Patriot National Bancorp Net Income Breaks $1 Million Milestone

Efforts yield significant 26% earnings climb, while assets increase to $826 million.

CEO says, “We can do even better!”

STAMFORD, CT – October 31, 2017 – Patriot National Bancorp, Inc. (“Patriot”, “Bancorp”) (NASDAQ: PNBK), the parent company of Patriot Bank, N.A. (the “Bank”), today announced another milestone achievement with quarterly pre-tax earnings of $1.7 million and quarterly net income exceeding $1.0 million, or $0.26 per fully diluted share.

The $1 million net income compares to net income of $804 thousand, $0.21 per fully diluted share, in the second quarter of 2017 and $814 thousand, $0.21 per share, for the same quarter a year ago. For the nine months ended September 30, 2017 net income was $3.5 million, or $0.91 per diluted share, compared with $885 thousand, or $0.22 per fully diluted share, for the corresponding 2016 period.

Patriot Bank’s deposits continued to rise and are now up 28% year-over-year, with loan growth of 5% for the quarter and 27% from the year prior, fueling a strong growth in net interest income. Net interest income climbed 23% from the corresponding 2016 period and for 2017 is 14% higher than in the nine-month period ending September 30, 2016.

In addition to the announcement of quarterly earnings, Patriot announced the declaration of its second consecutive quarterly dividend of $0.01 per fully diluted share. The correct record date for this quarterly dividend is November 9, 2017, with a dividend payment date of November 10, 2017.

CEO Michael Carrazza stated: “This quarter’s milestone is further confirmation of the steady progress we expect to achieve from the operational disciplines put in place and management’s focus on growth and value accretion. While pleased in reaching these milestones, content we are not. Internal mandates have been set to materially beat third quarter performance and further enhance key operating metrics in the fourth quarter. The expected closing of our acquisition of Prime Bank will further add to our earnings momentum.”

Announced last week, Prime Bank shareholders voted in favor of its merger with Patriot. As of June 30, 2017, Prime had approximately $73 million in total assets, $56 million in deposits and $28 million in total loans. Closing is pending receipt of regulatory approvals, which is targeted before year-end.

Richard Muskus, Patriot’s President added, “We have created greater capacity to build a high quality loan portfolio, achieve critical mass in attractive product lines and enhance service offerings to our customers. These are the primary areas of focus and will continue to add to our profitability and franchise value.”

The comparative results for the first nine months of 2016 and 2017 include the impact of a troubled loan that was ultimately resolved. In the second quarter of 2016, the Bank recorded a significant loan loss provision, but aggressively worked towards a recovery, which was successfully accomplished in the first quarter of 2017.

Excluding the impact of the loan loss provision, which primarily consisted of losses and recoveries related to this loan, net income for the nine-month period ending September 30, 2017 was 30% higher than the same period in 2016. These results are the by-product of aggressive value-enhancing strategies that have been underway over the past year.

The strong earnings performance is attributable to significant loan growth, while operating expenses have remained under tight control.

In the year since September 30, 2016, total assets increased by $144 million (21%), up from $682 million. Loans totaled $710 million as of September 30, 2017, up 5% from the $679 million reported June 30, 2017, and up 27% from the $560 million reported September 30, 2016.

Deposits increased during the quarter to $605 million and were up 28% year-over-year as compared with $471 million at the end of the third quarter of 2016. Deposit growth remains a key initiative to keep pace with Patriot’s overall growth prospects.

Net interest income was $7.1 million in the quarter, up 12% from the second quarter 2017 and up 23% from the corresponding 2016 period. Net interest income of $18.9 million in the year-to-date period was 14% higher than the $16.5 million in the nine month period ending September 30, 2016. Net interest margin was 3.65% for the quarter and 3.59% for the 2017 year-to-date period, as compared to 3.61 % in the prior quarter and 3.79% in the first nine months of 2016.

The provision for loan losses in the quarter was $545 thousand, reflecting the growth in loans with overall credit quality remaining strong. The year-to-date credit in the provision of $944 thousand reflects the previously noted recovery. The provision for loan losses was $355 thousand in the third quarter of 2016 and $2.3 million for the nine months ended September 30, 2016.

Non-interest income was $386 thousand in the quarter, 10% higher than the prior quarter. Year-to-date non-interest income of $1 million was 15% lower than the prior year, primarily due to the loss on security sales of $78 thousand recognized in the first quarter, as the portfolio was intentionally re-positioned to provide future enhancements to profitability.

Non-interest expense increased 4%, over the prior quarter and year-to-date non-interest expenses increased 7% over the same period in 2016.

As of September 30, 2017 shareholders’ equity was $66.3 million, an increase of $3.7 million from a year ago. The Company’s book value per share increased to $17.02 at September 30, 2017 as compared to $15.80 a year ago.

The Bank’s capital ratios continue to be strong, as the Bank maintained its “well capitalized” regulatory status. As of September 30, 2017, Tier 1 leverage ratio was 9.57%, Tier 1 risk based capital was 10.69% and total risk based capital was 11.55%.

Patriot National Bancorp, Inc. is headquartered in Stamford, Connecticut and the Bank has full service branches in Connecticut and New York.