The quarter ended September 30, 2010 is the fourth consecutive quarter during which total nonperforming assets declined. Nonperforming assets, which consist of non-accrual loans and other real estate owned properties (“OREO”), were $108.8 million at September 30, 2010 as compared to $145.6 million at September 30, 2009; this represents an improvement of $36.8 million or 25% over the twelve month period. This decrease further supports management’s statement made in the 2009 annual earnings release, that nonperforming assets peaked during the third quarter of 2009. The $108.8 million of nonperforming assets is comprised of $7.3 million of OREO properties and $101.5 million of non-accrual loans. Of the $101.5 million in non-accrual loans, borrowers of $30.5 million or 30% of non-accrual loans consisting of 21 notes continue to make payments. The $7.3 million in OREO consists of four properties, the oldest of which was acquired in July 2009. During the nine month period ended September 30, 2010, OREO declined by $11.7 million or 61% reflecting the disposition of six properties sold by the Company.Net interest income increased to $5.1 million for the three months ended September 30, 2010 as compared to $4.0 million for the three months ended September 30, 2009. The improvement in net interest income is primarily the result of the continuing improvement in the overall cost of funds; interest expense on deposits declined $2.6 million or 49% when compared to the same period last year. The net interest margin for the third quarter of 2010 was 2.71% which reflects the favorable impact of 19 basis points for the collection of delinquent interest payments on nonaccrual loans in the third quarter; the net interest margin for the same period last year was 1.76%. The provision for loan losses for the nine month period ended September 30, 2010 of $6.2 million represents an improvement of $2.7 million when compared to the same period last year. The provision for loan losses of $5.0 million recorded for the third quarter of 2010 is $3.6 million higher, as described above, when compared to the same period last year.
Noninterest income of $637,000 for the three months ended September 30, 2010 represents an increase of $19,000 when compared to the same period last year. The increase is attributable to higher fees and service charges on deposit accounts partially offset by decreases in mortgage brokerage referral fees and earnings on the cash surrender value of life insurance. Noninterest expenses of $7.5 million are $11,000 or less than 1% lower than those recorded for the third quarter of 2009. Declines in professional and other outside services of $443,000 were partially offset by increases in other real estate operations of $320,000.Balance sheet management resulted in a decrease in total assets of $78.6 million from $866.4 million at December 31, 2009 to $787.8 million at September 30, 2010. The strategy to reduce the concentrations in high risk construction and commercial real estate loans resulted in a decrease in the loan portfolio of $68.6 million from $645.2 million at December 31, 2009 to $576.6 million at September 30, 2010. Total deposits decreased $70.3 million from $761.3 million at December 31, 2009 to $691.0 million at September 30, 2010. Much of the decrease in deposits can be attributed to Bancorp’s strategy to reduce rate sensitive deposits resulting in a lower cost of funds and an improvement in spreads. Despite the decrease in deposits, the Company continues to maintain strong levels of liquidity, which have been further augmented by the recent capital infusion. As previously disclosed, on October 15, 2010, Bancorp and the Bank completed its recapitalization transaction with PNBK Holdings LLC, an unaffiliated entity. Pursuant to the Securities Purchase Agreement dated as of December 16, 2009, as amended, PNBK Holdings acquired 33,600,000 shares of Bancorp common stock for $50,400,000. Based on notifications from the Bank’s regulators, the Bank is considered “well capitalized” under all applicable regulatory guidelines. Mr. Christopher Maher, President and Chief Executive Officer stated that he is encouraged by the improvements described above and pleased with the successful capital infusion. He continued by saying that this is an exciting and challenging time for the Bank as the new capital will allow for the restructuring of the balance sheet and the implementation of management’s plans to restore the Company to profitability. “I am eager to work with the directors, officers and employees who are all united in this effort”.
Patriot National Bank is headquartered in Stamford, Connecticut and currently has 19 full service branches, 16 in Connecticut and three in New York. It also has a loan production office in Stamford, CT.
|Three Months Ended September 30,||Nine Months Ended September 30,|
|Net interest income||$5,122||$4,000||$17,018||$13,932|
|Provision for loan losses||5,025||1,453||6,264||9,009|
|Loss before taxes||6,790||4,371||11,097||14,058|
|Loans at period end||576,621||702,308||576,621||702,308|
|Deposits at period end||690,967||829,053||690,967||829,053|
|Assets at period end||787,775||937,438||787,775||937,438|
|Loss per share||$ 1.43||$ 2.93||$ 2.38||$ 4.14|