Business & Finance
Mon, May 21, 2012 
STAMFORD, Conn.--([ BUSINESS WIRE ])--Patriot National Bancorp, Inc. (NASDAQ:PNBK)(aPatriota), theparent of Patriot National Bank(the aBanka),today reported it earned $546,000, or $0.01 per diluted share, in the first quarter of 2012 compared to earnings of $443,000, or $0.01 per diluted share, in the fourth quarter of 2011anda net loss of$9.0million, or $0.23loss per share, in thefirstquartera year ago. First quarter 2011 results included a $6.2 million loss on a bulk sale of non-performing assets. The improving results were driven by the continued success of managementas recovery plan.
"Continued efforts remain focused on operational refinements and varying paths of enterprise and product growth."
aWe are pleased to post a profit for the third consecutive quarter on the heels of Patriotas turnaround. Both top-and bottom line improvements were recognized this quarter,a said Michael Carrazza, Chairman of the Board. aContinued efforts remain focused on operational refinements and varying paths of enterprise and product growth.a
Financial Highlights:
- Patriot earned $546,000, or $0.01 per diluted share, in the quarter ended March 31, 2012 compared to a net loss of$9.0million, or $0.23loss per share, in thefirstquartera year ago.
- The net interest margin increased 39 basis points to 3.25% for the quarter ended March 31, 2012, compared to 2.86% in the first quarter a year ago.
- Non-accrual loans decreased 24.8% to $15.5 million at March 31, 2012, or 3.3%, of total loans as compared to $20.7 million three months earlier.
- Other real estate owned (OREO) decreased 47.1% to $1.5 million at March 31, 2012 compared to $2.8 million three months earlier.
- Non-performing assets, which consist of non-accrual loans and OREO, declined to $17.0 million, or 2.5% of total assets compared to $23.4million, or 3.5% just three months earlier, and $33.5million, or 4.7% of total assets a year ago.
- Non-interest income increased 28.6% compared to the same quarter in the prior year as a result of a gain from the sale of residential loans.
- Non-interest operating expenses were 17.4% lower in the current quarter compared to the same period in the prior year resulting from lower salaries and benefits, occupancy and OREO expenses.
- Total Capital to Risk Weighted Assets was 16.0% for Patriot and 15.5% for the Bank at March 31, 2012.
Asset Quality
aImproving the risk profile of Patriot and aggressively managing our troubled assets has been and will remain a priority focus for the company. Non-performing assets have declined for ten consecutive quarters. In addition to asset quality improvements, we continue to focus on increasing revenue and decreasing operating expenses to improve earnings. Staff reductions in the first quarter and the planned closing of a branch in the second quarter will reduce future expenses by approximately $1.0 million per annum,a said Christopher Maher, President and Chief Executive Officer.
Total non-accrual loans decreased to $15.5 million, or 3.3% of gross loans, at March 31, 2012 compared to $20.7 million, or 4.1% of gross loans three months earlier, and $32.5 million, or 6.8% of gross loans, a year ago.
Due to the sale of two properties, other real estate owned (OREO) decreased 47.1% to $1.5 million at March 31, 2012 compared to $2.8 million three months earlier. There are now only two properties remaining in OREO. Non-performing assets, which consist of non-accrual loans and OREO, declined 27.5% to $17.0 million, or 2.5% of total assets, at March 31, 2012 compared to $23.4million, or 3.5% of total assets, at December31,2011, and $33.5million, or 4.7% of total assets, at March 31, 2011.
The reduction in total loans due to the sale of $66.4 million of residential real estate loans and the improved credit quality of the overall loan portfolio resulted in a release of $845,000 from the loan loss reserve for the first quarter of 2012, compared to the $7.0 million provision recorded in the first quarter last year, of which $6.0 million was related to the bulk loan sale of non-performing assets.
The allowance for loan losses totaled $8.5 million, or 1.78% of gross loans, at March 31, 2012 compared to $9.4 million, or 1.84%, of gross loans, at December 31, 2011, and $12.2 million, or 2.55%, of gross loans a year ago.
Balance Sheet Review
aDuring the first quarter we sold $65.8 million in residential loans resulting in a decrease in net loans compared to the preceding quarter end,a added Mr. Maher. aHowever, our continued focus on growing the loan portfolio is evident by our loan pipeline, which was $105 million at March 31, 2012.a Loans outstanding were $474.7 million at March 31, 2012, compared to $510.6 million at December 31, 2011 as a result of the previously mentioned loan sale, and $479.1 million a year ago.
While total deposits decreased compared to a year ago, non-interest bearing accounts increased 6.0%, representing Patriotas planned strategy to reduce higher cost certificates of deposit and replace them with lower cost deposits. Deposits totaled $539.6 million at March 31, 2012, compared to $544.9 million at December31,2011, and $581.3million a year ago. Non-interest bearing accounts increased to $59.0 million at March 31, 2012 compared to $55.7 million a year earlier.
Total assets were $671.1 million at March 31,2012 compared to $709.7 million at March 31, 2011 primarily as a result of the reduction in high cost deposits.
Income Statement Review
Patriotas first quarter net interest income increased 5.3% to $5.2 million, compared to $4.9 million in the first quarter a year ago. Interest income decreased 2.4% compared to the first quarter a year ago as a result of lower average outstanding loan balances and the lower interest rate environment. Interest expense decreased 16.6% compared to the first quarter a year ago due to the reduction in certificates of deposit and the increase in non-interest bearing deposits. As a result, Patriotas first quarter net interest margin increased 39 basis points to 3.25%, compared to 2.86% in the first quarter a year ago.
First quarter non-interest income increased 28.6% to $750,000 compared to $583,000 in the first quarter a year ago. The increase was primarily due to a gain on sale of residential loans of $264,000, and was partially offset by lower fees and service charges on deposit accounts of $53,000.
aWe made a concerted effort to reduce our operating costs and as a result operating expenses, including the $368,000 impact of a restructuring charge recorded in the first quarter of 2012, declined 17.4% compared to the first quarter a year ago,a Mr. Maher continued. Excluding the restructuring charge, total non-interest expenses declined 22.3% compared to the first quarter a year ago. Non-interest expenses declined $1.3 million to $6.2million in the first quarter compared to $7.5 million in the first quarter a year ago. Salary and employee benefits were down $323,000, or 10.0%, and occupancy and equipment expenses were down $231,000, or 17.0%, compared to the first quarter a year ago. In addition, OREO expenses were $421,000 lower due to $200,000 in gains recognized on the sale of two properties and lower operating costs relating to fewer properties being managed.
Capital
The capital ratios at March31,2012 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) | 16.00% | 15.52% | 10.00% | |||
| Tier 1 Capital (to Risk Weighted Assets) | 14.74% | 14.26% | 6.00% | |||
| Tier 1 Capital (to Average Assets) | 8.89% | 8.60% | 5.00% |
About the Company
Patriot National Bank is headquartered in Stamford, Connecticut and currently has 15 full service branches, 12 in Connecticut and three 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 managementas 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.Adiscussion of certain risks and uncertainties that could cause actual results to differ materially from those contained in forward-looking statements is included in Bancorpas Annual ReportonForm10-K for the year ended December 31, 2011.
| PATRIOT NATIONAL BANCORP, INC. | ||||||||||||
| STATEMENTS OF OPERATIONS | ||||||||||||
| (unaudited) | Three Months Ended | |||||||||||
| Dollars in thousands, except per share data | Mar. 31, 2012 | Dec. 31, 2011 | Mar. 31, 2011 | |||||||||
| Interest and dividend income | ||||||||||||
| Interest and fees on loans | $ | 6,666 | $ | 6,277 | $ | 6,957 | ||||||
| Interest on investment securities | 477 | 565 | 274 | |||||||||
| Dividends on investment securities | 33 | 33 | 70 | |||||||||
| Interest on federal funds sold | - | - | 4 | |||||||||
| Other interest income | 11 | 16 | 62 | |||||||||
| Total interest and dividend income | 7,187 | 6,891 | 7,367 | |||||||||
| Interest expense | ||||||||||||
| Interest on deposits | 1,517 | 1,480 | 1,865 | |||||||||
| Interest on Federal Home Loan Bank borrowings | 357 | 362 | 419 | |||||||||
| Interest on subordinated debt | 76 | 73 | 71 | |||||||||
| Interest on other borrowings | 77 | 78 | 76 | |||||||||
| Total interest expense | 2,027 | 1,993 | 2,431 | |||||||||
| Net interest income | 5,160 | 4,898 | 4,936 | |||||||||
| Provision for loan losses | (845 | ) | (1,000 | ) | 6,982 | |||||||
Net interest income after provision for loan losses | 6,005 | 5,898 | (2,046 | ) | ||||||||
| Non-interest income | ||||||||||||
| Mortgage brokerage referral fees | 12 | 30 | 13 | |||||||||
| Loan origination and processing fees | 15 | 17 | 17 | |||||||||
| Fees and service charges | 228 | 229 | 281 | |||||||||
| Gains on sale of loans | 264 | - | - | |||||||||
| Gain (loss) on sale of investment securities | (8 | ) | 330 | - | ||||||||
| Earnings on cash surrender value of life insurance | 143 | 145 | 168 | |||||||||
| Other income | 96 | 86 | 104 | |||||||||
| Total non-interest income | 750 | 837 | 583 | |||||||||
| Non-interest expense | ||||||||||||
| Salaries and benefits | 2,891 | 3,151 | 3,214 | |||||||||
| Occupancy and equipment expense, net | 1,124 | 1,147 | 1,355 | |||||||||
| Data processing | 346 | 307 | 328 | |||||||||
| Professional services and other outside services | 615 | 843 | 882 | |||||||||
| Advertising and promotional expenses | 18 | 52 | 158 | |||||||||
| Loan administration and processing expenses | 8 | 97 | 37 | |||||||||
| Regulatory assessments | 410 | 321 | 611 | |||||||||
| Insurance expense | 169 | 183 | 231 | |||||||||
| Other real estate operations | (150 | ) | (141 | ) | 271 | |||||||
| Material and communications | 131 | 157 | 200 | |||||||||
| Restructuring charges | 368 | - | - | |||||||||
| Other operating expenses | 279 | 175 | 233 | |||||||||
| Total non-interest expenses | 6,209 | 6,292 | 7,520 | |||||||||
| Income (loss) before income taxes | 546 | 443 | (8,983 | ) | ||||||||
| Provision for income taxes | - | - | - | |||||||||
| Net income (loss) | $ | 546 | $ | 443 | $ | (8,983 | ) | |||||
| Basic and diluted income (loss) per share | $ | 0.01 | $ | 0.01 | $ | (0.23 | ) | |||||
| (Dollars in thousands, except per share data) | Mar. 31, 2012 | Dec. 31, 2011 | Mar. 31, 2011 | |||||||||
| (Unaudited) | ||||||||||||
Assets | ||||||||||||
| Cash and due from banks | $ | 103,264 | $ | 54,716 | $ | 146,548 | ||||||
| Federal funds sold | - | - | 10,000 | |||||||||
| Short-term investments | 710 | 709 | 501 | |||||||||
| Total cash and cash equivalents | 103,974 | 55,425 | 157,049 | |||||||||
| Securities-available for sale | 58,592 | 66,470 | 38,539 | |||||||||
| Other investments | 3,500 | 3,500 | 3,500 | |||||||||
| FRB & FHLB stock | 6,036 | 6,215 | 6,684 | |||||||||
| Total securities | 68,128 | 76,185 | 48,723 | |||||||||
| Gross loans | 474,726 | 510,612 | 479,078 | |||||||||
| Allowance for loan losses | (8,461 | ) | (9,385 | ) | (12,209 | ) | ||||||
| Net loans | 466,265 | 501,227 | 466,869 | |||||||||
| Loans held for sale | - | 250 | - | |||||||||
| Accrued interest and dividend receivable | 2,243 | 2,453 | 2,326 | |||||||||
| Premise and equipment, net | 4,882 | 4,147 | 4,915 | |||||||||
| Cash surrender value of life insurance | 21,127 | 20,985 | 20,517 | |||||||||
| Other real estate owned | 1,462 | 2,763 | 950 | |||||||||
| Deferred tax asset, net (1) | - | - | - | |||||||||
| Other assets | 3,047 | 2,381 | 8,365 | |||||||||
| Total assets | $ | 671,128 | $ | 665,816 | $ | 709,714 | ||||||
Liabilities and Stockholders' Equity | ||||||||||||
| Deposits | ||||||||||||
| Non interest bearing deposits | $ | 59,049 | $ | 65,613 | $ | 55,692 | ||||||
| Interest bearing deposits | 480,541 | 479,296 | 525,591 | |||||||||
| 539,590 | 544,909 | 581,283 | ||||||||||
| FHLB advances and repurchase agreements | 67,000 | 57,000 | 57,000 | |||||||||
| Subordinated debt | 8,248 | 8,248 | 8,248 | |||||||||
| Accrued expenses and other liabilities | 5,052 | 5,110 | 4,990 | |||||||||
| Total Liabilities | 619,890 | 615,267 | 651,521 | |||||||||
| Common stock | 384 | 384 | 384 | |||||||||
| Treasury stock | (160 | ) | (160 | ) | (160 | ) | ||||||
| Additional paid-in capital | 105,130 | 105,050 | 105,050 | |||||||||
| Accumulated deficit | (54,313 | ) | (54,859 | ) | (48,382 | ) | ||||||
| Accumulated other comprehensive income | 197 | 134 | 1,301 | |||||||||
| Total stockholders' equity | 51,238 | 50,549 | 58,193 | |||||||||
| Total liabilities and stockholders' equity | $ | 671,128 | $ | 665,816 | $ | 709,714 | ||||||
| (1) Includes the deferred tax asset and a full valuation allowance of $14.1 million, $14.4 million and $16.1 million respectively. | ||||||||||||
Financial Ratios and Other Data | ||||||||||||
| (Dollars in thousands, except per share data) | ||||||||||||
| (Unaudited) | Mar. 31, | Dec. 31, | Mar. 31, | |||||||||
| 2012 | 2011 | 2011 | ||||||||||
| Asset Quality: | ||||||||||||
| Nonaccrual loans | $ | 15,545 | $ | 20,683 | $ | 32,530 | ||||||
| Other real estate owned | 1,462 | 2,763 | 950 | |||||||||
| Total nonperforming assets | $ | 17,007 | $ | 23,446 | $ | 33,480 | ||||||
| Nonaccrual loans / portfolio loans | 3.27 | % | 4.05 | % | 6.79 | % | ||||||
| Nonperforming assets / assets | 2.53 | % | 3.52 | % | 6.99 | % | ||||||
| Allowance for loan losses | $ | 8,461 | $ | 9,385 | $ | 12,208 | ||||||
| Allowance for loan losses / portfolio loans | 1.78 | % | 1.84 | % | 2.55 | % | ||||||
| Allowance / nonaccrual loans | 54.43 | % | 45.37 | % | 37.50 | % | ||||||
| Gross loan charge-offs for the quarter | $ | 102 | $ | 847 | $ | 4,154 | ||||||
| Gross loan recoveries for the quarter | $ | 24 | $ | 74 | $ | 21 | ||||||
| Net loan charge-offs for the quarter | $ | 78 | $ | 773 | $ | 4,133 | ||||||
| Capital Data: | ||||||||||||
| Book value per share (1) | $ | 1.33 | $ | 1.32 | $ | 1.52 | ||||||
| Tangible book value per share (2) | $ | 1.33 | $ | 1.32 | $ | 1.52 | ||||||
| Shares outstanding | 38,467,073 | 38,362,727 | 38,326,727 | |||||||||
| (1) Book value per share represents shareholdersa equity divided by outstanding shares. | ||||||||||||
| (2) Tangible book value per share represents shareholdersa equity less intangible assets divided by outstanding shares. | ||||||||||||
