STAMFORD, Conn., Aug. 06, 2018 (GLOBE NEWSWIRE) -- Patriot National Bancorp, Inc. (NASDAQ: PNBK), the parent company of Patriot Bank, N.A. today announced quarterly pre-tax earnings of $1.4 million and quarterly net income of $1.0 million, or $0.26 per fully diluted share for the quarter ended June 30, 2018.
Patriot’s second quarter net income includes $592 thousand of expenses related to the acquisition costs associated with Prime Bank and Hana Small Business Lending and, as a result, was essentially unchanged from the $1.1 million, $0.27 per fully diluted share, reported in the first quarter. Net income for the quarter was 29% higher than the $804 thousand, $0.21 per share, reported for the same quarter a year ago. For the six months ended June 30, 2018, net income was $2.1 million, or $0.54 per fully diluted share, as compared with $2.5 million, or $0.65 per fully diluted share, for the first half of 2017.
The year-to date net income is not comparable to the same period last year due to a material credit recovery that was recognized in the first quarter of 2017 and material non-recurring acquisition-related expenses recognized in the current year. Pre-tax earnings reported for the second and first quarter 2018 included non-recurring transaction expenses of $592 thousand and $523 thousand, respectively, which were associated with the Prime acquisition closed in May 2018 and the Hana SBL acquisition that is underway. These non-recurring expenses will cease once the acquisitions are consummated and the acquired companies are fully integrated.
On May 10, 2018 Patriot completed its acquisition of Prime Bank. The closing of the transaction adds a new Patriot branch located in the Town of Orange, New Haven County, Connecticut. In addition, on July 2nd, 2018 Patriot announced the successful completion of a $10 million subordinated debt offering, which closed on June 29, 2018. The funds were raised in connection with the pending Hana SBL acquisition and for general corporate purposes.
CEO Michael Carrazza stated: “We are pleased with the execution of our planned initiatives for the first half of 2018, while core earnings and assets continue to grow. We have followed 2017, the best earnings year in Patriot’s history, with a very strong first half of 2018. Quarterly income includes material transaction-related costs, which will taper off; we are confident these investments will bear much fruit into the second half of 2018 and then the full year of 2019 and beyond.”
Mr. Carrazza added: “The results show the strategies we have been implementing since mid-2016, including key additions to our executive team and a re-focusing on our core strengths in commercial lending and retail banking, are the right initiatives for Patriot, enabling the Bank to achieve a pattern of consistent earnings improvement.”
Richard Muskus, Patriot’s President, added: “The successful completion of the Prime transaction represents another critical step in further building Patriot into a leading community bank. We look forward to executing additional growth strategies, including the expansion into a national SBA lending platform, and the continued building of our retail banking presence.”
Patriot also announced today the declaration of its fifth consecutive quarterly dividend of $0.01 per fully diluted share. The record date for this quarterly dividend will be August 17, 2018 with a dividend payment date of August 24, 2018.
Financial Results
As of June 30, 2018, total assets increased to $930 million, as compared to $870 million at March 31, 2018 and $773 million at June 30, 2017, for a total asset growth of 20% in the one-year period. Net loans receivable totaled $751 million, up 5% over $718 million at March 31, 2018, and up 12% over $673 million at June 30, 2017. Deposits continued to grow to $712 million at June 30, 2018, as compared to $655 million at March 31, 2018 and $562 million at June 30, 2017.
All of these balance sheet categories were positively impacted by the completed merger with Prime Bank, which added total assets of $61.6 million, deposits of $46.2 million and loans of $21.6 million as of the acquisition date.
Net interest income was $7.0 million in the quarter, essentially unchanged from the prior quarter and up 12% over $733 thousand from the corresponding 2017 period. Net interest income of $14.1 million in the year-to-date period was 19% higher than the $11.8 million in the six month period ended June 30, 2017.
Net interest margin was 3.34% for the second quarter of 2018, as compared to 3.55% in the prior quarter and 3.61% for the second quarter of 2017.
The provision for loan losses in the quarter was $50 thousand, as compared to $260 thousand in the prior quarter of 2017. The year-to-date provision for loan losses was $235 thousand, as compared to a net credit for loan losses of $1.5 million, which reflected the previously noted recovery.
Non-interest income was $386 thousand in the quarter, 20% higher than the prior quarter. The current quarter included $66 thousand from the gain on sale of SBA loans as Patriot’s internal SBA initiative began to contribute to earnings growth. Year-to-date non-interest income of $708 thousand was 13% higher than the prior year, primarily due to a loss on security sales recognized in the first half of 2017 and gains on the sale of loans recognized in the second quarter of 2018.
Non-interest expense increased $170 thousand over the prior quarter, and increased $947 thousand over the second quarter of 2017. The expenses were impacted by non-recurring project costs associated with the acquisition of Prime Bank and pending acquisition of Hana SBL, and an income tax related consulting project. These costs totaled $592 thousand and $1.1 million for the second quarter and year-to-date period, respectively. The first half of 2017 non-interest expense did not include any non-recurring project costs.
The income tax provision in the second quarter of $380 thousand represented an effective tax rate of 27% and reflects the positive impact of the tax rate changes enacted in the fourth quarter of 2017.
As of June 30, 2018 shareholders’ equity was $68.4 million, an increase of $3.1 million from a year ago. Patriot’s book value per share increased to $17.51 at June 30, 2018, as compared to $16.77 a year ago.
The Bank’s capital ratios continue to be strong, as the Bank maintained its “well capitalized” regulatory status. The capital ratios improved from the first quarter 2018 level as the result of the subordinated debt issuance completed at the end of the quarter. A material amount of the proceeds from the debt issuance were down-streamed to the Bank. As of June 30, 2018, Tier 1 leverage ratio was 10.03%, Tier 1 risk based capital was 11.05% and total risk based capital was 11.85%.
About the Company
Founded in 1994, Patriot National Bancorp, Inc. (“Patriot” or “Bancorp”) is the parent holding company of Patriot Bank N.A. (“Patriot”), a nationally chartered bank headquartered in Stamford, CT. Patriot operates with full service branches in Connecticut and New York and provides lending products and services nationally. 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 business 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 our philosophy as we seek to maximize shareholder value.
