Patriot National Bancorp Inc. in Stamford, Conn., said Thursday that its second-quarter profit fell 26% from a year earlier, to $396,000, as declining property values and weak home sales in its market area forced it boost to its loan-loss provision.
Earnings per share fell 27%, to 8 cents.
The $904 million-asset company had no provision through the first six months of 2007, but so far this year it has provisioned more than $1.5 million.
Though its nonaccruing loans decreased in the quarter from three months earlier and it has never charged off a real estate loan in its 14-year history, the company said it opted to increase the provision "because it would be less than prudent to believe asset values will not decline further."
Patriot said that its loans increased 13% since the end of 2007, to $763 million, but that it expects volume to slow in the second half. It said deposits increased by 8% in the same period, to $723 million, though they declined in the second quarter as the company allowed high-rate certificates of deposit to run off in an effort to improve the net interest margin.
The strategy worked. Patriot's margin improved by 9 basis points from a year earlier and 34 basis from the start of the quarter, to 3.37%.
