GlobeNewswire Inc | Oct 29, 2021 08:30AM EDT

October 29, 2021

STAMFORD, Conn., Oct. 29, 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 net income of $1.3 million, or $0.34 basic and diluted earnings per share for the quarter ended September 30, 2021, compared to a net loss of $87,000, or $0.02 basic and diluted loss per share reported in the third quarter of 2020. On a year-to-date basis, net income was $3.2 million, or $0.81 per fully diluted share, compared to a net loss of $2.4 million, or $0.62 fully diluted loss per share during the same year-to-date period in 2020.

The Bank continued to show improved net interest margins, core deposit growth, and lower operating expenses. The prepaid debit card program continues to be an increasing, low-cost funding source for the Bank and has grown substantially to $142.4 million as of September 30, 2021, from the $50.0 million acquired in July 2020. The portfolio growth provides a substantial improvement to the Banks net interest margin and overall funding costs.

During the three and nine months ended September 30, 2021, the Bank recognized payroll tax credits of $906,000 and $2.9 million, respectively, under the Employee Retention Credit program of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). Also, during the third quarter, the Bank recorded a credit to provision for loan losses of $300,000 due to overall improvement in asset quality. Pre-tax income was $1.8 million and $4.4 million for the three and nine months ended September 30, 2021, respectively. Excluding the employee tax credit, pre-tax income was $896,000 and $1.5 million for the three- and nine-months periods, respectively.

Patriot President & CEO Robert Russell stated: I am incredibly proud of the continued progress made over the past year. Improvement continues with respect to funding sources, asset quality and asset generation, all of which provide a positive impact on the Banks financials. The growth in our prepaid programs is a significant contributor to the reduction in the Banks funding costs over the last year. The Company has enhanced processes and added strategic talent to position for an effective future and we are very encouraged by the path we have forged.

Since 2020, the Bank had provided payment deferrals on approximately $232.7 million of loans as permitted under the CARES Act. Virtually all of those loans deferred have now resumed normal payments. Only three loans remaining on deferral totaled $7.3 million at September 30, 2021.

Financial Results:

As of September 30, 2021, total assets increased to $952.3 million, as compared to $880.7 million at December 31, 2020, primarily due to increase in available-for-sale securities of $74.8 million. Net loans totaled $704.5 million versus $719.6 million as of December 31, 2020. Total deposits increased from $685.7 million at December 31, 2020, to $734.7 million at September 30, 2021.

The Bank has substantially improved its deposit and funding mix over the past year. During the past nine months, total deposits increased $49.0 million, primarily due to growth in prepaid deposits of $68.1 million, which was partially offset by decline of $27.3 million in brokered deposits and certificates of deposits. Excluding brokered deposits, total deposits increased 9.8% during the first nine months of 2021.

Net interest income was $6.3million and $18.4million for the three and nine months ended September 30, 2021, respectively. Net interest income for the three and nine months ended September 30, 2020, was $5.9 million and $17.9 million, respectively.

The Banks net interest margin showed strong improvement and was 2.87% for the nine months ended September 30, 2021, compared with 2.60% for the comparable 2020 period. As economic activity continues to expand, loan balances are expected to grow, and coupled with reductions in funding costs, the Bank expects further improvements in net interest income.

The recovering economy, lower loan balances and improvement in delinquencies of classified loans resulted in a $300,000 credit of provision for loan losses for the three and nine months ended September 30, 2021, as compared to a provision for loan losses of $85,000 and $1.8 million for the three and nine months ended September 30, 2020, respectively. The majority of the provision in 2020 was primarily attributable to conditions and the uncertainty created by the COVID-19 pandemic. As of September 30, 2021, the allowance for loan losses was 1.41% of total loans, compared with 1.45% at December 31, 2020.

Non-interest income was $923,000 and $2.1 million for the three and nine months ended September 30, 2021, respectively. Non-interest income was $704,000 and $1.5 million for the three and nine months ended September 30, 2020, respectively. The increase in the current quarter was primarily attributable to a gain of $512,000 recognized from the termination of an interest rate swap cash flow hedge in the third quarter of 2021.

Non-interest expense was $5.7 million and $16.4 million for the three and nine months ended September 30, 2021, respectively. Non-interest expense was $6.6 million and $20.9 million for the three and nine months ended September 30, 2020, respectively. The decrease in non-interest expense in the nine months ended September 30, 2021, was primarily driven by an Employee Retention Credit of $2.9 million under the CARES Act and a reduction of $510,000 in regulatory assessments expense.

For the nine months ended September 30, 2021, a provision for income taxes of $1.2 million was recorded, compared to a benefit for income taxes of $811,000 for the nine months ended September 30, 2020.

As of September 30, 2021, shareholders equity was $66.7 million, compared with $63.2 million at December 31, 2020. Patriots book value per share rose to $16.89 at September 30, 2021, compared with $16.03 at December 31, 2020.

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) September 30, December 31, September 30, 2021 2020 2020 Assets Cash and due from banks: Noninterest bearing deposits $ 5,298 $ 3,006 $ 3,231 and cashInterest bearing deposits 40,967 31,630 46,405 Total cash and cash 46,265 34,636 49,636 equivalentsInvestment securities: Available-for-sale securities, 124,103 49,262 47,823 at fair valueOther investments, at cost 4,450 4,450 4,450 Total investment 128,553 53,712 52,273 securities Federal Reserve Bank stock, at 2,843 2,783 2,783 costFederal Home Loan Bank stock, 5,009 4,503 4,503 at cost Gross loans receivable 714,538 730,180 751,298 Allowance for loan losses (10,079 ) (10,584 ) (11,171 ) Net loans receivable 704,459 719,596 740,127 SBA loans held for sale 4,128 1,217 6,824 Accrued interest and dividends 6,186 6,620 6,834 receivablePremises and equipment, net 32,638 33,423 33,632 Other real estate owned - 1,906 1,954 Deferred tax asset, net 10,352 11,496 12,066 Goodwill 1,107 1,107 1,107 Core deposit intangible, net 308 343 567 Other assets 10,498 9,387 10,623 Total assets $ 952,346 $ 880,729 $ 922,929 Liabilities Deposits: Noninterest bearing $ 207,941 $ 158,676 $ 161,871 deposits Interest bearing deposits 526,732 526,980 565,560 Total deposits 734,673 685,656 727,431 Federal Home Loan Bank and 110,000 90,000 90,000 correspondent bank borrowingsSenior notes, net 11,983 11,927 11,909 Subordinated debt, net 9,803 9,782 9,774 Junior subordinated debt owed 8,116 8,110 8,108 to unconsolidated trust, netNote payable 842 994 1,044 Advances from borrowers for 2,253 3,786 2,492 taxes and insuranceAccrued expenses and other 7,976 7,255 7,634 liabilities Total liabilities 885,646 817,510 858,392 Commitments and Contingencies - - - Shareholders' equity Preferred stock - - - Common stock 106,439 106,329 106,293 Accumulated deficit (39,393 ) (42,592 ) (41,210 )Accumulated other comprehensive (346 ) (518 ) (546 )loss Total shareholders' 66,700 63,219 64,537 equity Total liabilities and $ 952,346 $ 880,729 $ 922,929 shareholders' equity

PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended Nine Months Ended(In thousands, except per September June 30, September September Septembershare amounts) 30, 2021 30, 30, 30, 2021 2020 2021 2020 Interest and Dividend Income Interest and fees on $ 7,189 $ 7,267 $ 8,578 $ 22,199 $ 27,722 loans Interest on investment 692 420 340 1,422 1,134 securities Dividends on investment 59 57 85 150 313 securities Other interest income 20 23 28 67 187 Total interest and 7,960 7,767 9,031 23,838 29,356 dividend income Interest Expense Interest on deposits 448 623 2,028 1,856 8,020 Interest on Federal Home 756 741 628 2,230 1,963 Loan Bank borrowings Interest on senior debt 229 228 229 686 686 Interest on subordinated 233 233 235 700 756 debt Interest on note payable 4 4 5 12 15 and other Total interest 1,670 1,829 3,125 5,484 11,440 expense Net interest 6,290 5,938 5,906 18,354 17,916 income (Credit) provision for loan (300 ) - 85 (300 ) 1,799 losses Net interest income after (credit) 6,590 5,938 5,821 18,654 16,117 provision for loan losses Non-interest Income Loan application, inspection 79 61 54 203 147 and processing fees Deposit fees and service 61 64 73 190 253 charges Gains on sale of loans - 258 380 352 464 Rental income 130 140 131 400 393 Gain on sale of 26 93 - 119 - investment securities Other income 627 137 66 854 257 Total non-interest 923 753 704 2,118 1,514 income Non-interest Expense Salaries and benefits 2,843 2,447 3,460 7,506 10,966 Occupancy and equipment 832 778 810 2,530 2,680 expenses Data processing expenses 376 362 433 1,088 1,194 Professional and other 633 714 627 2,199 2,137 outside services Project expenses, net 4 1 6 15 154 Advertising and 57 77 107 196 377 promotional expenses Loan administration and 23 14 75 61 135 processing expenses Regulatory assessments 213 208 355 649 1,159 Insurance expenses 79 75 67 214 215 Communications, 161 144 118 450 371 stationary and supplies Other operating expenses 490 466 560 1,484 1,491 Total non-interest 5,711 5,286 6,618 16,392 20,879 expense Income (loss) 1,802 1,405 (93 ) 4,380 (3,248 ) before income taxes Provision (benefit) for 479 383 (6 ) 1,181 (811 )income taxes Net income $ 1,323 $ 1,022 $ (87 ) $ 3,199 $ (2,437 ) (loss) Basic earnings $ 0.34 $ 0.26 $ (0.02 ) $ 0.81 $ (0.62 ) (loss) per share Diluted earnings $ 0.34 $ 0.26 $ (0.02 ) $ 0.81 $ (0.62 ) (loss) per share

FINANCIAL RATIOS AND OTHER DATA Three Months Ended Nine Months Ended (Dollars in September 30, June 30, 2021 September 30, September 30, September 30, thousands) 2021 2020 2021 2020 Performance Data: Net income $ 1,323 $ 1,022 $ (87 ) $ 3,199 $ (2,437 ) (loss) Return on 0.56 % 0.46 % -0.04 % 0.47 % -0.33 % Average Assets Return on 7.86 % 6.35 % -0.53 % 6.56 % -4.94 % Average Equity Net Interest 2.82 % 2.82 % 2.61 % 2.87 % 2.60 % Margin Efficiency Ratio 79.20 % 78.99 % 100.12 % 80.07 % 107.46 % % increase (decrease) in 6.51 % -0.85 % -5.20 % -2.14 % -7.49 % loans % (decrease) increase in deposits -5.44 % 10.96 % 2.29 % 9.82 % 17.94 % excluding brokered deposits Asset Quality: Nonaccrual loans $ 28,046 $ 24,524 $ 20,440 $ 28,046 $ 20,440 Other real $ - $ 1,216 $ 1,954 $ - $ 1,954 estate owned Total nonperforming $ 28,046 $ 25,740 $ 22,394 $ 28,046 $ 22,394 assets Nonaccrual loans 3.93 % 3.66 % 2.72 % 3.93 % 2.72 % / loans Nonperforming 2.94 % 2.67 % 2.43 % 2.94 % 2.43 % assets / assets Allowance for $ 10,079 $ 10,362 $ 11,171 $ 10,079 $ 11,171 loan losses Valuation $ 466 $ 469 $ 492 $ 466 $ 492 reserve Allowance for loan losses with $ 10,545 $ 10,831 $ 11,663 $ 10,545 $ 11,663 valuation reserve Allowance for loan losses / 1.41 % 1.54 % 1.49 % 1.41 % 1.49 % loans Allowance / 35.94 % 42.25 % 54.65 % 35.94 % 54.65 % nonaccrual loans Allowance for loan losses and 1.47 % 1.61 % 1.55 % 1.47 % 1.55 % valuation reserve / loans Allowance for loan losses and valuation 37.60 % 44.16 % 57.06 % 37.60 % 57.06 % reserve / nonaccrual loans Gross loan $ 6 $ 80 $ 75 $ 358 $ 810 charge-offs Gross loan $ (23 ) $ (16 ) $ (13 ) $ (153 ) $ (67 ) (recoveries) Net loan $ (17 ) $ 64 $ 62 $ 205 $ 743 charge-offs Per Share Data and Capital Ratio Book value per $ 16.89 $ 16.69 $ 16.39 $ 16.89 $ 16.39 share ^(1) Tangible book value per share $ 16.54 $ 16.32 $ 15.97 $ 16.54 $ 15.97 ^(2) Tangible book value per $ 16.41 $ 16.18 $ 15.86 $ 16.41 $ 15.86 share-fully diluted Shares 3,947,976 3,947,276 3,937,041 3,947,976 3,937,041 outstanding Bank Leverage 9.88 % 10.10 % 9.35 % 9.88 % 9.35 % Ratio (1) Book value per share represents shareholders' equity divided by outstanding shares. (2) Tangible book value per share represents shareholders' equity less intangible assets divided by outstanding shares. Deposits: September 30, June 30, 2021 December 31, September 30, 2021 2020 2020 Non-interest bearing: Non-interest $ 114,850 $ 135,477 $ 99,344 $ 102,004 bearing Prepaid DDA 93,091 82,897 59,332 59,867 Total non-interest 207,941 218,374 158,676 161,871 bearing Interest bearing: NOW 34,528 36,085 30,529 29,518 Savings 102,365 99,264 98,635 91,169 Money market 116,318 123,327 131,378 142,906 Money market - 49,353 54,922 15,011 3 prepaid deposits Certificates of deposit, less than 142,141 152,700 160,968 160,610 $250,000 Certificates of deposit, $250,000 54,991 63,690 49,172 50,359 or greater Brokered deposits 27,036 12,836 41,287 90,995 Total Interest 526,732 542,824 526,980 565,560 bearing Total Deposits $ 734,673 $ 761,198 $ 685,656 $ 727,431 Total Prepaid $ 142,444 $ 137,819 $ 74,343 $ 59,870 deposits Total deposits excluding brokered $ 707,637 $ 748,362 $ 644,369 $ 636,436 deposits

Contacts: Patriot Bank, N.A. Joseph Perillo Robert Russell900 Bedford Street Chief Financial Officer President & CEOStamford, CT 06901 203-252-5954 203-252-5939www.BankPatriot.com