GlobeNewswire Inc | May 13, 2021 03:00PM EDT

May 13, 2021

STAMFORD, Conn., May 13, 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 pre-tax income of $1.2 million and net income of $854 thousand, or $0.22 basic and diluted earnings per share for the quarter ended March 31, 2021, compared to a net loss of $1.1 million reported in the first quarter of 2020.

Profitability in the first quarter was achieved as the Bank demonstrated improved net interest margins, core deposit growth, lower operating expenses, and a lower loan loss provision. In addition, during the quarter the Bank recognized a payroll tax credit of $843 thousand under the Employee Retention Credit program of the CARES Act. These factors were partially offset by a lower loan balance as loan payoffs outpaced new loan originations. Further improvements in profitability are projected as loan balances begin to grow and SBA loan and sale activity resumes.

Since 2020, the Bank had provided CARES Act payment deferrals on approximately $232.7 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 $37.7 million at March 31, 2021.

Patriot President & CEO Robert Russell stated: The Bank continues to make progress in the areas of income creation and expense management during challenging operational circumstances. Staff remain focused on service and process improvements to help Patriot become an efficient and high performing organization. We remain steadfast in our pursuit of efficiency and performance. The leadership team has expanded with experienced banking professionals now added to our team to help us achieve our goals and strengthen the Banks accountability culture. Mr. Russell added: we believe the changes and our culture have us on the right path of success for us, our customers and our communities.

Financial Results:

As of March 31, 2021, total assets increased to $886.2 million, as compared to $880.7 million at December 31, 2020. Net loans totaled $666.3 million versus $719.6 million as of December 31, 2020. Total deposits increased from $685.7 million at December 31, 2020 to $692.9 million at March 31, 2021.

Excluding the decline in brokered deposits, total deposits increased $23.8 million during the quarter due to stronger retail banking activity in the first quarter along with a $9.4 million growth in the prepaid debit card business during the first quarter of 2021.

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 continued growth in profitability in 2021 as net interest margins are expected to continue to improve and as business activity rebounds from the impact of the pandemic and returns to more normalized levels.

In the first quarter of 2021, net interest income was $6.1million and declined $197 thousand, or 3.1% from the first quarter of 2020. Net interest margin showed strong improvement and resulted in a 2.99% margin in the first quarter of 2021, compared with 2.72% for the first quarter of 2020. The impact of the improving net interest margin was mitigated by the lower loan balance associated with a cautious approach to lending during the pandemic. As economic activity expands, loan balances are expected to grow, further improving net interest income.

The provision for loan losses for the first quarter of 2021 was zero, compared to $804 thousand for the first quarter of 2020. No provision was required for the first quarter of 2021 due to the declining loan balance and the need for lower pooled reserves as the economic recovery accelerates. In the first quarter of 2020, the provision for loan losses was primarily due to an additional reserve attributable to COVID-19 pandemic.

The Allowance for Loan Losses at March 31, 2021 totaled 1.54% of total loans, compared with 1.45% at December 31, 2020.

Non-interest income was $442 thousand and $421 thousand for the first quarter of 2021 and 2020, respectively. The increase was primarily attributable to an increase in gains on sales of SBA loans from the first quarter of 2021.

Non-interest expense was $5.4 million and $7.4 million for the first quarter of 2021 and 2020, respectively. The decrease in non-interest expense in 2021 was primarily driven by an Employee Retention Credit of $843 thousand under the Employee Retention Credit program of the CARES Act, a reduction of $800 thousand in compensation and benefits due to staffing adjustments made during 2020, and a reduction of $212 thousand in regulatory assessments expense.

For the first quarter of 2021, a provision for income taxes of $319 thousand was recorded, compared to a benefit for income taxes of $359 thousand for the first quarter of 2020.

As of March 31, 2021, shareholders equity was $63.9 million, compared with $63.2 million at December 31, 2020. Patriots book value per share was $16.21 at March 31, 2021, compared with $16.03 at December 31, 2020. The Banks capital ratios continue to be strong, maintaining its well capitalized regulatory status. As of March 31, 2021, the Banks Tier 1 leverage ratio was 10.12%, Tier 1 risk-based capital ratio was 12.07% and total risk-based capital ratio was 13.32%.

About the Company:

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.

Founded in 1994, and now celebrating its 27th 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) March 31, December 31, March 31, 2021 2020 2020 Assets Cash and due from banks: Noninterest bearing deposits $ 2,593 $ 3,006 $ 1,806 and cashInterest bearing deposits 81,681 31,630 50,350 Total cash and cash 84,274 34,636 52,156 equivalentsInvestment securities: Available-for-sale 57,893 49,262 44,830 securities, at fair valueOther investments, at cost 4,450 4,450 4,450 Total investment 62,343 53,712 49,280 securities Federal Reserve Bank stock, 2,744 2,783 2,897 at costFederal Home Loan Bank 4,503 4,503 4,477 stock, at cost Gross loans receivable 676,676 730,180 818,841 Allowance for loan losses (10,426 ) (10,584 ) (10,916 ) Net loans receivable 666,250 719,596 807,925 SBA loans held for sale 2,829 1,217 17,996 Accrued interest and 6,270 6,620 3,801 dividends receivablePremises and equipment, net 33,128 33,423 34,312 Other real estate owned 1,216 1,906 2,400 Deferred tax asset, net 11,274 11,496 11,989 Goodwill 1,107 1,107 1,107 Core deposit intangible, net 331 343 605 Other assets 9,919 9,387 10,634 Total assets $ 886,188 $ 880,729 $ 999,579 Liabilities Deposits: Noninterest bearing $ 173,520 $ 158,676 $ 83,583 deposits Interest bearing deposits 519,358 526,980 719,631 Total deposits 692,878 685,656 803,214 Federal Home Loan Bank andcorrespondent bank 90,000 90,000 90,000 borrowingsSenior notes, net 11,946 11,927 11,871 Subordinated debt, net 9,789 9,782 9,760 Junior subordinated debtowed to unconsolidated 8,112 8,110 8,104 trust, netNote payable 943 994 1,143 Advances from borrowers for 2,158 3,786 2,637 taxes and insuranceAccrued expenses and other 6,425 7,255 8,227 liabilities Total liabilities 822,251 817,510 934,956 Commitments and - - - Contingencies Shareholders' equity Preferred stock - - - Common stock 106,363 106,329 106,213 Accumulated deficit (41,738 ) (42,592 ) (39,845 ) Accumulated other (688 ) (518 ) (1,745 ) comprehensive loss Total shareholders' 63,937 63,219 64,623 equity Total liabilities and $ 886,188 $ 880,729 $ 999,579 shareholders' equity

PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended(In thousands, except per share March 31, December 31, March 31,amounts) 2021 2020 2020 Interest and Dividend Income Interest and fees on loans $ 7,743 $ 8,113 $ 10,033 Interest on investment securities 310 326 416 Dividends on investment securities 34 86 138 Other interest income 24 22 135 Total interest and dividend 8,111 8,547 10,722 income Interest Expense Interest on deposits 785 1,134 3,200 Interest on Federal Home Loan Bank 733 708 697 borrowings Interest on senior debt 229 229 229 Interest on subordinated debt 234 235 268 Interest on note payable and other 4 4 5 Total interest expense 1,985 2,310 4,399 Net interest income 6,126 6,237 6,323 Provision for loan losses - 371 804 Net interest income after 6,126 5,866 5,519 provision for loan losses Non-interest Income Loan application, inspection and 63 76 53 processing fees Deposit fees and service charges 65 68 114 Gains on sale of loans 94 102 12 Rental income 130 130 131 Other income 90 89 111 Total non-interest income 442 465 421 Non-interest Expense Salaries and benefits 2,216 3,357 3,861 Occupancy and equipment expenses 920 833 949 Data processing expenses 350 377 390 Professional and other outside 852 691 784 services Project expenses, net 10 664 94 Advertising and promotional 62 77 147 expenses Loan administration and processing 24 39 24 expenses Regulatory assessments 228 318 440 Insurance expenses 60 70 70 Communications, stationary and 145 105 120 supplies Other operating expenses 528 708 492 Total non-interest expense 5,395 7,239 7,371 Income (loss) before income 1,173 (908 ) (1,431 ) taxes Provision (benefit) for income taxes 319 474 (359 ) Net income (loss) $ 854 $ (1,382 ) $ (1,072 ) Basic earnings (loss) per share $ 0.22 $ (0.35 ) $ (0.27 ) Diluted earnings (loss) per $ 0.22 $ (0.35 ) $ (0.27 ) share

FINANCIAL RATIOS AND OTHER DATA (Dollars December 31, in March 31, 2021 2020 March 31, 2020 thousands) Quarterly Performance Data: Net (loss) $ 854 $ (1,382 ) $ (1,072 ) income Return on Average 0.39 % -0.61 % -0.44 % Assets Return on Average 5.42 % -8.41 % -6.37 % Equity Net Interest 2.99 % 2.93 % 2.72 % Margin Efficiency 82.14 % 108.04 % 109.38 % Ratio Efficiency Ratio 81.99 % 98.58 % 107.99 % excluding project costs % (decrease) increase in -7.33 % -2.81 % 0.82 % loans % increase in deposits excluding 4.66 % 1.25 % 7.08 % brokered deposits Asset Quality: Nonaccrual $ 24,587 $ 20,005 $ 16,450 loans Other real $ 1,216 $ 1,906 $ 2,400 estate owned Total nonperforming $ 25,803 $ 21,911 $ 18,850 assets Nonaccrual 3.63 % 2.74 % 2.01 % loans / loans Nonperforming assets / 2.91 % 2.49 % 1.89 % assets Allowance for $ 10,426 $ 10,584 $ 10,916 loan losses Valuation $ 477 $ 482 $ 1,100 reserve Allowance for loan losses with $ 10,903 $ 11,066 $ 12,016 valuation reserve Allowance for loan losses / 1.54 % 1.45 % 1.33 % loans Allowance / nonaccrual 42.40 % 52.91 % 66.36 % loans Allowance for loan losses and valuation 1.61 % 1.51 % 1.47 % reserve / loans Allowance for loan losses and valuation 44.34 % 55.32 % 73.05 % reserve / nonaccrual loans Gross loan $ 272 $ 968 $ 44 charge-offs Gross loan $ (114 ) $ (10 ) $ (41 ) (recoveries) Net loan charge-offs $ 158 $ 958 $ 3 (recoveries) Capital Data and Capital Ratios Book value $ 16.21 $ 16.03 $ 16.43 per share (1) Shares 3,944,272 3,943,572 3,932,841 outstanding Bank Capital Ratios: Leverage 10.12 % 9.80 % 9.16 % Ratio Tier 1 12.07 % 11.25 % 10.51 % Capital Total Risk 13.32 % 12.50 % 11.76 % Based Capital (1) Book value per share represents shareholders' equity divided by outstanding shares. Deposits: (In thousands) March 31, 2021 December 31, March 31, 2020 2020 Non-interest bearing: Non-interest $ 104,766 $ 99,344 $ 83,583 bearing Prepaid DDA 68,754 59,332 - Total non-interest 173,520 158,676 83,583 bearing Interest bearing: NOW 34,433 30,529 28,265 Savings 103,025 98,635 59,567 Money market 131,844 146,389 132,629 Certificates of deposit, less 165,130 160,968 205,311 than $250,000 Certificates of deposit, 66,470 49,172 68,444 $250,000 or greater Brokered 18,456 41,287 225,415 deposits Total Interest 519,358 526,980 719,631 bearing Total $ 692,878 $ 685,656 $ 803,214 Deposits



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

www.BankPatriot.com