Executive Summary

Q2 2023 delivered a net loss of $0.55M ($(0.14) EPS) as net interest margin (NIM) compressed to 2.96% from 3.29% in Q1 and 3.27% in Q2 2022, reflecting higher deposit costs and increased wholesale borrowings amid sector uncertainty .
Loans grew nearly 6% QoQ and total assets reached $1.16B, while deposits were stable at $863M; the bank reduced uninsured deposits as a share of total deposits to 33.1% from 40.0% at YE22, enhancing funding resiliency .
Credit costs remained elevated with a $1.23M provision and higher net charge-offs, as management continued to build reserves under CECL; efficiency ratio deteriorated to 94.4% on higher operating expenses .
Management emphasized continued investment in digital/low-cost deposit initiatives (notably the Digital Payments/Deposit Strategies programs) and strategic actions to position for long-term growth; no formal quantitative guidance was issued .
No Q2 2023 earnings call transcript was found in our database or Yahoo Finance; Wall Street consensus estimates from S&P Global were unavailable for comparison at this time .

What Went Well and What Went Wrong

What Went Well
- Solid loan growth: Gross loans rose to $930.7M (up ~5.9% QoQ) supporting higher interest income; total assets expanded to $1.16B .
- Deposit stability and improved funding mix optics: Total deposits held at $863.4M; uninsured deposits to total deposits declined to 33.1% (22.35% ex-prepaid at YE22 down to 17.71% ex-prepaid), reducing perceived funding risk .
- Strategic initiatives: CEO highlighted ongoing investment in Digital Payments and other value-add initiatives aimed at long-term low-cost deposit and fee generation; management is actively pursuing “strategic actions” for growth .
What Went Wrong
- Margin compression: NIM fell to 2.96% (from 3.29% in Q1 and 3.27% in Q2’22), pressured by higher deposit costs and increased wholesale borrowings .
- Elevated credit costs: Provision for credit losses was $1.23M (vs. $1.34M in Q1 and $0.28M in Q2’22) and net charge-offs rose, reflecting ongoing reserve build under CECL and credit normalization .
- Efficiency deterioration: Efficiency ratio worsened to 94.39% (85.72% in Q1; 76.33% in Q2’22) as operating expenses increased on growth and investment, weighing on earnings .

Financial Results

Income Statement Snapshot

Metric ($000s, except per share)	Q4 2022	Q1 2023	Q2 2023
Total interest & dividend income	13,966	13,646	15,309
Net interest income	9,570	8,013	7,713
Provision for credit losses/loan losses	1,410	1,336	1,231
Non-interest income	1,339	835	829
Non-interest expense	7,077	7,584	8,063
Pre-tax income (loss)	2,422	(72)	(752)
Net income (loss)	1,770	(53)	(546)
Diluted EPS ($)	0.45	(0.01)	(0.14)

Margins and Profitability

Metric	Q4 2022	Q1 2023	Q2 2023
Net interest margin (NIM)	3.77%	3.29%	2.96%
Efficiency ratio	64.88%	85.72%	94.39%
Return on average assets (ROAA)	0.66%	-0.02%	-0.20%
Return on average equity (ROAE)	11.72%	-0.39%	-3.93%

Balance Sheet and Funding

Metric ($000s)	Q4 2022	Q1 2023	Q2 2023
Gross loans	848,316	878,769	930,734
Total deposits	860,446	856,468	863,379
Brokered deposits	48,698	105,089	109,126
Uninsured deposits	343,980	—	285,752
Uninsured/Total deposits	39.98%	—	33.10%
Total assets	1,043,359	1,100,012	1,162,731

Asset Quality and Reserves

Metric	Q4 2022	Q1 2023	Q2 2023
Nonaccrual loans ($000s)	18,593	23,769	20,634
Nonaccrual/Loans	2.19%	2.70%	2.22%
Allowance for loan losses ($000s)	10,310	17,801	16,858
Allowance/Loans	1.22%	2.03%	1.81%
Net loan charge-offs ($000s)	1,052	1,618	2,390

Capital and Book Value

Metric	Q4 2022	Q1 2023	Q2 2023
Book value per share	$15.03	$13.77	$13.23
Tangible BVPS (non-GAAP)	$14.68	$13.43	$12.89
TBVPS ex-OCI (non-GAAP)	$18.63	$17.06	$16.94
Bank leverage ratio	9.26%	9.25%	8.70%

Note: Non-GAAP metrics and reconciliations are provided in company materials .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Quantitative guidance	FY/Quarter	None provided	None provided	—

Management commentary discusses strategy and outlook qualitatively (investments in Digital Payments/deposit strategies; focus on credit quality and expense discipline) but no formal numerical guidance was issued in the Q2 2023 release .

Earnings Call Themes & Trends

No Q2 2023 earnings call transcript found in our database or on Yahoo Finance; themes are drawn from press releases and filings .

Topic	Previous Mentions (Q4 2022, Q1 2023)	Current Period (Q2 2023)	Trend
Digital/Payments initiatives	Payments division increasingly contributing to lower-cost funding; strategic discussions for digital-forward capabilities . Deposit Strategies contributed to NII; prepaid deposits $176.2M; focus on diversified funding .	Continued investment in Digital Payments Division and value-add initiatives to drive long-term fee and low-cost deposit generation .	Continued build-out; longer-term growth lever.
Interest rates & funding costs	NIM 3.77% in Q4; strong NII; higher rates aided NIM .	NIM slipped to 3.29% QoQ on higher deposit costs and purposeful borrowings to boost liquidity .	NIM declined to 2.96% on higher deposit costs/wholesale borrowings .
Credit/Reserves (CECL)	Allowance 1.22% at YE22; provision $1.4M in Q4 .	CECL adopted; opening ACL build; provision $1.34M .	Provision $1.23M; allowance 1.81%; nonaccrual/loans 2.22% .
Liquidity & deposits	Deposits +14.9% YoY in 2022; leverage of low-cost digital channels .	Deposits stable QoQ; liquidity bolstered (higher borrowings) .	Deposits stable; uninsured share down to 33.1%; brokered deposits rose YoY .
Operating expenses/efficiency	Efficiency 64.88% in Q4 .	Efficiency 85.72% in Q1 .	Efficiency 94.39% in Q2 as expenses rose .
Governance	—	CEO promotion noted (Mar 29, 2023) [pnbk IR PR list].	Added Grace Doherty to Board (Jul 21, 2023) to bolster digital expertise .

IR press release list reference for March 29, 2023 governance item: .

Management Commentary

“The Bank continued to invest in its long-term strategic plan and numerous value-add initiatives… As the Bank fully ramps up its many initiatives, particularly the Digital Payments Division, the Bank will have the tools necessary for long-term sustained growth.” – David Lowery, President & CEO .
“In the near term… the Bank will refocus efforts on credit quality and continue to manage non-interest expense. Additionally, the Bank continues to actively pursue a number of strategic actions that will position us for further growth opportunities.” – David Lowery .
“The first quarter of 2023 was a particularly challenging time for banks overall… PNBK made great strides in investing in its future, growing and diversifying its loan book and deposit base year over year, and increasing reserves.” – David Lowery (Q1’23) .
“The Bank’s Payments division has increasingly been contributing to the Bank’s lower-cost funding sources… expanding unique deposit gathering channels, while continuing to widen the Bank’s net interest margin.” – Robert Russell (Q4’22) .

Q&A Highlights

No public Q2 2023 earnings call transcript was identified; therefore, no Q&A highlights or guidance clarifications were available for this period .

Estimates Context

Wall Street consensus (S&P Global) for Q2 2023 EPS and revenue was unavailable at the time of this analysis; we were unable to retrieve SPGI estimates for PNBK for Q2 2023. As a result, comparisons vs consensus could not be made. Values would have been retrieved from S&P Global if available.

Key Takeaways for Investors

Near-term earnings pressure from NIM compression and elevated credit costs persisted in Q2; margin outlook hinges on deposit pricing discipline and wholesale funding needs .
Balance sheet growth remained a positive: loans +~~6% QoQ and assets +~~$62.7M QoQ, but growth must translate into improved operating leverage to reverse efficiency ratio deterioration .
Funding resiliency improved as uninsured deposits fell to 33.1% of total deposits (and to 17.71% ex-prepaid), a supportive signal amid sector scrutiny of deposit stability .
Credit normalization and CECL-driven reserve builds will be key watch items; nonaccrual/loans improved QoQ to 2.22% but net charge-offs rose sequentially .
Strategic investments (Digital Payments/Deposit Strategies) are central to the medium-term thesis—success should show up as lower-cost funding and fee income growth; governance additions (Grace Doherty) align with this digital focus .
With no formal guidance and no visible Street coverage, investors should track NIM trajectory, deposit mix (brokered and prepaid), expense control, and asset quality indicators each quarter for inflection signals .

Appendix: Additional Q2 2023 Press Releases

Board appointment: Grace Doherty joined the Board, bringing digital banking expertise to support Patriot’s strategy .

Sources: Patriot National Bancorp Q2 2023 8-K and press release (Aug 11, 2023) ; Q1 2023 8-K press release (May 12, 2023) ; Q4 2022 8-K press release (Mar 7, 2023) ; Board appointment 8-K (Jul 21, 2023) . No Q2 2023 call transcript found on Yahoo Finance and none listed on the company’s press release page .

PATRIOT NATIONAL BANCORP INC (PNBK)·Q2 2023 Earnings Summary