PNBK Patriot National Bancorp Inc

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 $0.32 basic and diluted earnings per share for the quarter ended June 30, 2022, compared to $800,000, or $0.20 per basic and diluted earnings per share for the first quarter of 2022 and net income of $1.0 million, or $0.26 basic and diluted earnings per share reported in the second quarter of 2021. The 2021 second quarter included the benefit of a non-recurring employee retention tax credit (“ERC”) of $1.1 million.

For the six months ended June 30, 2022, net income was $2.1 million, or $0.52 basic and diluted earnings per share, compared to a net income of $1.9 million, or $0.48 basic and $0.47 diluted earnings per share for the six months ended June 30, 2021. The first half of 2021 results included the recognition of an ERC of $2.0 million, while no ERC was recognized in 2022.

Along with reporting a substantial improvement in net interest income and strong earnings, the Bank reported loan growth of 16.2% and deposit growth of 13.1% compared to December 31, 2021. Net interest margin improved to 3.17% for the first half of 2022, up from 2.90% for the first half of 2021. The Bank’s prepaid debit card program continues to be an increasing, low-cost funding source and has tripled in size to $166.7 million as of June 30, 2022, from $50.0 million in July 2020. The portfolio growth provides a substantial improvement to the Bank’s net interest margin and overall funding costs.

Patriot President & CEO Robert Russell stated: “The Bank continued its path of strong financial performance and quality asset generation during the second quarter of 2022. Our net interest margin remained solid at 3.17%. The Bank remains focused on its balance sheet and improvement in nonperforming assets both of which had positive contributions during the quarter.

As disclosed on July 20, 2022, Patriot and American Challenger Development Corporation mutually agreed to terminate the previously announced Merger Agreement due to closing conditions that could not be attained. The parties remain in active discussions regarding the potential for a modified transaction. “Aside from our focus on meaningful strategic activities, Patriot’s organic platform and financial performance continues to grow and improve,” Russell added.

Financial Results:

As of June 30, 2022, total assets increased $100.7 million to $1.0 billion, as compared to $948.5 million on December 31, 2021, primarily due to the increase in net loans which increased from $729.6 million on December 31, 2021, to $849.2 million on June 30, 2022. Total deposits increased from $748.6 million on December 31, 2021, to $846.8 million on June 30, 2022.

Net interest income for the three months ended June 30, 2022, was $7.7 million, an increase of $1.8 million or 30.0% from the second quarter of 2021. Net interest income for the six months ended June 30, 2022 was $14.4 million, an increase of $2.3 million or 19.7% from the first half of 2021. These increases were primarily attributable to the growth in the loan portfolio over the past year.

The Bank’s net interest margin showed continued improvement, with an increase to 3.17% for the six months ended June 30, 2022, compared with 2.90% for the six months ended June 30, 2021.

A provision for loan losses of $275,000 was recorded for the three and six months ended June 30, 2022. There was no provision for loans losses recorded in the second quarter and first half of 2021. As of June 30, 2022, the allowance for loan losses was 1.16% of total loans, compared with 1.34% on December 31, 2021.

Non-interest income for the quarter ended June 30, 2022 and 2021 was $798,000 and $753,000, respectively. Non-interest income for the six months ended June 30, 2022 and 2021, was $1.6 million and $1.2 million, respectively. The increase in the first half of 2022 was primarily attributable to gains from sales of SBA loans totaling $509,000 along with higher non-interest income from the prepaid card program.

Non-interest expense for the quarter ended June 30, 2022 and 2021, was $6.5 million and $5.3 million, respectively. Non-interest expense for the six months ended June 30, 2022 and 2021, was $12.9 million and $10.7 million, respectively. The increase in the first half of 2022 was primarily due to an increase in salary and benefit expenses as the Company recognized an ERC of $2.0 million in the first half of 2021. The organization was no longer eligible for the ERC under the CARES Act program in 2022.

For the six months ended June 30, 2022, a provision for income taxes of $787,000 was recorded, compared to a provision for income taxes of $702,000 for the six months ended June 30, 2021.

As of June 30, 2022, shareholders’ equity was $59.8 million, compared with $67.3 million on December 31, 2021. Patriot’s book value per share was $15.11 on June 30, 2022, compared with $17.02 on December 31, 2021. The change was attributable to a decline in the market value of the Bank’s investment portfolio during the quarter associated with rising market interest rates.

* * * * *

About the Company:

Founded in 1994, and now celebrating its 28th 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. The 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, Mississippi, along with a Rhode Island operations center.

Patriot’s 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 Patriot’s philosophy as it seeks to maximize shareholder value.

“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. These forward-looking statements are based on Patriot’s current expectations and assumptions regarding Patriot’s businesses, the economy, and other future conditions. Because forward-looking statements relate to future results and occurrences, they are subject to inherent risks, uncertainties, changes in circumstances and other factors that are difficult to predict. Many possible events or factors could affect Patriot’s future financial results and performance and could cause the actual results, performance, or achievements of Patriot to differ materially from any anticipated results expressed or implied by such forward-looking statements. Such risks and uncertainties include, among others: (1) changes in prevailing interest rates which would affect the interest earned on the Company’s interest earning assets and the interest paid on its interest bearing liabilities; (2) the timing of re-pricing of the Company’s 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 Company’s market areas, and the consequent effect on the quality of the Company’s 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; (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; (25) our compensation expense associated with equity allocated or awarded to our employees; and (26) other such factors, including risk factors, as may be described in the Company’s other filings with the Securities and Exchange Commission.

PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited)
(In thousands)			June 30, 2022				December 31, 2021				June 30, 2021
Assets
Cash and due from banks:
Noninterest bearing deposits and cash			$	4,507			$	3,264			$	2,397
Interest bearing deposits				33,009				43,781				113,794
		Total cash and cash equivalents		37,516				47,045				116,191
Investment securities:
Available-for-sale securities, at fair value				76,971				94,341				108,612
Other investments, at cost				4,450				4,450				4,450
		Total investment securities		81,421				98,791				113,062
Federal Reserve Bank stock, at cost				2,762				2,843				2,744
Federal Home Loan Bank stock, at cost				4,474				4,184				4,185
Gross loans receivable				859,107				739,488				670,896
Allowance for loan losses				(9,929	)			(9,905	)			(10,362	)
	Net loans receivable			849,178				729,583				660,534
SBA loans held for sale				7,556				3,129				2,636
Accrued interest and dividends receivable				5,727				5,822				6,207
Premises and equipment, net				31,128				31,500				32,824
Other real estate owned				-				-				1,216
Deferred tax asset				14,910				12,146				10,560
Goodwill				1,107				1,107				1,107
Core deposit intangible, net				273				296				319
Other assets				13,128				12,035				11,469
	Total assets		$	1,049,180			$	948,481			$	963,054
Liabilities
Deposits:
	Noninterest bearing deposits		$	271,165			$	226,713			$	218,374
	Interest bearing deposits			575,618				521,849				542,824
		Total deposits		846,783				748,562				761,198
Federal Home Loan Bank and correspondent bank borrowings				100,000				90,000				90,000
Senior notes, net				12,000				12,000				11,965
Subordinated debt, net				9,825				9,811				9,796
Junior subordinated debt owed to unconsolidated trust, net				8,123				8,119				8,114
Note payable				689				791				893
Advances from borrowers for taxes and insurance				2,967				1,101				3,607
Accrued expenses and other liabilities				8,991				10,753				11,619
		Total liabilities		989,378				881,137				897,192
Commitments and Contingencies				-				-				-
Shareholders' equity
Preferred stock				-				-				-
Common stock				106,520				106,479				106,409
Accumulated deficit				(35,433	)			(37,498	)			(40,716	)
Accumulated other comprehensive loss				(11,285	)			(1,637	)			169
		Total shareholders' equity		59,802				67,344				65,862
	Total liabilities and shareholders' equity		$	1,049,180			$	948,481			$	963,054

PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
			Three Months Ended									Six Months Ended
(In thousands, except per share amounts)			June 30, 2022			March 31, 2022			June 30, 2021			June 30, 2022			June 30, 2021
Interest and Dividend Income
	Interest and fees on loans		$	9,044		$	7,664		$	7,267		$	16,708		$	15,010
	Interest on investment securities			510			570			420			1,080			730
	Dividends on investment securities			65			65			57			130			91
	Other interest income			68			21			23			89			47
		Total interest and dividend income		9,687			8,320			7,767			18,007			15,878
Interest Expense
	Interest on deposits			757			409			623			1,166			1,408
	Interest on Federal Home Loan Bank borrowings			747			737			741			1,484			1,474
	Interest on senior debt			210			210			228			420			457
	Interest on subordinated debt			251			234			233			485			467
	Interest on note payable and other			2			4			4			6			8
		Total interest expense		1,967			1,594			1,829			3,561			3,814
		Net interest income		7,720			6,726			5,938			14,446			12,064
Provision for loan losses				275			-			-			275			-
		Net interest income after provision for loan losses		7,445			6,726			5,938			14,171			12,064
Non-interest Income
	Loan application, inspection and processing fees			89			87			61			176			124
	Deposit fees and service charges			60			64			64			124			129
	Gains on sale of loans			301			208			258			509			352
	Rental income			132			192			140			324			270
	Loss on sale of investment securities			-			-			93			-			93
	Other income			216			263			137			479			227
		Total non-interest income		798			814			753			1,612			1,195
Non-interest Expense
	Salaries and benefits			3,763			3,346			2,447			7,109			4,663
	Occupancy and equipment expenses			881			836			778			1,717			1,698
	Data processing expenses			283			330			362			613			712
	Professional and other outside services			559			789			714			1,348			1,566
	Project expenses, net			29			52			1			81			11
	Advertising and promotional expenses			73			68			77			141			139
	Loan administration and processing expenses			42			105			14			147			38
	Regulatory assessments			179			174			208			353			436
	Insurance expenses			76			77			75			153			135
	Communications, stationary and supplies			139			135			144			274			289
	Other operating expenses			478			517			466			995			994
		Total non-interest expense		6,502			6,429			5,286			12,931			10,681
		Income before income taxes		1,741			1,111			1,405			2,852			2,578
Provision for income taxes				476			311			383			787			702
		Net income	$	1,265		$	800		$	1,022		$	2,065		$	1,876
		Basic earnings per share	$	0.32		$	0.20		$	0.26		$	0.52		$	0.48
		Diluted earnings per share	$	0.32		$	0.20		$	0.26		$	0.52		$	0.47

FINANCIAL RATIOS AND OTHER DATA
					Three Months Ended												Six Months Ended
			(Dollars in thousands)		June 30, 2022				March 31, 2022				June 30, 2021				June 30, 2022				June 30, 2021
Quarterly Performance Data:
		Net income			$	1,265			$	800			$	1,022			$	2,065			$	1,876
		Return on Average Assets				0.50%				0.34%				0.46%				0.42%				0.42%
		Return on Average Equity				8.20%				4.88%				6.34%				6.49%				5.87%
		Net Interest Margin				3.27%				3.06%				2.82%				3.17%				2.90%
		Efficiency Ratio				76.33%				85.27%				78.99%				80.53%				80.56%
		Efficiency Ratio excluding project costs				76.00%				84.58%				78.98%				80.03%				80.47%
		% increase (decrease) in loans				11.09%				4.58%				-0.85	%			16.18%				-8.12%
		% increase in deposits				8.58%				4.18%				9.86%				13.12%				11.02%
		% increase in deposits excluding brokered deposits				9.02%				1.83%				10.96%				11.01%				16.14%
Asset Quality:
		Nonaccrual loans			$	23,324			$	23,466			$	24,524			$	23,324			$	24,524
		Other real estate owned			$	-			$	-			$	1,216			$	-			$	1,216
		Total nonperforming assets			$	23,324			$	23,466			$	25,740			$	23,324			$	25,740
		Nonaccrual loans / loans				2.71%				3.03%				3.66%				2.71%				3.66%
		Nonperforming assets / assets				2.22%				2.41%				2.67%				2.22%				2.67%
		Allowance for loan losses			$	9,929			$	9,737			$	10,362			$	9,929			$	10,362
		Allowance for loan losses / loans				1.16%				1.26%				1.54%				1.16%				1.54%
		Allowance / nonaccrual loans				42.57%				41.49%				42.25%				42.57%				42.25%
		Loan charge-offs			$	100			$	185			$	80			$	285			$	352
		Loan recoveries			$	(17	)		$	(17	)		$	(16	)		$	(34	)		$	(130	)
		Net loan charge-offs			$	83			$	168			$	64			$	251			$	222
Capital Data and Capital Ratios
		Book value per share (1)			$	15.11			$	15.84			$	16.69			$	15.11			$	16.69
		Shares outstanding				3,957,269				3,956,492				3,947,276				3,957,269				3,947,276
		Bank Leverage Ratio				9.44%				9.94%				10.10%				9.44%				10.10%
	(1) Book value per share represents shareholders' equity divided by outstanding shares.
Deposits:
			(In thousands)
					June 30, 2022				March 31, 2022				June 30, 2021
	Non-interest bearing:
	Non-interest bearing				$	137,320			$	120,835			$	135,477
	Prepaid DDA					133,845				116,990				82,897
		Total non-interest bearing				271,165				237,825				218,374
	Interest bearing:
	NOW					35,973				42,272				36,085
	Savings					99,686				105,871				99,264
	Money market					151,212				117,049				123,327
	Money market - prepaid deposits					32,891				29,770				54,922
	Certificates of deposit, less than $250,000					169,690				158,625				152,700
	Certificates of deposit, $250,000 or greater					51,491				53,513				63,690
	Brokered deposits					34,675				34,924				12,836
		Total Interest bearing				575,618				542,024				542,824
		Total Deposits			$	846,783			$	779,849			$	761,198
		Total Prepaid deposits			$	166,736			$	146,760			$	137,819
			Total deposits excluding brokered deposits		$	812,108			$	744,925			$	748,362

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