Patriot National Bancorp, Inc. (NASDAQ:PNBK) (“Patriot”), the parent of Patriot National Bank (the “Bank”), today reported it earned $443,000, or $0.01 per diluted share, in the fourth quarter of 2011 compared to earnings of $255,500, or $0.01 per diluted share, in the third quarter of 2011 and a net loss of $4.1 million, or $0.12 loss per share, in the fourth quarter a year ago. The improving results were driven by the continued success of the company’s turnaround plan.
“Our team’s success in executing our recovery plan on schedule allowed us to end the year with two quarters of profitability behind us and restore the Bank to stable footing,” said Michael Carrazza, Chairman of the Board. “Our 2012 focus is on tackling growth in a responsible manner that supports lending in the communities we serve and to continue increasing profitability to more material levels.”
For the year, Patriot reported a net loss of $15.5 million, or $0.40 per share, compared to a net loss of $15.4 million, or $1.30 per share, for 2010. The 2011 results include the bulk sale of $66.8 million of non-performing assets in the first quarter and $3.0 million of restructuring charges and asset disposals recorded in the second quarter. Per share figures reflect the additional 33.6 million shares issued in connection with Patriot’s control recapitalization on October 15, 2010.
- Patriot earned $443,000, or $0.01 per diluted share, in the quarter ended December 31, 2011 compared to a net loss of $4.1 million, or $0.12 loss per share, in the fourth quarter a year ago.
- Fourth quarter net interest margin increased to 3.20%, compared to 2.70% in the fourth quarter a year ago.
- Non-accrual loans decreased $68.4 million, or 77%, compared to December 31, 2010.
- Non-performing assets were $23.4 million, or 3.52% of total assets, at December 31, 2011, compared to $26.5 million, or 4.22% of total assets, at September 30, 2011, and $105.6 million, or 13.46% of total assets, a year ago.
- A gain of $330,000 was realized on the sale of investment securities during the fourth quarter of 2011.
- Net loans increased to $501.2 million, or 11%, at year-end, compared to $453.1 million at September 30, 2011.
- Non-interest bearing deposits increased to $65.6 million, or 16%, at year-end, compared to $56.7 million at September 30, 2011.
- Total Capital to Risk Weighted Assets was 15.22% for Patriot and 14.75% for the Bank at December 31, 2011.
Non-accrual loans decreased to $20.7 million, or 4.05% of gross loans at December 31, 2011, compared to $21.8 million, or 4.69% of gross loans at September 30, 2011, and $89.1 million, or 16.20%, of gross loans, a year earlier. Non-performing assets, which consist of non-accrual loans and OREO, declined to $23.4 million at December 31, 2011, or 3.52% of total assets, compared to $26.5 million, or 4.22% of total assets at September 30, 2011, and $105.6 million, or 13.46% of total assets, a year ago.
The $20.7 million of non-accrual loans at year-end represents 25 loans, for which a specific reserve of $900,000 has been established. Of these loans, borrowers on five loans with aggregate balances of $7.7 million continue to make payments and these loans are current on payments within one month of schedule.
“We continue to make progress in reducing non-performing assets, with total non-performing assets down 78% compared to a year ago,” said Christopher Maher, President and Chief Executive Officer. “The fourth quarter marks the ninth consecutive quarter during which we reduced total non-performing assets.”
Based on a quarterly analysis of the allowance for loan losses and improved credit quality, it was determined that a provision was not necessary for the fourth quarter. Due to a $1.0 million paydown of a loan that had a specific reserve established in the second quarter, the impairment was eliminated and the $1.0 million was taken as a credit to the loan loss provision. As a result, a credit of $1.0 million was recorded for the loan loss provision in the fourth quarter of 2011. This compares to no provision in the preceding quarter and a $1.5 million provision recorded in the fourth quarter a year ago. The loan loss provision for the year was $7.5 million, of which $6.0 million related to loans transferred to held-for-sale, compared to $7.7 million for 2010.
The allowance for loan losses totaled $9.4 million, or 1.84% of gross loans, at year-end compared to $11.2 million, or 2.40%, of gross loans, at September 30, 2011, and $15.4 million, or 2.80%, of gross loans a year ago.
Balance Sheet Review
“As laid out in our recovery plan, our initial phase was to shrink the balance sheet while we cleaned up the loan portfolio. With the recovery phase behind us, we have begun to shift our focus on organic growth through building new relationships and growing the loan portfolio,” said Mr. Maher. “As a result, net loans increased $48.1 million during the quarter, and the loan pipeline reached $150 million at the end of the year.” Net loans were $501.2 million at December 31, 2011, compared to $453.1 million at September 30, 2011, and $534.5 million a year ago prior to the bulk sale.
Total assets were $665.8 million at December 31, 2011, compared with $628.4 million at September 30, 2011, and $784.3 million a year ago. While total deposits decreased compared to a year ago, non-interest bearing accounts increased 29%, representing Patriot’s planned strategy to reduce higher cost certificates of deposit and replace them with lower cost deposits. Deposits totaled $544.9 million at December 31, 2011, compared to $507.7 million at September 30, 2011, and $646.8 million a year ago. Non-interest bearing accounts increased to $65.6 million at year-end, compared to $51.1 million a year earlier.
Income Statement Review
Patriot’s fourth quarter net interest income was $4.9 million, compared to $5.1 million in the fourth quarter a year ago. Interest income decreased 14% compared to the fourth quarter a year ago as a result of lower average outstanding loan balances and the lower interest rate environment. Interest expense decreased 32% compared to the fourth quarter a year ago, as a result of the significant improvement in the overall cost of funds. Net interest income in 2011 was $19.8 million compared to $22.1 million in 2010.
The net interest margin increased to 3.20%, compared to 2.70% in the fourth quarter a year ago. The net interest margin for 2011 was 3.14% compared to 2.91% a year earlier.
Partially due to a $330,000 gain on sale of investment securities, fourth quarter non-interest income increased 35% to $837,000 compared to $618,000 in the fourth quarter a year ago. Non-interest income increased 45% to $3.4 million in 2011 compared to $2.4 million in 2010.
Operating expenses declined 25% to $6.3 million in the fourth quarter compared to $8.4 million in the fourth quarter a year ago. This was primarily a result of lower OREO expenses of $667,000 and a gain of $252,000 from the sale of two properties. Salary and employee benefits were down 9% and occupancy and equipment expenses were down 15% compared to the fourth quarter a year ago, respectively. This was primarily due to the reduction of back office personnel and from the consolidation of four branch locations in the second quarter of 2011. Non-interest expenses were $31.2 million in 2011 compared to $31.9 million a year earlier. The current year total includes $3.0 million of restructuring charges and asset disposals associated with management’s turnaround plan.
The capital ratios at December 31, 2011 for Patriot National Bancorp, Inc. and Patriot National Bank were:
|Total Capital (to Risk Weighted Assets)||15.22%||14.75%||10.00%|
|Tier 1 Capital (to Risk Weighted Assets)||13.95%||13.48%||6.00%|
Tier 1 Capital (to Average Assets)
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 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, 2010.
|PATRIOT NATIONAL BANCORP, INC.|
|STATEMENTS OF OPERATIONS|
|(unaudited)||Three Months Ended||Twelve Months Ended|
|Dollars in thousands, except per share|
Dec. 31, 2011
|Sept. 30, 2011||Dec. 31, 2010||Dec. 31, 2011||Dec. 31, 2010|
|Interest and dividend income|
|Interest and fees on loans||$||6,277||$||6,185||$||7,604||$||25,957||$||33,616|
|Interest on investment securities||565||665||287||1,990||1,523|
|Dividends on investment securities||33||56||66||240||268|
|Interest on federal funds sold||-||-||5||7||17|
|Other interest income||16||2||80||138||185|
|Total interest and dividend income||6,891||6,908||8,042||28,332||35,609|
|Interest on deposits||1,480||1,384||2,348||6,283||11,179|
|Interest on Federal Home Loan Bank borrowings||362||428||428||1,632||1,699|
|Interest on subordinated debt||73||71||72||286||288|
|Interest on other borrowings||78||78||78||309||309|
|Total interest expense||1,993||1,961||2,926||8,510||13,475|
|Net interest income||4,898||4,947||5,116||19,822||22,134|
|Provision for loan losses||(1,000||)||-||1,450||7,464||7,714|
Net interest income after provision for loan losses
|Mortgage brokerage referral fees||30||13||15||58||91|
|Loan origination and processing fees||17||21||40||79||155|
|Fees and service charges||229||207||324||965||1,174|
|Gains on sale of loans||-||-||-||80||-|
|Gains on sale of investment securities||330||780||-||1,109||-|
|Earnings on cash surrender value of life insurance||145||170||117||636||547|
|Total non-interest income||837||1,281||618||3,411||2,354|
|Salaries and benefits||3,151||2,840||3,451||12,395||13,196|
|Occupancy and equipment expense, net||1,147||1,039||1,348||4,832||5,555|
|Professional services and other outside services||843||546||747||3,506||3,067|
|Advertising and promotional expenses||52||92||96||574||313|
|Loan administration and processing expenses||97||88||86||271||303|
|Other real estate operations||(141||)||(26||)||527||878||2,287|
|Material and communications||157||163||207||685||805|
|Restructuring charges and asset disposals||-||-||-||2,986||-|
|Other operating expenses||175||256||295||953||1,072|
|Total non-interest expenses||6,292||5,973||8,361||31,228||31,948|
|Income (loss) before income taxes||443||255||(4,077||)||(15,459||)||(15,174||)|
|Provision for income taxes||-||-||-||-||225|
|Net income (loss)||$||443||$||255||$||(4,077||)||$||(15,459||)||$||(15,399||)|
|Basic and diluted income (loss) per share||$||0.01||$||0.01||$||(0.12||)||$||(0.40||)||$||(1.30||)|
|(Dollars in thousands, except per share data)||Dec. 31, 2011||Sept. 30, 2011||Dec. 30, 2010|
|Cash and due from banks||$||54,716||$||39,982||$||136,324|
|Federal funds sold||-||-||10,000|
|Total cash and cash equivalents||55,425||43,188||146,777|
|Securities-available for sale||66,470||88,529||40,565|
|FRB & FHLB stock||6,215||6,215||5,700|
|Allowance for loan losses||(9,385||)||(11,158||)||(15,374||)|
|Loans held for sale||250||250||-|
|Accrued interest and dividend receivable||2,453||2,321||2,512|
|Premise and equipment, net||4,147||4,181||5,270|
|Cash surrender value of life insurance||20,985||20,840||20,348|
|Other real estate owned||2,763||4,732||16,409|
|Deferred tax asset, net||-||-||-|
Liabilities and Stockholders' Equity
|Non interest bearing deposits||$||65,613||$||56,699||$||51,058|
|Interest bearing deposits||479,296||451,024||595,750|
|FHLB advances and repurchase agreements||57,000||57,000||57,000|
|Accrued expenses and other liabilities||5,110||4,786||5,097|
|Additional paid-in capital||105,050||105,050||105,050|
|Accumulated other comprehensive income||134||698||1,297|
|Total stockholders' equity||50,549||50,670||67,172|
|Total liabilities and stockholders' equity||$||665,816||$||628,427||$||784,325|
Financial Ratios and Other Data
|(Dollars in thousands, except per share data)|
|(Unaudited)||Dec. 31,||Sept. 30,||Dec. 31,|
|Other real estate owned||2,763||4,732||16,409|
|Total nonperforming assets||$||23,446||$||26,508||$||105,559|
|Nonaccrual loans / portfolio loans||4.05||%||4.69||%||16.22||%|
|Nonperforming assets / assets||3.52||%||4.22||%||13.46||%|
|Allowance for loan losses||$||9,385||$||11,158||$||15,374|
|Allowance for loan losses / portfolio loans||1.84||%||2.40||%||2.80||%|
|Allowance / nonaccrual loans||45.37||%||51.24||%||17.25||%|
|Gross loan charge-offs for the quarter||$||847||$||218||$||3,276|
|Gross loan recoveries for the quarter||$||74||$||16||$||50|
|Net loan charge-offs for the quarter||$||773||$||202||$||3,226|
|Book value per share (1)||$||1.32||$||1.32||$||1.75|
|Tangible book value per share (2)||$||1.32||$||1.32||$||1.75|
|(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.|
President & CEO
Christopher D. Maher, 203-251-8265
Sr. EVP & CFO
Robert F. O’Connell, 203-252-5926
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