8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of report (Date of earliest event reported): February 3, 2014

PATRIOT NATIONAL BANCORP, INC.

(Exact Name of Registrant as Specified in its Charter)

Connecticut	000-29599	06-1559137
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

900 Bedford Street, Stamford, Connecticut	06901
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code: (203) 324-7500

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition.

On February 5, 2014, Patriot National Bancorp, Inc. (the “Company”) issued a press release announcing its financial results and accomplishments for the three months and fiscal year ended December 31, 2013. A copy of the Company’s press release is attached to this report as Exhibit 99.1 and incorporated herein by reference.

Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On February 3, 2014, the Company, Patriot National Bank, a wholly-owned subsidiary of the Company (the “Bank” and together with the Company, “Patriot”), and Kenneth T. Neilson, President and Chief Executive Officer of Patriot (“Neilson”), entered into a letter agreement (the “Letter Agreement”) pursuant to which Patriot and Neilson mutually agreed to extend the term of that certain Employment Agreement, dated as of March 18, 2013 (the “Employment Agreement”), by and among Patriot and Neilson for an additional one-year period from March 18, 2014 (the “Renewal Date”) through March 17, 2015. Further, pursuant to the Letter Agreement, Patriot shall pay to Neilson a re-signing bonus in the amount of $200,000 and grant to Nielson a number of shares of restricted stock of the Company equal to $300,000 divided by the closing price of the Company’s common stock on the signing date of the Letter Agreement. In the event that Neilson’s employment with Patriot is terminated by Patriot for Cause (as defined in the Employment Agreement) or by Nielson without Good Reason (as defined in the Employment Agreement) (i) within three (3) months following the Renewal Date, Neilson shall repay 50% of the re-signing bonus to Patriot or (ii) more than three (3) months, but less than six (6) months, following the Renewal Date, Neilson shall repay 25% of the re-signing bonus to Patriot. The restricted stock grant to Neilson will be subject to a vesting schedule under which such grant will vest in equal one-third increments on December 31, 2014, December 31, 2015 and December 31, 2016.

The foregoing description is not a complete description of the Letter Agreement and is qualified in its entirety by reference to the full text of the Letter Agreement. Copies of the Employment Agreement and Letter Agreement are attached to this report as Exhibits 10.1 and 10.2, respectively, and incorporated herein by reference.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

Exhibit No.	Description
10.1	Employment Agreement, dated as of July 9, 2013, by and among Patriot National Bancorp, Inc., Patriot National Bank and Kenneth T. Neilson.
10.2	Letter Agreement, dated as of February 3, 2014, by and among Patriot National Bancorp, Inc., Patriot National Bank and Kenneth T. Neilson.
99.1	Patriot National Bancorp, Inc., Press Release, issued February 5, 2014.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	PATRIOT NATIONAL BANCORP, INC.
Date: February 5, 2014	By:	/s/ Kenneth T. Neilson ‘
		Kenneth T. Neilson President and Chief Executive Officer

EXHIBIT INDEX

Exhibit No.	Description
10.1	Employment Agreement, dated as of July 9, 2013, by and among Patriot National Bancorp, Inc., Patriot National Bank and Kenneth T. Neilson.
10.2	Letter Agreement, dated as of February 3, 2014, by and among Patriot National Bancorp, Inc., Patriot National Bank and Kenneth T. Neilson.
99.1	Patriot National Bancorp, Inc., Press Release, issued February 5, 2014.

EX-10.1

Exhibit 10.1

July 9, 2013

Mr. Kenneth T. Neilson

6801 SE Wood Lark Lane

Hobe Sound, FL 33455

Re: Board Service and Employment Terms

Dear Ken:

This will confirm the terms of your continued board service with, and employment offered to you by, Patriot National Bancorp, Inc. (“Bancorp”) and Patriot National Bank (“Bank”) (collectively, “Patriot”).

Roles and Responsibilities. You will continue to serve as a director on the Boards of Directors of Bancorp and the Bank, for which you will not be entitled to any compensation except as provided herein. You will also serve as President and Chief Executive Officer of Bancorp, reporting to Bancorp’s Board of Directors, and as President and Chief Executive Officer of the Bank, reporting to the Bank’s Board of Directors.

During the term of your employment as President and Chief Executive Officer of Bancorp and the Bank, you shall be employed on a full time basis, spending, on average, at least thirty-five (35) hours per week in-person at the bank, and shall have such titles and authority, perform such duties, discharge such responsibilities and render such services as are consistent with your role, as determined by the applicable Board of Directors in its sole discretion. During the term of your employment as President and Chief Executive Officer of Bancorp and the Bank, you shall render your services diligently, faithfully and to the best of your ability, devoting substantially all of your business time, energy and skills to Patriot (provided, however, that nothing herein shall preclude you from making and managing your personal investments, or serving in any capacity with any civic, educational or charitable organization, so long as such activities are disclosed to the Boards of Directors of Bancorp and the Bank, and only if such activities do not substantially interfere with your responsibilities to Patriot).

Term. We anticipate that your first day of employment as President and Chief Executive Officer of Bancorp and the Bank (your “Commencement Date”) will be on or about March 18, 2013. The term of your employment with Patriot under this agreement shall be one year, commencing on the Commencement Date, unless you and Patriot agree to extend the term on mutually agreeable terms. From and following the one year anniversary of the Commencement Date (i) your employment with Patriot shall not automatically terminate, you will continue to be employed by Patriot as an at-will employee, and this agreement shall have no continuing legal effect except as otherwise provided herein, and (ii) you will continue to serve as a member of the Bank and Bancorp Boards of Directors, irrespective of your employment status, except as is otherwise set forth herein.

Compensation. You will not be paid a base salary, provided that to the extent the failure to pay you a base salary would violate any federal, state or local law, you will be paid a minimum amount of base salary in order to comply with such law, which will be paid to you in accordance with the applicable terms of any such federal, state or local law (to the extent any such base salary is required to be paid, such amount, the “Required Base Salary”). You will be eligible for employee benefit coverage under Patriot’s plans, pursuant to the terms thereof.

Patriot shall pay to you, within five (5) business days following the Commencement Date, a signing bonus of two hundred thousand dollars ($200,000.00), minus required tax withholding amounts; provided that in the event your employment with Patriot is terminated by Patriot for Cause or by you without Good Reason (as such terms are defined below) (i) within three (3) months following the Commencement Date, you shall re-pay to Patriot fifty percent (50%) of such signing bonus or (ii) more than three (3), but less than six (6), months following the Commencement Date, you shall re-pay to Patriot twenty-five percent (25%) of such signing bonus.

For purposes of this agreement: (i) “Cause” shall mean (a) your gross misconduct or gross neglect of your duties, including breach of your fiduciary duties as a member of the Board of Directors of Bancorp or the Bank; (b) your commission of any fraud, misappropriation, embezzlement or similar act, which could result in material injury to Patriot or any of its affiliates, monetarily or otherwise; (c) your indictment, conviction of, or a plea of nolo contendere to, a crime constituting (1) a felony under the laws of the United States or any state thereof or (2) a misdemeanor involving moral turpitude; (d) your material breach of any material provision of any Bank or Bancorp policy or procedure; or (e) your willful and material breach of a provision of this agreement (or other material agreement between you and the Bank or Bancorp); provided, however, that Patriot must provide you with notice of any condition or event giving rise to Cause (solely to the extent curable) and you shall have fifteen (15) days in which to cure such condition or event (solely to the extent curable) and (ii) “Good Reason” shall mean (a) a material reduction in your authority, duties or responsibilities or (b) a material breach by Patriot of this agreement; provided, however, that you must provide Patriot with notice of any condition or event giving rise to Good Reason within fifteen (15) days of the initial occurrence of such condition or event and Patriot shall have fifteen (15) days in which to cure such condition or event, immediately after which your employment shall immediately terminate if such condition or event is not cured.

The Bancorp Board of Directors will take all necessary steps, within the ninety (90) day period following the Commencement Date, to cause the Patriot National Bancorp 2012 Stock Plan (the “Stock Plan”) to be amended to permit restricted stock to be granted to members of the Boards of Directors who are also employees. Immediately following obtaining shareholder approval for the above change to the Stock Plan, in connection with your service on the Bancorp and Bank Boards of Directors, you will be granted, subject to approval by the Bancorp Board of Directors, such whole number of shares of Bancorp restricted stock (“Shares”) that is obtained by dividing three hundred thousand dollars ($300,000.00) by the closing price of Bancorp common stock on the date this agreement is fully executed by you and Patriot (the “Restricted Stock Award”).

Subject to approval by the Bancorp Board of Directors, the Restricted Stock Award will be subject to a vesting schedule, under which the Restricted Stock Award will vest in equal one-third (1/3) increments commencing on December 31, 2013, and then December 31, 2014, and December 31, 2015. With respect to the vesting of the Restricted Stock Award, Bancorp will withhold such number of Shares as is required to satisfy (1) the tax withholding requirements arising in connection with such vesting events, unless at a time prior to such tax event, you irrevocably commit to Bancorp (at a time when you are not in possession of inside information, and are otherwise permitted to make investment decisions regarding the Restricted Stock Award) to satisfy required tax withholding requirements from your personal funds, and the Restricted Stock Award will otherwise be subject to the terms and conditions set forth under the Stock Plan and an applicable award agreement, as determined by the Bancorp Board of Directors in its discretion and (2) the payment of any Required Base Salary, if applicable.

In the event that your service on the Boards of Directors of Bancorp and the Bank is terminated by Patriot or you voluntarily cease to serve as a member of the Boards of Directors of Bancorp and the Bank, in either case for any reason, then any portion of the Restricted Stock Award that remains unvested as of the date of your cessation from the Bancorp and Bank Boards of Directors will be forfeited and canceled on the date of such cessation; provided, however, that in the event that your service on the Boards of Directors of Bancorp and the Bank is terminated by reason of your death or Disability (within the meaning under Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”)), any portion of the Restricted Stock Award that is not vested as of the date of termination for such reasons shall become immediately vested.

Local Housing. Patriot understands that you are a resident of Florida. During your employment as President and Chief Executive Officer, Patriot shall provide local, fully furnished housing accommodations to you in a manner to be mutually agreed by you and Patriot. It is understood that such housing accommodations may be REO property held by Patriot, in which case you will cooperate with Patriot in its continuing efforts to sell such property. The housing accommodations shall include, to the extent applicable, rental payments, all utilities and maintenance (“Housing Costs”).

Automobile. During your employment as President and Chief Executive Officer, Patriot will provide to you a monthly automobile allowance of up to one thousand five hundred dollars ($1,500.00.00), which may be used for lease payments, if applicable, as well as fuel, insurance, repairs and maintenance.

Reasonable Travel Expenses. Patriot will reimburse to you (within thirty (30) days following presentment) for any and all reasonable travel expenses incurred by you during your employment as President and Chief Executive Officer, provided that, with respect to air travel between Florida and Connecticut, Patriot will reimburse you for airfare and parking a vehicle at the airport, not to exceed $6,000.00 per quarter without approval by the Compensation Committee of the Bank’s and Bancorp’s Boards of Directors (“Travel Reimbursements”).

Regulatory Matters. The commencement and terms of your employment are subject to prior review and non-objection by applicable banking regulators. Notwithstanding anything herein to the contrary, Patriot shall not have any obligation to make any payment or take any action that is prohibited by applicable law, regulation, or regulatory directive, including, but not limited to, the FDIC golden parachute regulations provided at 12 C.F.R. part 359. Consistent with applicable regulatory and accounting requirements, expenses and obligations with respect to your employment shall be allocated by Patriot, in its sole discretion, between Bancorp and the Bank based on the expected amount of time you spend working for each. Such allocation is subject to change in the sole and absolute discretion of Bancorp and the Bank.

Tax Matters. Patriot may withhold from any amounts payable under this agreement such federal, state, and local taxes as may be required to be withheld pursuant to any applicable law or regulation. If necessary, Patriot will make additional payments to you (“Tax Gross-ups”) to negate the adverse tax impact to you of any and all income imputed to you in connection with Housing Costs, Travel Reimbursements, or the Tax Gross-ups themselves. Patriot understands that you are, and expect to remain, a permanent Florida resident and that you recognize income each year that is unrelated to your service with Patriot. If, as a result of your service with Patriot, you become subject to taxation by the State of Connecticut with respect to income other than Patriot-related income, then the Tax Gross-ups shall also include amounts necessary to negate the adverse tax impact to you of the imposition of tax by Connecticut upon any and all of your income (other than Patriot-related income) that would not otherwise have been subject to taxation by Connecticut; provided that the aggregate amount included in the Tax Gross-ups on account of this sentence shall not exceed $150,000.00. The Tax Gross-ups will be calculated by a national benefits consulting firm or certified public accounting firm, the fees of which shall be paid by Patriot. To the extent applicable, the Tax Gross-ups shall be paid as soon as administratively possible after the liability for the underlying amounts becomes fixed, provided that any such payment shall be paid at a time and in a manner that complies with, and does not result in additional penalties or taxes under, Section 409A of the Code. You agree to advise Patriot immediately in the event that you are contacted by applicable tax authorities with respect to such tax matters, and you agree to permit Patriot to participate in the resolution of such matters.

If the payments and benefits provided for under this agreement or otherwise payable to you constitute “parachute payments” within the meaning of Section 280G of the Code and will be subject to the excise tax imposed by Section 4999 of the Code, then those payments and benefits shall be subject to reduction to the extent necessary to assure that the payments and benefits provided to you under this agreement will be limited to the greater of (i) the amount of payments and benefits which can be provided without triggering a parachute payment under Code Section 280G or (ii) the maximum dollar amount of payments and benefits which can be provided under this agreement so as to provide you with the greatest after-tax amount of such payments and benefits after taking into account any excise tax that you may incur under Code Section 4999 with respect to those payments and benefits and any other benefits or payments to which you may be entitled in connection with any change in control or ownership of Patriot or the subsequent termination of your employment.

This agreement shall be interpreted and administered in a manner so that any amount or benefit payable hereunder shall be paid or provided in a manner that is either exempt from or compliant with the requirements of Section 409A of the Code. Notwithstanding any other provision herein, if any provision of this agreement conflicts with the requirements of Section 409A of the Code, the requirements of Section 409A of the Code shall supersede any such provision. In no event will Patriot or any of its affiliates be liable for any additional tax, interest or penalties that may be imposed on you by Section 409A of the Code or any damages for failing to comply with Section 409A of the Code. All payments to be made upon a termination of employment under this agreement shall, to the extent required to avoid accelerated or additional tax under Section 409A of the Code, be made only upon a “separation from service” within the meaning under Section 409A of the Code. To the extent required in order to avoid an accelerated or additional tax under Section 409A of the Code, amounts that would otherwise be payable pursuant to this agreement during the six-month period immediately following your separation from service shall instead be paid on the first business day after the date that is six months following your separation from service (or, if earlier, your death). No reimbursement payable to you pursuant to any provision of this agreement or otherwise pursuant to any plan or arrangement of Patriot shall be paid later than the last day of the calendar year following the calendar year in which the related expense was incurred, and no such reimbursement during any calendar year shall affect the amounts eligible for reimbursement in any other calendar year, except, in each case, to the extent that the right to reimbursement does not provide for a “deferral of compensation” within the meaning of Section 409A of the Code.

Other Provisions. This agreement shall be governed by the laws of the State of New York, without reference to principles of conflicts or choice of law under which the law of any other jurisdiction would apply.

Patriot will reimburse you, within thirty (30) days following presentment, for any and all reasonable attorney’s fees incurred by you in connection with the negotiation of this agreement not to exceed $20,000.00. Each of you and Patriot will bear your or its own attorney’s fees and costs incurred in any action or dispute arising out of this agreement. In the event that you or Patriot brings a legal action (whether at law or in equity) to enforce its or your rights or remedies, or the obligations of the other party, under this agreement, the prevailing party in such legal action shall be entitled to recover its or your (as applicable) reasonable legal fees and expenses, and court costs, incurred in connection therewith from the non-prevailing party.

Patriot’s obligations with respect to the Restricted Stock Award, Tax Gross-ups, and attorney fee provision of the immediately preceding paragraph will survive the termination of this agreement and the termination of your employment and Board of Directors service with Patriot.

*     *     *

If you are in agreement with the terms set forth herein, please sign below and return this agreement. We look forward to you assuming your new role.

	Very truly yours,
I hereby agree to the terms of this agreement.
Kenneth T. Neilson	Dated: July , 2013

EX-10.2

Exhibit 10.2

CONFIDENTIAL

February 3, 2014

Mr. Kenneth T. Neilson

6801 SW Wood Lark Lane

Hobe Sound, FL 33455

RE: Extension of Employment Agreement

Dear Ken:

Reference is made herein to the your Employment Agreement between you and Patriot National Bancorp, Inc. (“Bancorp”) and Patriot National Bank (“Bank”) (collectively, “Patriot”), a copy of which is attached. Capitalized terms contained herein but not otherwise defined herein shall have the meaning set forth in the Employment Agreement.

WHEREAS, you and Patriot entered into a one-year employment agreement commencing March 18, 2013 (the “Employment Agreement”), and both you and Patriot have mutually agreed to extend the term of the Employment Agreement.

In connection with the extension to the Employment Agreement the following changes shall be incorporated into the Employment Agreement:

1. Term: The term of your employment with Patriot under the Employment Agreement shall be extended from March 18, 2014 (the “Renewal Date”) through March 17, 2015.

2. Compensation:

a. Resigning Bonus: Similar to the original signing bonus, Patriot shall pay to you, within five (5) business days following the Renewal Date, a one-time Resigning Bonus of two hundred thousand dollars ($200,000.00), minus required tax withholding amounts; provided that in the event your employment with Patriot is terminated by Patriot for Cause or by you without Good Reason (as such terms are defined below) (i) within three (3) months following the Renewal Date, you shall re-pay to Patriot fifty percent (50%) of such Resigning Bonus or (ii) more than three (3), but less than six (6), months following the Renewal Date, you shall re-pay to Patriot twenty-five percent (25%) of such Resigning Bonus.

b. 2014 Restricted Stock Award: Similar to the original Restricted Stock Award and in connection with your continuing service on the Bancorp and Bank Boards of Directors, you will be granted such whole number of shares of Bancorp restricted stock (“Shares”) that is obtained by dividing three hundred thousand dollars ($300,000.00) by the closing price of Bancorp common stock on the signing date (the “2014 Restricted Stock Award”). The 2014 Restricted Stock Award will be subject to a vesting schedule, under which the 2014 Restricted Stock Award will vest in equal one-third (1/3) increments commencing on December 31, 2014, and then December 31, 2015 and December 31, 2016.

Terms contained in the Employment Agreement pertaining to the signing bonus and Restricted Stock Award shall apply to the Resigning Bonus and 2014 Restricted Stock Award, as applicable.

3. Other: All other terms contained in the Employment Agreement shall remain unchanged and in effect.

*    *    *

If you are in agreement with the terms set forth herein, please sign below and return this agreement. Patriot’s Board of Directors looks forward to having you continue in your role.

Very truly yours,

Michael A. Carrazza

Chairman

I hereby agree to the terms of this agreement.

Kenneth T. Neilson Dated: February     , 2014

EX-99.1

Exhibit 99.1

Patriot National Bancorp Announces Positive Fourth Quarter Results

Restructuring Strategies Return Patriot to Core Profitability; Reflects Positive Credit Quality

STAMFORD, CT—February 5, 2014—Patriot National Bancorp, Inc. (“Patriot”) (NASDAQ: PNBK), the parent company of Patriot National Bank (“the Bank”), today announced results for its fourth quarter ended December 31, 2013.

Net income for the quarter was $632,000, or $0.02 per diluted share, compared to a net loss of $1,445,000, or $0.04 loss per diluted share for the same quarter last year and a net loss of $2,370,000, or $0.06 loss per diluted share for the prior quarter ended September 30, 2013. Patriot incurred a net loss of $7.6 million or $0.20 loss per diluted share for fiscal 2013 compared to a net loss of $536,000, or $0.01 loss per diluted share for fiscal 2012. Excluding a one-time release from the loan loss allowance, gains on sales of loans, investments and branches and expenses for restructuring and prepayment penalties, the net losses were $3.5 million and $3.2 million for 2013 and 2012, respectively.

“We are pleased that fourth quarter performance positively reflects the series of restructurings strategies implemented to date. This pivotal quarter marks Patriot’s return to core earnings (earnings minus restructuring charges and prepayment penalties on borrowings) profitability. Asset quality, operations and financial metrics all improved greatly, contributing to the overall strength of the Bank”, said Michael Carrazza, Chairman of the Board. “While continuing to increase earnings, efforts are now keenly concentrated on growing assets and expanding products and services to meet the banking needs of our community.”

President’s Comments

Kenneth T. Neilson, President and CEO, commented, “We continued to execute on our business plan to build a highly profitable community bank. The initiatives put into place beginning in the first quarter of this year culminated in a profitable fourth quarter and are expected to benefit Patriot going forward. The Bank is now positioned to entertain growth opportunities.”

“We are especially pleased with the substantial improvement in asset quality. Non-accrual loans declined to $12.3 million, or 2.9% of total loans at December 31, 2013 compared to $20.7 million, or 4.8% of total loans at September 30, 2013 and $23.8 million, or 5.1% of total loans at December 31, 2012. Non-performing assets were $12.3 million at December 31, 2013 compared to $24.6 million at September 30, 2013 and $28.7 million at December 31, 2012, reflecting reductions of $12.3 million, or 50.0%, and $16.4 million, or 57.1%, respectively.”

“Our performance this quarter highlights the benefits derived from the strategies implemented. The continuance of these initiatives is Patriot’s primary goal as we focus on delivering a healthy and profitable future for our customers, employees and shareholders.”

Financial Highlights:

• Patriot earned $632,000, or $0.02 per diluted share, for the quarter ended December 31, 2013 compared to a net loss of $2.4 million, or $0.06 loss per share, in the prior quarter ending September 30, 2013 and a loss of $1.4 million, or $0.04 loss per share, in the fourth quarter a year ago.

• The net interest margin was 3.38% for the quarter ended December 31, 2013, compared to 2.70% for the fourth quarter a year ago. For the twelve months ended December 31, 2013 the net interest margin was 3.14% compared to 2.91% for the twelve months ended December 31, 2012.

• The Bank has methodically pre-paid its long-term high-cost borrowings, resulting in a significant reduction in its total cost of funds from 1.20% for the fourth quarter of 2012 to 0.86% for the third quarter of 2013, and down to 0.69% for the current quarter.

• Core non-interest operating expenses were 14.4% lower in the current quarter compared to the same quarter a year ago resulting primarily from reductions in every major category of expense including regulatory assessments. Core non-interest expenses exclude restructuring charges and prepayment penalties on borrowings.

• Our core efficiency ratio in 2013 went from 119.2% in the fourth quarter of 2012 to 98.3% in the third quarter of 2013 and to 94.1% for the quarter ended December 31, 2013. The core efficiency ratio is calculated using core non-interest expenses as defined above.

• Total Capital to Risk Weighted Assets was 13.9% for Patriot and 13.8% for the Bank at December 31, 2013.

Asset Quality

“Our management team has made the improvement of our risk profile and the credit quality of our loan portfolio a priority” said Samuel Davis, EVP and Chief Credit Officer. “Asset quality will continue to be a high priority.”

Other real estate owned (OREO) was $4.9 million at December 31, 2012 compared to $3.8 million at September 30, 2013. As of December 31, 2013, for the first time since December 31, 2008, Patriot had no OREO properties on its balance sheet.

At December 31, 2013, the allowance for loan losses as a percentage of total loans receivable was 1.34% compared to 1.29% at the prior year-end.

Balance Sheet Review

Total assets of $540.9 million at December 31, 2013 decreased $76.9 million compared to $617.8 million at December 31, 2012. Net loans decreased by $42.2 million to $418.1 million at December 31, 2013, primarily due to Patriot dissolving its residential lending group. Premises and equipment increased by $10.8 million as a result of the Bank’s purchase of branch buildings, including a headquarter building, which had been leased previously. Ownership of these properties enables the Bank to reduce occupancy expense significantly.

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Total deposits were $430.2 million at December 31, 2013, a decline of $67.1 million, or 13.5%, compared to $497.3 million at the prior year-end. These reductions were a part of our strategic effort to shrink the balance sheet to allow for repayment of higher cost borrowings while maintaining our capital ratio. In the process, the Bank reduced its total cost of deposits from 1.04% for fiscal 2012 to 0.82% for fiscal 2013 and to 0.69% for the fourth quarter of 2013.

Income Statement Review

Patriot began the disciplined and orderly implementation of its restructuring plan in March of 2013. Diverse initiatives were put into play in a deliberate and systematic manner throughout the nine month period and will continue throughout 2014. The Bank executed strategies to attain greater efficiencies and returns in the future. Some of those decisions resulted in non-core, or one-time, expenses which are reported as restructuring charges and prepayment penalties on borrowings.

In assessing Patriot’s performance, management focuses on core earnings as the indicator of the company’s profitability. For these analyses, core earnings exclude restructuring charges and prepayment penalties on borrowings. Core earnings for the twelve months ended December 31, 2013 were a loss of $3.0 million compared to core earnings of $397,000 for the twelve months ended December 31, 2012, which included a $2.4 million credit from an allowance for loan losses release and $1.2 million from the sale of investments and loans. On a core earnings basis Patriot has shown consistent improvement since the beginning of the restructuring, progressing from a net loss of $1.0 million in fourth quarter 2012 to core earnings of $292,000 for the fourth quarter of 2013.

Patriot’s fourth quarter net interest income was $4.4 million, compared to $4.0 million in the fourth quarter a year ago. Despite an increase in average yield, interest income decreased $506,000, or 8.8%, compared to the same quarter last year as a result of a decline in average interest-earning assets of $79.6 million, of which $59 million was loans. Offsetting the decline in interest income, interest expense decreased 49.4%, or $846,000, compared to 2012’s fourth quarter. This was due to a decline of $48.7 million in average interest bearing deposits coupled with a 29 basis-point decrease in their cost, and a reduction in average borrowings of $11.3 million coupled with an average rate reduction of 2.22%. For the twelve-month period ended December 31, 2013 net interest income was $16.8 million compared to $17.8 million for the same period in 2012 due to these same general factors, along with the high cost borrowings not being repaid until late in 2013.

Non-interest income was $610,000 for the fourth quarter in 2013 compared to $612,000 for the same quarter in 2012. For the twelve months ended December 31, 2013 non-interest income declined by $848,000, or 25.9%, due primarily to a $911,000 gain in 2012 on the sale of securities and a $336,000 gain on the sale of loans.

On a core operating basis, non-interest expenses declined 14.4%, or $784,000, to $4.7 million in the fourth quarter of 2013, compared to $5.5 million for the same period a year ago. Included in the current quarter non-interest expenses are $74,000 of restructuring charges associated with management’s turnaround plan and a credit of $414,000 associated with the restructuring of Patriot’s data processing services.

In 2012, the fourth quarter included a restructuring charge of $436,000. Year-to-date, core non-interest expenses decreased 6.0% to $21.6 million compared to $23.0 million for the twelve-month period in 2012.

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Capital

The capital ratios at December 31, 2013 for Patriot National Bancorp, Inc. and Patriot National Bank were:

	Patriot National Bancorp, Inc.			Patriot National Bank			Well Capitalized Requirement
Total Capital (to Risk Weighted Assets)		13.88	%		13.79	%		10.00	%
Tier 1 Capital (to Risk Weighted Assets)		12.63	%		12.54	%		6.00	%
Tier 1 Capital (to Average Assets)		9.27	%		9.22	%		5.00	%

About the Company

Patriot National Bank is headquartered in Stamford, Connecticut and currently has 10 full service branches, 8 in Connecticut and 2 in New York.

Statements in this earnings release that are not historical facts are considered to be forward-looking statements. Such statements include, but are not limited to, statements regarding management beliefs and expectations, based upon information available at the time the statements are made, regarding future plans, objectives and performance. All forward-looking statements are subject to risks and uncertainties, many of which are beyond management’s control and actual results and performance may differ significantly from those contained in forward-looking statements. Bancorp intends any forward-looking statement to be covered by the Litigation Reform Act of 1995 and is including this statement for purposes of said safe harbor provisions. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this news release. Bancorp undertakes no obligation to update any forward-looking statements to reflect events or circumstances that occur after the date as of which such statements are made. A discussion of certain risks and uncertainties that could cause actual results to differ materially from those contained in forward-looking statements is included in Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2012.

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PATRIOT NATIONAL BANCORP, INC.

STATEMENTS OF OPERATIONS

(Unaudited)

Dollars in thousands, except per share data

	Three Months Ended									Twelve Months Ended
	Dec. 31, 2013			Sep. 30, 2013			Dec. 31, 2012			Dec. 31, 2013			Dec. 31, 2012
Interest and dividend income
Interest and fees on loans	$	5,037		$	5,427		$	5,471		$	20,706		$	23,482
Interest on investment securities		156			148			208			778			1,508
Dividends on investment securities		26			29			31			113			128
Other interest income		11			9			26			57			98
Total interest and dividend income		5,230			5,613			5,736			21,654			25,216
Interest expense
Interest on deposits		767			893			1,174			3,822			5,351
Interest on Federal Home Loan Bank borrowings		30			118			389			666			1,459
Interest on subordinated debt		71			71			73			284			300
Interest on other borrowings		—			—			78			82			309
Total interest expense		868			1,082			1,714			4,854			7,419
Net interest income		4,362			4,531			4,022			16,800			17,797
Provision for loan losses		—			1,000			180			970			(2,379	)
Net interest income after provision for loan losses		4,362			3,531			3,842			15,830			20,176
Non-interest income
Mortgage banking activity		(6	)		96			79			255			164
Loan application, inspection and processing fees		41			54			42			249			101
Fees and service charges		185			176			186			744			857
Gain on sale of loans		—			—			57			28			336
(Loss) gain on sale of investment securities		—			—			(6	)		—			910
Gain on sale of branch assets and deposits		—			—			—			51			—
Earnings on cash surrender value of life insurance		126			129			133			523			517
Other income		264			105			121			576			388
Total non-interest income		610			560			612			2,426			3,273
Non-interest expense
Salaries and benefits		1,962			2,158			2,356			9,702			10,593
Occupancy and equipment expense		954			982			1,033			3,911			4,419
Data processing		436			367			398			1,463			1,469
Professional services and other outside services		436			740			622			2,836			2,601
Advertising and promotional expenses		60			39			45			217			86
Loan administration and processing expenses		28			41			48			220			137
Regulatory assessments		239			242			413			1,159			1,724
Insurance expense		64			89			85			315			471
Other real estate operations		121			34			53			212			(58	)
Material and communications		95			94			134			397			504
Restructuring charges and asset disposals		(340	)		54			436			108			939
Prepayment penalty on borrowings		—			1,406			—			4,116			—
Other operating expenses		285			215			276			1,228			1,100
Total non-interest expense		4,340			6,461			5,899			25,884			23,985
Income (loss) before income taxes		632			(2,370	)		(1,445	)		(7,628	)		(536	)
Benefit for income taxes		—			—			—			(21	)		—
Net income (loss)	$	632		$	(2,370	)	$	(1,445	)	$	(7,607	)	$	(536	)
Basic and diluted income (loss) per share	$	0.02		$	(0.06	)	$	(0.04	)	$	(0.20	)	$	(0.01	)

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PATRIOT NATIONAL BANCORP, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

Dollars in thousands

	Dec. 31, 2013			Sep. 30, 2013			Dec. 31, 2012
Assets
Noninterest bearing deposits and cash	$	1,570		$	1,551		$	2,736
Interest bearing deposits		33,296			21,785			67,567
Short-term investments		—			—			711
Total cash and cash equivalents		34,866			23,336			71,014
Securities-available for sale		37,701			38,297			41,719
Other investments		4,450			3,500			3,500
FRB & FHLB stock		5,587			5,661			6,074
Total securities		47,738			47,458			51,293
Gross loans		423,829			436,445			466,337
Allowance for loan losses		(5,681	)		(6,216	)		(6,016	)
Net loans		418,148			430,229			460,321
Accrued interest and dividends receivable		1,566			1,551			1,894
Premises and equipment, net		15,062			6,086			4,288
Cash surrender value of life insurance		22,025			21,899			21,502
Other real estate owned		—			3,845			4,874
Deferred tax asset, net (1)		—			—			—
Other assets		1,525			1,453			2,669
Total Assets	$	540,930		$	535,857		$	617,855
Liabilities and Shareholders’ Equity
Deposits
Noninterest bearing deposits	$	55,358		$	58,110		$	65,176
Interest bearing deposits		374,846			383,013			432,107
		430,204			441,123			497,283
FHLB advances and repurchase agreements		57,000			42,000			57,000
Subordinated debt		8,248			8,248			8,248
Accrued expenses and other liabilities		3,955			3,925			5,756
Total Liabilities		499,407			495,296			568,287
Common stock		388			387			385
Treasury stock		(160	)		(160	)		(160	)
Additional paid-in capital		105,484			105,424			105,356
Accumulated deficit		(63,002	)		(63,634	)		(55,395	)
Accumulated other comprehensive income		(1,187	)		(1,456	)		(618	)
Total Shareholders’ Equity		41,523			40,561			49,568
Total Liabilities and Shareholders’ Equity	$	540,930		$	535,857		$	617,855

(1) Includes the deferred tax asset and a full valuation allowance of $18.3 million, $18.6 million and $15.0 million, respectively.

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PATRIOT NATIONAL BANCORP, INC.

FINANCIAL RATIOS AND OTHER DATA

(Unaudited)

Dollars in thousands, except per share data

	Dec. 31, 2013			Sep. 30, 2013			Dec. 31, 2012
Asset Quality:
Nonaccrual loans	$	12,308		$	20,741		$	23,810
Other real estate owned		—			3,845			4,874
Total nonperforming assets	$	12,308		$	24,586		$	28,684
Nonaccrual loans / loans		2.90	%		4.75	%		5.11	%
Nonperforming assets / assets		2.28	%		4.59	%		4.64	%
Allowance for loan losses	$	5,681		$	6,216		$	6,016
Allowance for loan losses / loans		1.34	%		1.42	%		1.29	%
Allowance / nonaccrual loans		46.15	%		29.97	%		25.27	%
Gross loan charge-offs for the quarter	$	828		$	123		$	230
Gross loan recoveries for the quarter	$	293		$	17		$	10
Net loan charge-offs for the quarter	$	535		$	106		$	220
Capital Data:
Book value per share (l)	$	1.07		$	1.05		$	1.29
Tangible book value per share (2)	$	1.07		$	1.05		$	1.29
Shares outstanding		38,786,680			38,669,206			38,491,819

(1) Book value per share represents shareholders’ equity divided by outstanding shares.

(2) Tangible book value per share represents shareholders’ equity less intangible assets divided by outstanding shares.

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