507 5,727 26,750 19,936
Non-interest income
Loan application, inspection and processing fees 12 25 28 73 180
Fees and service charges 146 149 149 590 600
Rental Income 97 117 103 399 414
Other income 177 95 88 382 362
Total non-interest income
432 386 368 1,444 1,556
Non-interest expense
Salaries and benefits 3,247 2,741 2,155 10,915 9,489
Occupancy and equipment expense 755 796 797 3,133 3,110
Data processing 353 340 125 1,139 939
Professional services and other outside services 438 410 565 2,050 1,747
Merger/tax initiative project expenses 601 39 - 640 -
Advertising and promotional expenses 56 81 53 322 394
Loan administration and processing expenses 18 22 24 63 54
Regulatory assessments 272 230 151 844 603
Insurance expense 52 66 54 233 222
Material and communications 94 97 88 381 402
Other operating expenses 356 400 402 1,452 1,395
Total non-interest expense
6,242 5,222 4,414 21,172 18,355
Income before income taxes 1,102 1,671 1,681 7,022 3,137
Expense for Income taxes 502 658 636 2,875 1,207
Net income
$ 600 $ 1,013 $ 1,045 $ 4,147 $ 1,930
Basic income per share $0.15 $0.26 $0.27 $1.06 $0.49
Diluted income per share $0.15 $0.26 $0.27 $1.06 $0.49

PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARY
FINANCIAL RATIOS AND OTHER DATA
(Unaudited)
Dollars in thousands, except shares outstanding and per share data
Quarter Ended
December 31,
2017
September
30, 2017
December 31,
2016
Quarterly Performance Data:
Net Income $600 $1,013 $1,045
Return on Average Assets 0.29% 0.49% 0.62%
Return on Average Equity 3.65% 6.05% 6.55%
Net Interest Margin 3.51% 3.65% 3.98%
Efficiency Ratio 84% 70% 71%
Qtr % increase loans 1% 5% 4%
Qtr % increase deposits 5% 8% 12%
Asset Quality:
Nonaccrual loans $3,781 $2,051 $4,751
Other real estate owned - 851 851
Total nonperforming assets $3,781 $2,902 $5,602
Nonaccrual loans / loans 0.53% 0.29% 0.82%
Nonperforming assets / assets 0.44% 0.35% 0.74%
Allowance for loan losses $6,297 $6,222 $4,675
Allowance for loan losses / loans 0.88% 0.88% 0.80%
Allowance / nonaccrual loans 166.5% 303.4% 98.4%
Gross loan charge-offs for the quarter $17 $275 $2,935
Gross loan (recoveries) for the quarter $(4) $(8) $(132)
Net loan charge-offs (recoveries) for the quarter $13 $267 $2,803
Capital Data and Capital Ratios
Book value per share (1) $17.12 $17.02 $16.08
Shares outstanding 3,899,675 3,895,720 3,891,897
Bank Capital Ratios:
Leverage Ratio 9.36% 9.57% 10.52%
Tier 1 Capital 10.55% 10.69% 11.18%
Total Risk Based Capital 11.41% 11.55% 11.93%
(1) Book value per share represents shareholders' equity divided by outstanding shares.
Net Income excluding Loan Loss Provision
The following table represents a reconciliation of the reported net income to the net income excluding loan loss provision for the three and twelve months ended December 31, 2017 and 2016, and the three months ended September 30, 2017. The table is reported in a format that is not in compliance with Generally Accepted Accounting Principles (non-GAAP) but is beneficial to the reader and provides enhanced comparability due to the loan loss and subsequent loan recovery associated with the troubled loan mentioned previously. Company management finds this measure useful when assessing the period to period change in core performance of the business.
Quarter Ended
Year Ended December 31,
December 31,
2017
September
30, 2017
December 31,
2016
2017 2016
Net Income reported$600 $1,013 $1,045 $4,147 $1,930
Tax Provision$502 $658 $636 $2,875 $1,207
Loan Loss Provision$87 $545 $150 $(857) $2,464
Effective tax rate 45.55% 39.38% 37.83% 40.94% 38.48%
Pre-Tax Income Reported$1,102 $1,671 $1,681 $7,022 $3,137
Pre-tax Income excluding loan loss provision$1,189 $2,216 $1,831 $6,165 $5,601
Net Income excluding loan loss provision$647 $1,343 $1,138 $3,641 $3,446

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

Source:Patriot National Bancorp Inc.