GlobeNewswire Inc | Dec 1, 2020 08:30AM EST

December 01, 2020

STAMFORD, Conn., Dec. 01, 2020 (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 net loss of $87,000, or $0.02 basic and diluted loss per share for the quarter ended September 30, 2020, compared with a net loss of $1.3 million reported in the second quarter of 2020. The improvement compared with the second quarter of 2020 resulted from a lower provision for loan losses and higher net interest and non-interest income.

The net loss for the nine-month period ended September 30, 2020 was $2.4 million, or $0.62 per fully diluted share, as compared to a net loss of $1.3 million, or $0.33 per fully diluted shares, during the same period in the prior year. The 2020 results to date, reflect lower net interest income and non-interest income.

As of September 30, 2020, total assets decreased 5.8% to $922.9 million, as compared to the second quarter of 2020. The Banks net loan portfolio by $41.3 million, to $740.1 million, while total deposits decreased $55.7 million or 7.1%, to $727.4 million in the third quarter of 2020. The decline in loans represented an intentional slow-down in new loan originations as the impact of the pandemic on the local economy was better understood. The decrease in total deposits during the quarter is primarily the result of declines in the use of wholesale brokered deposits and higher-cost certificates of deposits, partially offset by growth in deposits gathered from the prepaid debit card business.

Excluding that change in brokered deposits, total deposits increased $71.0million or 12.5% since the end of the third quarter in 2019. In July 2020, the Company completed the purchase of prepaid debit card deposits from a prominent national provider and processor of prepaid debit cards for corporate, consumer and government clients. The prepaid debit card deposits totaled approximately $60.0 million as of September 30, 2020.

As far as the impact of COVID-19, Patriot has kept all branches open with customers re-directed to non-contact ATMs and Live Banker ATMs as on-line banking services continue to be optimized with expanded customer call center staffing. Its multi-year investment to enhance customers technological banking experience has been well tested during the pandemic, as from January 1 to September 30, 2020, Patriots mobile deposits were up 98%, use of its mobile app banking was up 33%, monthly average log-ins rose 8% and the number of customers completely new to digital banking rose by 30%.

The Bank had provided CARES Act payment relief on loans of approximately $244.4 million. The Bank received some very positive indications of the strength of its borrowers as a significant percentage of the loans deferred as a result of the CARES Act have now resumed normal payments. The majority of the modifications granted to customers expired in November of 2020, the balance of loans modified in conjunction with the CARES Act had declined from the high of $244.4 million to $59.1 million

Patriot President & CEO Robert Russell stated Many of the changes implemented during the second and third quarters are showing signs of success and are reflected in the positive profitability trends. The Bank continues to reshape its leadership team and its balance sheet and has strengthened its capital position to prepare for future growth and profitability of the organization. As the pandemic continues, Patriot remains prepared to deliver the tools and service required to remain a strong partner with the communities we serve. Mr. Russell added: we are very pleased that loans on deferral as a result of the Cares Act have declined from $244.4 million to $59.1 million.

Financial Results

As of September 30, 2020, total assets were $922.9 million, as compared to $979.5 million at June 30, 2020 and $972.0 million at September 30, 2019. Net loans receivable totaled $740.1 million, as compared to $781.4 million at June 30, 2020 and $791.9 million at September 30, 2019. Deposits totaled $727.4 million at September 30, 2020, as compared to $783.1 million at June 30, 2020 and $762.1 million at September 30, 2019.

The decline in loans and total assets represents the intentional downsizing of the Banks balance sheet as the current economic uncertainties associated with the COVID-19 pandemic are assessed. The Company continues to originate loans, but at a slower pace than in the past, and has seen loan maturities and loan payoffs outpace loan originations during the nine-month period of September 30, 2020.

Total deposits declined $55.7 million during the third quarter of 2020, this was due to a decline of $69.9 million in wholesale brokered deposits, a decline of $51.0 million in certificate of deposits as higher rate non-relationship deposits were allowed to run off, and a decline of $22.7 million in money market deposits, which was partially offset by an increase of $60.0 million in prepaid debit card deposits.

Net interest income was $5.9 million in the third quarter of 2020, an increase of 3.9% from the second quarter of 2020, and a decline of 5.4% from the third quarter of 2019. The year-to-date September 30, 2020 net interest income was $17.9million, a decrease of 6.8% over the year-to-date September 2019.

Net interest margin was 2.61% in the third quarter of 2020, as compared to 2.46% in the second quarter of 2020 and 2.70% in the third quarter of 2019.

Compared to the prior year, net interest income was negatively impacted by a lower average loan balance, and an increase in the rate paid on FHLB borrowings associated with the conversion of certain borrowings from a low variable teaser rate to higher fixed rate. The decline also reflects the impact of lower interest rates connected with a decline in market interest rates in late first quarter of 2020 connected to the COVID-19 pandemic.

The provision for loan losses in the third quarter of 2020 was $85,000, as compared to $910,000 in the second quarter of 2020 and $100,000 in the third quarter of 2019. The Allowance for Loan losses on September 30, 2020 totals 1.49% of total loans compared with 1.41% on June 30, 2020 and 1.05% on September 30, 2019. The increase in the Allowance as a percent of loans reflects additional provisions in the second and third quarter associated with the estimated impact of the COVID pandemic on the economy and local business community

Noninterest income was $704,000 in the third quarter of 2020, 81.0% higher than the second quarter of 2020, and 23.3% higher than the third quarter of 2019. The increase was primarily due to gains on sale of SBA loans of $421,000 in the third quarter of 2020. The year-to-date September 30, 2020 non-interest income was $1.5 million, a decline of 27.0% over the year-to-date September 30, 2019. The decrease in noninterest income for the year-to-date period was primarily due to lower realized gains on the sale of SBA loans associated with delays in executing the sale of those loans in 2020.

Noninterest expense was $6.6 million in the third quarter of 2020, 3.9% lower than the second quarter of 2020, and 0.9% lower than the third quarter of 2019. The year-to-date September 30, 2020 non-interest expense was $20.9 million, 5.2% higher than the prior year. The increase in non-interest expense for the year-to-date period was primarily driven by an increase of $694,000 in salaries and benefits and an increase of $297,000 in regulatory assessments expenses in 2020.

The income tax benefit was $6,000 in the third quarter of 2020, representing an effective tax rate of 6.5%. The income tax benefit was $811,000 in the nine-month period ended September 30, 2020, representing an effective tax rate of25.0%.

As of September 30, 2020, shareholders equity was $64.5 million, as compared to $64.2 million at June 30, 2020. Patriots book value per share was $16.39 at September 30, 2020, as compared to $16.30 at June 30, 2020. The Banks capital ratios continue to be strong, maintaining its well capitalized regulatory status. As of September 30, 2020, the Banks Tier 1 leverage ratio was 9.35%, Tier 1 risk-based capital ratio was 11.08% and total risk-based capital ratio was 12.33%.

Patriot has currently suspended its quarterly dividend due to the uncertainties surrounding the pandemic however, the Bank hopes to resume when the current economic uncertainties are settled.

Patriot 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 Jacksonville and Stamford, along with a Rhode Island operations center.

About the CompanyFounded in 1994, and now celebrating its 26th 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. Patriots 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 1995Certain statements contained in Bancorps 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 the Companys interest earning assets and the interest paid on its interest bearing liabilities; (2) the timing of re-pricing of the Companys 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 Companys market areas, and the consequent effect on the quality of the Companys 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 and other such factors, including risk factors, as may be described in the Companys other filings with the Securities and Exchange Commission (the SEC); (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; and (25) our compensation expense associated with equity allocated or awarded to our employees.

PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS (Unaudited) (In thousands, except share September 30, June 30, September 30,data) 2020 2020 2019 Assets Cash and due from banks: Noninterest bearing deposits $ 3,231 $ 1,616 $ 3,157 and cashInterest bearing deposits 46,405 64,280 46,844 Total cash and cash 49,636 65,896 50,001 equivalentsInvestment securities: Available-for-sale 47,823 46,624 50,057 securities, at fair valueOther investments, at cost 4,450 4,450 4,963 Total investment securities 52,273 51,074 55,020 Federal Reserve Bank stock, 2,783 2,897 2,889 at costFederal Home Loan Bank 4,503 4,503 4,477 stock, at cost Gross loans receivable 751,298 792,500 800,314 Allowance for loan losses (11,171 ) (11,148 ) (8,405 )Net loans receivable 740,127 781,352 791,909 SBA loans held for sale 6,824 7,579 4,103 Accrued interest and 6,834 5,624 3,538 dividends receivablePremises and equipment, net 33,632 33,962 34,883 Other real estate owned 1,954 2,400 2,400 Deferred tax asset, net 12,066 12,180 11,495 Goodwill 1,107 1,107 1,107 Core deposit intangible, net 567 586 642 Other assets 10,623 10,384 9,521 Total assets $ 922,929 $ 979,544 $ 971,985 Liabilities Deposits: Noninterest bearing deposits $ 161,871 $ 97,360 $ 80,772 Interest bearing deposits 565,560 685,728 681,284 Total deposits 727,431 783,088 762,056 Federal Home Loan Bank andcorrespondent bank 90,000 90,000 100,000 borrowingsSenior notes, net 11,909 11,890 11,834 Subordinated debt, net 9,774 9,767 9,745 Junior subordinated debtowed to unconsolidated 8,108 8,106 8,100 trust, netNote payable 1,044 1,094 1,242 Advances from borrowers for 2,492 3,773 2,182 taxes and insuranceAccrued expenses and other 7,634 7,654 8,647 liabilitiesTotal liabilities 858,392 915,372 903,806 Commitments and - - - Contingencies Shareholders' equity Preferred stock - - - Common stock 106,293 106,251 106,118 Accumulated deficit (41,210 ) (41,123 ) (37,222 )Accumulated other (546 ) (956 ) (717 )comprehensive lossTotal shareholders' equity 64,537 64,172 68,179 Total liabilities and $ 922,929 $ 979,544 $ 971,985 shareholders' equity

PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended Nine Months Ended(In thousands, September June 30, September September Septemberexcept per 30, 2020 30, 30, 30,share amounts) 2020 2019 2020 2019 Interest and Dividend IncomeInterest and $ 8,578 $ 9,111 $ 10,245 $ 27,722 $ 30,345 fees on loansInterest oninvestment 340 378 430 1,134 1,207 securitiesDividends oninvestment 85 90 112 313 344 securitiesOther interest 28 24 225 187 795 incomeTotal interestand dividend 9,031 9,603 11,012 29,356 32,691 income Interest ExpenseInterest on 2,028 2,792 3,655 8,020 10,452 depositsInterest onFederal Home 628 638 602 1,963 1,467 Loan BankborrowingsInterest on 229 228 229 686 686 senior debtInterest onsubordinated 235 253 277 756 845 debtInterest onnote payable 5 5 6 15 20 and otherTotal interest 3,125 3,916 4,769 11,440 13,470 expense Net interest 5,906 5,687 6,243 17,916 19,221 income Provision for 85 910 100 1,799 3,202 Loan Losses Net interestincome after 5,821 4,777 6,143 16,117 16,019 provision forloan losses Non-interest IncomeLoanapplication, 54 40 32 147 74 inspection andprocessing feesDeposit feesand service 73 66 123 253 366 chargesGains on sale 380 72 188 464 864 of loansRental income 131 131 137 393 459 Other income 66 80 91 257 312 Totalnon-interest 704 389 571 1,514 2,075 income Non-interest ExpenseSalaries and 3,460 3,645 3,480 10,966 10,272 benefitsOccupancy andequipment 810 921 937 2,680 2,598 expensesData processing 433 371 357 1,194 1,088 expensesProfessionaland other 627 726 721 2,137 2,233 outsideservicesProject 6 54 212 154 277 expenses, netAdvertising andpromotional 107 123 63 377 255 expensesLoanadministration 75 36 44 135 101 and processingexpensesRegulatory 355 364 152 1,159 862 assessmentsInsurance 67 78 65 215 160 expensesCommunications,stationary and 118 133 118 371 383 suppliesOther operating 560 439 530 1,491 1,626 expensesTotalnon-interest 6,618 6,890 6,679 20,879 19,855 expense (Loss) incomebefore income (93 ) (1,724 ) 35 (3,248 ) (1,761 )taxes (Benefit)provision for (6 ) (446 ) 8 (811 ) (456 )income taxesNet (loss) $ (87 ) $ (1,278 ) $ 27 $ (2,437 ) $ (1,305 )income Basic (loss)earnings per $ (0.02 ) $ (0.32 ) $ 0.01 $ (0.62 ) $ (0.33 )shareDiluted (loss)earnings per $ (0.02 ) $ (0.32 ) $ 0.01 $ (0.62 ) $ (0.33 )share

FINANCIALRATIOS AND OTHER DATA Three Months Ended Nine Months Ended(Dollars in September 30, June 30, September 30, September 30, September 30,thousands) 2020 2020 2019 2020 2019 QuarterlyPerformance Data:Net (loss) $ (87 ) $ (1,279 ) $ 26 $ (2,437 ) $ (1,305 )incomeReturn onAverage -0.04 % -0.52 % 0.01 % -0.33 % -0.08 %AssetsReturn onAverage -0.53 % -7.89 % 0.15 % -4.96 % -1.07 %EquityNet Interest 2.61 % 2.46 % 2.70 % 2.61 % 1.22 %MarginEfficiency 100.12 % 113.41 % 98.02 % 107.46 % 93.24 %RatioEfficiencyRatio 100.03 % 112.51 % 94.92 % 106.66 % 91.94 %excludingproject costs% increase -5.20 % -3.22 % -1.41 % -7.49 % 2.55 %loans% increase -7.11 % -2.51 % -0.72 % -5.47 % 2.53 %deposits Asset Quality:Nonaccrual $ 20,440 $ 21,593 $ 19,183 $ 20,440 $ 19,183 loansOther real $ 1,954 $ 2,400 $ 2,400 $ 1,954 $ 2,400 estate ownedTotalnonperforming $ 22,394 $ 23,993 $ 21,583 $ 22,394 $ 21,583 assets Nonaccrual 2.72 % 2.72 % 2.40 % 2.72 % 2.40 %loans / loansNonperformingassets / 2.43 % 2.45 % 2.22 % 2.43 % 2.22 %assetsAllowance for $ 11,171 $ 11,148 $ 8,405 $ 11,171 $ 8,405 loan lossesValuation $ 492 $ 485 $ 1,252 $ 492 $ 1,252 reserveAllowance forloan losseswith $ 11,663 $ 11,633 $ 9,657 $ 11,663 $ 9,657 valuationreserve Allowance forloan losses / 1.49 % 1.41 % 1.05 % 1.49 % 1.05 %loansAllowance /nonaccrual 54.65 % 51.63 % 43.81 % 54.65 % 43.81 %loansAllowance forloan lossesand valuation 1.55 % 1.47 % 1.20 % 1.55 % 1.20 %reserve /loansAllowance forloan lossesand valuation 57.06 % 53.87 % 50.34 % 57.06 % 50.34 %reserve /nonaccrualloans Gross loan $ 75 $ 691 $ 282 $ 810 $ 2,589 charge-offsGross loan $ (13 ) $ (13 ) $ (128 ) $ (67 ) $ (183 )(recoveries)Net loancharge-offs $ 62 $ 678 $ 154 $ 743 $ 2,406 (recoveries) Capital Dataand Capital RatiosBook value $ 16.39 $ 16.30 $ 17.37 $ 16.39 $ 17.37 per share (1)Shares 3,937,041 3,935,841 3,925,002 3,937,041 3,925,002 outstandingBank Capital Ratios:Leverage 9.35 % 9.03 % 9.47 % 9.35 % 9.47 %RatioTier 1 11.08 % 10.52 % 10.82 % 11.08 % 10.82 %CapitalTotal Risk 12.33 % 11.77 % 11.81 % 12.33 % 11.81 %Based Capital (1) Book value per share represents shareholders' equity divided by outstandingshares. Deposits: September 30, June 30, September 30, (In 2020 2020 2019 thousands)Non-interest bearing:Non-interest $ 102,004 $ 95,932 $ 80,772 bearingPrepaid DDA 59,867 1,428 - Totalnon-interest 161,871 97,360 80,772 bearing Interest bearing:NOW 29,518 26,941 23,675 Savings 91,169 70,230 57,390 Money market 142,909 165,658 125,934 Certificatesof deposit, 133,754 160,258 170,814 less than$250,000Certificatesof deposit, 44,042 60,066 62,702 $250,000 orgreaterListed 33,173 41,690 44,140 DepositsBrokered 90,995 160,885 196,629 depositsTotalInterest 565,560 685,728 681,284 bearing Total $ 727,431 $ 783,088 $ 762,056 Deposits

Contacts: Patriot Bank, N.A. Joseph Perillo Robert Russell Michael Carrazza900 Bedford Street Chief Financial Officer President & CEO ChairmanStamford, CT 06901 203-252-5954 203-252-5939 203-251-8230www.BankPatriot.com