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8-K - FORM 8-K - PATRIOT NATIONAL BANCORP INCd447895d8k.htm

Exhibit 99.1

 

LOGO

 

Contact:          
Patriot National Bank    Christopher D. Maher    Robert F. O’Connell
900 Bedford Street    President & CEO    Sr. EVP & CFO
Stamford, CT 06901    203 251-8265    203 252-5926

Patriot National Bancorp Earns $909,000 in First Nine Months of 2012;

Restructuring Initiatives Lead to Greater Operating Efficiencies

Stamford, Connecticut – November 29, 2012, Patriot National Bancorp, Inc. (NASDAQ Global Market “PNBK,” “Patriot”), the parent of Patriot National Bank (the “Bank”), today reported it earned $909,000, or $0.02 diluted income per share, for the nine months ended September 30, 2012 compared to a net loss of $15.9 million, or $0.41 diluted loss per share, for the nine months ended September 30, 2011. For the quarter ended September 30, 2012 Patriot earned $18,000 compared to $255,000 for the third quarter a year ago.

“In the third quarter we reduced operating expenses by 8.6% compared to the preceding quarter and posted our fifth consecutive quarter of profitability,” stated Michael Carrazza, Chairman of the Board. “We are on track to surpass our targeted levels of asset quality improvement by year-end and will continue to implement our core earnings profitability strategies in the fourth quarter.”

Financial Highlights:

 

   

Total Capital to Risk Weighted Assets was 14.78% for Patriot and 14.45% for the Bank at September 30, 2012. The Tier 1 Leverage Capital Ratio was 9.60% for Patriot and 9.37% for the Bank.

 

   

Non-interest operating expenses declined 5.0% in the current quarter compared to the same quarter a year ago primarily due to lower salaries and benefits and administrative expenses.

 

   

The net interest margin was 2.86% in the third quarter of 2012 compared to 2.81% in the prior quarter and 3.40% in the third quarter a year ago.

 

   

Classified assets were 9.1% of total assets at September 30, 2012, compared to 10.4% at June 30, 2012 and 11.7% in the third quarter a year ago.

 

   

Non-accrual loans were $30.0 million, or 6.0%, of total loans at September 30, 2012, compared to $17.5 million, or 3.6% of total loans at June 30, 2012, and $21.8 million, or 4.7% of total loans, at September 30, 2011.

 

   

Non-performing assets, which consist of non-accrual loans and OREO, were $31.3 million, or 5.1% of total assets at September 30, 2012, compared to $19.0 million, or 2.9% of total assets at June 30, 2012 and $26.5 million, or 4.2% of total assets a year ago.

Asset Quality

“Aggressively managing our troubled assets remains a top priority. The increase in delinquencies during the quarter was driven by four loans secured by properties that are being marketed for sale,” said Christopher Maher, President and Chief Executive Officer. “We will remain diligent in our efforts to reduce credit costs as problem asset resolution occurs and the economy continues to recover.”


PNBK 3Q12 Results

November 29, 2012

 

Four owner-occupied residential real estate loans, of which three were already categorized as substandard, but accruing interest, deteriorated and were moved to non-accrual status during the quarter. Primarily due to this action, total non-accrual loans increased $12.6 million during the third quarter to $30.0 million, or 6.1% of gross loans compared to $17.5 million, or 3.6% of gross loans, three months earlier. Total non-accrual loans were $21.8 million, or 4.7% of gross loans at September 30, 2011. The overall trend, however, was positive as 93.2% of the portfolio remained current as of September 30, 2012.

Other real estate owned (OREO) was $1.3 million at September 30, 2012 compared to $1.5 million at June 30, 2012 and $4.7 million a year ago. Only one property remains in OREO and this property is contracted for sale in the fourth quarter. Non-performing assets, which consist of non-accrual loans and OREO, totaled $31.3 million, or 5.1% of total assets at quarter end, compared to $19.0 million, or 2.9% of total assets, at June 30, 2012, and $26.5 million, or 4.2% of total assets, a year ago.

“Due to the favorable recent loss history as it relates to our assessment of the adequacy of the allowance for loan losses, a loan loss provision was not recorded during the third quarter, the same as in the third quarter a year ago,” said Mr. Maher. In the second quarter of 2012, Patriot released $1.7 million from its allowance for loan losses. The allowance for loan losses totaled $6.7 million, or 1.34% of gross loans, at September 30, 2012 compared to $11.2 million, or 2.40 %, of gross loans a year ago.

Balance Sheet Review

Patriot’s net loans increased 8.8% to $493.1 million at September 30, 2012, compared to $453.1 million a year ago. The year-over-year increase in net loans is primarily attributed to increases in commercial real estate loans, lines of credit and residential real estate loans. At September 30, 2012 the loan pipeline totaled $87.9 million, which reflects Patriot’s increased focus on new loan production, targeted at strengthening the margin and building fee income.

Total assets were $615.3 million at September 30, 2012, compared to $628.4 million at September 30, 2011. Total deposits were $484.0 million at September 30, 2012, compared to $507.7 million at September 30 of the prior year, as the Bank continues to focus on core transaction accounts while reducing the balance sheet by letting higher cost deposits run off. Non-interest bearing deposits increased 4.6% to $59.3 million at September 30, 2012, compared to $56.7 million a year earlier while interest bearing deposits declined 5.8% to $424.6 million at September 30, 2012, compared to $451.0 million a year earlier. Total deposits per branch averaged $34.3 million at September 30, 2012.

Income Statement Review

Patriot’s third quarter net interest income was $4.2 million, compared to $4.9 million in the third quarter a year ago. Interest income decreased 13.4% compared to the third quarter a year ago as a result of the lower interest rate environment’s impact on loans that re-priced, loan payoffs, and the overall loan mix. Interest expense decreased 10.7% compared to the third quarter a year ago due to the reduction in interest bearing deposits and the increase in non-interest bearing deposits. In the first nine months of 2012, net interest income was $19.5 million compared to $21.4 million in the first nine months of 2011. The decline compared to the first nine months of the prior year was due to the overall lower rate environment and the change in the balance sheet mix.

The lower interest rate environment held Patriot’s net interest margin flat during the third quarter. The net interest margin in the third quarter of 2012 was 2.86%, compared to 2.81% in the second quarter of 2012 and 3.40% in the third quarter a year ago. In the first nine months of the year the net interest margin was 2.98% compared to 3.12% in the first nine months of 2011.


PNBK 3Q12 Results

November 29, 2012

 

Third quarter non-interest income increased 13.7% to $1.5 million compared to $1.3 million in the third quarter of 2011, in part due to a net increase of $145,000 in the gain on sale of investment securities and a $31,000 gain on sale of loans. In the first nine months of the year, non-interest income improved modestly to $2.7 million compared to $2.6 million in the same period a year ago.

Non-interest expenses declined 5.0% to $5.7 million in the third quarter of 2012, compared to $6.0 million in the third quarter a year ago. Year-to-date, non-interest expenses decreased 27.5% to $18.1 million compared to $24.9 million in the same period a year earlier as a result of a significant reduction in salaries and benefits, restructuring charges, other real estate operations and professional services. “We closed our West End branch in June and closed three more branches during the first week of October. These branch closures will continue the significant reduction in our operating expenses going forward,” said Mr. Maher.

Capital

The capital ratios at September 30, 2012 for Patriot National Bancorp, Inc. and Patriot National Bank were:

 

     Patriot National
Bancorp, Inc.
    Patriot National
Bank
   

Well Capitalized

Requirement

 

Total Capital (to Risk Weighted Assets)

     14.78     14.45     10.00

Tier 1 Capital (to Risk Weighted Assets)

     13.52     13.19     6.00

Tier 1 Capital (to Average Assets)

     9.60     9.37     5.00

About the Company

Patriot National Bank is headquartered in Stamford, Connecticut and currently has 11 full service branches, 9 in Connecticut and two in New York. It also has a loan production office in Stamford, CT.

Statements in this earnings release that are not historical facts are considered to be forward-looking statements. Such statements include, but are not limited to, statements regarding management beliefs and expectations, based upon information available at the time the statements are made, regarding future plans, objectives and performance. All forward-looking statements are subject to risks and uncertainties, many of which are beyond management’s control and actual results and performance may differ significantly from those contained in forward-looking statements. Bancorp intends any forward-looking statement to be covered by the Litigation Reform Act of 1995 and is including this statement for purposes of said safe harbor provisions. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this news release. Bancorp undertakes no obligation to update any forward-looking statements to reflect events or circumstances that occur after the date as of which such statements are made. A discussion of certain risks and uncertainties that could cause actual results to differ materially from those contained in forward-looking statements is included in Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2011.


PNBK 3Q12 Results

November 29, 2012

 

PATRIOT NATIONAL BANCORP, INC.

STATEMENTS OF OPERATIONS

 

(unaudited)    Three Months Ended     Nine Months Ended  
Dollars in thousands, except per share data    Sep. 30, 2012      Jun. 30, 2012     Sep. 30, 2011     Sep. 30, 2012     Sep. 30, 2011  

Interest and dividend income

           

Interest and fees on loans

   $ 5,533       $ 5,811      $ 6,185      $ 18,011      $ 19,680   

Interest on investment securities

     396         427        665        1,300        1,425   

Dividends on investment securities

     32         32        56        97        207   

Interest on federal funds sold

     —           —          —          —          7   

Other interest income

     22         40        2        72        122   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total interest and dividend income

     5,983         6,310        6,908        19,480        21,441   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Interest expense

           

Interest on deposits

     1,240         1,421        1,385        4,178        4,804   

Interest on Federal Home Loan Bank borrowings

     358         354        428        1,069        1,270   

Interest on subordinated debt

     75         75        71        226        212   

Interest on other borrowings

     78         77        78        232        231   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total interest expense

     1,751         1,927        1,962        5,705        6,517   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Net interest income

     4,232         4,383        4,946        13,775        14,924   

Provision for loan losses

     —           (1,713     —          (2,559     8,464   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Net interest income after provision for loan losses

     4,232         6,096        4,946        16,334        6,459   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Non-interest income

           

Mortgage brokerage referral fees

     35         22        14        69        28   

Loan application, inspection and processing fees

     29         16        21        59        61   

Deposit fees and service charges

     215         227        207        671        736   

Gain on sale of loans

     31         —          —          295        80   

Gain on sale of investment securities

     924         —          780        916        780   

Earnings on cash surrender value of life insurance

     122         120        170        385        491   

Other income

     101         70        90        267        398   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total non-interest income

     1,457         455        1,282        2,662        2,574   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Non-interest expense

           

Salaries and benefits

     2,620         2,725        2,840        8,237        9,244   

Occupancy and equipment expense

     1,127         1,135        1,039        3,386        3,685   

Data processing

     379         346        316        1,070        980   

Professi ional and other outside services

     510         854        546        1,979        2,662   

Advertising and promotional expenses

     15         8        92        41        522   

Loan administration and processing expenses

     35         46        88        89        174   

Regulatory assessments

     439         462        432        1,311        1,671   

Insurance expense

     109         109        227        387        687   

Other real estate operations

     22         16        (26     (111     1,019   

Material and communications

     106         133        163        370        527   

Restructuring charges and asset disposals

     8         127        —          503        2,986   

Other operating expenses

     301         245        256        825        779   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total non-interest expenses

     5,671         6,206        5,973        18,087        24,936   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income taxes

     18         345        255        909        (15,903

Provision for income taxes

     —           —          —          —          —     
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

   $ 18       $ 345      $ 255      $ 909      $ (15,903
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Basic and diluted income (loss) per share

     0.00       $ 0.01      $ 0.01      $ 0.02      $ (0.41
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 


PNBK 3Q12 Results

November 29, 2012

 

 

(Dollars in thousands, except per share data)

(Unaudited)

   Sep. 30, 2012     Jun. 30, 2012     Sep. 30, 2011  

Assets

      

Cash and due from banks

   $ 43,831      $ 62,177      $ 39,982   

Federal funds sold

     —          —          —     

Short-term investments

     710        710        3,206   
  

 

 

   

 

 

   

 

 

 

Total cash and cash equivalents

     44,541        62,887        43,188   

Securities-available for sale

     18,315        56,343        88,529   

Other investments

     3,500        3,500        3,500   

FRB & FHLB stock

     6,088        6,063        6,215   
  

 

 

   

 

 

   

 

 

 

Total securities

     27,903        65,906        98,244   

Gross loans

     499,801        490,532        464,291   

Allowance for loan losses

     (6,692     (6,674     (11,158
  

 

 

   

 

 

   

 

 

 

Net loans

     493,109        483,858        453,133   

Real estate loans held for sale

     1,950        —          250   

Accrued interest and dividend receivable

     1,979        2,289        2,321   

Premise and equipment, net

     4,656        4,713        4,181   

Cash surrender value of life insurance

     21,369        21,248        20,840   

Other real estate owned

     1,252        1,518        4,732   

Deferred tax asset, net (1)

     —          —          —     

Other assets

     18,589        1,848        1,538   
  

 

 

   

 

 

   

 

 

 

Total assets

   $ 615,348      $ 644,267      $ 628,427   
  

 

 

   

 

 

   

 

 

 

Liabilities and Shareholders’ Equity

      

Deposits

      

Non interest bearing deposits

   $ 59,309      $ 71,722      $ 56,699   

Interest bearing deposits

     424,644        450,373        451,024   
  

 

 

   

 

 

   

 

 

 
     483,953        522,095        507,723   

FHLB advances and repurchase agreements

     67,000        57,000        57,000   

Subordinated debt

     8,248        8,248        8,248   

Accrued expenses and other liabilities

     5,015        5,165        4,786   
  

 

 

   

 

 

   

 

 

 

Total Liabilities

     564,216        592,508        577,757   

Common stock

     385        385        384   

Treasury stock

     (160     (160     (160

Additional paid-in capital

     105,285        105,183        105,050   

Accumulated deficit

     (53,950     (53,968     (55,302

Accumulated other comprehensive income

     (428     319        698   
  

 

 

   

 

 

   

 

 

 

Total shareholders’ equity

     51,132        51,759        50,670   
  

 

 

   

 

 

   

 

 

 

Total liabilities and shareholders’ equity

   $ 615,348      $ 644,267      $ 628,427   
  

 

 

   

 

 

   

 

 

 

 

(1) Includes the deferred tax asset and a full valuation allowance of $13.7 million, $ 13.5 million and $ 16.1 million, respectively.


PNBK 3Q12 Results

November 29, 2012

 

Financial Ratios and Other Data

 

(Dollars in thousands, except per share data)

(Unaudited)

   Sep. 30,
2012
    Jun. 30,
2012
    Sep. 30,
2011
 

Asset Quality:

      

Nonaccrual loans

   $ 30,020      $ 17,452      $ 21,776   

Other real estate owned

     1,252        1,518        4,732   
  

 

 

   

 

 

   

 

 

 

Total nonperforming assets

   $ 31,272      $ 18,970      $ 26,508   
  

 

 

   

 

 

   

 

 

 

Nonaccrual loans / portfolio loans

     6.01     3.56     4.69

Nonperforming assets / assets

     5.08     2.94     4.22

Allowance for loan losses

   $ 6,692      $ 6,674      $ 11,158   

Allowance for loan losses / portfolio loans

     1.34     1.36     2.40

Allowance / nonaccrual loans

     22.92     38.24     51.24

Gross loan charge-offs for the quarter

   $ 4      $ 91      $ 218   

Gross loan recoveries for the quarter

   $ 22      $ 17      $ 16   

Net loan charge-offs for the quarter

   $ (18   $ 74      $ 202   

Capital Data:

      

Book value per share (1)

   $ 1.33      $ 1.35      $ 1.32   

Tangible book value per share (2)

   $ 1.33      $ 1.35      $ 1.32   

Shares outstanding

     38,467,073        38,467,073        38,362,727   

 

(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.

Note: Transmitted on Business Wire on November 29, 2012 at 7:41 p.m. EST.