ex_114565.htm

Patriot National Bancorp, Inc. and Prime Bank

Pro Forma Condensed Combined Statement of Income (Unaudited)

For the twelve months ended December 31, 2017

(In thousands)

EX-99.1 2 ex_114565.htm EXHIBIT 99.1 ex_114565.htm

Exhibit 99.1

Patriot National Bancorp, Inc.

Unaudited Pro Forma Condensed Combined Financial Statements

Patriot National Bancorp, Inc. (the “Company”) (PNBK), the parent company of Patriot Bank, N.A. (“Patriot”), acquired Prime Bank, headquartered in Orange, CT (“Prime”) on May 10, 2018.

The following unaudited pro forma condensed combined financial statements are based on the Company’s historical consolidated financial statements and Prime’s historical financial statements adjusted to give effect to the Company’s acquisition of Prime. The unaudited pro forma condensed combined balance sheet was prepared as if the merger occurred on March 31, 2018 and includes pro forma adjustments that are directly attributable to the merger and are factually supportable. The unaudited pro forma condensed combined statements of income for the three months ended March 31, 2018 and the twelve months ended December 31, 2017 were prepared as if the merger occurred on January 1, 2017 and include pro forma adjustments that are directly attributable to the merger, are factually supportable, and are expected to have a continuing impact on the combined results.

These unaudited pro forma condensed combined financial statements are provided for informational purposes only and do not claim to represent the actual balance sheet or statements of income had the merger occurred on March 31, 2018 or January 1, 2017. Neither is it expected that the pro forma condensed combined financial statements represent the Company’s future financial statements. The pro forma condensed combined financial statements do not include adjustments for expected future synergies resulting from the merger or expected future costs of combining the operations of Patriot with Prime.

The assumptions and estimates underlying the unaudited pro forma adjustments are described in the accompanying notes. The unaudited pro forma condensed combined financial statements should be read together with the notes. The unaudited pro forma condensed combined financial statements should be read together with the Company’s historical financial statements for the year ended December 31, 2017 on the Company’s Annual Report on Form 10-K and for the quarter ended March 31, 2018 on the Company’s Quarterly Report on Form 10-Q.

Patriot National Bancorp, Inc. and Prime Bank

Pro forma Condensed Combined Balance Sheet (Unaudited)

As of March 31, 2018

(In thousands)

	Patriot National			Prime			Pro Forma				Pro Forma
	Bancorp, Inc.			Bank			Adjustments			REF	Combined
Assets

Cash and cash equivalents	$	61,992		$	487		$	(5,888	)	A	$	56,591

Investments		29,243			36,125			211		B		65,579

Loans receivable (net of allowance for loan losses: Patriot $6,485, Prime $383)		718,070			24,267			(1,243	)	C		741,094
Accrued interest and dividends receivable		3,505			385							3,890
Premises and equipment, net		35,638			6							35,644
Other real estate owned					929							929
Goodwill								444		D		444
Intangible asset								324		E		324
Other assets (including FRB and FHLB stock, at cost)		21,969			2,494							24,463
Total Assets	$	870,417		$	64,693		$	(6,152	)		$	928,958


Liabilities

Deposits:
Non interest bearing deposits	$	71,736		$	3,598						$	75,334
Interest bearing deposits		583,562			42,599							626,161
Total deposits		655,298			46,197			-				701,495

Borrowings		139,810			9,925							149,735
Note payable		1,532										1,532
Accrued expenses and other liabilities		6,172			111			2,308		F,G		8,591
Total Liabilities		802,812			56,233			2,308				861,353


Shareholders' equity

Common stock		40			1,163			(1,163	)	H		40
Additional paid-in capital		106,928			4,029			(4,029	)	H		106,928
Accumulated deficit/retained earnings		(37,805	)		4,908			(4,908	)	H		(37,805	)
Less: Treasury stock, at cost		(1,179	)									(1,179	)
Accumulated other comprehensive loss		(379	)		(1,640	)		1,640		H		(379	)
Total Equity Capital		67,605			8,460			(8,460	)			67,605
Total Liabilities and Equity Capital	$	870,417		$	64,693		$	(6,152	)		$	928,958

See accompanying notes to the unaudited pro forma condensed combined financial statements

Patriot National Bancorp, Inc. and Prime Bank

Pro Forma Condensed Combined Statement of Income (Unaudited)

For the three months ended March 31, 2018

(In thousands)

	Patriot National		Prime			Pro Forma				Pro Forma
	Bancorp, Inc.		Bank			Adjustments			REF	Combined

Interest and Dividend Income	$	9,312	$	631						$	9,943

Interest Expense		2,249		170			-				2,419

Net interest income		7,063		461			-				7,524

Provision for loan losses		185		-							185

Net interest income after provision for loan losses		6,878		461			-				7,339

Non-interest income		322		7			-				329

Non-interest expense
Salaries and benefits		2,769		231							3,000
Occupancy and equipment expense		741		31							772
Amortization Expense - Core Deposit Intangible							16		I		16
Other operating expense		2,281		39			(136	)	J		2,184
Total non-interest expense		5,791		301			(120	)			5,972

Income (loss) before income taxes		1,409		167			120				1,696

Provision for income taxes		344		201			32		K		577

Net income (loss)	$	1,065	$	(34	)	$	88			$	1,119

Basic earnings per share	$	0.27								$	0.28
Diluted earnings per share	$	0.27								$	0.28

See accompanying notes to the unaudited pro forma condensed combined financial statements

	Patriot National			Prime			Pro Forma				Pro Forma
	Bancorp, Inc.			Bank			Adjustments			REF	Combined

Interest and Dividend Income	$	32,849		$	2,661						$	35,510

Interest Expense		6,956			694							7,650

Net interest income		25,893			1,967			-				27,860

(Credit) Provision for loan losses		(857	)		416							(441	)

Net interest income after (credit) provision for loan losses		26,750			1,551			-				28,301

Non-interest income		1,444			45			-				1,489

Non-interest expense
Salaries and benefits		10,915			845							11,760
Occupancy and equipment expense		3,133			129							3,262
Amortization Expense - Core Deposit Intangible								65		I		65
Other operating expense		7,124			290			(385	)	J		7,029
Total non-interest expense		21,172			1,264			(320	)			22,116

Income (loss) before income taxes		7,022			332			320				7,674

Provision (benefit) for income taxes		2,875			(116	)		125		K		2,884

Net income (loss)	$	4,147		$	448		$	195			$	4,790

Basic earnings per share	$	1.06									$	1.22
Diluted earnings per share	$	1.06									$	1.22

See accompanying notes to the unaudited pro forma condensed combined financial statements

Note 1. Basis of presentation

The unaudited pro forma condensed combined financial statements are based on the Company’s historical consolidated financial statements and Prime’s historical financial statements adjusted to give effect to the Company’s acquisition of Prime. The unaudited pro forma condensed combined balance sheet was prepared as if the merger occurred on March 31, 2018 and includes pro forma adjustments that are directly attributable to the merger and are factually supportable. The unaudited pro forma condensed combined statements of income for the three months ended March 31, 2018 and the twelve months ended December 31, 2017 were prepared as if the merger occurred on January 1, 2017 and include pro forma adjustments that are directly attributable to the merger, are factually supportable, and are expected to have a continuing impact on the combined results.

The acquisition was accounted for under the acquisition method of accounting in accordance with ASC 805, Business Combinations. Under the acquisition method, the total estimated purchase price, or consideration transferred, is measured at the acquisition closing date and the assets and liabilities of Prime are measured at their fair market value, with any difference identified as goodwill. These pro-forma statements use estimates of the fair value of the assets and liabilities of Prime which will subsequently be adjusted to actual fair value upon completion of further fair value calculations.

Note 2. Purchase price and financing

The unaudited pro forma condensed combined financial statements reflect the initial cash consideration paid of $5.9 million. This amount may be adjusted in the future to reflect post-closing adjustments relating to the calculation of tangible book value at close, including a potential adjustment associated with the disposition of certain problem loans.

The purchase of Prime will be financed with available cash.

Note 3.

Represents the cash payment of the purchase of Prime.

Represents an increase to the fair value of the securities included in the purchase.

Represents an estimate of the reduction of value of the loan portfolio.

Goodwill included in the purchase of Prime. Calculated as purchase price less Prime adjusted tangible book value (“TBV”) less core deposit intangible.

Intangible asset related to core deposits of Prime. Estimated based on Prime’s April 30, 2018 deposit base.

Increase liabilities for $1,065 thousand for various items to be paid in relation to the merger agreement. These items are included in the adjustments to Prime’s TBV.

Increase liabilities for $1,243 thousand for estimate of contingent liability related to the cure of deficient loans.

Reflects the elimination of Prime’s equity capital.

Amortization of core deposit intangible over 5 year period.

Reduction of other operating expense for non-recurring transactions costs incurred in Q1 2018 and in 2017.

Tax impact of adjustments I. and J. above at 27% effective tax rate for 2018 and 39% effective tax rate for 2017.