STAMFORD, Conn.--()--Patriot National Bancorp, Inc. (NASDAQ: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.
“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”
“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.”
- 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.
“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.”
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.
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.
The capital ratios at September 30, 2012 for Patriot National Bancorp, Inc. and Patriot National Bank were:
|Patriot National||Patriot National||Well Capitalized|
|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.
|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 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
|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
|Earnings on cash surrender value of life insurance||122||120||170||385||491|
|Total non-interest income||1,457||455||1,282||2,662||2,574|
|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|
Professional and other outside services
|Advertising and promotional expenses||15||8||92||41||522|
|Loan administration and processing expenses||35||46||88||89||174|
|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||$||(0.41||)|
|(Dollars in thousands, except per share data)||Sep. 30, 2012||Jun. 30, 2012||Sep. 30, 2011|
|Cash and due from banks||$||43,831||$||62,177||$||39,982|
|Federal funds sold||-||-||-|
|Total cash and cash equivalents||44,541||62,887||43,188|
|Securities-available for sale||18,315||56,343||88,529|
|FRB & FHLB stock||6,088||6,063||6,215|
|Allowance for loan losses||(6,692||)||(6,674||)||(11,158||)|
|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)||-||-||-|
Liabilities and Shareholders' Equity
|Non interest bearing deposits||$||59,309||$||71,722||$||56,699|
|Interest bearing deposits||424,644||450,373||451,024|
|FHLB advances and repurchase agreements||67,000||57,000||57,000|
|Accrued expenses and other liabilities||5,015||5,165||4,786|
|Additional paid-in capital||105,285||105,183||105,050|
|Accumulated other comprehensive income||(428||)||319||698|
|Total shareholders' equity||51,132||51,759||50,670|
|Total liabilities and shareholders' equity||$||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 $16.1 million, respectively.|
Financial Ratios and Other Data
|(Dollars in thousands, except per share data)|
|Other real estate owned||1,252||1,518||4,732|
|Total nonperforming assets||$||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|
|Book value per share (1)||$||1.33||$||1.35||$||1.32|
|Tangible book value per share (2)||$||1.33||$||1.35||$||1.32|
|(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.|