PN
PATRIOT NATIONAL BANCORP INC (PNBK)·Q4 2022 Earnings Summary
Executive Summary
- Q4 delivered solid core banking momentum: net income $1.77M ($0.45 EPS) vs $2.33M ($0.59) in Q3 and $1.90M ($0.48) in Q4’21; NIM expanded to 3.77% and the efficiency ratio improved to 64.88% .
- Balance sheet scaled further: loans $848.3M gross and deposits $860.4M at 12/31/22; nonaccrual loans fell to $18.6M vs $19.2M in Q3 and $23.1M in Q4’21 .
- Mix shift and Payments-driven funding aided margin; non-interest income declined YoY on lower SBA gain-on-sale premiums; provision rose to $1.41M vs $0.20M in Q3 .
- Strategic optionality is a narrative catalyst: management signaled “transformational events” under active discussion to elevate scale and digital capabilities .
- Street estimates: Wall Street consensus from S&P Global was unavailable at time of retrieval; therefore, no versus-estimate comparisons are presented.
What Went Well and What Went Wrong
What Went Well
- Margin and efficiency: NIM rose to 3.77% (from 3.68% in Q3; 3.05% in Q4’21) and the efficiency ratio improved to 64.88% (from 72.89% in Q3; 95.30% in Q4’21) .
- Deposit growth and Payments funding: total deposits reached $860.4M (up from $834.4M in Q3), with Payments division driving lower-cost funding sources; prepaid deposits totaled $197.3M at 12/31/22 .
- Asset quality trend: nonaccrual loans declined to $18.6M (2.19% of loans) vs $19.2M (2.22%) in Q3 and $23.1M (3.12%) in Q4’21; allowance coverage vs nonaccruals improved to 55.45% vs 51.88% in Q3 and 42.89% in Q4’21 .
- Management tone: “increasing earnings and widening net interest margin” with “efficiency ratio…64.88%” (CEO Robert Russell) . Chairman underscored pursuit of “transformational events” and digital deposit and asset initiatives .
What Went Wrong
- Sequential earnings softened: EPS fell to $0.45 from $0.59 in Q3 as provision for loan losses rose to $1.41M (vs $0.20M in Q3; $(0.20)M in Q4’21) and non-interest income remained muted vs prior year period .
- Non-interest income headwind: $1.34M in Q4 vs $2.31M in Q4’21 driven by lower SBA loan sale gains amid weaker market premiums .
- Book value/AOCI pressure: book value per share was $15.03 vs $17.02 a year ago, driven by AFS marks from higher rates; tangible book excluding AOCI was $18.63 (up vs $18.21 in Q3 and $17.08 in Q4’21) .
- Credit cost/charge-offs: net charge-offs were $1.052M in Q4 vs $0.177M in Q3 and $(0.025)M in Q4’21 .
Financial Results
Income Statement Summary (USD Thousands, except per-share)
Key Margins and Ratios
Balance Sheet Highlights (Period End, USD Thousands except per-share)
Deposit Mix and Funding (USD Thousands)
Asset Quality and Reserves
Guidance Changes
The Q4 2022 press release did not include formal numerical forward guidance, and no earnings call transcript was available to supplement guidance; therefore, there are no guidance metrics to compare for revenue, margins, OpEx, OI&E, tax rate, or dividends .
Earnings Call Themes & Trends
No earnings call transcript was located for Q4 2022; themes below reflect management commentary from press releases and reported metrics.
Management Commentary
- CEO Robert Russell: “Despite the myriad impacts related to the changing interest rate environment, we are proud of the increasing operational and financial results…increasing earnings and widening net interest margin…Our efficiency ratio has improved significantly in the fourth quarter to 64.88%.”
- Chairman Michael Carrazza: “Patriot remains aggressively committed to completing one or more transformational events that will elevate the scale of Patriot and its digital forward capabilities…coupled with the organic roll-out of initiatives on the digital deposit gathering and asset generating sides of the balance sheet.”
- Q2 context (Russell): After the termination of the American Challenger merger, “The parties remain in active discussions regarding the potential for a modified transaction…Patriot’s organic platform and financial performance continues to grow and improve.”
Q&A Highlights
- No Q4 2022 earnings call transcript was available; thus, there are no Q&A disclosures to summarize [List: none found].
Estimates Context
- Wall Street consensus estimates (S&P Global) for Q4 2022 EPS and revenue were unavailable at time of retrieval; therefore, no versus-estimate comparisons are shown. Where estimates become available, we would compare Q4 EPS of $0.45 and NIM of 3.77% against consensus and highlight any material beats/misses .
Key Takeaways for Investors
- Core profitability trend is constructive: sustained NIM expansion and sharply better efficiency ratio support the earnings power trajectory into 2023, even as provision normalizes .
- Funding advantage via Payments is scaling: prepaid deposits rose to ~$197M and management is “keenly focused” on expanding unique deposit channels; a key driver for margin resilience if deposit competition intensifies .
- Credit costs ticked up in Q4 but asset quality metrics improved YoY/QoQ; monitoring net charge-offs and provisioning cadence is prudent into a slower macro .
- Capital optics are pressured by AOCI marks; on a TBV ex-AOCI basis, intrinsic capital improved sequentially and YoY, which may matter for valuation discussions in a volatile rate tape .
- Optionality catalyst: management’s pursuit of “transformational events” plus digital deposit and asset initiatives could be stock-moving upon concrete announcements .
- Near term, focus on: deposit beta and mix, SBA gain-on-sale premiums (non-interest income sensitivity), and credit normalization pace; medium term, evaluate strategic outcomes and digital growth execution .
Citations:
- Q4 2022 8-K earnings press release and financials .
- Q2 2022 8-K earnings press release .