GlobeNewswire Inc | Apr 2, 2021 03:00PM EDT

April 02, 2021

STAMFORD, Conn., April 02, 2021 (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 $1.4 million, or $0.35 basic and diluted loss per share for the quarter ended December 31, 2020, compared to a net loss of $87 thousand reported in the third quarter of 2020. The net loss for the year ended December 31, 2020 was $3.8 million, or $0.97 per fully diluted share, as compared to a net loss of $2.8 million, or $0.72 per fully diluted shares in the fiscal year 2019. The Banks loan loss provision on a year over year basis is down $2.8 million, or 56.3% to $2.2 million for the twelve months ended December 31, 2020.

During the fourth quarter, Patriot recorded a $1.9 million charge associated with the establishment of a valuation allowance on its deferred tax assets and charges relating to a previous acquisition in the amount of $834 thousand. The income tax provision in the fourth quarter of 2020 was also impacted by a benefit for income taxes of $1.1 million due to reversal of an uncertain tax position.

During the COVID-19 pandemic, Patriot has kept all branches open while at the same time leveraging its non-contact ATMs and Live Banker ATMs. Patriot continues to optimize on-line banking services and expand customer call center staffing. The investments to enhance the digital platform and the customer service experience have been well tested during 2020 and the global pandemic. Patriots mobile deposits were up 124% and use of its mobile app banking was up 25%.

Throughout 2020 the Bank provided CARES Act payment relief on approximately $232.4 million of loans. A significant percentage of the loans deferred as a result of the CARES Act have now resumed normal payments. The balance of loans remaining on deferral in conjunction with the CARES Act had declined to $52.6 million at December 31, 2020 and subsequently declined to $37.8 million at March 30, 2021.

Patriot President & CEO Robert Russell stated The Bank is fortunate to have committed and dedicated employees who are resilient and resourceful. The Bank, thanks to efforts of its staff, focused on service and process improvements throughout a very challenging year. We continue to observe positive improvements related to loans previously on deferral, net interest margin and noninterest expense. The leadership team continues to evaluate and upgrade its staff and processes as evidenced by its recent upgrade to its SBA staff. Mr. Russell added: We believe the changes that have been implemented and a culture of accountability position the Bank for a strong 2021 and beyond. We remain focused on the delivery of excellent customer service with products that support our communities.

Financial Results:

As of December 31, 2020, total assets were $880.7 million compared to $979.8 million as of December 31, 2019. Net loans totaled $719.6 million versus $802.0 million as of December 31, 2019. Total deposits were $685.7 million and $769.5 million at December 31, 2020 and 2019, respectively.

The change in loans and total assets represents the intentional resizing 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 year ended December 31, 2020.

The Bank remains focused on its cost of funds and funding sources. The overall decline in deposits of $83.9 million was the result of a planned decline in higher cost brokered deposits of $188.6 million partially offset by an increase in core and prepaid deposits in the amount of $104.7 million.

These balance sheet changes have significantly strengthened the Banks capital ratios and at the same time improved its net interest margin. These foundational changes position Patriot for a return to profitability in 2021 as margins are expected to continue to improve and the slowdown in business activity is expected to gradually rebound from the impact of the pandemic and return to more normalized levels.

Year-to-date December 31, 2020 net interest income was $24.2million and declined $1.3 million, or 5.0% from year-to-date December 31, 2019. Net interest income for the fourth quarters of 2020 and 2019 was unchanged at $6.2 million for the respective periods. Net interest margin showed strong improvement as a lower cost of funds resulted in a 2.93% margin in the fourth quarter of 2020 compared with 2.65% for the fourth 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. Overall, net interest income reflects the impact of lower market rates connected to the COVID-19 pandemic.

Patriot recorded a provision for loan losses of $2.2 million and $5.0 million for the years ended December 31, 2020 and 2019, respectively. The year over year decline represents a decline of 56% compared to the year-to-date December 31, 2019. The decrease in provision for loan loss for the year ended 2020 was attributable to a reduced loan portfolio in 2020, stronger governance around credit administration and oversight of nonperforming assets. In addition, the 2019 provision included the impact of a single commercial loan charge-off as previously reported.

The Allowance for Loan Losses at December 31, 2020 totaled 1.45% of total loans compared with 1.25% at December 31, 2019. The increase in the Allowance as a percent of loans in 2020 compared to 2019, reflects additional provisions associated with the estimated impact of the COVID-19 pandemic on the economy and local business community in 2020 and a slightly lower loan portfolio.

Noninterest income was $2.0 million and $2.5 million for the years ended December 31, 2020 and 2019, respectively representing a decline of 20%. The decrease in noninterest income for the year-to-date period was due largely to reduced deposit fees and charges of $171 thousand and lower levels of gains on sales of SBA loans of $325 thousand associated with delays in executing the sale of those loans in 2020.

Noninterest expense for the year ended December 31, 2020 was $28.1 million versus $26.7 million representing an increase of 5% from a year earlier. The increase was primarily due to higher project expenses and a non-cash intangible write-off aggregating $834 thousand relating to a prior period acquisition, and higher salaries and benefits costs.

The income tax benefit was $337 thousand for 2020 and reflects the establishment of a valuation allowance partially offsetting a reversal of a prior tax reserve as noted previously. The tax benefit recorded in 2019 was $899 thousand.

As of December 31, 2020, shareholders equity was $63.2 million, compared with $67.0 million at December 31, 2019. Patriots book value per share was $16.03 at December 31, 2020, compared with $17.04 at December 31, 2019. The Banks capital ratios continue to be strong, maintaining its well capitalized regulatory status. As of December 31, 2020, the Banks Tier 1 leverage ratio was 9.80%, Tier 1 risk-based capital ratio was 11.25% and total risk-based capital ratio was 12.50%.

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 Stamford, Connecticut, Florida, Georgia, Ohio, along with a Rhode Island operations center.

About the Company:Founded 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 1995:Certain 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) December 31, September 30, December 31, 2020 2020 2019 Assets Cash and due from banks: Noninterest bearing deposits $ 3,006 $ 3,231 $ 2,693 and cashInterest bearing deposits 31,630 46,405 36,711 Total cash and cash 34,636 49,636 39,404 equivalentsInvestment securities: Available-for-sale 49,262 47,823 48,317 securities, at fair valueOther investments, at cost 4,450 4,450 4,450 Total investment 53,712 52,273 52,767 securities Federal Reserve Bank stock, 2,783 2,783 2,897 at costFederal Home Loan Bank 4,503 4,503 4,477 stock, at cost Gross loans receivable 730,180 751,298 812,164 Allowance for loan losses (10,584 ) (11,171 ) (10,115 ) Net loans receivable 719,596 740,127 802,049 SBA loans held for sale 1,217 6,824 15,282 Accrued interest and 6,620 6,834 3,603 dividends receivablePremises and equipment, net 33,423 33,632 34,568 Other real estate owned 1,906 1,954 2,400 Deferred tax asset, net 11,496 12,066 11,133 Goodwill 1,107 1,107 1,107 Core deposit intangible, net 343 567 623 Other assets 9,387 10,623 9,526 Total assets $ 880,729 $ 922,929 $ 979,836 Liabilities Deposits: Noninterest bearing $ 158,676 $ 161,871 $ 88,135 deposits Interest bearing 526,980 565,560 681,400 deposits Total deposits 685,656 727,431 769,535 Federal Home Loan Bank andcorrespondent bank 90,000 90,000 100,000 borrowingsSenior notes, net 11,927 11,909 11,853 Subordinated debt, net 9,782 9,774 9,752 Junior subordinated debtowed to unconsolidated 8,110 8,108 8,102 trust, netNote payable 994 1,044 1,193 Advances from borrowers for 3,786 2,492 3,681 taxes and insuranceAccrued expenses and other 7,255 7,634 8,726 liabilities Total liabilities 817,510 858,392 912,842 Commitments and - - - Contingencies Shareholders' equity Preferred stock - - - Common stock 106,329 106,293 106,170 Accumulated deficit (42,592 ) (41,210 ) (38,773 ) Accumulated other (518 ) (546 ) (403 ) comprehensive loss Total shareholders' 63,219 64,537 66,994 equity Total liabilities and $ 880,729 $ 922,929 $ 979,836 shareholders' equity

PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended Year Ended (In thousands, December 31, September December 31, December 31, December 31,except per share 2020 30, 2019 2020 2019 amounts) 2020 Interest and Dividend Income Interest and $ 8,113 $ 8,578 $ 10,223 $ 35,835 $ 40,568 fees on loans Interest on investment 326 340 460 1,460 1,667 securities Dividends on investment 86 85 109 399 453 securities Other interest 22 28 161 209 956 income Total interest and 8,547 9,031 10,953 37,903 43,644 dividend income Interest Expense Interest on 1,134 2,028 3,533 9,154 13,985 deposits Interest on Federal Home 708 628 708 2,671 2,175 Loan Bank borrowings Interest on 229 229 229 915 915 senior debt Interest on subordinated 235 235 273 991 1,118 debt Interest on note payable 4 5 5 19 25 and other Total interest 2,310 3,125 4,748 13,750 18,218 expense Net interest 6,237 5,906 6,205 24,153 25,426 income Provision for loan 371 85 1,769 2,170 4,971 losses Net interest income after provision 5,866 5,821 4,436 21,983 20,455 for loan losses Non-interest Income Loan application, 76 54 39 223 113 inspection and processing fees Deposit fees and service 68 73 126 321 492 charges Gains on sale 102 380 27 566 891 of loans Rental income 130 131 130 523 589 Other income 89 66 86 346 398 Total non-interest 465 704 408 1,979 2,483 income Non-interest Expense Salaries and 3,357 3,460 3,409 14,323 13,681 benefits Occupancy and equipment 833 810 923 3,513 3,521 expenses Data processing 377 433 375 1,571 1,463 expenses Professional and other 691 627 777 2,828 3,010 outside services Project 664 6 188 818 465 expenses, net Advertising and promotional 77 107 125 454 380 expenses Loan administration 39 75 54 174 155 and processing expenses Regulatory 318 355 371 1,477 1,233 assessments Insurance 70 67 (24 ) 285 136 expenses Communications, stationary and 105 118 135 476 518 supplies Other operating 708 560 466 2,199 2,092 expenses Total non-interest 7,239 6,618 6,799 28,118 26,654 expense Loss before (908 ) (93 ) (1,955 ) (4,156 ) (3,716 ) income taxes Provision(benefit) for 474 (6 ) (443 ) (337 ) (899 ) income taxes Net loss $ (1,382 ) $ (87 ) $ (1,512 ) $ (3,819 ) $ (2,817 ) Basic loss $ (0.35 ) $ (0.02 ) $ (0.39 ) $ (0.97 ) $ (0.72 ) per share Diluted loss $ (0.35 ) $ (0.02 ) $ (0.39 ) $ (0.97 ) $ (0.72 ) per share

FINANCIAL RATIOS AND OTHER DATA Three Months Ended Year Ended (Dollars December 31, September 30, December 31, December 31, December 31, in 2020 2020 2019 2020 2019 thousands) Quarterly Performance Data: Net (loss) $ (1,382 ) $ (87 ) $ (1,512 ) $ (3,819 ) $ (2,817 ) income Return on Average -0.61 % -0.04 % -0.61 % -0.40 % -0.15 % Assets Return on Average -8.41 % -0.53 % -8.74 % -5.82 % -2.03 % Equity Net Interest 2.93 % 2.61 % 2.65 % 2.68 % 1.40 % Margin Efficiency 108.04 % 100.12 % 102.80 % 107.60 % 95.51 % Ratio Efficiency Ratio 98.58 % 100.03 % 99.95 % 104.59 % 93.84 % excluding project costs % increase -2.81 % -5.20 % 1.48 % -10.09 % 4.07 % loans % increase -5.74 % -7.11 % 0.98 % -10.90 % 3.53 % deposits Asset Quality: Nonaccrual $ 20,005 $ 20,440 $ 18,049 $ 20,005 $ 18,049 loans Other real $ 1,906 $ 1,954 $ 2,400 $ 1,906 $ 2,400 estate owned Total nonperforming $ 21,911 $ 22,394 $ 20,449 $ 21,911 $ 20,449 assets Nonaccrual 2.74 % 2.72 % 2.22 % 2.74 % 2.22 % loans / loans Nonperforming assets / 2.49 % 2.43 % 2.09 % 2.49 % 2.09 % assets Allowance for $ 10,584 $ 11,171 $ 10,115 $ 10,584 $ 10,115 loan losses Valuation $ 482 $ 492 $ 1,258 $ 482 $ 1,258 reserve Allowance for loan losses with $ 11,066 $ 11,663 $ 11,373 $ 11,066 $ 11,373 valuation reserve Allowance for loan losses / 1.45 % 1.49 % 1.25 % 1.45 % 1.25 % loans Allowance / nonaccrual 52.91 % 54.65 % 56.04 % 52.91 % 56.04 % loans Allowance for loan losses and valuation 1.51 % 1.55 % 1.40 % 1.51 % 1.40 % reserve / loans Allowance for loan losses and valuation 55.32 % 57.06 % 63.01 % 55.32 % 63.01 % reserve / nonaccrual loans Gross loan $ 968 $ 75 $ 71 $ 1,778 $ 2,660 charge-offs Gross loan $ (10 ) $ (13 ) $ (11 ) $ (77 ) $ (194 ) (recoveries) Net loan charge-offs $ 958 $ 62 $ 60 $ 1,701 $ 2,466 (recoveries) Capital Data and Capital Ratios Book value $ 16.03 $ 16.39 $ 17.04 $ 16.03 $ 17.04 per share (1) Shares 3,943,572 3,937,041 3,930,669 3,943,572 3,930,669 outstandingBank Capital Ratios: Leverage 9.80 % 9.35 % 9.28 % 9.80 % 9.28 % Ratio Tier 1 11.25 % 11.08 % 10.64 % 11.25 % 10.64 % Capital Total Risk 12.50 % 12.33 % 11.83 % 12.50 % 11.83 % Based Capital (1) Book value per share represents shareholders' equity divided by outstanding shares. Deposits: (In thousands) December 31, September 30, December 31, 2020 2020 2019 Non-interest bearing: Non-interest $ 99,344 $ 102,004 $ 88,135 bearing Prepaid DDA 59,332 59,867 - Total non-interest 158,676 161,871 88,135 bearing Interest bearing: NOW 30,529 29,518 26,864 Savings 98,635 91,169 64,020 Money market 146,389 142,909 99,115 Certificates of deposit, less 160,968 160,610 193,942 than $250,000 Certificates of deposit, 49,172 50,359 67,550 $250,000 or greater Brokered 41,287 90,995 229,909 deposits Total Interest 526,980 565,560 681,400 bearing Total $ 685,656 $ 727,431 $ 769,535 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