Patriot National Bancorp(US:PNBK)2023-03-29 20:20Financial Performance - Total assets increased to $1,043,359 thousand in 2022, up from $948,481 thousand in 2021, representing a growth of approximately 10%[214]. - Net interest income rose to $33,259 thousand in 2022, compared to $25,261 thousand in 2021, marking an increase of about 32%[215]. - Net income for 2022 was $6,161 thousand, up from $5,094 thousand in 2021, reflecting a growth of approximately 21%[215]. - Total deposits increased to $860,446 thousand in 2022, up from $748,562 thousand in 2021, indicating a growth of around 15%[214]. - Non-interest income decreased to $3,605 thousand in 2022 from $4,423 thousand in 2021, a decline of about 18%[215]. - The provision for loan losses was $1,885 thousand in 2022, compared to a credit of $500 thousand in 2021, indicating a shift in loan loss provisioning[215]. - Total non-interest expense increased to $27,222 thousand in 2022, up from $25,171 thousand in 2021, representing an increase of approximately 8%[215]. - The accumulated deficit improved to $(31,337) thousand in 2022 from $(37,498) thousand in 2021, showing a reduction of about 16%[219]. - Comprehensive loss for 2022 was $(7,847) thousand, compared to comprehensive income of $3,975 thousand in 2021, indicating a significant decline[217]. - Basic earnings per share increased to $1.56 in 2022 from $1.29 in 2021, reflecting a growth of approximately 21%[215]. Loan Portfolio and Allowance for Loan Losses - The Company's allowance for loan and lease losses totaled $10.3 million as of December 31, 2022, with $4.3 million related to loans collectively evaluated for impairment and $6.0 million for loans individually evaluated[207]. - The allowance for loan and lease losses was $10.3 million as of December 31, 2022, compared to $9.9 million in 2021[322]. - The allowance for loan losses may increase to reflect the decline in the performance of the loan portfolio and higher incurred losses[349]. - The company actively monitors credit quality indicators, including cash flow from business operations and debt service coverage ratios[344]. - Individually evaluated loans for impairment totaled $18.92 million as of December 31, 2022, while collectively evaluated loans amounted to $829.40 million[344]. - The allowance for loan and lease losses for commercial real estate increased to $6.97 million in 2022 from $5.06 million in 2021, a rise of approximately 37.7%[344]. - The company incurred net charge-offs of $1.6 million for unsecured consumer loans in 2022, with total outstanding loans from this program reaching $78.9 million[335]. - The company has established credit policies that limit the extension of credit on commercial real estate loans to 75% of the market value of the underlying collateral[323]. - The company recorded an employee retention credit of $2.9 million for the year ended December 31, 2021, which was included as a reduction to salaries and benefits non-interest expense[304]. Interest Rate Risk and Management - The Company aims to maximize long-term profitability while minimizing exposure to interest rate fluctuations by maintaining a proper balance between the timing and volume of assets and liabilities re-pricing[189]. - Management conducts quarterly interest income simulations to estimate the impact of changes in interest rates on net interest income under various assumptions[192]. - The Management Asset and Liability Committee monitors interest rate risk and reports to the Board of Directors, ensuring compliance with investment and liquidity policies[190]. - The estimated net interest income under a +200 basis point interest rate scenario is $46,131 thousand, which is a decrease of $1,177 thousand or 2.49% from the base case[196]. - The estimated net portfolio value under a +200 basis point interest rate scenario is $146,888 thousand, reflecting a decrease of $15,357 thousand or 9.47% from the base case[196]. - The estimated net portfolio value under a -200 basis point interest rate scenario is $155,386 thousand, reflecting a decrease of $6,859 thousand or 4.23% from the base case[196]. Goodwill and Impairment Testing - The Company’s goodwill balance was $1.1 million as of December 31, 2022, with an annual impairment test performed on October 31[210]. - The Company evaluates goodwill for impairment annually, with the last assessment conducted on October 31, and no impairment was indicated[278]. Securities and Investments - As of December 31, 2022, the fair value of available-for-sale securities was approximately $84.52 million, with gross unrealized losses of $21.09 million, representing a depreciation of 20.3% from amortized cost[315][316]. - The amortized cost of U.S. Government agency and mortgage-backed securities was $73.48 million as of December 31, 2022, with gross unrealized losses of $14.43 million[315]. - The company’s available-for-sale securities included corporate bonds with an amortized cost of $19.77 million and gross unrealized losses of $5.13 million as of December 31, 2022[315]. - The fair value of available-for-sale securities with stated maturity dates was $105.6 million as of December 31, 2022, compared to $96.5 million in 2021[320]. - The total amount of SBA loans held for sale increased to $5.2 million in 2022 from $3.1 million in 2021, with $3.1 million in commercial and industrial loans and $2.1 million in commercial real estate loans[375]. Cash Flow and Financing Activities - Cash flows from operating activities provided $7,036,000 in 2022, slightly down from $7,596,000 in 2021[221]. - Total cash and cash equivalents at the end of 2022 were $38,493,000, a decrease from $47,045,000 at the end of 2021[221]. - Cash paid for interest increased to $10,472,000 in 2022 from $7,210,000 in 2021[222]. - Net cash used in investing activities was $122,051,000 in 2022, compared to $55,205,000 in 2021[221]. - Net cash provided by financing activities was $106,463,000 in 2022, up from $60,018,000 in 2021[221]. Regulatory and Compliance Matters - The Company recognizes interest and penalties related to income tax matters in income tax expense[290]. - Directors and officers of the Company have had transactions with the Company, which were conducted in the ordinary course of business[299]. - The Company’s only business segment is Community Banking, which represented all revenues and income for the years ended December 31, 2022, 2021, and 2020[297]. - The company is not required to maintain cash reserves with the Federal Reserve Bank as of December 31, 2022, due to the elimination of reserve requirements[314]. Other Financial Metrics - The company completed the acquisition of Prime Bank in May 2018, which is included in the consolidated financial statements from the date of acquisition[226]. - The company had no applicable material accounting pronouncements adopted during 2022[307]. - The company transferred $274,000 and $281,000 of SBA loans from held for sale to held for investment in 2022 and 2021 respectively[375]. - The company recognized revenue based on ASC 606 principles, which require revenue recognition upon the completion of performance obligations[305].