-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AMNRE6A6al5TLVLzlAHA3TShOkkW4Lr/rsEmclH/bs1+JLMlgoxQT831aHIlkw7E r3LDi3uWGUjpYuXdbwoHtg== /in/edgar/work/20000814/0000913355-00-000146/0000913355-00-000146.txt : 20000921 0000913355-00-000146.hdr.sgml : 20000921 ACCESSION NUMBER: 0000913355-00-000146 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000814 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PATRIOT NATIONAL BANCORP INC CENTRAL INDEX KEY: 0001098146 STANDARD INDUSTRIAL CLASSIFICATION: [6770 ] IRS NUMBER: 061559137 STATE OF INCORPORATION: CT FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-29599 FILM NUMBER: 697707 BUSINESS ADDRESS: STREET 1: 900 BEDFORD ST CITY: STAMFORD STATE: CT ZIP: 06901 BUSINESS PHONE: 2033247500 10-Q 1 0001.txt 10-Q FOR PERIOD ENDED JUNE 30, 2000 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10 - QSB QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarter Ended June 30, 2000 Commission file number 000-29599 PATRIOT NATIONAL BANCORP, INC. (Name of small business issuer as specified in its charter) Connecticut 06-1559137 (State of incorporation) (IRS employer identification number) 900 Bedford Street, Stamford, Connecticut 06901 (Address of principal executive offices) (203) 324-7500 Issuer's telephone number: State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date. Common stock, $2.00 par value per share, 2,400,375 shares issued and outstanding as of the close of business July 31, 2000. Transitional Small Business Disclosure Format: Yes No X ----- ------ Table of Contents Part I Page - ------ ---- Item 1. Consolidated Financial Statements 1 Item 2. Management's Discussion and Analysis or Plan of Operation 9 Part II - ------- Item 2 Changes in securities 14 Item 4. Submission of matters to a vote of security holders 14 Item 6. Exhibits and reports on Form 8-K 15 Part 1 -Financial information ITEM 1. FINANCIAL STATEMENTS Patriot National Bancorp, Inc. Consolidated Balance Sheets
June 30, December 31, 2000 1999 ------------- ------------- ASSETS Unaudited Cash and due from banks .................................. $ 6,232,887 $ 2,685,031 Federal funds sold ....................................... 17,000,000 18,900,000 Short-term investments-commercial paper .................. -- 10,976,264 ------------- ------------- Cash and cash equivalents ...................... 23,232,887 32,561,295 Available for sale Securities (at fair value) ............ 18,446,998 19,984,309 Held to maturity Securities .............................. 12,299,794 12,301,485 Federal Reserve Bank Stock ............................... 397,150 410,700 Federal Home Loan Bank Stock ............................. 593,600 307,000 Loans receivable (net of allowance for loan losses of $1,569,103 in 2000 and $1,360,183 in 1999) ............. 124,290,700 107,769,911 Accrued interest receivable .............................. 1,358,886 980,777 Premises and equipment, net .............................. 1,004,419 953,656 Deferred tax asset, net .................................. 666,633 562,928 Goodwill (net of accumulated amortization of $120,177 in 2000 and $58,180 in 1999) .................. 1,115,951 1,177,948 Other assets (net of accumulated amortization of $18,744 in 2000 and $17,285 in 1999) ................... 247,576 184,688 ------------- ------------- Total assets ........................................ $ 183,654,594 $ 177,194,697 ============= ============= LIABILITIES AND SHAREHOLDERS' EQUITY Deposits Non-interest bearing deposits ....................... $ 14,553,196 $ 12,630,926 Interest bearing deposits ........................... 152,454,175 150,115,428 ------------- ------------- Total deposits ................................. 167,007,371 162,746,354 Capital lease obligations ................................ 518,829 563,687 Collateralized borrowings ................................ 475,000 325,000 Accrued expenses and other liabilities ................... 439,798 323,568 ------------- ------------- Total liabilities .............................. 168,440,998 163,958,609 ------------- ------------- SHAREHOLDERS' EQUITY Common stock ($2 par value); 5,333,333 shares authorized; issued and outstanding shares 2,372,702 in 2000 and 2,160,952 in 1999 4,745,404 4,321,904 Paid in capital .......................................... 11,288,893 9,807,957 Accumulated deficit ...................................... (419,599) (635,331) Accumulated other comprehensive income-net unrealized loss on available for sale securities ....... (401,102) (258,442) ------------- ------------- Total shareholders' equity ..................... 15,213,596 13,236,088 Total liabilities and shareholders' equity ............... $ 183,654,594 $ 177,194,697 ============= =============
See accompanying Notes to Consolidated Financial Statements. 1 Consolidated Statements of Income (Unaudited)
Three months Three months Six months Six months Ended Ended Ended Ended June 30,2000 June 30,1999 June 30,2000 June 30,1999 ------------ ------------ ------------ ------------ Interest and Dividend Income Interest and fees on loans .............................. $2,738,652 $1,658,596 $5,263,291 $3,053,876 Interest and dividends on investment securities ......... 514,982 326,412 1,057,869 661,947 Interest on federal funds sold .......................... 177,420 133,348 464,182 311,387 ---------- ---------- ---------- ---------- Total interest and divided income .. 3,431,054 2,118,356 6,785,342 4,027,210 ---------- ---------- ---------- ---------- Interest Expense Interest on deposits .................................... 1,773,730 912,695 3,583,531 1,753,723 Interest on capital lease obligation .................... 18,148 21,125 37,141 42,914 Interest Expense on collateralized borrowings ........... 9,299 16,660 ---------- ---------- ---------- ---------- Total interest expense .. 1,801,177 933,820 3,637,332 1,796,637 ---------- ---------- ---------- ---------- Net interest income .. 1,629,877 1,184,536 3,148,010 2,230,573 Provision for Loan Losses ................................... 114,000 87,000 223,500 155,000 ---------- ---------- ---------- ---------- Net interest income after provision for loan losses 1,515,877 1,097,536 2,924,510 2,075,573 ---------- ---------- ---------- ---------- Non-Interest Income Mortgage brokerage referral fees ........................ 605,817 0 1,127,487 0 Fees and service charges ................................ 45,880 56,300 84,496 111,298 Gains and origination fees from loans sold .............. 15,015 25,701 15,015 35,955 Other income ............................................ 15,533 12,328 28,333 44,555 ---------- ---------- ---------- ---------- Total non-interest income .. 682,245 94,329 1,255,331 191,808 ---------- ---------- ---------- ---------- Non-Interest Expense Salaries and benefits ................................... 1,080,560 467,640 2,127,714 932,570 Occupancy and equipment expense, net .................... 214,712 98,556 401,231 205,374 Professional services ................................... 70,981 53,831 143,231 95,195 Advertising and promotional expenses .................... 102,110 83,535 172,980 142,040 Forms, printing and supplies ............................ 40,392 26,738 103,503 62,959 Directors fees and expenses ............................. 24,500 27,500 49,600 51,640 Data processing ......................................... 173,360 54,425 308,652 102,509 Regulatory assessments .................................. 18,519 14,291 39,870 24,583 Insurance ............................................... 16,894 10,859 26,637 17,438 Other operating expenses ............................... 219,072 141,505 405,538 278,489 ---------- ---------- ---------- ---------- Total non-interest expenses .. 1,961,100 978,880 3,778,956 1,912,797 ---------- ---------- ---------- ---------- Income before income taxes .. 237,022 212,985 400,885 354,584 Provision for Income Taxes .................................. 107,903 1,885 185,153 3,085 ---------- ---------- ---------- ---------- Net income .. $ 129,119 $ 211,100 $ 215,732 $ 351,499 ========== ========== ========== ========== Basic income per share .. $ 0.06 $ 0.11 $ 0.10 $ 0.18 Diluted income per share .. $ 0.06 $ 0.10 $ 0.10 $ 0.17
See accompanying Notes to Consolidated Financial Statements 2 Patriot National Bancorp, Inc. Consolidated Statements of Comprehensive Income (unaudited)
Three months Three months Six months Six months Ended Ended Ended Ended June 30,2000 June 30,1999 June 30,2000 June 30,1999 ------------------------------------------------------------ Net income $ 129,119 $ 211,100 $ 215,732 $ 351,499 Unrealized holding losses on securities: Unrealized holding losses arising during the period, net of taxes. (88,341) (154,663) (142,660) (199,697) ----------------------------------------------------------- Comprehensive income $ 40,778 $ 56,437 $ 73,072 $ 151,802 ===========================================================
See accompanying Notes to Consolidated Financial Statements. 3 Consolidated Statements of Cash Flows Six months ended June 30, 2000 and 1999 (unaudited)
2000 1999 ------------ ------------ Cash Flows from Operating Activities Net income ............................................. $ 215,732 $ 351,499 Adjustments to reconcile net income to net cash provided by operating activites: Amortization and accretion of investment premiums and discounts, net ........................... (3,350) 27,155 Originations of loans held for sale .................... (1,521,410) (2,014,950) Proceeds from sales of loans held for sale ............. 1,521,410 2,014,950 Gain on sale of available for sale securities .......... 0 (42,031) Provision for loan losses .............................. 223,500 155,000 Depreciation and amortization .......................... 197,005 122,411 Professional fees paid by issuance of common stock ..... 0 4,719 Director's fees paid by issuance of common stock ....... 0 50,044 Changes in assets and liabilities: Decrease in deferred loan fees ........................ (63,681) (16,946) Increase in accrued interest receivable ............... (378,109) (238,077) Increase in other assets .............................. (63,354) (8,997) Increase in accrued expenses and other liabilities .... 116,230 13,434 ------------ ------------ Net cash provided by operating activities .................. 243,973 418,211 ------------ ------------ Cash Flows from Investing Activities Purchases of Federal Home Loan Bank stock ................ (286,600) 0 Purchases of available for sale securities ............... 0 (10,562,517) Redemption of Federal Reserve Bank stock ................. 13,550 0 Proceeds from maturities of available for sale securities 0 500,000 Proceeds from sales of available for sale securities ..... 0 6,350,708 Principal repayments on available for sale securities .... 1,295,985 0 Purchase of held to maturity securities .................. 0 (8,966,053) Net increase in loans .................................... (16,680,607) (18,314,231) Purchases of bank premises and equipment ................. (185,304) (103,822) Recoveries on other real estate owned .................... 0 18,800 Purchase of assets of mortgage company ................... 0 (167,269) ------------ ------------ Net cash used in investing activities ...................... (15,842,976) (31,244,384) ------------ ------------ Cash Flows from Financing Activities Net increase in demand, savings and money market deposits 13,264,940 6,083,753 Net (decrease) increase in time certificates of deposit .. (9,003,923) 12,154,403 Principal payments on capital lease obligation ........... (44,858) (39,086) Increase in collateralized borrowings .................... 150,000 0 Proceeds from issuance of common stock ................... 1,904,436 10,091 ------------ ------------ Net cash provided by financing activities .................. 6,270,595 18,209,161 ------------ ------------ Net decrease in cash and cash equivalents .................. (9,328,408) (12,617,012) Cash and cash equivalents Beginning ................................................ 32,561,295 29,567,353 ------------ ------------ Ending ................................................... $ 23,232,887 $ 16,950,341 ============ ============
See accompanying Notes to Consolidated Financial Statements. 4 Patriot National Bancorp, Inc. Consolidated Statements of Cash Flows, continued Six months ended June 30, 2000 and 1999 (unaudited)
2000 1999 ---------- ---------- Suppmental Disclosures of Cash Flow Information Cash paid for: Interest ................................................. $3,637,332 $1,796,637 ========== ========== Income taxes ............................................. $ 53,000 $ 3,085 ========== ========== Supplemental Disclosures of Noncash Investing and Financing Activities Purchase of assets of mortgage company: Purchase price .................................. $ 0 $1,500,000 Direct acquisition costs ........................ 0 17,269 ---------- ---------- $ 0 $1,517,269 ========== ========== Fair value of asset acquired: Goodwill ...................................... $ 0 $1,517,269 ========== ========== Source of Funds Cash ........................................... $ 0 $ 167,269 Issuance of capital stock ..................... 0 1,350,000 ---------- ---------- $ 0 $1,517,269 ========== ========== Accrued prior year director and professional fees settled in common stock ....................................... $ 0 $ 24,965 ========== ==========
See accompanying Notes to Consolidated Financial Statements. 5 Notes to Consolidated Financial Statements 1. The Consolidated Balance Sheet at December 31, 1999 has been derived from the audited financial statements of Patriot National Bancorp, Inc. ("Bancorp") at that date, but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. 2. The accompanying unaudited consolidated financial statements and related notes have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted. The accompanying consolidated financial statements and related notes should be read in conjunction with the audited financial statements of Bancorp and notes thereto for the fiscal year ended December 31, 1999. The information furnished reflects, in the opinion of management, all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of the results of the interim periods presented. The results of operations for the six months ended June 30, 2000 are not necessarily indicative of the results of operations that may be expected for all of 2000. 3. Bancorp is required to present basic income per share and diluted income per share in its income statements. Basic income per share amounts are computed by dividing net income by the weighted average number of common shares outstanding. Diluted income per share assumes the exercise of all potential common stock in weighted average shares outstanding, unless the effect is antidilutive. Bancorp is also required to provide a reconciliation of the numerator and denominator used in the computation of both basic and diluted income per share. The following is information about the computation of income per share for the quarters and six months ended June 30, 2000 and 1999. Quarter ended June 30, 2000
Net Income Shares Amount ---------- ------ ------ Basic Income Per Share Income available to common stockholders $ 129,119 2,166,100 $ 0.06 Effect of Dilutive Securities Warrants and options outstanding - 34,966 - -------------------------------------- Diluted Income Per Share Income available to common stockholders plus assumed conversions $ 129,119 2,201,066 $ 0.06 ======================================
6 Quarter ended June 30, 1999
Net Income Shares Amount ---------- ------ ------ Basic Income Per Share Income available to common stockholders $ 211,100 2,001,378 $ 0.11 Effect of Dilutive Securities Warrants outstanding ................. -- 28,255 -- --------- --------- --------- Diluted Income Per Share Income available to common stockholders plus assumed conversions .............. $ 211,100 2,029,633 $ 0.10 ========= ========= ==========
Six months ended June 30, 2000
Net Income Shares Amount ---------- ------ ------ Basic Income Per Share Income available to common stockholders $ 215,732 2,163,526 $ 0.10 Effect of Dilutive Securities Warrants and options outstanding ..... -- 46,470 -- --------- --------- --------- Diluted Income Per Share Income available to common stockholders plus assumed conversions .............. $ 215,732 2,209,996 $ 0.10 ========= ========= ========
Six months ended June 30, 1999
Net Income Shares Amount ---------- ------ ------ Basic Income Per Share Income available to common stockholders $ 351,499 1,999,837 $ 0.18 Effect of Dilutive Securities Warrants outstanding .................. -- 31,959 -- --------- --------- --------- Diluted Income Per Share Income available to common stockholders plus assumed conversions ......... $ 351,499 2,031,796 $ 0.17 ========= ========= =========
4. Bancorp has two reportable segments, the commercial bank and the mortgage broker. The Bank provides its commercial customers with products such as commercial mortgage loans, working capital loans, equipment loans and other business financing arrangements, and provides its consumer customers with residential mortgage loans, home equity loans and other consumer installment loans. The commercial bank segment also attracts deposits from both consumer and commercial customers and invests such deposits in loans, Investments and working capital. Revenues of the bank are generated primarily from net interest income from its lending, investment and deposit activities. The mortgage broker solicits and processes conventional mortgage loan applications from consumers and originates loans on behalf of permanent investors, and revenues are generated from loan brokerage fees received from permanent investors. 7 Information about reportable segments, and a reconciliation of such information to the consolidated financial statements as of June 30, 2000 is as follows (in thousands): Six months ended June 30, 2000 Mortgage Consolidated Bank Broker Totals ------------------------------------------- Net interest income ..... $ 3,148 -- $ 3,148 Non-interest income ..... 128 1,127 1,255 Non-interest expense .... 2,576 1,203 3,779 Provision for loan losses 224 -- 224 Income before taxes ..... 477 (76) 401 Assets .................. 183,583 72 183,655 Quarter ended June 30, 2000 Mortgage Consolidated Bank Broker Totals ------------------------------------- Net interest income ..... $1,630 -- $1,630 Non-interest income ..... 76 606 682 Non-interest expense .... 1,242 719 1,961 Provision for loan losses 114 -- 114 Income before taxes ..... 351 (11 ) 237 Bancorp did not have a mortgage brokerage segment in the first six months of 1999 as such operations relate to Pinnacle, a division of the Bank acquired on June 30, 1999. 5. During the quarter ended June 30, 2000, Bancorp issued an aggregate of 211,750 shares of its $2 par value common stock through a private placement offering of 208,416 shares, and the issuance of 3,334 shares upon the exercise of stock warrants. The proceeds from the sale of these shares was $1,904,436. 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION a. Plan of Operation Not applicable since Bancorp had revenues from operations in each of the last two fiscal years. b. Management's Discussion and Analysis of Financial Condition and Results of Operations Summary - ------- Bancorp had net income of $129,000 ($0.06 basic income per share and $0.06 diluted income per share) for the quarter ended June 30, 2000, compared to net income of $211,000 ($0.11 basic income per share and $0.10 diluted income per share) for the quarter ended June 30, 1999. On a pre-tax basis, income increased 11.3% during the quarter ended June 30, 2000. For the six- month period ended June 30, 2000, net income was $216,000 which represents a decrease from the $351,000 earned during the period ended June 30, 1999. During that same period however, pre-tax income increased 13%, from $355,000 to $401,000. Total assets increased $6.5 million from $177.2 million at December 31, 1999 to $183.7 million at June 30, 2000. The net loan portfolio increased $16.5 million from $107.8 million at December 31, 1999 to $124.3 million at June 30, 2000. Loan growth was funded through the proceeds from maturities of short-term investments and growth in deposits. For the quarter ended June 30, 2000, Bancorp recorded a provision for loan losses of $114,000 as compared to $87,000 for the corresponding period in 1999. The increase in the loan loss provision is due to the growth in the loan portfolio. During the quarter ended June 30, 2000, Bancorp recorded net loan charge offs of $15,000 as compared to net recoveries from loans charged off of $12,000 during the same period in 1999. Deposits increased $4.3 million from $162.7 million at December 31, 1999 to $167.0 million at June 30, 2000. Total Shareholder's Equity increased $2 million to $15.2 million at June 30, 2000. The increase was due primarily to proceeds from the private placement of the Bancorp's common stock on June 30, 2000. FINANCIAL CONDITION Assets - ------ Bancorp's total assets increased $6.5 million from $177.2 million at December 31, 1999 to $183.7 million at June 30, 2000. Cash and cash equivalents decreased $9.3 million at June 30, 2000 as compared to December 31, 1999 due mainly to the maturity of $11 million of short-term investments. Cash and due from banks increased $3.5 million and federal funds sold decreased $1.9 million. Loans - ----- Bancorp's net loan portfolio increased $16.5 million from $107.8 million at December 31, 1999 to $124.3 million at June 30, 2000. Loan growth was funded through the maturity of short-term investments and deposit growth. At June 30, 2000, the net loan to deposit ratio was 74.42% and 9 the net loan to asset ratio was 67.68%. At December 31, 1999, the net loan to deposit ratio was 66.22%, and the net loan to asset ratio was 60.82%. Bancorp experienced robust loan demand during the first half of 2000 and, although the higher interest rate environment may slow loan demand somewhat, management believes that loan growth will remain strong for the remainder of 2000. Allowance for Loan Losses - ------------------------- The provision for loan losses is a charge against income and an addition to the allowance for loan losses. Management's judgement in determining the adequacy of the allowance is based on an evaluation of individual loans, the risk characteristics and size of the loan portfolio, an assessment of current economic and real estate market conditions, estimates of the current value of underlying collateral, past loan loss experience, review of regulatory authority examination reports and evaluations of specific loans and other relevant factors. Based upon this evaluation, management believes the allowance for loan losses of $1.6 million at June 30, 2000, which represents 1.25% of gross loans outstanding, is adequate, under prevailing economic conditions, to absorb losses on existing loans which may become uncollectible. At December 31, 1999, the allowance for loan losses was $1.4 million or 1.25% of gross loans outstanding. Analysis of Allowance for Loan Losses at June 30, - ------------------------------------------------- (Thousands of dollars) 2000 1999 -------------------------------------------------------------- Balance at beginning of period $1,360 $785 ------------------------ Charge-offs (15) (17) Recoveries 0 29 ------------------------ Net (charge-offs) recoveries (15) 12 ------------------------ Provision charged to operations 224 155 ------------------------ Balance at end of period $1,569 $952 ======================== Ratio of net (charge-offs) recoveries during the period to average loans outstanding during the period (0.00%) 0.02% ======================== Non-Accrual, Past Due and Restructured Loans - -------------------------------------------- The following table presents non-accruing and past due loans as of June 30, 2000 and December 31, 1999. 10 (Thousands of dollars) 2000 1999 - ---------------------------------------------------------------- Loans delinquent over 90 days still accruing $ 482 $ 475 Non-accruing loans 1,711 91 --------------------------- $2,193 $ 566 =========================== % of Total Loans 1.74% .52% % of Total Assets 1.19% .32% The increase in non-accruing loans is due to two loans for which management does not anticipate any loss due to sufficient loan to value ratios. Potential Problem Loans - ----------------------- At June 30, 2000, Bancorp had no loans other than those described above, as to which management has significant doubts as to the ability of the borrower to comply with the present repayment terms. Deposits - -------- Total deposits increased $4.3 million from $162.7 million at December 31, 1999 to $167.0 million at June 30, 2000. Certificates of deposit decreased $9.0 million as Bancorp did not aggressively price such deposits in a rising rate environment. These deposits were replaced with $11.4 million in high cost checking accounts. Other NOW, DDA and Money Market Accounts increased $5.9 million, but Savings Accounts decreased by $4.0 million. RESULTS OF OPERATIONS Interest and dividend income and expense - ---------------------------------------- Bancorp's interest and dividend income increased 62%, or $1.3 million, for the quarter ended June 30, 2000 over the comparable period in 1999. This increase reflects a 65.2% increase in the loan portfolio over the past twelve months and a 54.5% increase in federal funds sold over the same period. The rising interest rate environment also was a positive factor improving the yields on variable rate loans and overnight investments. For the six-month period ended June 30, 2000, interest and dividend income was $6.8 million representing a 68.5% increase over the comparable period in 1999. Interest earning asset growth and a rising interest rate environment were again the cause of the increase. Interest expense increased 92.9% to $1.8 million for the quarter ended June 30,2000 compared to the same period in 1999. The increase was due to the growth in deposits of 55.3% over the past twelve months. The increase was primarily in higher yielding certificates of deposit. Rising interest rates also increased funding costs on the Bankcorp's certificate of deposit portfolio. 11 Non-interest income - ------------------- Non-interest income increased $588,000 and $1.1 million respectively for three-month and six- month periods ended June 30, 2000. The increase in other non-interest income is attributed to the acquisition of a mortgage broker operation ("Pinnacle") in June 1999, which offers mortgage brokerage services and generated approximately $606,000 mortgage brokerage referral fee revenue in the second quarter of 2000 and $1.1 million for the six months ended June 30,2000. Non-interest expenses - --------------------- Non-interest expenses increased from $979,000 for the three months ended June 30, 1999 to $2.0 million for the three months ended June 30, 2000. For the six months ended June 30, 2000, non- interest expenses were $3.8 million which represents an increase of $1.9 million over the comparable period in 1999. Salaries and benefits increased $613,000 and $1.2 million, respectively, and occupancy and equipment expense increased $116,000 and $196,000 from the comparable periods in 1999. The overall increase in non-interest expenses was due to the acquisition of Pinnacle as of June 30, 1999, the opening of a bank branch office in the fourth quarter of 1999, the continued expansion of Pinnacle including the opening of a new office in the first quarter of 2000, and the overall growth of the Bank. Income Taxes - ------------ Bancorp recorded income tax expense of $108,000 and $185,000 for the three-month and six- month periods ended June 30, 2000. This compares to the prior year when the expense was $2,000 and $3,000 as Bancorp recognized a benefit from the utilization of available net operating loss carry forwards. LIQUIDITY Bancorp's liquidity position was 23.53% and 24.83% at June 30, 2000 and 1999, respectively. The liquidity ratio is defined as the percentage of liquid assets to total assets. The following categories of assets as described in the accompanying consolidated balance sheets are considered liquid assets: cash and due from banks, federal funds sold, short-term investments, available-for-sale securities and held-to-maturity securities maturing in one year or less. Liquidity is a measure of Bancorp's ability to generate adequate cash to meet financial obligations. The principal cash requirements of a financial institution are to cover downward fluctuations in deposit accounts and increases in its loan portfolio. Management believes Bancorp's short-term assets have sufficient liquidity to cover potential fluctuations in deposit accounts, loan demand and to meet other anticipated cash requirements. CAPITAL The following table illustrates the Bancorp's regulatory capital ratios at June 30, 2000 and December 31, 1999 respectively: 12 2000 1999 ---- ---- Leverage Capital 8.47% 7.21% Tier 1 Risk-based Capital 9.89% 8.91% Total Risk-based Capital 10.97% 9.90% Capital adequacy is one of the most important factors used to determine the safety and soundness of individual banks and the banking system. Based on the above ratios, Bancorp believes that at June 30, 2000 it is considered to be "well capitalized" under applicable regulations. To be considered "well-capitalized," an institution must generally have a leverage capital ratio of at least 5%, a Tier 1 risk-based capital ratio of at least 6% and a total risk-based capital ratio of at least 10%. At the Bancorp's annual meeting held June 14, 2000, shareholders approved a private placement of up to $5 million of common stock. Bancorp intends to sell the stock in one or more closings as the need arises. The proceeds of the offerings will be used to provide the Bank with additional capital sufficient for the Bank to continue to be "well capitalized" for regulatory purposes and the balance of the net proceeds of the offering will be retained by Bancorp for working capital and other general corporate purposes. $1.9 million from the first closing was sold on June 30, 2000. Impact of Inflation and Changing Prices - --------------------------------------- Bancorp's consolidated financial statements have been prepared in terms of historical dollars, without considering changes in relative purchasing power of money over time due to inflation. Unlike most industrial companies, virtually all of the assets and liabilities of a financial institution are monetary in nature. As a result, interest rates have a more significant impact on a financial institution's performance than the effect of general levels of inflation. Interest rates do not necessarily move in the same direction or in the same magnitude as the prices of goods and services. Notwithstanding this, inflation can directly affect the value of loan collateral, in particular, real estate. Inflation, or disinflation, could significantly affect Bancorp's earnings in future periods. "Safe Harbor" Statement Under Private Securities Litigation Reform Act of 1995 - ------------------------------------------------------------------------------ Certain statements contained in Bancorp's public reports, including this report, and in particular in this "Management's Discussion and Analysis of Financial Condition and Results of Operation," may be forward looking and subject to a variety of risks and uncertainties. These factors include, but are not limited to, (1) changes in prevailing interest rates which would affect the interest earned on Bancorp's interest earning assets and the interest paid on its interest bearing liabilities, (2) the timing of repricing of Bancorp's interest earning assets and interest bearing liabilities, (3) the effect of changes in governmental monetary policy, (4) the effect of changes in regulations applicable to Bancorp and the conduct of its business, (5) changes in 13 competition among financial service companies, including possible further encroachment of non- banks on services traditionally provided by banks and the impact of recently enacted federal legislation, (6) the ability of competitors which are larger than Bancorp to provide products and services which it is impracticable for Bancorp to provide, (7) the effect of Bancorp's opening of branches, and (8) the effect of any decision by Bancorp to engage in any business not historically permitted to it. Other such factors may be described in Bancorp's filings with the SEC. PART II - OTHER INFORMATION - --------------------------- Item 2. Changes in Securities a. Not applicable b. Not applicable c. During the quarter ended June 30, 2000, Bancorp issued an aggregate of 211,750 shares of its common stock, par value $2.00 per share (the "common stock"). 208,416 shares of common stock were sold in a private placement for an aggregate selling price of approximately $1.9 million approved by the shareholders at the annual meeting held on June 14. These shares were issued in transactions exempt from the registration requirements of the Securities Act of 1933 under rule 506 of Regulation D under such act. Each purchaser of such shares is an Accredited Investor as such term is defined in rule 506 of Regulation D. The remaining 3,334 shares were issued to accredited investors as the result of the exercise of warrants previously granted. d. Not applicable Item 4. Submission of Matters to a Vote of Security Holders (a) The Annual Meeting of Shareholders (the "Annual Meeting") of Patriot National Bancorp, Inc. was held on June 14, 2000. (b) Not applicable pursuant to Instruction 3 to Item 4 of Part II of Form 10 - QSB. (c) The following is a brief description of the matters voted upon at the Annual Meeting and the number of votes cast for, against or withheld as well as the number of abstentions to each such matter: 14 (i) The election of nine directors for the ensuing year. Withheld Authority For to Vote for Herbert A. Bregman ..... 15,728,463 544,725 Angelo DeCaro .......... 16,105,563 167,625 Fred A. DeCaro, Jr ..... 15,410,124 863,064 John A. Geoghegan ...... 16,103,263 164,925 L. Morris Glucksman..... 15,698,124 575,064 Michael Intrieri ....... 15,321,024 952,164 Richard Naclerio ....... 15,715,863 557,325 Salvatore Travato ...... 16,089,363 183,825 Philip W. Wolford ...... 16,103,263 164,925 (ii) The proposal to approve a private placement of up to $5 million of common stock. For Against Abstain 1,344,558 24,100 59,305 (iii) The consideration of a proposal to ratify the appointment of McGladrey & Pullen, LLP as independent accountants for the Bankcorp for the year ending December 31, 2000. For Against Abstain 1,791,431 14,296 2,405 (d) Not applicable ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a. Exhibits No. Description --- ----------- 27 Financial Data Schedule 15 b. Report on Form 8-K A Current Report on Form 8-K dated June 30, 2000 was filed by Bancorp with the Securities and Exchange Commission on July 18, 2000. This report responded to item 5 of the Form 8-K. SIGNATURES In accordance with of the requirements of Exchange Act, the registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Patriot National Bancorp, Inc. By: /s/ Robert F. O'Connell --------------------------- Robert F. O'Connell, Executive Vice President Chief Financial Officer August 14, 2000 16 EX-27 2 0002.txt FINANCIAL DATA SCHEDULE
9 This schedule contains summary financial information extracted from the consolidated financial statements of Patriot National Bancorp, Inc. as of June 30, 2000 and for the six months then ended and is qualified in its entirety by reference to such financial statements. 0001098146 Patriot National Bancorp, Inc. 1,000 6-MOS DEC-31-2000 JAN-01-2000 JUN-30-2000 6,233 0 17,000 0 18,447 12,300 11,927 125,860 1,569 183,655 167,007 0 1,434 0 0 0 4,745 10,469 183,655 5,263 1,058 464 6,785 3,583 3,637 3,148 224 0 3,779 401 216 0 0 216 0.10 0.10 8.25 1,711 482 0 0 1,360 15 0 1,569 0 0 1,569
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