Patriot National Bancorp Inc. (PNBK, Financial) filed Quarterly Report for the period ended 2011-09-30.
Patriot National Bancorp Inc. has a market cap of $69.4 million; its shares were traded at around $1.81 with and P/S ratio of 1.8.
Total assets decreased $155.9 million from $784.3 million at December 31, 2010 to $628.4 million at September 30, 2011. Cash and cash equivalents decreased $103.6 million from $146.8 million at December 31, 2010 to $43.2 million at September 30, 2011. Available-for-sale securities increased $47.9 million from $40.6 million at December 31, 2010 to $88.5 million at September 30, 2011 as overnight liquidity was invested into higher yielding instruments. The net loan portfolio decreased $81.4 million from $534.5 million at December 31, 2010 to $453.1 million at September 30, 2011. This decrease is primarily a result of a $66.8 million bulk sale of non-performing assets, comprised of $52.4 million of non-performing loans and $14.4 million of other real estate owned. This was the result of managements strategic plan to dramatically lower the level of non-performing assets and improve the overall credit quality, and significantly increase the level of earning assets. As a result of weak loan demand and high levels of balance sheet liquidity, the Bank continued to lower rates on deposit products. The overall cost of deposits decreased from 1.69% at September 30, 2010 to 1.24% at September 30, 2011. Deposits decreased $139.1 million from $646.8 million at December 31, 2010 to $507.7 million at September 30, 2011. Borrowings remained unchanged compared to December 31, 2010.
The methodology for determining the adequacy of the allowance for loan losses has been consistently applied. Of the $11.2 million allowance for loan losses as of September 30, 2011, $2.9 million was attributed to collateral dependent impaired loans and $8.3 million was the reserve attributed to performing loans. The appraised values on impaired loans that are anticipated to become OREO in the coming quarter are adjusted based upon Bancorps recent sales experience. As of September 30, 2011, the Banks OREO sales experience has indicated that the ultimate sales prices of the underlying collateral have been 13% less than the appraisal amounts. The appraisal adjustment percentage is reviewed quarterly for those loans anticipated to become OREO in the subsequent quarter, based on an analysis of actual variances between appraised values as of the date the loan is transferred into OREO and the actual sales prices of the OREO properties. Generally, the sales prices have usually been below the appraised values due to the fact that buyers become aware that the Bank owns those properties and, therefore, attempt to offer less than fair market value. In the future, additional revisions may be made to the methodology and assumptions based on historical information related to charge-off and recovery experience and managements evaluation of the current loan portfolio, and prevailing internal and external factors including but not limited to current economic conditions and local real estate markets. The $8.5 million provision for the nine months ended September 30, 2011 included $6.0 million related to loans transferred to held-for-sale in connection with the bulk loan sale and $2.5 million was deemed necessary by management to maintain appropriate coverage after taking the net charge-offs of $6.6 million. The ratio of allowance for loan losses to total loans as of September 30, 2011 was 2.40% as compared to 2.80% as of December 31, 2010. Management believes that the decrease is warranted based upon the significant reduction in non-performing loans and charge-offs of specific reserves related to loans in the bulk sale.
For the quarter ended September 30, 2011, average interest earning assets decreased $174.4 million, or 23%, to $582.5 million from $757.0 million for the quarter ended September 30, 2010, resulting in interest income for Bancorp of $6.9 million compared to $8.5 million for the same period in 2010. Interest and fees on loans decreased $1.8 million, or 22%, from $8.0 million for the quarter ended September 30, 2010 to $6.2 million for the quarter ended September 30, 2011. This decrease is primarily the result of a $145.0 million decrease in the average balance of the loan portfolio. When compared to the same period last year, interest income on investments increased by 65% due to an increase of $42.0 million in the average balance of investments outstanding.
For the nine months ended September 30, 2011, non-interest income increased $838,000, or 48%, to $2.6 million as compared to $1.7 million for the nine months ended September 30, 2010. This is primarily due to $780,000 in gains on the sales of investment securities, $111,000 in interest received on federal tax refunds, an $80,000 gain on sale of loans, and an increase of $62,000 in earnings on the cash surrender value of life insurance. These were partially offset by lower service charges on deposit accounts, loan origination and processing fees and mortgage brokerage referral fees of $115,000, $54,000 and $48,000 respectively.
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Patriot National Bancorp Inc. has a market cap of $69.4 million; its shares were traded at around $1.81 with and P/S ratio of 1.8.
Highlight of Business Operations:
Bancorp realized net income of $255,000 ($0.01 basic and diluted income per share) for the quarter ended September 30, 2011, compared to a net loss of $6.8 million ($1.43 basic and diluted loss per share) for the quarter ended September 30, 2010. This increase in net income of $7.0 million is primarily due to the lower level of non-performing assets, resulting in no provision for loan losses for the quarter ended September 30, 2011, compared to a $5.0 million provision for loan losses recorded during the same period in the prior year. For the nine-month period ended September 30, 2011, Bancorp incurred a net loss of $15.9 million ($0.41 basic and diluted loss per share) compared to net loss of $11.3 million ($2.38 basic and diluted loss per share) for the nine months ended September 30, 2010. The primary reason for the increased loss in the nine-month comparison is the $6.2 million charge on the bulk sale of non-performing assets, as discussed in Note 3, and the restructuring charges of $3.0 million associated with the branch closings and reduction-in-force, discussed in Note 11. Bancorps net interest income for the quarter ended September 30, 2011 was $4.9 million compared to $5.1 million for the quarter ended September 30, 2010. Interest income and interest expense decreased by 18% and 41%, respectively, for the quarter ended September 30, 2011 compared to the quarter ended September 30, 2010, as improvement in the net margin was offset by lower level of earning assets. Non-interest income increased $644,000, or 101%, for the quarter ended September 30, 2011, when compared to the quarter ended September 30, 2010. For the nine months ended September 30, 2011, interest income and interest expense declined by 22% and 38% respectively, compared to the nine months ended September 30, 2010. The decline in interest income is due primarily to lower average outstanding loan balances and the lower interest rate environment. The significant decline in interest expense is primarily due to the reduction of total deposits as management lowered interest rates paid on high rate non-core deposits.Total assets decreased $155.9 million from $784.3 million at December 31, 2010 to $628.4 million at September 30, 2011. Cash and cash equivalents decreased $103.6 million from $146.8 million at December 31, 2010 to $43.2 million at September 30, 2011. Available-for-sale securities increased $47.9 million from $40.6 million at December 31, 2010 to $88.5 million at September 30, 2011 as overnight liquidity was invested into higher yielding instruments. The net loan portfolio decreased $81.4 million from $534.5 million at December 31, 2010 to $453.1 million at September 30, 2011. This decrease is primarily a result of a $66.8 million bulk sale of non-performing assets, comprised of $52.4 million of non-performing loans and $14.4 million of other real estate owned. This was the result of managements strategic plan to dramatically lower the level of non-performing assets and improve the overall credit quality, and significantly increase the level of earning assets. As a result of weak loan demand and high levels of balance sheet liquidity, the Bank continued to lower rates on deposit products. The overall cost of deposits decreased from 1.69% at September 30, 2010 to 1.24% at September 30, 2011. Deposits decreased $139.1 million from $646.8 million at December 31, 2010 to $507.7 million at September 30, 2011. Borrowings remained unchanged compared to December 31, 2010.
The methodology for determining the adequacy of the allowance for loan losses has been consistently applied. Of the $11.2 million allowance for loan losses as of September 30, 2011, $2.9 million was attributed to collateral dependent impaired loans and $8.3 million was the reserve attributed to performing loans. The appraised values on impaired loans that are anticipated to become OREO in the coming quarter are adjusted based upon Bancorps recent sales experience. As of September 30, 2011, the Banks OREO sales experience has indicated that the ultimate sales prices of the underlying collateral have been 13% less than the appraisal amounts. The appraisal adjustment percentage is reviewed quarterly for those loans anticipated to become OREO in the subsequent quarter, based on an analysis of actual variances between appraised values as of the date the loan is transferred into OREO and the actual sales prices of the OREO properties. Generally, the sales prices have usually been below the appraised values due to the fact that buyers become aware that the Bank owns those properties and, therefore, attempt to offer less than fair market value. In the future, additional revisions may be made to the methodology and assumptions based on historical information related to charge-off and recovery experience and managements evaluation of the current loan portfolio, and prevailing internal and external factors including but not limited to current economic conditions and local real estate markets. The $8.5 million provision for the nine months ended September 30, 2011 included $6.0 million related to loans transferred to held-for-sale in connection with the bulk loan sale and $2.5 million was deemed necessary by management to maintain appropriate coverage after taking the net charge-offs of $6.6 million. The ratio of allowance for loan losses to total loans as of September 30, 2011 was 2.40% as compared to 2.80% as of December 31, 2010. Management believes that the decrease is warranted based upon the significant reduction in non-performing loans and charge-offs of specific reserves related to loans in the bulk sale.
For the quarter ended September 30, 2011, average interest earning assets decreased $174.4 million, or 23%, to $582.5 million from $757.0 million for the quarter ended September 30, 2010, resulting in interest income for Bancorp of $6.9 million compared to $8.5 million for the same period in 2010. Interest and fees on loans decreased $1.8 million, or 22%, from $8.0 million for the quarter ended September 30, 2010 to $6.2 million for the quarter ended September 30, 2011. This decrease is primarily the result of a $145.0 million decrease in the average balance of the loan portfolio. When compared to the same period last year, interest income on investments increased by 65% due to an increase of $42.0 million in the average balance of investments outstanding.
For the nine months ended September 30, 2011, non-interest income increased $838,000, or 48%, to $2.6 million as compared to $1.7 million for the nine months ended September 30, 2010. This is primarily due to $780,000 in gains on the sales of investment securities, $111,000 in interest received on federal tax refunds, an $80,000 gain on sale of loans, and an increase of $62,000 in earnings on the cash surrender value of life insurance. These were partially offset by lower service charges on deposit accounts, loan origination and processing fees and mortgage brokerage referral fees of $115,000, $54,000 and $48,000 respectively.
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