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x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
2023
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o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
_______
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Connecticut | 06-1559137 | |||||||
(State or other jurisdiction of
| (I.R.S. Employer
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900 Bedford Street, Stamford, Connecticut | 06901 | |||||||
(Address of principal executive offices) | (Zip Code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Common Stock | PNBK | NASDAQ Global Market |
Large accelerated filer |
| Accelerated filer |
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Non-accelerated filer |
| Smaller reporting company |
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Emerging growth company |
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PART I- FINANCIAL INFORMATION
March 31, December 31, (In thousands, except share data) 2022 2021 Assets Cash and due from banks: Noninterest bearing deposits and cash Interest bearing deposits Total cash and cash equivalents Investment securities: Available-for-sale securities, at fair value Other investments, at cost Total investment securities Federal Reserve Bank stock, at cost Federal Home Loan Bank stock, at cost Loans receivable (net of allowance for loan losses: 2022: $9,737 and 2021: $9,905) Loans held for sale Accrued interest and dividends receivable Premises and equipment, net Deferred tax asset Goodwill Core deposit intangible, net Other assets Total assets Liabilities Deposits: Noninterest bearing deposits Interest bearing deposits Total deposits Federal Home Loan Bank and correspondent bank borrowings Senior notes, net Subordinated debt, net Junior subordinated debt owed to unconsolidated trust, net Note payable Advances from borrowers for taxes and insurance Accrued expenses and other liabilities Total liabilities Commitments and Contingencies Shareholders' equity Preferred stock, no par value; 1,000,000 shares authorized, no shares issued and outstanding Common stock, $.01 par value, 100,000,000 shares authorized; As of March 31, 2022: 4,030,233 shares issued; 3,956,492 shares outstanding; As of December 31, 2021: 4,030,233 shares issued; 3,956,492 shares outstanding. Accumulated deficit Accumulated other comprehensive loss Total shareholders' equity Total liabilities and shareholders' equity (Unaudited)March 31, 2023 December 31, 2022 (In thousands, except share data) Unaudited Assets Cash and due from banks: Noninterest bearing deposits and cash $ 1,828 $ 5,182 Interest bearing deposits 58,424 33,311 Total cash and cash equivalents 60,252 38,493 Investment securities: Available-for-sale securities, at fair value 91,736 84,520 Other investments, at cost 4,450 4,450 Total investment securities 96,186 88,970 Federal Reserve Bank stock, at cost 2,673 2,627 Federal Home Loan Bank stock, at cost 6,374 3,874 Loans receivable (net of allowance for credit losses: 2023: $17,801 and 2022: $10,310) 860,968 838,006 Loans held for sale 6,882 5,211 Accrued interest and dividends receivable 7,308 7,267 Premises and equipment, net 30,467 30,641 Deferred tax asset 17,392 15,527 Goodwill 1,107 1,107 Core deposit intangible, net 238 249 Other assets 10,165 11,387 Total assets $ 1,100,012 $ 1,043,359 Liabilities Deposits: Noninterest bearing deposits $ 152,773 $ 269,636 Interest bearing deposits 703,695 590,810 Total deposits 856,468 860,446 Federal Home Loan Bank and correspondent bank borrowings 150,000 85,000 Senior notes, net 11,619 11,640 Subordinated debt, net 9,847 9,840 Junior subordinated debt owed to unconsolidated trust, net 8,130 8,128 Note payable 533 585 Advances from borrowers for taxes and insurance 2,824 886 Accrued expenses and other liabilities 5,982 7,251 Total liabilities 1,045,403 983,776 Commitments and Contingencies Shareholders' equity Preferred stock, no par value; 1,000,000 shares authorized, no shares issued and outstanding — — Common stock, $.01 par value, 100,000,000 shares authorized; As of March 31, 2023: 4,038,927 shares issued; 3,965,186 shares outstanding; As of December 31, 2022: 4,038,927 shares issued; 3,965,186 shares outstanding. 106,588 106,565 Accumulated deficit (37,581) (31,337) Accumulated other comprehensive loss (14,398) (15,645) Total shareholders' equity 54,609 59,583 Total liabilities and shareholders' equity $ 1,100,012 $ 1,043,359 $ 9,026 $ 3,264 35,290 43,781 44,316 47,045 83,260 94,341 4,450 4,450 87,710 98,791 2,869 2,843 4,184 4,184 763,602 729,583 5,820 3,129 5,596 5,822 31,269 31,500 13,755 12,146 1,107 1,107 284 296 14,992 12,035 $ 975,504 $ 948,481 $ 237,825 $ 226,713 542,024 521,849 779,849 748,562 90,000 90,000 12,000 12,000 9,818 9,811 8,121 8,119 740 791 2,574 1,101 9,719 10,753 912,821 881,137 0 0 106,500 106,479 (36,698 ) (37,498 ) (7,119 ) (1,637 ) 62,683 67,344 $ 975,504 $ 948,481
See Accompanying Notes to Consolidated Financial Statements.
PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIES
Three Months Ended March 31, | Three Months Ended March 31, | ||||||||||||||||||||||||||||||
(In thousands, except per share amounts) | 2022 | 2021 | (In thousands, except per share amounts) | 2023 | 2022 | ||||||||||||||||||||||||||
Interest and Dividend Income | Interest and Dividend Income | ||||||||||||||||||||||||||||||
Interest and fees on loans | $ | 7,664 | $ | 7,743 | Interest and fees on loans | $ | 12,550 | $ | 7,664 | ||||||||||||||||||||||
Interest on investment securities | 570 | 310 | Interest on investment securities | 680 | 570 | ||||||||||||||||||||||||||
Dividends on investment securities | 65 | 34 | Dividends on investment securities | 135 | 65 | ||||||||||||||||||||||||||
Other interest income | 21 | 24 | Other interest income | 281 | 21 | ||||||||||||||||||||||||||
Total interest and dividend income | 8,320 | 8,111 | Total interest and dividend income | 13,646 | 8,320 | ||||||||||||||||||||||||||
Interest Expense | Interest Expense | ||||||||||||||||||||||||||||||
Interest on deposits | 409 | 785 | Interest on deposits | 3,579 | 409 | ||||||||||||||||||||||||||
Interest on Federal Home Loan Bank borrowings | 737 | 733 | Interest on Federal Home Loan Bank borrowings | 1,373 | 737 | ||||||||||||||||||||||||||
Interest on senior debt | 210 | 229 | Interest on senior debt | 290 | 210 | ||||||||||||||||||||||||||
Interest on subordinated debt | 234 | 234 | Interest on subordinated debt | 326 | 234 | ||||||||||||||||||||||||||
Interest on note payable and other | 4 | 4 | Interest on note payable and other | 65 | 4 | ||||||||||||||||||||||||||
Total interest expense | 1,594 | 1,985 | Total interest expense | 5,633 | 1,594 | ||||||||||||||||||||||||||
Net interest income | 6,726 | 6,126 | Net interest income | 8,013 | 6,726 | ||||||||||||||||||||||||||
Provision for loan losses | 0 | 0 | |||||||||||||||||||||||||||||
Provision for credit losses | Provision for credit losses | 1,336 | — | ||||||||||||||||||||||||||||
Net interest income after provision for loan losses | 6,726 | 6,126 | |||||||||||||||||||||||||||||
Net interest income after provision for credit losses | Net interest income after provision for credit losses | 6,677 | 6,726 | ||||||||||||||||||||||||||||
Non-interest Income | Non-interest Income | ||||||||||||||||||||||||||||||
Loan application, inspection and processing fees | 87 | 63 | Loan application, inspection and processing fees | 123 | 87 | ||||||||||||||||||||||||||
Deposit fees and service charges | 64 | 65 | Deposit fees and service charges | 68 | 64 | ||||||||||||||||||||||||||
Gains on sales of loans | 208 | 94 | Gains on sales of loans | 81 | 208 | ||||||||||||||||||||||||||
Rental income | 192 | 130 | Rental income | 119 | 192 | ||||||||||||||||||||||||||
Gain on sale of investment securities | Gain on sale of investment securities | 24 | — | ||||||||||||||||||||||||||||
Other income | 263 | 90 | Other income | 420 | 263 | ||||||||||||||||||||||||||
Total non-interest income | 814 | 442 | Total non-interest income | 835 | 814 | ||||||||||||||||||||||||||
Non-interest Expense | Non-interest Expense | ||||||||||||||||||||||||||||||
Salaries and benefits | 3,346 | 2,216 | Salaries and benefits | 4,267 | 3,346 | ||||||||||||||||||||||||||
Occupancy and equipment expense | 836 | 920 | Occupancy and equipment expense | 884 | 836 | ||||||||||||||||||||||||||
Data processing expense | 330 | 350 | Data processing expense | 294 | 330 | ||||||||||||||||||||||||||
Professional and other outside services | 789 | 852 | Professional and other outside services | 914 | 789 | ||||||||||||||||||||||||||
Project expenses, net | 52 | 10 | Project expenses, net | 27 | 52 | ||||||||||||||||||||||||||
Advertising and promotional expense | 68 | 62 | Advertising and promotional expense | 85 | 68 | ||||||||||||||||||||||||||
Loan administration and processing expense | 105 | 24 | Loan administration and processing expense | 51 | 105 | ||||||||||||||||||||||||||
Regulatory assessments | 174 | 228 | Regulatory assessments | 182 | 174 | ||||||||||||||||||||||||||
Insurance expense, net | 77 | 60 | Insurance expense, net | 77 | 77 | ||||||||||||||||||||||||||
Communications, stationery and supplies | 135 | 145 | |||||||||||||||||||||||||||||
Communications, stationary and supplies | Communications, stationary and supplies | 191 | 135 | ||||||||||||||||||||||||||||
Other operating expense | 517 | 528 | Other operating expense | 612 | 517 | ||||||||||||||||||||||||||
Total non-interest expense | 6,429 | 5,395 | Total non-interest expense | 7,584 | 6,429 | ||||||||||||||||||||||||||
Income before income taxes | 1,111 | 1,173 | |||||||||||||||||||||||||||||
(Loss) income before income taxes | (Loss) income before income taxes | (72) | 1,111 | ||||||||||||||||||||||||||||
Provision for income taxes | 311 | 319 | |||||||||||||||||||||||||||||
(Benefit) provision for income taxes | (Benefit) provision for income taxes | (19) | 311 | ||||||||||||||||||||||||||||
Net income | $ | 800 | $ | 854 | |||||||||||||||||||||||||||
Net (loss) income | Net (loss) income | $ | (53) | $ | 800 | ||||||||||||||||||||||||||
Basic earnings per share | $ | 0.20 | $ | 0.22 | |||||||||||||||||||||||||||
Diluted earnings per share | $ | 0.20 | $ | 0.22 | |||||||||||||||||||||||||||
Basic (loss) earnings per share | Basic (loss) earnings per share | $ | (0.01) | $ | 0.20 | ||||||||||||||||||||||||||
Diluted (loss) earnings per share | Diluted (loss) earnings per share | $ | (0.01) | $ | 0.20 |
(In thousands) | Three Months Ended March 31, | |||||||
2022 | 2021 | |||||||
Net income | $ | 800 | $ | 854 | ||||
Other comprehensive loss | ||||||||
Unrealized holding loss on securities | (7,389 | ) | (229 | ) | ||||
Income tax effect | 1,907 | 59 | ||||||
Total other comprehensive loss | (5,482 | ) | (170 | ) | ||||
Comprehensive (loss) income | $ | (4,682 | ) | $ | 684 |
(In thousands) | Three Months Ended March 31, | ||||||||||||||||||||||
2023 | 2022 | ||||||||||||||||||||||
Net (loss) income | $ | (53) | $ | 800 | |||||||||||||||||||
Other comprehensive income (loss) | |||||||||||||||||||||||
Unrealized holding gain (loss) on securities | 1,704 | (7,389) | |||||||||||||||||||||
Income tax effect | (439) | 1,907 | |||||||||||||||||||||
Reclassification for realized gain on sale of investment securities | (24) | — | |||||||||||||||||||||
Income tax effect | 6 | — | |||||||||||||||||||||
Total securities available-for-sale | 1,247 | (5,482) | |||||||||||||||||||||
Comprehensive income (loss) | $ | 1,194 | $ | (4,682) |
Three Months Ended March 31, 2022 | ||||||||||||||||||||
(In thousands, except shares) | Number of Shares | Common | Accumulated | Accumulated Other | Total | |||||||||||||||
Balance at December 31, 2021 | 3,956,492 | $ | 106,479 | $ | (37,498 | ) | $ | (1,637 | ) | $ | 67,344 | |||||||||
Comprehensive income (loss): | ||||||||||||||||||||
Net income | - | 0 | 800 | 0 | 800 | |||||||||||||||
Unrealized holding loss on available-for-sale securities, net of tax | - | 0 | 0 | (5,482 | ) | (5,482 | ) | |||||||||||||
Total comprehensive income (loss) | - | 0 | 800 | (5,482 | ) | (4,682 | ) | |||||||||||||
Share-based compensation expense | - | 21 | 0 | 0 | 21 | |||||||||||||||
Balance at March 31, 2022 | 3,956,492 | $ | 106,500 | $ | (36,698 | ) | $ | (7,119 | ) | $ | 62,683 |
Three Months Ended March 31, 2023 | |||||||||||||||||||||||||||||
(In thousands, except shares) | Number of Shares | Common Stock | Accumulated Deficit | Accumulated Other Comprehensive (Loss) Income | Total | ||||||||||||||||||||||||
Balance at January 1, 2023 | 3,965,186 | $ | 106,565 | $ | (31,337) | $ | (15,645) | $ | 59,583 | ||||||||||||||||||||
Transition adjustment related to adoption of ASC 326, net of tax | — | — | (6,191) | — | (6,191) | ||||||||||||||||||||||||
Comprehensive (loss) income: | |||||||||||||||||||||||||||||
Net (loss) income | — | — | (53) | — | (53) | ||||||||||||||||||||||||
Unrealized holding gain on available-for-sale securities, net of tax | — | — | — | 1,247 | 1,247 | ||||||||||||||||||||||||
Total comprehensive (loss) income | — | — | (53) | 1,247 | 1,194 | ||||||||||||||||||||||||
Share-based compensation expense | — | 23 | — | — | 23 | ||||||||||||||||||||||||
Balance at March 31, 2023 | 3,965,186 | $ | 106,588 | $ | (37,581) | $ | (14,398) | $ | 54,609 |
Three Months Ended March 31, 2021 | ||||||||||||||||||||
(In thousands, except shares) | Number of Shares | Common | Accumulated | Accumulated Other | Total | |||||||||||||||
Balance at December 31, 2020 | 3,943,572 | $ | 106,329 | $ | (42,592 | ) | $ | (518 | ) | $ | 63,219 | |||||||||
Comprehensive income (loss): | ||||||||||||||||||||
Net income | - | 0 | 854 | 0 | 854 | |||||||||||||||
Unrealized holding loss on available-for-sale securities, net of tax | - | 0 | 0 | (170 | ) | (170 | ) | |||||||||||||
Total comprehensive income (loss) | - | 0 | 854 | (170 | ) | 684 | ||||||||||||||
Share-based compensation expense | - | 34 | 0 | 0 | 34 | |||||||||||||||
Vesting of restricted stock | 700 | 0 | 0 | 0 | 0 | |||||||||||||||
Balance at March 31, 2021 | 3,944,272 | $ | 106,363 | $ | (41,738 | ) | $ | (688 | ) | $ | 63,937 |
Three Months Ended March 31, 2022 | |||||||||||||||||||||||||||||
(In thousands, except shares) | Number of Shares | Common Stock | Accumulated Deficit | Accumulated Other Comprehensive (Loss) Income | Total | ||||||||||||||||||||||||
Balance at January 1, 2022 | 3,956,492 | $ | 106,479 | $ | (37,498) | $ | (1,637) | $ | 67,344 | ||||||||||||||||||||
Comprehensive income (loss): | |||||||||||||||||||||||||||||
Net income | — | — | 800 | — | 800 | ||||||||||||||||||||||||
Unrealized holding loss on available-for-sale securities, net of tax | — | — | — | (5,482) | (5,482) | ||||||||||||||||||||||||
Total comprehensive income (loss) | — | — | 800 | (5,482) | (4,682) | ||||||||||||||||||||||||
Share-based compensation expense | — | 21 | — | — | 21 | ||||||||||||||||||||||||
Vesting of restricted stock | — | — | — | — | — | ||||||||||||||||||||||||
Balance at March 31, 2022 | 3,956,492 | $ | 106,500 | $ | (36,698) | $ | (7,119) | $ | 62,683 |
(In thousands) | Three Months Ended March 31, | (In thousands) | Three Months Ended March 31, | ||||||||||||||||
2022 | 2021 | 2023 | 2022 | ||||||||||||||||
Cash Flows from Operating Activities: | Cash Flows from Operating Activities: | ||||||||||||||||||
Net income | $ | 800 | $ | 854 | |||||||||||||||
Adjustments to reconcile net income to net cash used in operating activities: | |||||||||||||||||||
Net (loss) income | Net (loss) income | $ | (53) | $ | 800 | ||||||||||||||
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: | Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: | ||||||||||||||||||
Amortization and accretion of investment premiums and discounts, net | (17 | ) | 89 | Amortization and accretion of investment premiums and discounts, net | (23) | (17) | |||||||||||||
Amortization and accretion of purchase loan premiums and discounts, net | 639 | 285 | Amortization and accretion of purchase loan premiums and discounts, net | 698 | 639 | ||||||||||||||
Amortization of debt issuance costs | 9 | 28 | Amortization of debt issuance costs | 44 | 9 | ||||||||||||||
Amortization of core deposit intangible | 12 | 12 | Amortization of core deposit intangible | 11 | 12 | ||||||||||||||
Amortization of servicing assets of sold SBA loans | 10 | 6 | Amortization of servicing assets of sold SBA loans | 27 | 10 | ||||||||||||||
Provision for credit losses | Provision for credit losses | 1,336 | — | ||||||||||||||||
Depreciation and amortization | 323 | 384 | Depreciation and amortization | 275 | 323 | ||||||||||||||
Gain on sales of available-for-sale securities | Gain on sales of available-for-sale securities | (24) | — | ||||||||||||||||
Share-based compensation | 21 | 34 | Share-based compensation | 23 | 21 | ||||||||||||||
Decrease in deferred income taxes | 298 | 281 | |||||||||||||||||
(Increase) decrease in deferred income taxes, net | (Increase) decrease in deferred income taxes, net | (23) | 298 | ||||||||||||||||
Originations of SBA loans held for sale | (5,057 | ) | (2,805 | ) | Originations of SBA loans held for sale | (3,218) | (5,057) | ||||||||||||
Proceeds from sale of SBA loans held for sale | 2,574 | 1,006 | Proceeds from sale of SBA loans held for sale | 1,628 | 2,574 | ||||||||||||||
Gains on sale of SBA loans held for sale, net | (208 | ) | (94 | ) | Gains on sale of SBA loans held for sale, net | (81) | (208) | ||||||||||||
Net gain on sale and write-down of other real estate owned | 0 | (2 | ) | ||||||||||||||||
Changes in assets and liabilities: | Changes in assets and liabilities: | ||||||||||||||||||
Decrease in accrued interest and dividends receivable | 226 | 350 | |||||||||||||||||
Increase in other assets | (2,520 | ) | (1,025 | ) | |||||||||||||||
(Increase) decrease in accrued interest and dividends receivable | (Increase) decrease in accrued interest and dividends receivable | (41) | 226 | ||||||||||||||||
Decrease (increase) in other assets | Decrease (increase) in other assets | 1,003 | (2,520) | ||||||||||||||||
Decrease in accrued expenses and other liabilities | (1,430 | ) | (237 | ) | Decrease in accrued expenses and other liabilities | (1,794) | (1,430) | ||||||||||||
Net cash used in operating activities | (4,320 | ) | (834 | ) | Net cash used in operating activities | (212) | (4,320) | ||||||||||||
Cash Flows from Investing Activities: | Cash Flows from Investing Activities: | ||||||||||||||||||
Proceeds from maturity or sales on available-for-sale securities | 2,500 | 1,886 | Proceeds from maturity or sales on available-for-sale securities | 1,780 | 2,500 | ||||||||||||||
Principal repayments on available-for-sale securities | 2,209 | 3,066 | Principal repayments on available-for-sale securities | 1,074 | 2,209 | ||||||||||||||
Purchases of available-for-sale securities | (1,000 | ) | (13,901 | ) | Purchases of available-for-sale securities | (8,343) | (1,000) | ||||||||||||
(Purchases) redemptions of Federal Reserve Bank stock | (26 | ) | 39 | ||||||||||||||||
Decrease in originated loans receivable, net | 4,312 | 69,366 | |||||||||||||||||
Redemptions (purchases) of Federal Reserve Bank stock | Redemptions (purchases) of Federal Reserve Bank stock | (46) | (26) | ||||||||||||||||
Purchases of Federal Home Loan Bank stock | Purchases of Federal Home Loan Bank stock | (2,500) | — | ||||||||||||||||
Origination of loans receivable | Origination of loans receivable | (48,490) | (42,570) | ||||||||||||||||
Purchases of loans receivable | (39,022 | ) | (16,041 | ) | Purchases of loans receivable | (10,623) | (39,022) | ||||||||||||
Payments received on loans receivable | Payments received on loans receivable | 26,309 | 46,882 | ||||||||||||||||
Purchases of premises and equipment | (91 | ) | (178 | ) | Purchases of premises and equipment | (98) | (91) | ||||||||||||
Proceeds from sale of other real estate owned | 0 | 692 | Proceeds from sale of other real estate owned | — | — | ||||||||||||||
Net cash (used in) provided by investing activities | (31,118 | ) | 44,929 | ||||||||||||||||
Net cash used in investing activities | Net cash used in investing activities | (40,937) | (31,118) | ||||||||||||||||
Cash Flows from Financing Activities: | Cash Flows from Financing Activities: | ||||||||||||||||||
Increase in deposits | 31,287 | 7,222 | |||||||||||||||||
(Decrease) increase in deposits, net | (Decrease) increase in deposits, net | (3,978) | 31,287 | ||||||||||||||||
Increase in FHLB borrowings | Increase in FHLB borrowings | 65,000 | — | ||||||||||||||||
Principal repayments of note payable | (51 | ) | (51 | ) | Principal repayments of note payable | (52) | (51) | ||||||||||||
Decrease (increase) in advances from borrowers for taxes and insurance | 1,473 | (1,628 | ) | ||||||||||||||||
Decrease in advances from borrowers for taxes and insurance | Decrease in advances from borrowers for taxes and insurance | 1,938 | 1,473 | ||||||||||||||||
Net cash provided by financing activities | 32,709 | 5,543 | Net cash provided by financing activities | 62,908 | 32,709 | ||||||||||||||
Net (decrease) increase in cash and cash equivalents | (2,729 | ) | 49,638 | ||||||||||||||||
Net increase (decrease) in cash and cash equivalents | Net increase (decrease) in cash and cash equivalents | 21,759 | (2,729) | ||||||||||||||||
Cash and cash equivalents at beginning of period | 47,045 | 34,636 | Cash and cash equivalents at beginning of period | 38,493 | 47,045 | ||||||||||||||
Cash and cash equivalents at end of period | $ | 44,316 | $ | 84,274 | Cash and cash equivalents at end of period | $ | 60,252 | $ | 44,316 |
PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIES
(In thousands) | Three Months Ended March 31, | |||||||
2022 | 2021 | |||||||
Supplemental Disclosures of Cash Flow Information: | ||||||||
Cash paid for interest | $ | 1,247 | $ | 1,836 | ||||
Cash paid for income taxes | $ | 0 | $ | 47 | ||||
Non-cash transactions: | ||||||||
Increase in premises and equipment | $ | 0 | $ | (130 | ) | |||
Reclass of premises and equipment to implementation cost | $ | 0 | $ | 52 | ||||
Increase in accrued expense and other liabilities | $ | 0 | $ | 78 | ||||
Transfers of SBA loans held for sale to loans receivable | $ | 0 | $ | 281 | ||||
Capitalized servicing assets | $ | 52 | $ | 17 | ||||
Operating lease right-of-use assets/ lease liabilites | $ | 61 | $ | 0 | ||||
(Decrease) increase in interest rate swaps | $ | (405 | ) | $ | 396 | |||
Capital raise deferred costs | $ | 863 | $ | 0 |
(In thousands) | Three Months Ended March 31, | ||||||||||
2023 | 2022 | ||||||||||
Supplemental Disclosures of Cash Flow Information: | |||||||||||
Cash paid for interest | $ | 5,438 | $ | 1,247 | |||||||
Cash refund from income taxes | $ | (2) | $ | — | |||||||
Non-cash transactions: | |||||||||||
Capitalized servicing assets | $ | 34 | $ | 52 | |||||||
Transfers of loans held for sale to loans receivable | $ | — | $ | — | |||||||
Operating lease right-of-use assets | $ | — | $ | 61 | |||||||
Decrease in interest rate swaps | $ | (97) | $ | (405) | |||||||
Capital raise deferred costs | $ | — | $ | 863 | |||||||
Expected credit loss for loans - ASC 362 adoption | $ | 7,372 | $ | — | |||||||
Expected credit loss for unfunded commitments - ASC 362 adoption | $ | 1,094 | $ | — | |||||||
Deferred tax assets - ASC 362 adoption | $ | (2,275) | $ | — | |||||||
PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIES
2022.10-K10-K for the year ended December 31, 2021.2021 2022 presented herein has been derived from the audited consolidated financial statements of the Company at that date, but does not include all of the information and footnotes required by US GAAP for complete financial statements.2022 2023 are not necessarily indicative of the results of operations that may be expected for the remainder of 2022.2023.
2022. in 2023 2016-13 opening balance of accumulated deficit of $6.2 million, net of $2.3 million tax at the date of adoption. 2020-02 The Company adopted ASC 326 effective January 1, 2023. 2020-03 2022-02 (In thousands) Amortized Gross Gross Fair March 31, 2022: U. S. Government agency and mortgage-backed securities Corporate bonds Subordinated notes SBA loan pools Municipal bonds December 31, 2021: U. S. Government agency and mortgage-backed securities Corporate bonds Subordinated notes SBA loan pools Municipal bonds (In thousands) Less than 12 Months 12 Months or More Total Fair Unrealized Fair Unrealized Fair Unrealized March 31, 2022: U. S. Government agency and mortgage-backed securities Corporate bonds Subordinated notes SBA loan pools Municipal bonds December 31, 2021: U. S. Government agency and mortgage-backed securities Corporate bonds Subordinated notes SBA loan pools Municipal bonds 2022:20212022 Annual Report on Form 10-K10-K for a list of all policies in effect as of December 31, 2021.IssuedAdopted Accounting Pronouncements, the Company adopted Accounting StandardsNew Update (“ASU”) 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“CECL”) Accounting Standards AdoptedStandard Codification (“ASC”) 326 effective January 1, 2023.2022There were no applicable material accounting pronouncements adopted byan unrealized loss position, the Company since December 31, 2021.Issued But Not Yet Adopted2016-13willare required to estimate credit losses over the entire contractual term of a financial instrument from the date of initial recognition of the instrument. The ASU also changes the existing impairment model for available-for-sale debt securities. In cases where there is neither the intent nor a more-likely-than-notmore-likely-than-not requirement to sell the debt security, an entity willshould record credit losses as an allowance rather than a direct write-down of the amortized cost basis. Additionally, ASU 2016-132016-13 notes that credit losses related to available-for-sale debt securities and purchased credit impaired loans should be recorded through an allowance for credit losses. ASU 2016-132016-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, with early adoption permitted for fiscal years beginning after December 15, 2018. In November 2019, the FASB issued ASU 2019-10,2019-10, which amends the effective date of ASC 326 for smaller reporting companies, as defined by the SEC, and other non-SEC reporting entities, and delays the effective date to fiscal years beginning after December 31, 2022, including interim periods within those fiscal periods. As the Company is a small reporting company, the delay will bewas applicable to the Company. ManagementThe Company adopted ASC 326 effective January 1, 2023, the Company recorded an increase to the allowance for credit losses of $7.4 million and an increase to reserve for unfunded commitments of $1.1 million (which is currently evaluatingincluded in other liabilities on the impact thatCompany’s consolidated balance sheets), and a cumulative-effect adjustment to increase the standard will have on its consolidated financial statements.2020-022016-02, 2016-02, Leases (Topic 842)842).” This ASU adds and amends SEC paragraphs in the Accounting Standards Codification to reflect the issuance of SEC Staff Accounting Bulletin No.119, related to the new credit losses standard, and comments by the SEC staff related to the revised effective date of the new leases standard. This ASU is effective upon issuance. See the discussion regarding the adoption of ASU 2016-13 above.2020-032020-03, 2020-03, “Codification Improvements to Financial Instruments.” This ASU clarifies various financial instruments topics, including the CECL standard issued in 2016.2016. Amendments related to ASU 2016-132016-13 for entities that have not yet adopted that guidance are effective upon adoption of the amendments in ASU 2016-13.2016-13. Early adoption is not permitted before an entity’s adoption of ASU 2016-13.2016-13. Other amendments are effective upon issuance of this ASU. See the discussion regarding the adoption of ASU 2016-132016-13 above.2022-022022-02, 2022-02, "Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings ("TDR") and Vintage Disclosures". ASU 2022-022022-02 updates guidance in Topic 326, to eliminate the accounting guidance for TDRs by creditors in Subtopic 310-40,310-40, Receivables—Troubled Debt Restructurings by Creditors, while enhancing disclosure requirements for certain loan refinancing and restructurings by creditors when a borrower is experiencing financial difficulty and to require entities to disclose current-period gross write-offs by year of origination for financing receivables and net investments in leases within the scope of Subtopic 326-20,326-20, Financial Instruments—Credit Losses—Measured at Amortized Cost. ASU 2022-022022-02 is effective for fiscal years beginning after December 15, 2022, with early adoption permitted.permitted if an entity has adopted the amendments in Update 2016-03,2016-03, including adoption in an interim period. Management is currently evaluatingThe Company adopted ASC 326 effective January 1, 2023. The adoption of this guidance did not have any material impact on the impact that the standard will have on itsCompany's consolidated financial statements. See the discussion regarding the adoption2022 2023 and December 31, 2021 2022 are as follows:
Cost
Unrealized
Gains
Unrealized
(Losses)
Value $ 65,864 $ 0 $ (5,974 ) $ 59,890 17,754 43 (3,065 ) 14,732 3,108 9 (48 ) 3,069 5,567 0 (512 ) 5,055 562 0 (48 ) 514 $ 92,855 $ 52 $ (9,647 ) $ 83,260 $ 67,850 $ 24 $ (1,245 ) $ 66,629 17,754 118 (951 ) 16,921 4,608 35 (17 ) 4,626 5,772 0 (169 ) 5,603 563 1 (2 ) 562 $ 96,547 $ 178 $ (2,384 ) $ 94,341 (In thousands) Amortized
CostGross
Unrealized
GainsGross
Unrealized
(Losses)Fair
ValueMarch 31, 2023: U. S. Government agency and mortgage-backed securities $ 81,084 $ 4 $ (13,551) $ 67,537 Corporate bonds 18,010 — (4,348) 13,662 Subordinated notes 5,000 — (479) 4,521 SBA loan pools 6,487 — (982) 5,505 Municipal bonds 560 — (49) 511 Total available-for-sale securities $ 111,141 $ 4 $ (19,409) $ 91,736 December 31, 2022: U. S. Government agency and mortgage-backed securities $ 73,480 $ — $ (14,434) $ 59,046 Corporate bonds 19,773 7 (5,125) 14,655 Subordinated notes 5,000 — (398) 4,602 SBA loan pools 6,791 — (1,073) 5,718 Municipal bonds 561 — (62) 499 Total available-for-sale securities $ 105,605 $ 7 $ (21,092) $ 84,520 2022 2023 and December 31, 2021:
Value
(Loss)
Value
(Loss)
Value
(Loss) $ 52,958 $ (5,216 ) $ 6,932 $ (758 ) $ 59,890 $ (5,974 ) 12,931 (3,065 ) 0 0 12,931 (3,065 ) 2,059 (48 ) 0 0 2,059 (48 ) 2,450 (246 ) 2,605 (266 ) 5,055 (512 ) 515 (48 ) 0 0 515 (48 ) $ 70,913 $ (8,623 ) $ 9,537 $ (1,024 ) $ 80,450 $ (9,647 ) $ 60,606 $ (1,196 ) $ 1,610 $ (49 ) $ 62,216 $ (1,245 ) 15,042 (951 ) 0 0 15,042 (951 ) 0 0 1,092 (17 ) 1,092 (17 ) 5,603 (169 ) 0 0 5,603 (169 ) 406 (2 ) 0 0 406 (2 ) $ 81,657 $ (2,318 ) $ 2,702 $ (66 ) $ 84,359 $ (2,384 ) (In thousands) Less than 12 Months 12 Months or More Total Fair
ValueUnrealized
(Loss)Fair
ValueUnrealized
(Loss)Fair
ValueUnrealized
(Loss)March 31, 2023: U. S. Government agency and mortgage-backed securities $ 15,559 $ (560) $ 48,506 $ (12,991) $ 64,065 $ (13,551) Corporate bonds 1,967 (48) 11,695 (4,300) 13,662 (4,348) Subordinated notes 2,748 (252) 1,773 (227) 4,521 (479) SBA loan pools 1,355 (13) 4,150 (969) 5,505 (982) Municipal bonds — — 511 (49) 511 (49) Total available-for-sale securities $ 21,629 $ (873) $ 66,635 $ (18,536) $ 88,264 $ (19,409) December 31, 2022: U. S. Government agency and mortgage-backed securities $ 11,126 $ (633) $ 47,920 $ (13,801) $ 59,046 $ (14,434) Corporate bonds 1,959 (64) 10,934 (5,061) 12,893 (5,125) Subordinated notes 4,602 (398) — — 4,602 (398) SBA loan pools 1,437 (12) 4,280 (1,061) 5,717 (1,073) Municipal bonds — — 498 (62) 498 (62) Total available-for-sale securities $ 19,124 $ (1,107) $ 63,632 $ (19,985) $ 82,756 $ (21,092) 2022 2023 and December 31, 2021, NaN2022, forty-eight of NaNforty-nine and NaNforty-six of NaNforty-seven available-for-sale securities had unrealized losses with an aggregate decline of 10.7%(18.0)% and 2.7%(20.3)% from the amortized cost of those securities, respectively.11
PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIES
Notes to consolidated financial statements (Unaudited)
BasedAt March 31, 2023, no allowance for credit losses has been recognized on its quarterly reviews, management believes that noneavailable for sale debt securities in an unrealized loss position as the Company does not believe any of the lossesdebt securities are credit impaired. This is based on available-for-sale securities noted above constitute other-than-temporary impairment (“OTTI”).the Company’s analysis of the risk characteristics, including credit ratings, and other qualitative factors related to available for sale debt securities. The noted losses are considered temporary due to market fluctuations in available interest rates on U.S. Government agency debt, mortgage-backed securities issued by U.S. Government agencies, subordinated notes, corporate debt, and municipal bonds. Management considers the issuers of thethese debt securities continue to be financially sound, the corporate bonds are investment grade, and the collectability of all contractualmake timely principal and interest payments under the contractual terms of the securities. The Company does not intend to sell these debt securities and it is reasonably expected.more likely than not that the Company will not be required to sell the debt securities before recovery of their amortized cost, which may be at maturity. The unrealized losses are due to increases in market interest rates over the yields available at the time the debt securities were purchased.
2023 continue to perform as scheduled and the Company does not believe there is a possible credit loss or that an allowance for credit loss on these debt securities is necessary.
(In thousands) | Amortized Cost | Fair Value | ||||||||||||||||||||||||||||||
Due | Due After | Due | Total | Due | Due After | Due | Total | |||||||||||||||||||||||||
March 31, 2022: | ||||||||||||||||||||||||||||||||
Corporate bonds | $ | 17,754 | $ | 0 | $ | 0 | $ | 17,754 | $ | 14,732 | $ | 0 | $ | 0 | $ | 14,732 | ||||||||||||||||
Subordinated notes | 0 | 3,108 | 0 | 3,108 | 0 | 3,069 | 0 | 3,069 | ||||||||||||||||||||||||
SBA loan pools | 0 | 0 | 5,567 | 5,567 | 0 | 0 | 5,055 | 5,055 | ||||||||||||||||||||||||
Municipal bonds | 0 | 562 | 0 | 562 | 0 | 514 | 0 | 514 | ||||||||||||||||||||||||
Available-for-sale securities with stated maturity dates | 17,754 | 3,670 | 5,567 | 26,991 | 14,732 | 3,583 | 5,055 | 23,370 | ||||||||||||||||||||||||
U. S. Government agency and mortgage-backed securities | 9,986 | 0 | 55,878 | 65,864 | 9,024 | 0 | 50,866 | 59,890 | ||||||||||||||||||||||||
$ | 27,740 | $ | 3,670 | $ | 61,445 | $ | 92,855 | $ | 23,756 | $ | 3,583 | $ | 55,921 | $ | 83,260 | |||||||||||||||||
December 31, 2021: | ||||||||||||||||||||||||||||||||
Corporate bonds | $ | 17,754 | $ | 0 | $ | 0 | $ | 17,754 | $ | 16,921 | $ | 0 | $ | 0 | $ | 16,921 | ||||||||||||||||
Subordinated notes | 0 | 4,608 | 0 | 4,608 | 0 | 4,626 | 0 | 4,626 | ||||||||||||||||||||||||
SBA loan pools | 0 | 0 | 5,772 | 5,772 | 0 | 0 | 5,603 | 5,603 | ||||||||||||||||||||||||
Municipal bonds | 0 | 563 | 0 | 563 | 0 | 562 | 0 | 562 | ||||||||||||||||||||||||
Available-for-sale securities with stated maturity dates | 17,754 | 5,171 | 5,772 | 28,697 | 16,921 | 5,188 | 5,603 | 27,712 | ||||||||||||||||||||||||
U. S. Government agency and mortgage-backed securities | 13,876 | 0 | 53,974 | 67,850 | 13,835 | 0 | 52,794 | 66,629 | ||||||||||||||||||||||||
$ | 31,630 | $ | 5,171 | $ | 59,746 | $ | 96,547 | $ | 30,756 | $ | 5,188 | $ | 58,397 | $ | 94,341 |
(In thousands) | Amortized Cost | Fair Value | |||||||||||||||||||||||||||||||||||||||||||||
Due Within 5 years | Due After 5 years through 10 years | Due After 10 years | Total | Due Within 5 years | Due After 5 years through 10 years | Due After 10 years | Total | ||||||||||||||||||||||||||||||||||||||||
March 31, 2023: | |||||||||||||||||||||||||||||||||||||||||||||||
Corporate bonds | $ | 2,015 | $ | 15,995 | $ | — | $ | 18,010 | $ | 1,967 | $ | 11,695 | $ | — | $ | 13,662 | |||||||||||||||||||||||||||||||
Subordinated notes | 3,000 | 2,000 | — | 5,000 | 2,748 | 1,773 | — | 4,521 | |||||||||||||||||||||||||||||||||||||||
SBA loan pools | — | 1,367 | 5,120 | 6,487 | — | 1,355 | 4,150 | 5,505 | |||||||||||||||||||||||||||||||||||||||
Municipal bonds | 154 | 406 | — | 560 | 141 | 370 | — | 511 | |||||||||||||||||||||||||||||||||||||||
Available-for-sale securities with stated maturity dates | 5,169 | 19,768 | 5,120 | 30,057 | 4,856 | 15,193 | 4,150 | 24,199 | |||||||||||||||||||||||||||||||||||||||
U. S. Government agency and mortgage-backed securities | — | 5,254 | 75,830 | 81,084 | — | 4,230 | 63,307 | 67,537 | |||||||||||||||||||||||||||||||||||||||
Total available-for-sale securities | $ | 5,169 | $ | 25,022 | $ | 80,950 | $ | 111,141 | $ | 4,856 | $ | 19,423 | $ | 67,457 | $ | 91,736 | |||||||||||||||||||||||||||||||
December 31, 2022: | |||||||||||||||||||||||||||||||||||||||||||||||
Corporate bonds | $ | 3,778 | $ | 15,995 | $ | — | $ | 19,773 | $ | 3,721 | $ | 10,934 | $ | — | $ | 14,655 | |||||||||||||||||||||||||||||||
Subordinated notes | 3,000 | 2,000 | — | 5,000 | 2,830 | 1,772 | — | 4,602 | |||||||||||||||||||||||||||||||||||||||
SBA loan pools | — | 1,449 | 5,342 | 6,791 | — | 1,438 | 4,280 | 5,718 | |||||||||||||||||||||||||||||||||||||||
Municipal bonds | 154 | 407 | — | 561 | 139 | 360 | — | 499 | |||||||||||||||||||||||||||||||||||||||
Available-for-sale securities with stated maturity dates | 6,932 | 19,851 | 5,342 | 32,125 | 6,690 | 14,504 | 4,280 | 25,474 | |||||||||||||||||||||||||||||||||||||||
U. S. Government agency and mortgage-backed securities | — | 5,276 | 68,204 | 73,480 | — | 4,129 | 54,917 | 59,046 | |||||||||||||||||||||||||||||||||||||||
Total available-for-sale securities | $ | 6,932 | $ | 25,127 | $ | 73,546 | $ | 105,605 | $ | 6,690 | $ | 18,633 | $ | 59,197 | $ | 84,520 |
PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIES
Notes to consolidated financial statements (Unaudited)
During the three months ended March 31, 2022, 2023, the Bank purchased $1.0 million corporate bonds. During the three months ended March 31, 2021, the Bank purchased $10.9$8.3 million U.S. Government agency mortgage-backed securities and $3.0sold $1.8 million SBA government guaranteed loan pools securities. There was 0available-for-sale securities and recognized a net gain on sale of available-for-sale securities in$24,000. During the three months ended March 31, 2022, the Bank purchased $1.0 million corporate bonds, and 2021.
March 31, | December 31, | |||||||
(In thousands) | 2022 | 2021 | ||||||
Loan portfolio segment: | ||||||||
Commercial Real Estate | $ | 413,104 | $ | 365,247 | ||||
Residential Real Estate | 146,221 | 158,591 | ||||||
Commercial and Industrial | 128,515 | 122,810 | ||||||
Consumer and Other | 71,219 | 59,364 | ||||||
Construction | 12,223 | 21,781 | ||||||
Construction to Permanent - CRE | 2,057 | 11,695 | ||||||
Loans receivable, gross | 773,339 | 739,488 | ||||||
Allowance for loan and lease losses | (9,737 | ) | (9,905 | ) | ||||
Loans receivable, net | $ | 763,602 | $ | 729,583 |
(In thousands) | March 31, 2023 | December 31, 2022 | ||||||||||||
Loan portfolio segment: | ||||||||||||||
Commercial Real Estate | $ | 464,410 | $ | 437,443 | ||||||||||
Residential Real Estate | 118,892 | 124,140 | ||||||||||||
Commercial and Industrial | 153,773 | 138,787 | ||||||||||||
Consumer and Other | 132,410 | 141,091 | ||||||||||||
Construction | 7,052 | 4,922 | ||||||||||||
Construction to Permanent - CRE | 2,232 | 1,933 | ||||||||||||
Loans receivable, gross | 878,769 | 848,316 | ||||||||||||
Allowance for credit losses | (17,801) | (10,310) | ||||||||||||
Loans receivable, net | $ | 860,968 | $ | 838,006 |
first quarter of 2022.
PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIES
Notes to consolidated financial statements (Unaudited)
Included in this category are loans to construct single family homes where no contract of sale exists, based upon the experience and financial strength of the builder, the type and location of the property, and other factors. Construction loans tend to be personally guaranteed by the principal(s). Repayment of such loans may be negatively impacted by an inability to complete construction, a downturn in the market for new construction, by a significant increase in interest rates, or by decline in general economic conditions.
The construction loans outstanding at March 31, 2023 and December 31, 2022 totaled $7.1 million and $4.9 million, respectively.
The CARES Act created the SBA’s Paycheck Protection Program.
(In thousands) | Commercial | Residential | Commercial | Consumer | Construction | Construction | Unallocated | Total | ||||||||||||||||||||||||
Three months ended March 31, 2022 | ||||||||||||||||||||||||||||||||
Allowance for loan and lease losses: | ||||||||||||||||||||||||||||||||
December 31, 2021 | $ | 5,063 | $ | 1,700 | $ | 2,532 | $ | 253 | $ | 78 | $ | 41 | $ | 238 | $ | 9,905 | ||||||||||||||||
Charge-offs | 0 | 0 | (68 | ) | (47 | ) | (70 | ) | 0 | 0 | (185 | ) | ||||||||||||||||||||
Recoveries | 0 | 1 | 15 | 1 | 0 | 0 | 0 | 17 | ||||||||||||||||||||||||
Provisions (credits) | (174 | ) | (189 | ) | 381 | 112 | 48 | (32 | ) | (146 | ) | 0 | ||||||||||||||||||||
March 31, 2022 | $ | 4,889 | $ | 1,512 | $ | 2,860 | $ | 319 | $ | 56 | $ | 9 | $ | 92 | $ | 9,737 | ||||||||||||||||
Three months ended March 31, 2021 | ||||||||||||||||||||||||||||||||
Allowance for loan and lease losses: | ||||||||||||||||||||||||||||||||
December 31, 2020 | $ | 4,485 | $ | 1,379 | $ | 3,284 | $ | 295 | $ | 739 | $ | 162 | $ | 240 | $ | 10,584 | ||||||||||||||||
Charge-offs | (42 | ) | (3 | ) | (209 | ) | (18 | ) | 0 | 0 | 0 | (272 | ) | |||||||||||||||||||
Recoveries | 0 | 0 | 12 | 102 | 0 | 0 | 0 | 114 | ||||||||||||||||||||||||
Provisions (credits) | (289 | ) | 533 | 537 | 3 | (459 | ) | (85 | ) | (240 | ) | 0 | ||||||||||||||||||||
March 31, 2021 | $ | 4,154 | $ | 1,909 | $ | 3,624 | $ | 382 | $ | 280 | $ | 77 | $ | 0 | $ | 10,426 |
loan and lease losses for three months ended March 31, 2022:
(In thousands) | Commercial Real Estate | Residential Real Estate | Commercial and Industrial | Consumer and Other | Construction | Construction to Permanent - CRE | Unallocated | Total | ||||||||||||||||||||||||||||||||||||||||||
Three Months Ended March 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Allowance for credit losses: | ||||||||||||||||||||||||||||||||||||||||||||||||||
December 31, 2022 | $ | 6,966 | $ | 665 | $ | 1,403 | $ | 1,207 | $ | 24 | $ | 10 | $ | 35 | $ | 10,310 | ||||||||||||||||||||||||||||||||||
Impact of ASC 326 Adoption | 1,626 | 189 | 219 | 5,347 | (4) | 29 | (35) | 7,371 | ||||||||||||||||||||||||||||||||||||||||||
Charge-offs | — | — | (2) | (1,796) | — | — | — | (1,798) | ||||||||||||||||||||||||||||||||||||||||||
Recoveries | — | — | 7 | 173 | — | — | — | 180 | ||||||||||||||||||||||||||||||||||||||||||
Provisions (credits) | 1,217 | (1) | 172 | 341 | 1 | 8 | — | 1,738 | (1) | |||||||||||||||||||||||||||||||||||||||||
March 31, 2023 | $ | 9,809 | $ | 853 | $ | 1,799 | $ | 5,272 | $ | 21 | $ | 47 | $ | — | $ | 17,801 | ||||||||||||||||||||||||||||||||||
Three Months Ended March 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Allowance for loan and lease losses: | ||||||||||||||||||||||||||||||||||||||||||||||||||
December 31, 2021 | $ | 5,063 | $ | 1,700 | $ | 2,532 | $ | 253 | $ | 78 | $ | 41 | $ | 238 | $ | 9,905 | ||||||||||||||||||||||||||||||||||
Charge-offs | — | — | (68) | (47) | (70) | — | — | (185) | ||||||||||||||||||||||||||||||||||||||||||
Recoveries | — | 1 | 15 | 1 | — | — | — | 17 | ||||||||||||||||||||||||||||||||||||||||||
Provisions (credits) | (174) | (189) | 381 | 112 | 48 | (32) | (146) | — | ||||||||||||||||||||||||||||||||||||||||||
March 31, 2022 | $ | 4,889 | $ | 1,512 | $ | 2,860 | $ | 319 | $ | 56 | $ | 9 | $ | 92 | $ | 9,737 |
(In thousands) | Commercial | Residential | Commercial | Consumer | Construction | Construction to | Unallocated | Total | ||||||||||||||||||||||||
March 31, 2022 | ||||||||||||||||||||||||||||||||
Allowance for loan and lease losses: | ||||||||||||||||||||||||||||||||
Individually evaluated for impairment | $ | 1,752 | $ | 3 | $ | 954 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 2,709 | ||||||||||||||||
Collectively evaluated for impairment | 3,137 | 1,509 | 1,906 | 319 | 56 | 9 | 92 | 7,028 | ||||||||||||||||||||||||
Total allowance for loan and lease losses | $ | 4,889 | $ | 1,512 | $ | 2,860 | $ | 319 | $ | 56 | $ | 9 | $ | 92 | $ | 9,737 | ||||||||||||||||
Loans receivable, gross: | ||||||||||||||||||||||||||||||||
Individually evaluated for impairment | $ | 15,643 | $ | 2,940 | $ | 4,544 | $ | 521 | $ | 0 | $ | 0 | $ | 0 | $ | 23,648 | ||||||||||||||||
Collectively evaluated for impairment | 397,461 | 143,281 | 123,971 | 70,698 | 12,223 | 2,057 | 0 | 749,691 | ||||||||||||||||||||||||
Total loans receivable, gross | $ | 413,104 | $ | 146,221 | $ | 128,515 | $ | 71,219 | $ | 12,223 | $ | 2,057 | $ | 0 | $ | 773,339 |
(In thousands) | Commercial Real Estate | Residential Real Estate | Commercial and Industrial | Consumer and Other | Construction | Construction to Permanent - CRE | Unallocated | Total | |||||||||||||||||||||||||||||||||||||||
March 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||
Allowance for loan and lease losses: | |||||||||||||||||||||||||||||||||||||||||||||||
Individually evaluated for impairment | $ | 6,352 | $ | 29 | $ | 754 | $ | — | $ | — | $ | — | $ | — | $ | 7,135 | |||||||||||||||||||||||||||||||
Collectively evaluated for impairment | 3,457 | 824 | 1,045 | 5,272 | 21 | 47 | — | 10,666 | |||||||||||||||||||||||||||||||||||||||
Total allowance for loan and lease losses | $ | 9,809 | $ | 853 | $ | 1,799 | $ | 5,272 | $ | 21 | $ | 47 | $ | — | $ | 17,801 | |||||||||||||||||||||||||||||||
Loans receivable, gross: | |||||||||||||||||||||||||||||||||||||||||||||||
Individually evaluated for impairment | $ | 11,368 | $ | 2,491 | $ | 7,559 | $ | 512 | $ | 2,317 | $ | — | $ | — | $ | 24,247 | |||||||||||||||||||||||||||||||
Collectively evaluated for impairment | 453,042 | 116,401 | 146,214 | 131,898 | 4,735 | 2,232 | — | 854,522 | |||||||||||||||||||||||||||||||||||||||
Total loans receivable, gross | $ | 464,410 | $ | 118,892 | $ | 153,773 | $ | 132,410 | $ | 7,052 | $ | 2,232 | $ | — | $ | 878,769 |
PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIES
(In thousands) | Commercial | Residential | Commercial | Consumer | Construction | Construction to | Unallocated | Total | ||||||||||||||||||||||||
December 31, 2021 | ||||||||||||||||||||||||||||||||
Allowance for loan and lease losses: | ||||||||||||||||||||||||||||||||
Individually evaluated for impairment | $ | 1,567 | $ | 3 | $ | 722 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 2,292 | ||||||||||||||||
Collectively evaluated for impairment | 3,496 | 1,697 | 1,810 | 253 | 78 | 41 | 238 | 7,613 | ||||||||||||||||||||||||
Total allowance for loan losses | $ | 5,063 | $ | 1,700 | $ | 2,532 | $ | 253 | $ | 78 | $ | 41 | $ | 238 | $ | 9,905 | ||||||||||||||||
Loans receivable, gross: | ||||||||||||||||||||||||||||||||
Individually evaluated for impairment | $ | 15,704 | $ | 2,954 | $ | 4,031 | $ | 523 | $ | 0 | $ | 0 | $ | 0 | $ | 23,212 | ||||||||||||||||
Collectively evaluated for impairment | 349,543 | 155,637 | 118,779 | 58,841 | 21,781 | 11,695 | 0 | 716,276 | ||||||||||||||||||||||||
Total loans receivable, gross | $ | 365,247 | $ | 158,591 | $ | 122,810 | $ | 59,364 | $ | 21,781 | $ | 11,695 | $ | 0 | $ | 739,488 |
(In thousands) | Commercial Real Estate | Residential Real Estate | Commercial and Industrial | Consumer and Other | Construction | Construction to Permanent - CRE | Unallocated | Total | |||||||||||||||||||||||||||||||||||||||
December 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||
Allowance for loan and lease losses: | |||||||||||||||||||||||||||||||||||||||||||||||
Individually evaluated for impairment | $ | 5,430 | $ | 5 | $ | 608 | $ | — | $ | — | $ | — | $ | — | $ | 6,043 | |||||||||||||||||||||||||||||||
Collectively evaluated for impairment | 1,536 | 660 | 795 | 1,207 | 24 | 10 | 35 | 4,267 | |||||||||||||||||||||||||||||||||||||||
Total allowance for loan losses | $ | 6,966 | $ | 665 | $ | 1,403 | $ | 1,207 | $ | 24 | $ | 10 | $ | 35 | $ | 10,310 | |||||||||||||||||||||||||||||||
Loans receivable, gross: | |||||||||||||||||||||||||||||||||||||||||||||||
Individually evaluated for impairment | $ | 11,241 | $ | 2,508 | $ | 4,653 | $ | 514 | $ | — | $ | — | $ | — | $ | 18,916 | |||||||||||||||||||||||||||||||
Collectively evaluated for impairment | 426,202 | 121,632 | 134,134 | 140,577 | 4,922 | 1,933 | — | 829,400 | |||||||||||||||||||||||||||||||||||||||
Total loans receivable, gross | $ | 437,443 | $ | 124,140 | $ | 138,787 | $ | 141,091 | $ | 4,922 | $ | 1,933 | $ | — | $ | 848,316 |
exposure and other credit metrics.
of Directors.
|
|
|
|
If either type of
Term of Loans by Origination | |||||||||||||||||||||||||||||||||||||||||||||||
As of March 31, 2023: | 2023 | 2022 | 2021 | 2020 | 2019 | Prior | Revolving | Total Loans Receivable Gross | |||||||||||||||||||||||||||||||||||||||
Loan portfolio segment: | |||||||||||||||||||||||||||||||||||||||||||||||
Commercial Real Estate: | |||||||||||||||||||||||||||||||||||||||||||||||
Pass | $ | 32,600 | $ | 167,018 | $ | 129,918 | $ | 3,750 | $ | 30,339 | $ | 68,519 | $ | — | $ | 432,144 | |||||||||||||||||||||||||||||||
Special mention | — | — | — | — | 10,933 | 4,941 | — | 15,874 | |||||||||||||||||||||||||||||||||||||||
Substandard | — | — | — | — | 10,981 | 5,411 | — | 16,392 | |||||||||||||||||||||||||||||||||||||||
32,600 | 167,018 | 129,918 | 3,750 | 52,253 | 78,871 | — | 464,410 | ||||||||||||||||||||||||||||||||||||||||
Residential Real Estate: | |||||||||||||||||||||||||||||||||||||||||||||||
Pass | 191 | 1,274 | 3,533 | 12,170 | 16,084 | 82,044 | 527 | 115,823 | |||||||||||||||||||||||||||||||||||||||
Special mention | — | — | — | — | — | 617 | — | 617 | |||||||||||||||||||||||||||||||||||||||
Substandard | — | — | — | — | — | 2,452 | — | 2,452 | |||||||||||||||||||||||||||||||||||||||
191 | 1,274 | 3,533 | 12,170 | 16,084 | 85,113 | 527 | 118,892 | ||||||||||||||||||||||||||||||||||||||||
Commercial and Industrial: | |||||||||||||||||||||||||||||||||||||||||||||||
Pass | 633 | 16,042 | 23,495 | 8,377 | 9,288 | 5,013 | 82,113 | 144,961 | |||||||||||||||||||||||||||||||||||||||
Special mention | — | — | — | — | 549 | 11 | — | 560 | |||||||||||||||||||||||||||||||||||||||
Substandard | — | 732 | 969 | 432 | 4,401 | 1,306 | 412 | 8,252 | |||||||||||||||||||||||||||||||||||||||
633 | 16,774 | 24,464 | 8,809 | 14,238 | 6,330 | 82,525 | 153,773 | ||||||||||||||||||||||||||||||||||||||||
Consumer and Other: | |||||||||||||||||||||||||||||||||||||||||||||||
Pass | 4,999 | 62,902 | 8,460 | — | 6,186 | 15,490 | 34,302 | 132,339 | |||||||||||||||||||||||||||||||||||||||
Substandard | — | — | — | — | — | 71 | — | 71 | |||||||||||||||||||||||||||||||||||||||
4,999 | 62,902 | 8,460 | — | 6,186 | 15,561 | 34,302 | 132,410 | ||||||||||||||||||||||||||||||||||||||||
Construction: | |||||||||||||||||||||||||||||||||||||||||||||||
Pass | — | — | 4,225 | — | — | — | — | 4,225 | |||||||||||||||||||||||||||||||||||||||
Special mention | — | — | — | — | 510 | — | — | 510 | |||||||||||||||||||||||||||||||||||||||
Substandard | — | — | — | 2,317 | — | — | — | 2,317 | |||||||||||||||||||||||||||||||||||||||
— | — | 4,225 | 2,317 | 510 | — | — | 7,052 | ||||||||||||||||||||||||||||||||||||||||
Construction to Permanent -CRE: | |||||||||||||||||||||||||||||||||||||||||||||||
Pass | — | — | 2,232 | — | — | — | — | 2,232 | |||||||||||||||||||||||||||||||||||||||
— | — | 2,232 | — | — | — | — | 2,232 | ||||||||||||||||||||||||||||||||||||||||
Total | $ | 38,423 | $ | 247,968 | $ | 172,832 | $ | 27,046 | $ | 89,271 | $ | 185,875 | $ | 117,354 | $ | 878,769 | |||||||||||||||||||||||||||||||
Loans receivable, gross: | |||||||||||||||||||||||||||||||||||||||||||||||
Pass | $ | 38,423 | $ | 247,236 | $ | 171,863 | $ | 24,297 | $ | 61,897 | $ | 171,066 | $ | — | $ | 116,942 | $ | 831,724 | |||||||||||||||||||||||||||||
Special mention | — | — | — | — | 11,992 | 5,569 | — | — | 17,561 | ||||||||||||||||||||||||||||||||||||||
Substandard | — | 732 | 969 | 2,749 | 15,382 | 9,240 | — | 412 | 29,484 | ||||||||||||||||||||||||||||||||||||||
Loans receivable, gross | $ | 38,423 | $ | 247,968 | $ | 172,832 | $ | 27,046 | $ | 89,271 | $ | 185,875 | $ | 117,354 | $ | 878,769 |
(In thousands) | Performing (Accruing) Loans | |||||||||||||||||||||||||||||||
As of March 31, 2022: | 30 - 59 Days | 60 - 89 Days | 90 Days Past Due | Total | Current | Total | Non- accruing | Loans | ||||||||||||||||||||||||
Loan portfolio segment: | ||||||||||||||||||||||||||||||||
Commercial Real Estate: | ||||||||||||||||||||||||||||||||
Pass | $ | 849 | $ | 0 | $ | 0 | $ | 849 | $ | 373,639 | $ | 374,488 | $ | 0 | $ | 374,488 | ||||||||||||||||
Special mention | 0 | 0 | 0 | 0 | 20,384 | 20,384 | 0 | 20,384 | ||||||||||||||||||||||||
Substandard | 339 | 0 | 0 | 339 | 2,250 | 2,589 | 15,643 | 18,232 | ||||||||||||||||||||||||
1,188 | 0 | 0 | 1,188 | 396,273 | 397,461 | 15,643 | 413,104 | |||||||||||||||||||||||||
Residential Real Estate: | ||||||||||||||||||||||||||||||||
Pass | 0 | 0 | 0 | 0 | 141,695 | 141,695 | 0 | 141,695 | ||||||||||||||||||||||||
Substandard | 0 | 0 | 0 | 0 | 1,392 | 1,392 | 3,134 | 4,526 | ||||||||||||||||||||||||
0 | 0 | 0 | 0 | 143,087 | 143,087 | 3,134 | 146,221 | |||||||||||||||||||||||||
Commercial and Industrial: | ||||||||||||||||||||||||||||||||
Pass | 997 | 0 | 0 | 997 | 119,292 | 120,289 | 0 | 120,289 | ||||||||||||||||||||||||
Special mention | 0 | 0 | 0 | 0 | 1,435 | 1,435 | 0 | 1,435 | ||||||||||||||||||||||||
Substandard | 573 | 0 | 0 | 573 | 1,674 | 2,247 | 4,544 | 6,791 | ||||||||||||||||||||||||
1,570 | 0 | 0 | 1,570 | 122,401 | 123,971 | 4,544 | 128,515 | |||||||||||||||||||||||||
Consumer and Other: | ||||||||||||||||||||||||||||||||
Pass | 0 | 0 | 0 | 0 | 71,051 | 71,051 | 0 | 71,051 | ||||||||||||||||||||||||
Substandard | 0 | 0 | 0 | 0 | 23 | 23 | 145 | 168 | ||||||||||||||||||||||||
0 | 0 | 0 | 0 | 71,074 | 71,074 | 145 | 71,219 | |||||||||||||||||||||||||
Construction: | ||||||||||||||||||||||||||||||||
Pass | 0 | 0 | 0 | 0 | 12,223 | 12,223 | 0 | 12,223 | ||||||||||||||||||||||||
0 | 0 | 0 | 0 | 12,223 | 12,223 | 0 | 12,223 | |||||||||||||||||||||||||
Construction to Permanent - CRE: | ||||||||||||||||||||||||||||||||
Pass | 0 | 0 | 0 | 0 | 2,057 | 2,057 | 0 | 2,057 | ||||||||||||||||||||||||
0 | 0 | 0 | 0 | 2,057 | 2,057 | 0 | 2,057 | |||||||||||||||||||||||||
Total | $ | 2,758 | $ | 0 | $ | 0 | $ | 2,758 | $ | 747,115 | $ | 749,873 | $ | 23,466 | $ | 773,339 | ||||||||||||||||
Loans receivable, gross: | ||||||||||||||||||||||||||||||||
Pass | $ | 1,846 | $ | 0 | $ | 0 | $ | 1,846 | $ | 719,957 | $ | 721,803 | $ | 0 | $ | 721,803 | ||||||||||||||||
Special mention | 0 | 0 | 0 | 0 | 21,819 | 21,819 | 0 | 21,819 | ||||||||||||||||||||||||
Substandard | 912 | 0 | 0 | 912 | 5,339 | 6,251 | 23,466 | 29,717 | ||||||||||||||||||||||||
Loans receivable, gross | $ | 2,758 | $ | 0 | $ | 0 | $ | 2,758 | $ | 747,115 | $ | 749,873 | $ | 23,466 | $ | 773,339 |
(In thousands) | Performing (Accruing) Loans | |||||||||||||||||||||||||||||||||||||||||||||||||
As of March 31, 2023: | 30 - 59 Days Past Due | 60 - 89 Days Past Due | 90 Days or Greater Past Due | Total Past Due | Current | Total Performing Loans | Non- accruing Loans | Loans Receivable Gross | ||||||||||||||||||||||||||||||||||||||||||
Loan portfolio segment: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Commercial Real Estate: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Pass | $ | 4,387 | $ | — | $ | — | $ | 4,387 | $ | 427,757 | $ | 432,144 | $ | — | $ | 432,144 | ||||||||||||||||||||||||||||||||||
Special mention | — | — | — | — | 15,874 | 15,874 | — | 15,874 | ||||||||||||||||||||||||||||||||||||||||||
Substandard | 327 | — | — | 327 | 4,698 | 5,025 | 11,367 | 16,392 | ||||||||||||||||||||||||||||||||||||||||||
4,714 | — | — | 4,714 | 448,329 | 453,043 | 11,367 | 464,410 | |||||||||||||||||||||||||||||||||||||||||||
Residential Real Estate: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Pass | 174 | — | 329 | 503 | 115,320 | 115,823 | — | 115,823 | ||||||||||||||||||||||||||||||||||||||||||
Special mention | — | — | — | — | 617 | 617 | — | 617 | ||||||||||||||||||||||||||||||||||||||||||
Substandard | — | — | — | — | — | — | 2,452 | 2,452 | ||||||||||||||||||||||||||||||||||||||||||
174 | — | 329 | 503 | 115,937 | 116,440 | 2,452 | 118,892 | |||||||||||||||||||||||||||||||||||||||||||
Commercial and Industrial: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Pass | 372 | — | 1,318 | 1,690 | 143,271 | 144,961 | — | 144,961 | ||||||||||||||||||||||||||||||||||||||||||
Special mention | — | — | — | — | 560 | 560 | — | 560 | ||||||||||||||||||||||||||||||||||||||||||
Substandard | 547 | — | — | 547 | 120 | 667 | 7,585 | 8,252 | ||||||||||||||||||||||||||||||||||||||||||
919 | — | 1,318 | 2,237 | 143,951 | 146,188 | 7,585 | 153,773 | |||||||||||||||||||||||||||||||||||||||||||
Consumer and Other: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Pass | 1,126 | 899 | 1,745 | 3,770 | 128,569 | 132,339 | — | 132,339 | ||||||||||||||||||||||||||||||||||||||||||
Substandard | — | — | — | — | 23 | 23 | 48 | 71 | ||||||||||||||||||||||||||||||||||||||||||
1,126 | 899 | 1,745 | 3,770 | 128,592 | 132,362 | 48 | 132,410 | |||||||||||||||||||||||||||||||||||||||||||
Construction: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Pass | — | — | — | — | 4,225 | 4,225 | — | 4,225 | ||||||||||||||||||||||||||||||||||||||||||
Special mention | — | — | — | — | 510 | 510 | — | 510 | ||||||||||||||||||||||||||||||||||||||||||
Substandard | — | — | — | — | — | — | 2,317 | 2,317 | ||||||||||||||||||||||||||||||||||||||||||
— | — | — | — | 4,735 | 4,735 | 2,317 | 7,052 | |||||||||||||||||||||||||||||||||||||||||||
Construction to Permanent -CRE: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Pass | — | — | — | — | 2,232 | 2,232 | — | 2,232 | ||||||||||||||||||||||||||||||||||||||||||
— | — | — | — | 2,232 | 2,232 | — | 2,232 | |||||||||||||||||||||||||||||||||||||||||||
Total | $ | 6,933 | $ | 899 | $ | 3,392 | $ | 11,224 | $ | 843,776 | $ | 855,000 | $ | 23,769 | $ | 878,769 | ||||||||||||||||||||||||||||||||||
Loans receivable, gross: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Pass | $ | 6,059 | $ | 899 | $ | 3,392 | $ | 10,350 | $ | 821,374 | $ | 831,724 | $ | — | $ | 831,724 | ||||||||||||||||||||||||||||||||||
Special mention | — | — | — | — | 17,561 | 17,561 | — | 17,561 | ||||||||||||||||||||||||||||||||||||||||||
Substandard | 874 | — | — | 874 | 4,841 | 5,715 | 23,769 | 29,484 | ||||||||||||||||||||||||||||||||||||||||||
Loans receivable, gross | $ | 6,933 | $ | 899 | $ | 3,392 | $ | 11,224 | $ | 843,776 | $ | 855,000 | $ | 23,769 | $ | 878,769 |
(In thousands) | Performing (Accruing) Loans | |||||||||||||||||||||||||||||||
As of December 31, 2021: | 30 - 59 Days | 60 - 89 Days | 90 Days Past Due | Total | Current | Total | Non- accruing | Loans | ||||||||||||||||||||||||
Loan portfolio segment: | ||||||||||||||||||||||||||||||||
Commercial Real Estate: | ||||||||||||||||||||||||||||||||
Pass | $ | 696 | $ | 0 | $ | 0 | $ | 696 | $ | 324,858 | $ | 325,554 | $ | 0 | $ | 325,554 | ||||||||||||||||
Special mention | 0 | 0 | 0 | 0 | 16,625 | 16,625 | 0 | 16,625 | ||||||||||||||||||||||||
Substandard | 0 | 0 | 0 | 0 | 7,364 | 7,364 | 15,704 | 23,068 | ||||||||||||||||||||||||
696 | 0 | 0 | 696 | 348,847 | 349,543 | 15,704 | 365,247 | |||||||||||||||||||||||||
Residential Real Estate: | ||||||||||||||||||||||||||||||||
Pass | 0 | 0 | 0 | 0 | 154,044 | 154,044 | 0 | 154,044 | ||||||||||||||||||||||||
Special mention | 0 | 0 | 0 | 0 | 1,399 | 1,399 | 0 | 1,399 | ||||||||||||||||||||||||
Substandard | 0 | 0 | 0 | 0 | 0 | 0 | 3,148 | 3,148 | ||||||||||||||||||||||||
0 | 0 | 0 | 0 | 155,443 | 155,443 | 3,148 | 158,591 | |||||||||||||||||||||||||
Commercial and Industrial: | ||||||||||||||||||||||||||||||||
Pass | 243 | 0 | 0 | 243 | 114,306 | 114,549 | 0 | 114,549 | ||||||||||||||||||||||||
Special mention | 0 | 0 | 0 | 0 | 1,951 | 1,951 | 0 | 1,951 | ||||||||||||||||||||||||
Substandard | 0 | 0 | 0 | 0 | 2,209 | 2,209 | 4,101 | 6,310 | ||||||||||||||||||||||||
243 | 0 | 0 | 243 | 118,466 | 118,709 | 4,101 | 122,810 | |||||||||||||||||||||||||
Consumer and Other: | ||||||||||||||||||||||||||||||||
Pass | 0 | 26 | 2 | 28 | 59,171 | 59,199 | 0 | 59,199 | ||||||||||||||||||||||||
Substandard | 0 | 0 | 0 | 0 | 23 | 23 | 142 | 165 | ||||||||||||||||||||||||
0 | 26 | 2 | 28 | 59,194 | 59,222 | 142 | 59,364 | |||||||||||||||||||||||||
Construction: | ||||||||||||||||||||||||||||||||
Pass | 0 | 0 | 0 | 0 | 21,781 | 21,781 | 0 | 21,781 | ||||||||||||||||||||||||
0 | 0 | 0 | 0 | 21,781 | 21,781 | 0 | 21,781 | |||||||||||||||||||||||||
Construction to Permanent - CRE: | ||||||||||||||||||||||||||||||||
Pass | 0 | 0 | 0 | 0 | 11,695 | 11,695 | 0 | 11,695 | ||||||||||||||||||||||||
0 | 0 | 0 | 0 | 11,695 | 11,695 | 0 | 11,695 | |||||||||||||||||||||||||
Total | $ | 939 | $ | 26 | $ | 2 | $ | 967 | $ | 715,426 | $ | 716,393 | $ | 23,095 | $ | 739,488 | ||||||||||||||||
Loans receivable, gross: | ||||||||||||||||||||||||||||||||
Pass | $ | 939 | $ | 26 | $ | 2 | $ | 967 | $ | 685,855 | $ | 686,822 | $ | 0 | $ | 686,822 | ||||||||||||||||
Special mention | 0 | 0 | 0 | 0 | 19,975 | 19,975 | 0 | 19,975 | ||||||||||||||||||||||||
Substandard | 0 | 0 | 0 | 0 | 9,596 | 9,596 | 23,095 | 32,691 | ||||||||||||||||||||||||
Loans receivable, gross | $ | 939 | $ | 26 | $ | 2 | $ | 967 | $ | 715,426 | $ | 716,393 | $ | 23,095 | $ | 739,488 |
(In thousands) | Performing (Accruing) Loans | |||||||||||||||||||||||||||||||||||||||||||||||||
As of December 31, 2022: | 30 - 59 Days Past Due | 60 - 89 Days Past Due | 90 Days or Greater Past Due | Total Past Due | Current | Total Performing Loans | Non-accruing Loans | Loans Receivable Gross | ||||||||||||||||||||||||||||||||||||||||||
Loan portfolio segment: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Commercial Real Estate: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Pass | $ | — | $ | — | $ | — | $ | — | $ | 401,313 | $ | 401,313 | $ | — | $ | 401,313 | ||||||||||||||||||||||||||||||||||
Special mention | — | — | — | — | 24,559 | 24,559 | — | 24,559 | ||||||||||||||||||||||||||||||||||||||||||
Substandard | 330 | — | — | 330 | — | 330 | 11,241 | 11,571 | ||||||||||||||||||||||||||||||||||||||||||
330 | — | — | 330 | 425,872 | 426,202 | 11,241 | 437,443 | |||||||||||||||||||||||||||||||||||||||||||
Residential Real Estate: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Pass | 330 | — | — | 330 | 120,715 | 121,045 | — | 121,045 | ||||||||||||||||||||||||||||||||||||||||||
Special mention | — | — | — | — | 625 | 625 | — | 625 | ||||||||||||||||||||||||||||||||||||||||||
Substandard | — | — | — | — | — | — | 2,470 | 2,470 | ||||||||||||||||||||||||||||||||||||||||||
330 | — | — | 330 | 121,340 | 121,670 | 2,470 | 124,140 | |||||||||||||||||||||||||||||||||||||||||||
Commercial and Industrial: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Pass | 2 | — | 230 | 232 | 131,092 | 131,324 | — | 131,324 | ||||||||||||||||||||||||||||||||||||||||||
Special mention | — | — | — | — | 597 | 597 | — | 597 | ||||||||||||||||||||||||||||||||||||||||||
Substandard | 1,488 | 412 | — | 1,900 | 133 | 2,033 | 4,833 | 6,866 | ||||||||||||||||||||||||||||||||||||||||||
1,490 | 412 | 230 | 2,132 | 131,822 | 133,954 | 4,833 | 138,787 | |||||||||||||||||||||||||||||||||||||||||||
Consumer and Other: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Pass | 929 | 3,175 | 925 | 5,029 | 135,990 | 141,019 | — | 141,019 | ||||||||||||||||||||||||||||||||||||||||||
Substandard | — | — | — | — | 23 | 23 | 49 | 72 | ||||||||||||||||||||||||||||||||||||||||||
929 | 3,175 | 925 | 5,029 | 136,013 | 141,042 | 49 | 141,091 | |||||||||||||||||||||||||||||||||||||||||||
Construction: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Pass | 895 | — | — | 895 | 3,503 | 4,398 | — | 4,398 | ||||||||||||||||||||||||||||||||||||||||||
Special mention | — | — | — | — | 524 | 524 | — | 524 | ||||||||||||||||||||||||||||||||||||||||||
895 | — | — | 895 | 4,027 | 4,922 | — | 4,922 | |||||||||||||||||||||||||||||||||||||||||||
Construction to Permanent - CRE: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Pass | — | — | — | — | 1,933 | 1,933 | — | 1,933 | ||||||||||||||||||||||||||||||||||||||||||
— | — | — | — | 1,933 | 1,933 | — | 1,933 | |||||||||||||||||||||||||||||||||||||||||||
Total | $ | 3,974 | $ | 3,587 | $ | 1,155 | $ | 8,716 | $ | 821,007 | $ | 829,723 | $ | 18,593 | $ | 848,316 | ||||||||||||||||||||||||||||||||||
Loans receivable, gross: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Pass | $ | 2,156 | $ | 3,175 | $ | 1,155 | $ | 6,486 | $ | 794,546 | $ | 801,032 | $ | — | $ | 801,032 | ||||||||||||||||||||||||||||||||||
Special mention | — | — | — | — | 26,305 | 26,305 | — | 26,305 | ||||||||||||||||||||||||||||||||||||||||||
Substandard | 1,818 | 412 | — | 2,230 | 156 | 2,386 | 18,593 | 20,979 | ||||||||||||||||||||||||||||||||||||||||||
Loans receivable, gross | $ | 3,974 | $ | 3,587 | $ | 1,155 | $ | 8,716 | $ | 821,007 | $ | 829,723 | $ | 18,593 | $ | 848,316 |
(In thousands) | Non-accruing Loans | |||||||||||||||||||||||
30 - 59 | 60 - 89 | 90 Days or Past Due | Total | Current | Total | |||||||||||||||||||
As of March 31, 2022: | ||||||||||||||||||||||||
Loan portfolio segment: | ||||||||||||||||||||||||
Commercial Real Estate: | ||||||||||||||||||||||||
Substandard | $ | 0 | $ | 0 | $ | 6,787 | $ | 6,787 | $ | 8,856 | $ | 15,643 | ||||||||||||
Residential Real Estate: | ||||||||||||||||||||||||
Substandard | 696 | 0 | 2,419 | 3,115 | 19 | 3,134 | ||||||||||||||||||
Commercial and Industrial: | ||||||||||||||||||||||||
Substandard | 0 | 118 | 3,292 | 3,410 | 1,134 | 4,544 | ||||||||||||||||||
Consumer and Other: | ||||||||||||||||||||||||
Substandard | 0 | 0 | 121 | 121 | 24 | 145 | ||||||||||||||||||
Total non-accruing loans | $ | 696 | $ | 118 | $ | 12,619 | $ | 13,433 | $ | 10,033 | $ | 23,466 | ||||||||||||
As of December 31, 2021: | ||||||||||||||||||||||||
Loan portfolio segment: | ||||||||||||||||||||||||
Commercial Real Estate: | ||||||||||||||||||||||||
Substandard | $ | 0 | $ | 0 | $ | 15,704 | $ | 15,704 | $ | 0 | $ | 15,704 | ||||||||||||
Residential Real Estate: | ||||||||||||||||||||||||
Substandard | 0 | 0 | 2,419 | 2,419 | 729 | 3,148 | ||||||||||||||||||
Commercial and Industrial: | ||||||||||||||||||||||||
Substandard | - | 491 | 2,458 | 2,949 | 1,152 | 4,101 | ||||||||||||||||||
Consumer and Other: | ||||||||||||||||||||||||
Substandard | 0 | 94 | 28 | 122 | 20 | 142 | ||||||||||||||||||
Total non-accruing loans | $ | 0 | $ | 585 | $ | 20,609 | $ | 21,194 | $ | 1,901 | $ | 23,095 |
2022:
(In thousands) | Non-accruing Loans | |||||||||||||||||||||||||||||||||||||
30 - 59 Days Past Due | 60 - 89 Days Past Due | 90 Days or Greater Past Due | Total Past Due | Current | Total Non-accruing Loans | |||||||||||||||||||||||||||||||||
As of March 31, 2023: | ||||||||||||||||||||||||||||||||||||||
Loan portfolio segment: | ||||||||||||||||||||||||||||||||||||||
Commercial Real Estate: | ||||||||||||||||||||||||||||||||||||||
Substandard | $ | — | $ | — | $ | 11,367 | $ | 11,367 | $ | — | $ | 11,367 | ||||||||||||||||||||||||||
Residential Real Estate: | ||||||||||||||||||||||||||||||||||||||
Substandard | 641 | — | 1,795 | 2,436 | 16 | 2,452 | ||||||||||||||||||||||||||||||||
Commercial and Industrial: | ||||||||||||||||||||||||||||||||||||||
Substandard | — | 914 | 5,521 | 6,435 | 1,150 | 7,585 | ||||||||||||||||||||||||||||||||
Consumer and Other: | ||||||||||||||||||||||||||||||||||||||
Substandard | — | — | 27 | 27 | 21 | 48 | ||||||||||||||||||||||||||||||||
Construction: | ||||||||||||||||||||||||||||||||||||||
Substandard | 2,317 | — | — | 2,317 | — | 2,317 | ||||||||||||||||||||||||||||||||
Total non-accruing loans | $ | 2,958 | $ | 914 | $ | 18,710 | $ | 22,582 | $ | 1,187 | $ | 23,769 | ||||||||||||||||||||||||||
As of December 31, 2022: | ||||||||||||||||||||||||||||||||||||||
Loan portfolio segment: | ||||||||||||||||||||||||||||||||||||||
Commercial Real Estate: | ||||||||||||||||||||||||||||||||||||||
Substandard | $ | — | $ | — | $ | 11,241 | $ | 11,241 | $ | — | $ | 11,241 | ||||||||||||||||||||||||||
Residential Real Estate: | ||||||||||||||||||||||||||||||||||||||
Substandard | 657 | — | 1,796 | 2,453 | 17 | 2,470 | ||||||||||||||||||||||||||||||||
Commercial and Industrial: | ||||||||||||||||||||||||||||||||||||||
Substandard | 46 | 395 | 3,196 | 3,637 | 1,196 | 4,833 | ||||||||||||||||||||||||||||||||
Consumer and Other: | ||||||||||||||||||||||||||||||||||||||
Substandard | — | — | 27 | 27 | 22 | 49 | ||||||||||||||||||||||||||||||||
Total non-accruing loans | $ | 703 | $ | 395 | $ | 16,260 | $ | 17,358 | $ | 1,235 | $ | 18,593 |
During the three months ended March 31, 2022 and 2021, interest2022.
PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIES
NotesLoan Modifications Made to consolidated financial statements (Unaudited)
Troubled Debt Restructurings (“TDR”)
Borrowers Experiencing Financial Difficulty
Substantially all TDR loan modifications involve lowering the monthly payments on such loans through either a reduction in interest rate below market rate, an extension of the term of the loan, or a combination of adjusting these two contractual attributes. TDR loanLoan modifications may also result in the forgiveness of principal or accrued interest. In addition, when modifying commercial loans, Patriot frequently obtains additional collateral or guarantor support. If the borrower has performed under the existing contractual terms of the loan and Patriot’s underwriters determine that the borrower has the capacity to continue to perform under the terms of the TDR,loan, the loan continues accruing interest. Non-accruing TDRs modified loans may be returned to accrual status when there has been a sustained period of performance (generally six consecutive months of payments) and both principal and interest are reasonably assured of collection.
The following table summarizes
(In thousands) | March 31, 2022 | December 31, 2021 | ||||||||||||||
Loan portfolio segment: | Number of Loans | Recorded Investment | Number of Loans | Recorded Investment | ||||||||||||
Commercial Real Estate | 1 | $ | 8,856 | 1 | $ | 8,884 | ||||||||||
Residential Real Estate | 3 | 856 | 3 | 870 | ||||||||||||
Consumer and Other | 3 | 637 | 3 | 640 | ||||||||||||
Total TDR Loans | 7 | 10,349 | 7 | 10,394 | ||||||||||||
Less: | ||||||||||||||||
TDRs included in non-accrual loans | 3 | (9,646 | ) | 3 | (9,688 | ) | ||||||||||
Total accrual TDR Loans | 4 | $ | 703 | 4 | $ | 706 |
During the three months ended March 31, 2022,and 2021, 0 loans were modified as TDRs, and there were 0 defaults of TDRs.
The loans modified in a TDR often involve reducing the interest rate for the remaining term of the loan, extending the maturity date at an interest rate lower than the current market rate for new debt with similar risk, extending the interest-only payment period, or substituting or adding a co-borrower or guarantor. There were 0 defaults of TDRs during the three months ended March 31, 2022 and 2021. At March 31, 2022 and December 31, 2021, there were 0no commitments to advance additional funds under TDRs.
The balances reflected here as TDR’s are also included in the non-accruing loan balance included in the prior table - Loan Portfolio Aging Analysis.
Impaired
Impaired
(In thousands) | March 31, 2023 | December 31, 2022 | ||||||||||||||||||||||||||||||||||||
Recorded Investment | Principal Outstanding | Related Allowance | Recorded Investment | Principal Outstanding | Related Allowance | |||||||||||||||||||||||||||||||||
With no related allowance recorded: | ||||||||||||||||||||||||||||||||||||||
Commercial Real Estate | $ | 387 | $ | 430 | $ | — | $ | 2,435 | $ | 2,428 | $ | — | ||||||||||||||||||||||||||
Residential Real Estate | 763 | 882 | — | 2,402 | 2,224 | — | ||||||||||||||||||||||||||||||||
Commercial and Industrial | 2,524 | 4,801 | — | 1,939 | 2,424 | — | ||||||||||||||||||||||||||||||||
Consumer and Other | 512 | 512 | — | 514 | 514 | — | ||||||||||||||||||||||||||||||||
Construction | 2,317 | 2,317 | — | — | — | — | ||||||||||||||||||||||||||||||||
6,503 | 8,942 | — | 7,290 | 7,590 | — | |||||||||||||||||||||||||||||||||
With a related allowance recorded: | ||||||||||||||||||||||||||||||||||||||
Commercial Real Estate | $ | 10,981 | $ | 10,968 | $ | 6,352 | 8,806 | 8,656 | 5,430 | |||||||||||||||||||||||||||||
Residential Real Estate | 1,728 | 1,553 | 29 | 106 | 105 | 5 | ||||||||||||||||||||||||||||||||
Commercial and Industrial | 5,035 | 5,241 | 754 | 2,714 | 2,863 | 608 | ||||||||||||||||||||||||||||||||
Consumer and Other | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||
17,744 | 17,762 | 7,135 | 11,626 | 11,624 | 6,043 | |||||||||||||||||||||||||||||||||
Individually evaluated loans, Total: | ||||||||||||||||||||||||||||||||||||||
Commercial Real Estate | 11,368 | 11,398 | 6,352 | 11,241 | 11,084 | 5,430 | ||||||||||||||||||||||||||||||||
Residential Real Estate | 2,491 | 2,435 | 29 | 2,508 | 2,329 | 5 | ||||||||||||||||||||||||||||||||
Commercial and Industrial | 7,559 | 10,042 | 754 | 4,653 | 5,287 | 608 | ||||||||||||||||||||||||||||||||
Consumer and Other | 512 | 512 | — | 514 | 514 | — | ||||||||||||||||||||||||||||||||
Construction | 2,317 | 2,317 | — | — | — | — | ||||||||||||||||||||||||||||||||
Total | $ | 24,247 | $ | 26,704 | $ | 7,135 | $ | 18,916 | $ | 19,214 | $ | 6,043 |
At December 31,2021, exposure to the impaired loans was related to NaN borrowers. Twenty-three out of thirty-four impaired loans were individually evaluated for impairment, and the remaining 11 impaired loans with balances under $100,000, totaling $590,000, with a general reserve of $7,000 were collectively evaluated, and not individually evaluated for impairment.
2022.
(In thousands) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||
Average Recorded Investment | Interest Income Recognized | Average Recorded Investment | Interest Income Recognized | |||||||||||||||||||||||||||||||||||||||||||||||
With no related allowance recorded: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Commercial Real Estate | $ | 899 | $ | — | $ | 6,806 | $ | 32 | ||||||||||||||||||||||||||||||||||||||||||
Residential Real Estate | 1,179 | 3 | 2,840 | 8 | ||||||||||||||||||||||||||||||||||||||||||||||
Commercial and Industrial | 2,402 | 82 | 621 | 4 | ||||||||||||||||||||||||||||||||||||||||||||||
Consumer and Other | 513 | 9 | 522 | 4 | ||||||||||||||||||||||||||||||||||||||||||||||
Construction | 1,738 | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
6,731 | 94 | 10,789 | 48 | |||||||||||||||||||||||||||||||||||||||||||||||
With a related allowance recorded: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Commercial Real Estate | 10,405 | 154 | 8,873 | 25 | ||||||||||||||||||||||||||||||||||||||||||||||
Residential Real Estate | 1,352 | 1 | 1,328 | 21 | ||||||||||||||||||||||||||||||||||||||||||||||
Commercial and Industrial | 4,052 | 43 | 2,738 | 2 | ||||||||||||||||||||||||||||||||||||||||||||||
Consumer and Other | 18 | — | 165 | 1 | ||||||||||||||||||||||||||||||||||||||||||||||
15,827 | 198 | 13,104 | 49 | |||||||||||||||||||||||||||||||||||||||||||||||
Individually evaluated loans, Total: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Commercial Real Estate | 11,304 | 154 | 15,679 | 57 | ||||||||||||||||||||||||||||||||||||||||||||||
Residential Real Estate | 2,531 | 4 | 4,168 | 29 | ||||||||||||||||||||||||||||||||||||||||||||||
Commercial and Industrial | 6,454 | 125 | 3,359 | 6 | ||||||||||||||||||||||||||||||||||||||||||||||
Consumer and Other | 531 | 9 | 687 | 5 | ||||||||||||||||||||||||||||||||||||||||||||||
Construction | 1,738 | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
Total | $ | 22,558 | $ | 292 | $ | 23,893 | $ | 97 |
The following table reflects information about the impaired loans by class as
The following table summarizes additional information regarding impaired loans by class for the three months ended March 31, 2022 and 2021.
Three Months Ended March 31, | ||||||||||||||||
(In thousands) | 2022 | 2021 | ||||||||||||||
Average | Interest | Average | Interest | |||||||||||||
With no related allowance recorded: | ||||||||||||||||
Commercial Real Estate | $ | 6,806 | $ | 32 | $ | 6,078 | $ | 0 | ||||||||
Residential Real Estate | 2,840 | 8 | 4,248 | 13 | ||||||||||||
Commercial and Industrial | 621 | 4 | 2,745 | 46 | ||||||||||||
Consumer and Other | 522 | 4 | 945 | 6 | ||||||||||||
10,789 | 48 | 14,016 | 65 | |||||||||||||
With a related allowance recorded: | ||||||||||||||||
Commercial Real Estate | 8,873 | 25 | 8,813 | 0 | ||||||||||||
Residential Real Estate | 1,328 | 21 | 190 | 3 | ||||||||||||
Commercial and Industrial | 2,738 | 2 | 462 | 26 | ||||||||||||
Consumer and Other | 165 | 1 | 47 | 2 | ||||||||||||
13,104 | 49 | 9,512 | 31 | |||||||||||||
Impaired Loans, Total: | ||||||||||||||||
Commercial Real Estate | 15,679 | 57 | 14,891 | 0 | ||||||||||||
Residential Real Estate | 4,168 | 29 | 4,438 | 16 | ||||||||||||
Commercial and Industrial | 3,359 | 6 | 3,207 | 72 | ||||||||||||
Consumer and Other | 687 | 5 | 992 | 8 | ||||||||||||
Impaired Loans, Total | $ | 23,893 | $ | 97 | $ | 23,528 | $ | 96 |
PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIES
Notes to consolidated financial statements (Unaudited)
Serviced loans sold to others are not included in the accompanying consolidated balance sheets. The total amount of such loans serviced, but owned by third party, amounted to approximately $31.2$47.5 million and $29.6$47.3 million at March 31, 2022 2023 and December 31, 2021, 2022, respectively. As of March 31, 2022 2023 and December 31, 2021, 2022, the servicing asset has a carrying value of $626,000$893,000 and $584,000,$886,000, respectively, and fair value of $660,000$987,000 and $617,000,$1.0 million, respectively. Income and fees collected for loan servicing are credited to noninterest income when earned, net of amortization on the related servicing assets. The servicing asset is included in other assets on the consolidated balance sheets.
(In thousands) | Three Months Ended March 31, | |||||||
2022 | 2021 | |||||||
Beginning balance | $ | 584 | $ | 316 | ||||
Servicing rights capitalized | 52 | 17 | ||||||
Servicing rights amortized | (8 | ) | (6 | ) | ||||
Servicing rights disposed | (2 | ) | 0 | |||||
Ending balance | $ | 626 | $ | 327 |
(In thousands) | Three Month Ended March 31, | ||||||||||||||||||||||
2023 | 2022 | ||||||||||||||||||||||
Beginning balance | $ | 886 | $ | 584 | |||||||||||||||||||
Servicing rights capitalized | 34 | 52 | |||||||||||||||||||||
Servicing rights amortized | (11) | (8) | |||||||||||||||||||||
Servicing rights disposed | (16) | (2) | |||||||||||||||||||||
Ending balance | $ | 893 | $ | 626 |
of goodwill after adjustments as of May 10, 2019. In December 2020, a purchase price adjustment of $556,000 was recognized to project expenses on the consolidated statements of operations. The charge represented an adjustment to the earlier estimate of the final purchase price upon preliminary settlement of the litigation related to a dispute over the final purchase price in 2020. There was no further adjustment to goodwill as of March 31, 2023 and December 31, 2022. quarter three months of 20222023 as no events occurred which would trigger an impairment assessment.24Merger and acquisition with American ChallengerOn November 15, 2021, the Company and American Challenger Development Corp., a Delaware corporation (“American Challenger”), entered into an Agreement and Plan of Merger (the “Original Merger Agreement”), which was subsequently amended on January 26, 2022 and February 28, 2022 (the Original Merger Agreement, as amended, referred to as the “Merger Agreement”). Pursuant to the Merger Agreement, American Challenger will merge with and into PNBK (the "Merger"). Following the Merger, Patriot Bank will adopt a consolidated business plan and will operate as two divisions. The Patriot Bank Division will continue to operate the existing business model. The American Challenger Division will execute the high-growth component of the consolidated business plan. To date, the Company incurred $1.9 million of project expenses in connection with the Merger.The pending acquisition is subject to several material conditions including obtaining regulatory and shareholder approval.
(In thousands) March 31, 2022 December 31, 2021 Non-interest bearing Interest bearing: Negotiable order of withdrawal accounts Savings Money market Certificates of deposit, less than $250,000 Certificates of deposit, $250,000 or greater Brokered deposits Interest bearing, Total Total Deposits (In thousands) CDs CDs Brokered Total 1 year or less More than 1 year through 2 years More than 2 years through 3 years More than 3 years through 4 years More than 4 years through 5 years2022 2023 and December 31, 2021. $ 237,825 $ 226,713 42,272 34,741 105,871 109,744 146,819 164,518 158,625 142,246 53,513 53,584 34,924 17,016 542,024 521,849 $ 779,849 $ 748,562 On July 22, 2020, the Company completed the purchase of prepaid debit card deposits of $50.0 million from a prominent national provider and processor of prepaid debit cards for corporate, consumer and government clients. 2022.(In thousands) March 31, 2023 December 31, 2022 Non-interest bearing $ 152,773 $ 269,636 Interest bearing: Negotiable order of withdrawal accounts 29,316 34,440 Savings deposits 56,418 71,002 Money market deposits 306,474 211,000 Certificates of deposit, less than $250,000 162,734 165,793 Certificates of deposit, $250,000 or greater 43,664 59,877 Brokered deposits 105,089 48,698 Interest bearing, Total 703,695 590,810 Total Deposits $ 856,468 $ 860,446 $146.8$176.2 million and $150.4$197.3 million as of March 31, 2022 2023 and December 31, 2021, 2022, respectively.2022, 2023, contractual maturities of Certificates of Deposit (“CDs”), and brokered deposits is summarized as follows:
less than
$250,000
$250,000
or greater
Deposits $ 96,349 $ 41,582 $ 1,498 $ 139,429 39,836 8,668 28,320 76,824 8,710 2,503 5,106 16,319 3,936 760 0 4,696 9,794 0 0 9,794 $ 158,625 $ 53,513 $ 34,924 $ 247,062 (In thousands) CDs
less than
$250,000CDs
$250,000
or greaterBrokered
DepositsTotal 1 year or less $ 114,989 $ 33,040 $ 99,980 $ 248,009 More than 1 year through 2 years 23,955 9,368 4,858 38,181 More than 2 years through 3 years 9,911 1,256 251 11,418 More than 3 years through 4 years 488 — — 488 More than 4 years through 5 years 13,391 — — 13,391 $ 162,734 $ 43,664 $ 105,089 $ 311,487 25
PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIES
Notes to consolidated financial statements (Unaudited)
Note 8. Derivatives
swaps. 2022. The following table presents summary information regarding these derivatives for the periods presented (dollars in thousands): (In thousands) Notional Amount Maturity (Years) Fixed Rate Variable Fair Value March 31, 2022 Classified in Other Assets: Customer interest rate swap 1 Mo. LIBOR + 1.96% Customer interest rate swap 1 Mo. LIBOR + 2.00% Classified in Other Liabilities: 3rd party interest rate swap 1 Mo. LIBOR + 1.96% 3rd party interest rate swap 1 Mo. LIBOR + 2.00% December 31, 2021 Classified in Other Assets: Customer interest rate swap 1 Mo. LIBOR + 1.96% Customer interest rate swap 1 Mo. LIBOR + 2.00% Classified in Other Liabilities: 3rd party interest rate swap 1 Mo. LIBOR + 1.96% 3rd party interest rate swap 1 Mo. LIBOR + 2.00%4four interest rate swaps derivatives that are not designated as hedging instruments. Under a program, Patriot will execute interest rate swaps with commercial lending customers to facilitate their respective risk management strategies. These interest rate swaps with customers are simultaneously offset by interest rate swaps that Patriot executes with a third party, such that Patriot minimizes its net risk exposure resulting from such transactions. Because the interest rate swaps associated with this program do not meet the strict hedge accounting requirements, changes in the fair value of both the customer swaps and the offsetting swaps are recognized directly in earnings. The changes in the fair value of the swaps offset each other, except for the credit risk of the counterparties, which is determined by taking into consideration the risk rating, probability of default and loss given default for all counterparties.2into two initial interest rate swaps under the program in November 2018,and another 2two swaps were entered into in May 2019. 2019. As ofMarch 31, 2022 2023and December 31, 2021, 2022, Patriot haddid not have any cash pledged for collateral on its interest rate swaps of $1.1 million and $1.4 million, respectively. This collateral is included in other assets on the consolidated balance sheets.2022 2023 and 2021.cashflowscash flows associated with a pool of 1-month1-month LIBOR floating rate loans by converting a $50 million portion of that pool of loans into fixed rates with the swap. The Bank received fixed and paid floating rate based on 1 month LIBOR for a 7-year rolling period beginning April 29, 2021. A hedging instrument is expected at inception to be highly effective at offsetting changes in the hedged transactions attributable to the changes in the hedged risk. Changes in the fair value of derivatives designated and that qualify as cash flow hedges are recorded in accumulated other comprehensive income and are subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. In August 2021,the cash flow hedge interest rate swap contract was terminated.26PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIESNotes to consolidated financial statements (Unaudited)
Rate $ 4,816 7.1 5.25 % $ 318 1,389 7.3 4.38 % 15 $ 4,816 7.1 5.25 % $ (318 ) 1,389 7.3 4.38 % (15 ) $ 4,843 7.3 5.25 % $ 638 1,398 7.5 4.38 % 100 $ 4,843 7.3 5.25 % $ (638 ) 1,398 7.5 4.38 % (100 ) (In thousands) Notional
AmountMaturity
(Years)Fixed Rate Variable
RateFair Value March 31, 2023 Classified in Other Assets: 3rd party interest rate swap $ 4,707 6.25 5.25 % 1 Mo. LIBOR + 1.96% $ 32 3rd party interest rate swap 1,354 6.26 4.38 % 1 Mo. LIBOR + 2.00% 74 Classified in Other Liabilities: Customer interest rate swap $ 4,707 6.25 5.25 % 1 Mo. LIBOR + 1.96% $ (32) Customer interest rate swap 1,354 6.26 4.38 % 1 Mo. LIBOR + 2.00% (74) December 31, 2022 Classified in Other Assets: 3rd party interest rate swap $ 4,736 6.30 5.25 % 1 Mo. LIBOR + 1.96% $ 106 3rd party interest rate swap 1,363 6.50 4.38 % 1 Mo. LIBOR + 2.00% 97 Classified in Other Liabilities: Customer interest rate swap $ 4,736 6.30 5.25 % 1 Mo. LIBOR + 1.96% $ (106) Customer interest rate swap 1,363 6.50 4.38 % 1 Mo. LIBOR + 2.00% (97)
.On November 10, 2022, the Board of Directors approved the Amendment and Restatement of the 2020 Plan (the “Amended and Restated 2020 Plan”), which was approved and ratified by shareholders of the Company on December 14, 2022. Three months ended March 31, 2022: Number of Weighted Average Unvested at December 31, 2021 Unvested at March 31, 2022 Three months ended March 31, 2021: Unvested at December 31, 2020 Vested Unvested at March 31, 2021“2012“2012 Plan”). The 2012 Plan was amended in 2020 and renamed as the Patriot National Bancorp, Inc. 2020 Restricted Stock Award Plan (the “2020“2020 Plan”). A copy of the 2020 Plan was filed as Exhibit 10.1 to the Company’s Amendment No.1 to Annual Report on Form 10-K/10-K/A for the year ended December 31, 2020 filed on April 30, 2021. The 2020 Plan provides an incentive to directors and employees of the Company by the grant of restricted stock awards (“RSA”).authorizeswas amended primarily to (i) reduce the total number of shares authorized for issuance thereunder from 3,000,000 shares to 400,000 shares; and (ii) limit the maximum number of theshares of Company’s Common Stock for issuance.granted during a single fiscal year to any non-employee director, together with any cash fees paid to such director, to be no more than a total value of $300,000. As of March 31, 2022, 2,834,6172023, 234,617 shares of stock arewere available for issuance under the Plan. In accordance with the terms of the Plan, the vesting of RSAs may be accelerated at the discretion of the Compensation Committee of the Board of Directors. The Compensation Committee sets the terms and conditions applicable to the vesting of RSAs. RSAs granted to directors and employees generally vest in quarterly or annual installments over a three, four or five year period from the date of grant.2022 2023 and 2021:
Shares Awarded
Grant Date
Fair Value 21,468 $ 6.48 21,468 $ 6.48 18,498 $ 7.29 (700 ) $ 17.85 17,798 $ 6.88 Three months ended March 31, 2023: Number of
Shares AwardedWeighted Average
Grant Date
Fair ValueUnvested at December 31, 2022 22,660 $ 7.11 Unvested at March 31, 2023 22,660 $ 7.11 Three months ended March 31, 2022: Number of
Shares AwardedWeighted Average
Grant Date
Fair ValueUnvested at December 31, 2021 21,468 $ 6.48 Unvested at March 31, 2022 21,468 $ 6.48 27
PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIES
Notes to consolidated financial statements (Unaudited)
The Company recognizes compensation expense for all director and employee share-based compensation awards on a straight-line basis over the requisite service period, which is equal to the vesting schedule of each award, for each vesting portion of an award equal to its grant date fair value.
For the three months ended March 31, 2021, the Company recognized total share-based compensation expense of $34,000. The share-based compensation attributable to employees of Patriot amounted to $15,000. Included in share-based compensation expense were $19,000 attributable to Patriot’s external directors, who received total compensation of $94,000, which amounts are included in other operating expenses in the consolidated statements of operations.
Dividends
The Company has not paid any dividends since 2020 and has temporarily suspended dividend payments pending resolution of the economic uncertainties associated with the Coronavirus pandemic.
Retirement Plan
The Company offers a 401K retirement plan (the “401K”), which provides for tax-deferred salary deductions for eligible employees. Employees may choose to make voluntary contributions to the 401K, limited to an annual maximum amount as set forth periodically by the Internal Revenue Service. The Company matches 50% of such contributions, up to a maximum of 9 percent of an employee's annual compensation. During the three months ended March 31, 2022 and 2021, compensation expense under the 401K aggregated $74,000 and $48,000, respectively.
(Net income in thousands) | Three Months Ended March 31, | |||||||
2022 | 2021 | |||||||
Basis earnings per share: | ||||||||
Net income attributable to Common shareholders | $ | 800 | $ | 854 | ||||
Divided by: | ||||||||
Weighted average shares outstanding | 3,956,492 | 3,943,580 | ||||||
Basic earnings per common share | $ | 0.20 | $ | 0.22 | ||||
Diluted earnings per share: | ||||||||
Net income attributable to Common shareholders | $ | 800 | $ | 854 | ||||
Weighted average shares outstanding | 3,956,492 | 3,943,580 | ||||||
Effect of potentially dilutive restricted common shares | 9,510 | 1,540 | ||||||
Divided by: | ||||||||
Weighted average diluted shares outstanding | 3,966,002 | 3,945,120 | ||||||
Diluted earnings per common share | $ | 0.20 | $ | 0.22 |
(Net income in thousands) | Three Months Ended March 31, | |||||||||||||||||||||||||
2023 | 2022 | |||||||||||||||||||||||||
Basis earnings per share: | ||||||||||||||||||||||||||
Net income attributable to Common shareholders | $ | (53) | $ | 800 | ||||||||||||||||||||||
Divided by: | ||||||||||||||||||||||||||
Weighted average shares outstanding | 3,965,186 | 3,956,492 | ||||||||||||||||||||||||
Basic earnings per common share | $ | (0.01) | $ | 0.20 | ||||||||||||||||||||||
Diluted earnings per share: | ||||||||||||||||||||||||||
Net income attributable to Common shareholders | $ | (53) | $ | 800 | ||||||||||||||||||||||
Weighted average shares outstanding | 3,965,186 | 3,956,492 | ||||||||||||||||||||||||
Effect of potentially dilutive restricted common shares | — | (1) | 9,510 | |||||||||||||||||||||||
Divided by: | ||||||||||||||||||||||||||
Weighted average diluted shares outstanding | 3,965,186 | 3,966,002 | ||||||||||||||||||||||||
Diluted earnings per common share | $ | (0.01) | $ | 0.20 |
(1) | The weighted average diluted shares outstanding does not include 491 anti-dilutive restricted common shares for the three months ended March 31, 2023. |
(In thousands) March 31, 2022 December 31, 2021 Commitments to extend credit: Unused lines of credit Undisbursed construction loans Home equity lines of credit Future loan commitments Financial standby letters of credit The increase in allowance for credit loss in 2023 is primarily due to the adoption of CECL.2022 2023 and December 31, 2021 2022 are as follows: $ 76,691 $ 68,341 16,314 18,594 16,520 16,396 41,427 23,486 164 164 $ 151,116 $ 126,981 (In thousands) March 31, 2023 December 31, 2022 Commitments to extend credit: Unused lines of credit $ 125,357 $ 100,986 Undisbursed construction loans 10,122 12,000 Home equity lines of credit 14,736 26,878 Future loan commitments 55,150 14,365 Financial standby letters of credit — 78 $ 205,365 $ 154,307 a reservean allowance for credit loss of $8,000$700,000 and $8,000 as of March 31, 2022 2023 and December 31, 2021, 2022, respectively, which is included in accrued expenses and other liabilities.30
(In thousands) March 31, 2022 December 31, 2021 Patriot Bank, N.A. Amount Ratio Amount Ratio Tier 1 Leverage Capital (to average assets): Actual To be Well Capitalized (“ (“CET1”) Capital, and a Tier 1 Leverage Capital ratio. The risk-based capital ratios measure the adequacy of a bank's capital against the riskiness of its on- and off-balance sheet assets and activities. Failure to maintain adequate capital is a basis for "prompt corrective action" or other regulatory enforcement action. In assessing a bank's capital adequacy, regulators also consider other factors such as interest rate risk exposure, liquidity, funding and market risks, quality and level of earnings, concentrations of credit, quality of loans and investments, nontraditional activity risk, policy effectiveness, and management's overall ability to monitor and control risk.("CBLR"(“CBLR”) framework was jointly issued by the Federal Deposit Insurance Corporation (“FDIC”("FDIC"), the Office of the Comptroller of the Currency (“OCC”) and FRB. The final rule gives qualifying community banks the option to use a simplified measure of capital adequacy instead of risk based capital, beginning with their March 31, 2020 Call Report. Under the final rule a community bank may qualify for the CBLR framework if it has a Tier 1 leverage ratio of greater than 9%, less than $10 billion in total consolidated assets, and limited amounts of off-balance sheet exposures and trading assets and liabilities. The CARES Act directed the federal banking agencies to issue an interim rule temporarily lowering the CBLR ratio to 8% which the agencies did with a transition back to 9% beginning January 1, 2022.2022 2023 and December 31, 2021 2022 was 9.94%9.25% and 9.86%9.27%, respectively, which satisfied the “greater than 9 percent” leverage ratio requirement under the CBLR framework. Management continuously assesses the adequacy of the Bank’s capital in order to maintain its “well capitalized” status.2022 2023 and December 31, 2021 2022 are summarized as follows: $ 95,094 9.94 % $ 93,923 9.86 % 86,133 9.00 % (1) 85,773 9.00 % (1) (1)Leverage Capital Ratio greater than 9% is considered well-capitalized under the CBLR Framework. (In thousands) March 31, 2023 December 31, 2022 Patriot Bank, N.A. Amount Ratio Amount Ratio Tier 1 Leverage Capital (to average assets): Actual $ 98,496 9.25 % $ 100,267 9.27 % To be Well Capitalized 95,790 9.00 % (1) 97,388 9.00 % (1) 31
Level 1Unadjusted quoted market prices for identical assets or liabilities in active markets that the entity has the ability to access at the measurement date (such as active exchange-traded equity securities and certain U.S. and government agency debt securities).Level 2Observable inputs other than quoted prices included in Level 1, such as:- Quoted prices for similar assets or liabilities in active markets (such as U.S. agency and government sponsored mortgage-backed securities)- Quoted prices for identical or similar assets or liabilities in less active markets (such as certain U.S. and government agency debt securities, and corporate and municipal debt securities that trade infrequently)- Other inputs that are observable for substantially the full term of the asset or liability (i.e. interest rates, yield curves, prepayment speeds, default rates, etc.).Level 3Valuation techniques that require unobservable inputs that are supported by little or no market activity and are significant to the fair value measurement of the asset or liability (such as pricing and discounted cash flow models that typically reflect management’s estimates of the assumptions a market participant would use in pricing the asset or liability).1)1), or matrix pricing (Level 2)2), which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted market prices for the specific securities, but rather by relying on the securities' relationship to other benchmark quoted prices, or using unobservable inputs employing various techniques and assumptions (Level 3)3).
PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIES
Other Real Estate Owned
The fair value of OREO the Bank may obtain is based on current appraised property value less estimated costs to sell. When fair value is based on unadjusted current appraised value, OREO is classified within Level 2 of the fair value hierarchy. Patriot classifies OREO within Level 3 of the fair value hierarchy when unobservable inputs are used to determine adjustments to appraised values. Patriot does not record OREO at fair value on a recurring basis, but rather initially records OREO at fair value on a non-recurring basis and then monitors property and market conditions that may indicate a change in value is warranted.
PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIES
Notes to consolidated financial statements (Unaudited)
Deposits
The fair value of demand deposits, regular savings and certain money market deposits is the amount payable on demand at the reporting date.
junior subordinated debt.
(In thousands) | March 31, 2022 | December 31, 2021 | |||||||||||||||
Fair Value | Carrying | Estimated | Carrying | Estimated | |||||||||||||
Financial Assets: | |||||||||||||||||
Cash and noninterest bearing balances due from banks | Level 1 | $ | 9,026 | $ | 9,026 | $ | 3,264 | $ | 3,264 | ||||||||
Interest-bearing deposits due from banks | Level 1 | 35,290 | 35,290 | 43,781 | 43,781 | ||||||||||||
Available-for-sale securities | Level 2 | 72,023 | 72,023 | 81,161 | 81,161 | ||||||||||||
Available-for-sale securities | Level 3 | 11,237 | 11,237 | 13,180 | 13,180 | ||||||||||||
Other investments | Level 2 | 4,450 | 4,450 | 4,450 | 4,450 | ||||||||||||
Federal Reserve Bank stock | Level 2 | 2,869 | 2,869 | 2,843 | 2,843 | ||||||||||||
Federal Home Loan Bank stock | Level 2 | 4,184 | 4,184 | 4,184 | 4,184 | ||||||||||||
Loans receivable, net | Level 3 | 763,602 | 754,217 | 729,583 | 727,733 | ||||||||||||
Loans held for sale | Level 2 | 5,820 | 6,506 | 3,129 | 3,506 | ||||||||||||
SBA servicing assets | Level 3 | 626 | 660 | 584 | 617 | ||||||||||||
Accrued interest receivable | Level 2 | 5,596 | 5,596 | 5,822 | 5,822 | ||||||||||||
Interest rate swap receivable | Level 2 | 333 | 333 | 738 | 738 | ||||||||||||
Financial assets, total | $ | 915,056 | $ | 906,391 | $ | 892,719 | $ | 891,279 | |||||||||
Financial Liabilities: | |||||||||||||||||
Demand deposits | Level 2 | $ | 237,825 | $ | 237,825 | $ | 226,713 | $ | 226,713 | ||||||||
Savings deposits | Level 2 | 105,871 | 105,871 | 109,744 | 109,744 | ||||||||||||
Money market deposits | Level 2 | 146,819 | 146,819 | 164,518 | 164,518 | ||||||||||||
NOW accounts | Level 2 | 42,272 | 42,272 | 34,741 | 34,741 | ||||||||||||
Time deposits | Level 2 | 212,138 | 209,462 | 195,830 | 195,048 | ||||||||||||
Brokered deposits | Level 1 | 34,924 | 34,267 | 17,016 | 17,003 | ||||||||||||
FHLB borrowings | Level 2 | 90,000 | 91,087 | 90,000 | 93,643 | ||||||||||||
Senior notes | Level 2 | 12,000 | 12,002 | 12,000 | 12,045 | ||||||||||||
Subordinated debt | Level 2 | 9,818 | 9,758 | 9,811 | 9,947 | ||||||||||||
Junior subordinated debt owed to unconsolidated trust | Level 2 | 8,121 | 8,121 | 8,119 | 8,119 | ||||||||||||
Note payable | Level 3 | 740 | 706 | 791 | 775 | ||||||||||||
Accrued interest payable | Level 2 | 680 | 680 | 343 | 343 | ||||||||||||
Interest rate swap liability | Level 2 | 333 | 333 | 738 | 738 | ||||||||||||
Financial liabilities, total | $ | 901,541 | $ | 899,203 | $ | 870,364 | $ | 873,377 |
2022:
(In thousands) | March 31, 2023 | December 31, 2022 | |||||||||||||||||||||||||||
Fair Value Hierarchy | Carrying Amount | Estimated Fair Value | Carrying Amount | Estimated Fair Value | |||||||||||||||||||||||||
Financial Assets: | |||||||||||||||||||||||||||||
Cash and noninterest bearing balances due from banks | Level 1 | $ | 1,828 | $ | 1,828 | $ | 5,182 | $ | 5,182 | ||||||||||||||||||||
Interest-bearing deposits due from banks | Level 1 | 58,424 | 58,424 | 33,311 | 33,311 | ||||||||||||||||||||||||
Available-for-sale securities | Level 2 | 81,531 | 81,531 | 75,093 | 75,093 | ||||||||||||||||||||||||
Available-for-sale securities | Level 3 | 10,205 | 10,205 | 9,427 | 9,427 | ||||||||||||||||||||||||
Other investments | Level 2 | 4,450 | 4,450 | 4,450 | 4,450 | ||||||||||||||||||||||||
Federal Reserve Bank stock | Level 2 | 2,673 | 2,673 | 2,627 | 2,627 | ||||||||||||||||||||||||
Federal Home Loan Bank stock | Level 2 | 6,374 | 6,374 | 3,874 | 3,874 | ||||||||||||||||||||||||
Loans receivable, net | Level 3 | 860,968 | 846,185 | 838,006 | 818,960 | ||||||||||||||||||||||||
Loans held for sale | Level 2 | 6,882 | 7,471 | 5,211 | 5,534 | ||||||||||||||||||||||||
SBA servicing assets | Level 3 | 893 | 987 | 886 | 1,013 | ||||||||||||||||||||||||
Accrued interest receivable | Level 2 | 7,308 | 7,308 | 7,267 | 7,267 | ||||||||||||||||||||||||
Interest rate swap receivable | Level 2 | 106 | 106 | 203 | 203 | ||||||||||||||||||||||||
Financial assets, total | $ | 1,041,642 | $ | 1,027,542 | $ | 985,537 | $ | 966,941 | |||||||||||||||||||||
Financial Liabilities: | |||||||||||||||||||||||||||||
Demand deposits | Level 2 | $ | 152,773 | $ | 152,773 | $ | 269,636 | $ | 269,636 | ||||||||||||||||||||
Savings deposits | Level 2 | 56,418 | 56,418 | 71,002 | 71,002 | ||||||||||||||||||||||||
Money market deposits | Level 2 | 306,474 | 306,474 | 211,000 | 211,000 | ||||||||||||||||||||||||
Negotiable order of withdrawal accounts | Level 2 | 29,316 | 29,316 | 34,440 | 34,440 | ||||||||||||||||||||||||
Time deposits | Level 2 | 206,398 | 203,531 | 225,670 | 221,353 | ||||||||||||||||||||||||
Brokered deposits | Level 1 | 105,089 | 104,362 | 48,698 | 47,684 | ||||||||||||||||||||||||
FHLB borrowings | Level 2 | 150,000 | 149,075 | 85,000 | 83,853 | ||||||||||||||||||||||||
Senior notes | Level 2 | 11,619 | 11,162 | 11,640 | 11,103 | ||||||||||||||||||||||||
Subordinated debt | Level 2 | 9,847 | 9,758 | 9,840 | 9,680 | ||||||||||||||||||||||||
Junior subordinated debt owed to unconsolidated trust | Level 2 | 8,130 | 8,130 | 8,128 | 8,128 | ||||||||||||||||||||||||
Note payable | Level 3 | 533 | 504 | 585 | 544 | ||||||||||||||||||||||||
Accrued interest payable | Level 2 | 771 | 771 | 585 | 585 | ||||||||||||||||||||||||
Interest rate swap liability | Level 2 | 106 | 106 | 203 | 203 | ||||||||||||||||||||||||
Financial liabilities, total | $ | 1,037,474 | $ | 1,032,380 | $ | 976,427 | $ | 969,211 |
(In thousands) | Quoted Prices in | Significant Observable Inputs | Significant Unobservable Inputs | Total | ||||||||||||
March 31, 2022 | ||||||||||||||||
U. S. Government agency and mortgage-backed securities | $ | 0 | $ | 59,890 | $ | 0 | $ | 59,890 | ||||||||
Corporate bonds | 0 | 3,495 | 11,237 | 14,732 | ||||||||||||
Subordinated notes | 0 | 3,069 | 0 | 3,069 | ||||||||||||
SBA loan pools | 0 | 5,055 | 0 | 5,055 | ||||||||||||
Municipal bonds | 0 | 514 | 0 | 514 | ||||||||||||
Available-for-sale securities | $ | 0 | $ | 72,023 | $ | 11,237 | $ | 83,260 | ||||||||
Interest rate swap receivable | $ | 0 | $ | 333 | $ | 0 | $ | 333 | ||||||||
Interest rate swap liability | $ | 0 | $ | 333 | $ | 0 | $ | 333 | ||||||||
December 31, 2021: | ||||||||||||||||
U. S. Government agency and mortgage-backed securities | $ | 0 | $ | 66,629 | $ | 0 | $ | 66,629 | ||||||||
Corporate bonds | 0 | 3,741 | 13,180 | 16,921 | ||||||||||||
Subordinated notes | 0 | 4,626 | 0 | 4,626 | ||||||||||||
SBA loan pools | 0 | 5,603 | 0 | 5,603 | ||||||||||||
Municipal bonds | 0 | 562 | 0 | 562 | ||||||||||||
Available-for-sale securities | $ | 0 | $ | 81,161 | $ | 13,180 | $ | 94,341 | ||||||||
Interest rate swap receivable | $ | 0 | $ | 738 | $ | 0 | $ | 738 | ||||||||
Interest rate swap liability | $ | 0 | $ | 738 | $ | 0 | $ | 738 |
2022:
(In thousands) | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total | |||||||||||||||||||
March 31, 2023: | |||||||||||||||||||||||
U. S. Government agency and mortgage-backed securities | $ | — | $ | 67,537 | $ | — | $ | 67,537 | |||||||||||||||
Corporate bonds | — | 3,457 | 10,205 | 13,662 | |||||||||||||||||||
Subordinated notes | — | 4,521 | — | 4,521 | |||||||||||||||||||
SBA loan pools | — | 5,505 | — | 5,505 | |||||||||||||||||||
Municipal bonds | — | 511 | — | 511 | |||||||||||||||||||
Available-for-sale securities | $ | — | $ | 81,531 | $ | 10,205 | $ | 91,736 | |||||||||||||||
Interest rate swap receivable | $ | — | $ | 106 | $ | — | $ | 106 | |||||||||||||||
Interest rate swap liability | $ | — | $ | 106 | $ | — | $ | 106 | |||||||||||||||
December 31, 2022: | |||||||||||||||||||||||
U. S. Government agency and mortgage-backed securities | $ | — | $ | 59,046 | $ | — | $ | 59,046 | |||||||||||||||
Corporate bonds | — | 5,228 | 9,427 | 14,655 | |||||||||||||||||||
Subordinated notes | — | 4,602 | — | 4,602 | |||||||||||||||||||
SBA loan pools | — | 5,718 | — | 5,718 | |||||||||||||||||||
Municipal bonds | — | 499 | — | 499 | |||||||||||||||||||
Available-for-sale securities | $ | — | $ | 75,093 | $ | 9,427 | $ | 84,520 | |||||||||||||||
Interest rate swap receivable | $ | — | $ | 203 | $ | — | $ | 203 | |||||||||||||||
Interest rate swap liability | $ | — | $ | 203 | $ | — | $ | 203 |
PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIES
(In thousands) | ||||
Three Months Ended | ||||
Level 3 fair value, beginning of year | $ | 13,180 | ||
Purchases | 0 | |||
Realized gain (loss) | 0 | |||
Unrealized loss | (1,943 | ) | ||
Transfers in and /or out of Level 3 | 0 | |||
Level 3 fair value, end of year | $ | 11,237 |
(In thousands) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | |||||||||
Level 3 fair value, beginning of year | $ | 9,427 | $ | 13,180 | |||||||
Purchases | — | — | |||||||||
Realized gain (loss) | — | — | |||||||||
Unrealized gain (loss) | 778 | (1,943) | |||||||||
Transfers in and /or out of Level 3 | — | — | |||||||||
Level 3 fair value, end of year | $ | 10,205 | $ | 11,237 |
(In thousands) | Fair Value | Valuation Methodology | Unobservable Inputs | Range of Inputs | ||||||||
March 31, 2022: | ||||||||||||
Impaired loans, net | $ | 20,939 | Real Estate Appraisals | Discount for appraisal type | 5.8% | - | 20% | |||||
SBA servicing assets | 660 | Discounted Cash Flows | Market discount rates | 14.73% | - | 14.90% | ||||||
December 31, 2021: | ||||||||||||
Impaired loans, net | $ | 20,920 | Real Estate Appraisals | Discount for appraisal type | 5.8% | - | 20% | |||||
SBA servicing assets | 617 | Discounted Cash Flows | Market discount rates | 14.73% | - | 14.90% |
2022:
(In thousands) | Fair Value | Valuation Methodology | Unobservable Inputs | Range of Inputs | |||||||||||||||||||||||||
March 31, 2023: | |||||||||||||||||||||||||||||
Impaired loans, net | $ | 17,112 | Real Estate Appraisals | Discount for appraisal type | 5.8 | % | - | 20% | |||||||||||||||||||||
SBA servicing assets | 987 | Discounted Cash Flows | Market discount rates | 14.73 | % | - | 14.90% | ||||||||||||||||||||||
December 31, 2022: | |||||||||||||||||||||||||||||
Impaired loans, net | $ | 12,873 | Real Estate Appraisals | Discount for appraisal type | 5.8 | % | - | 20% | |||||||||||||||||||||
SBA servicing assets | 1,013 | Discounted Cash Flows | Market discount rates | 14.73 | % | - | 14.90% |
Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations
(26) the occurrence of any event, change or other circumstances that could give rise to the right of one or both of the parties to terminate the Merger Agreement, as amended, between the Company and American Challenger, or the Investment Agreements between the Company and the investors in the capital raise in connection with the merger with American Challenger (the “Merger”);
(27) the failure to obtain the necessary approvals of the Company’s shareholders on the proposed Merger;
(28) the outcome of any legal proceedings that may be instituted against the Company and/or American Challenger;
(29) the failure to obtain required governmental approvals on the proposed Merger or a delay in obtaining such approvals;
(30) the failure of any of the closing conditions in the Merger Agreement, as amended or Investment Agreements related to the capital raise, to be satisfied on a timely basis or at all;
(31) delays in closing the proposed Merger or capital raise;
(32) the possibility that the proposed Merger and capital raise may be more expensive to complete than anticipated, including as a result of unexpected factors or event; and
(33) the dilution caused by the Company’s issuance of additional shares of its capital stock in connection with the proposed Merger and the capital raise.
CRITICAL ACCOUNTING POLICIES
Net interest margin remained strong at 3.29%. The Bank continued executing its low-cost deposit gathering strategies to show improved net interest margins and deposit growth. The prepaid debit card program continuescomplement its branch franchise. This new funding silo has grown to be a low-cost funding source for the Bank and has increased substantially to $146.8$176.2 million as of March 31, 2023. The combination of timing events associated with the onboarding of new deposit channels and rate increases in the Bank’s steady state deposit funding has resulted in a decrease in net interest margin from the previous quarter. Net interest margin decreased 48bps from 3.77% reported in the fourth quarter of 2022, but increased 23bps from $50.0 million acquired in July 2020.3.06% for the first quarter of last year. The portfolio growth provides a substantial improvementBank’s prepaid debit card and deposit strategy programs are expected to increasingly become significant contributors to the Bank’s diversified funding sources.
The previously announced pending merger transactionincreased loan loss reserves.The Bank’s strengths are evidenced by:
Financial Condition
As
Cash and Cash Equivalents
Cash and cash equivalents decreased $2.7 million, from $47.0 million at December 31, 2021 to $44.3 million at March 31, 2022. The decreaseboost balance sheet liquidity in 2022 was primarily due to cash used for loan purchases of $39.0 million, which was partially offset by increaseconnection with recent uncertainty in deposits of $31.2 million. The Company’s liquidity position is strong with liquid assets rising to 10.4% of total assets at March 31, 2022.
Investments
the banking sector.
(In thousands) | March 31, | December 31, | Increase / (Decrease) | |||||||||||||
2022 | 2021 | ($) | (%) | |||||||||||||
U. S. Government agency and mortgage-backed securities | $ | 59,890 | $ | 66,629 | $ | (6,739 | ) | -10.11 | % | |||||||
Corporate bonds | 14,732 | 16,921 | (2,189 | ) | -12.94 | % | ||||||||||
Subordinated notes | 3,069 | 4,626 | (1,557 | ) | -33.66 | % | ||||||||||
SBA loan pools | 5,055 | 5,603 | (548 | ) | -9.78 | % | ||||||||||
Municipal bonds | 514 | 562 | (48 | ) | -8.54 | % | ||||||||||
Total available-for-sale securities, at fair value | 83,260 | 94,341 | (11,081 | ) | -11.75 | % | ||||||||||
Other investments, at cost | 4,450 | 4,450 | - | 0.00 | % | |||||||||||
$ | 87,710 | $ | 98,791 | $ | (11,081 | ) | -11.22 | % |
March 31, | December 31, | Increase /(Decrease) | |||||||||||||||||||||
(In thousands, except per share amounts) | 2023 | 2022 | ($) | (%) | |||||||||||||||||||
U. S. Government agency and mortgage-backed securities | $ | 67,537 | $ | 59,046 | $ | 8,491 | 14.38 | % | |||||||||||||||
Corporate bonds | 13,662 | 14,655 | (993) | -6.78 | % | ||||||||||||||||||
Subordinated notes | 4,521 | 4,602 | (81) | -1.76 | % | ||||||||||||||||||
SBA loan pools | 5,505 | 5,718 | (213) | -3.73 | % | ||||||||||||||||||
Municipal bonds | 511 | 499 | 12 | 2.40 | % | ||||||||||||||||||
Total available-for-sale securities, at fair value | 91,736 | 84,520 | 7,216 | 8.54 | % | ||||||||||||||||||
Other investments, at cost | 4,450 | 4,450 | — | — | % | ||||||||||||||||||
Total investment securities | $ | 96,186 | $ | 88,970 | $ | 7,216 | 8.11 | % |
the net unrealized gain of $1.7 million for the available-for-sale securities, associated with rising market interest rates. During the three months ended March 31, 2023, the Bank sold available-for-sale securities of $1.8 million and recognized a net gain of $24,000.
(In thousands) | March 31, 2022 | December 31, 2021 | ||||||||||||||
Amount | % | Amount | % | |||||||||||||
Loan portfolio segment: | ||||||||||||||||
Commercial Real Estate | $ | 413,104 | 53.41 | % | $ | 365,247 | 49.38 | % | ||||||||
Residential Real Estate | 146,221 | 18.91 | % | 158,591 | 21.45 | % | ||||||||||
Commercial and Industrial | 128,515 | 16.62 | % | 122,810 | 16.61 | % | ||||||||||
Consumer and Other | 71,219 | 9.21 | % | 59,364 | 8.03 | % | ||||||||||
Construction | 12,223 | 1.58 | % | 21,781 | 2.95 | % | ||||||||||
Construction to permanent - CRE | 2,057 | 0.27 | % | 11,695 | 1.58 | % | ||||||||||
Loans receivable, gross | 773,339 | 100.00 | % | 739,488 | 100.00 | % | ||||||||||
Allowance for loan losses | (9,737 | ) | (9,905 | ) | ||||||||||||
Loans receivable, net | $ | 763,602 | $ | 729,583 |
(In thousands) | March 31, 2023 | December 31, 2022 | |||||||||||||||||||||
Amount | % | Amount | % | ||||||||||||||||||||
Loan portfolio segment: | |||||||||||||||||||||||
Commercial Real Estate | $ | 464,410 | 52.85 | % | $ | 437,443 | 51.57 | % | |||||||||||||||
Residential Real Estate | 118,892 | 13.53 | % | 124,140 | 14.63 | % | |||||||||||||||||
Commercial and Industrial | 153,773 | 17.50 | % | 138,787 | 16.36 | % | |||||||||||||||||
Consumer and Other | 132,410 | 15.07 | % | 141,091 | 16.63 | % | |||||||||||||||||
Construction | 7,052 | 0.80 | % | 4,922 | 0.58 | % | |||||||||||||||||
Construction to permanent - CRE | 2,232 | 0.25 | % | 1,933 | 0.23 | % | |||||||||||||||||
Loans receivable, gross | 878,769 | 100.00 | % | 848,316 | 100.00 | % | |||||||||||||||||
Allowance for credit losses | (17,801) | (10,310) | |||||||||||||||||||||
Loans receivable, net | $ | 860,968 | $ | 838,006 |
has applied it retroactively to January 1, 2023. ASU 2016-13 requires the measurement of expected credit losses for financial assets, including loans and certain off-balance-sheet credit exposures, measured at amortized cost. See Note 2 - Summary of Significant Accounting Policies to the Company's financial statements for a description of the adoption of ASU 2016-13 and the Company's allowance methodology.
$7.4 million effective January1, 2023. Based upon the overall assessment and evaluation of the loan portfolio at March 31, 2022,2023, management believes $9.7$17.8 million in the allowance for loan and leasecredit losses, which represented 1.3%2.03% of gross loans outstanding, is adequate under prevailing economic conditions to absorb existing losses in the loan portfolio, and noa provision for loan losses of $1.7 million was requiredrecorded for the three months ended March 31, 2022.
2023.
Three Months Ended March 31, | ||||||||
(In thousands) | 2022 | 2021 | ||||||
Balance at beginning of the period | $ | 9,905 | $ | 10,584 | ||||
Charge-offs: | ||||||||
Commercial Real Estate | - | (42 | ) | |||||
Residential Real Estate | - | (3 | ) | |||||
Commercial and Industrial | (68 | ) | (209 | ) | ||||
Consumer and Other | (47 | ) | (18 | ) | ||||
Construction | (70 | ) | - | |||||
Total charge-offs | (185 | ) | (272 | ) | ||||
Recoveries: | ||||||||
Residential Real Estate | 1 | - | ||||||
Commercial and Industrial | 15 | 12 | ||||||
Consumer and Other | 1 | 102 | ||||||
Total recoveries | 17 | 114 | ||||||
Net charge-offs | (168 | ) | (158 | ) | ||||
Provision charged to earnings | - | - | ||||||
Balance at end of the period | $ | 9,737 | $ | 10,426 | ||||
Ratios: | ||||||||
Net charge-offs to average loans | (0.02 | )% | (0.02 | )% | ||||
Allowance for loan losses to total loans | 1.26 | % | 1.54 | % |
Three Months Ended March 31, | ||||||||||||||||||||||||||
(In thousands) | March 31, 2023 | March 31, 2022 | ||||||||||||||||||||||||
Balance at beginning of the period | $ | 10,310 | $ | 9,905 | ||||||||||||||||||||||
Charge-offs: | ||||||||||||||||||||||||||
Commercial and Industrial | (2) | (68) | ||||||||||||||||||||||||
Consumer and Other | (1,796) | (47) | ||||||||||||||||||||||||
Construction | — | (70) | ||||||||||||||||||||||||
Total charge-offs | (1,798) | (185) | ||||||||||||||||||||||||
Recoveries: | ||||||||||||||||||||||||||
Residential Real Estate | — | 1 | ||||||||||||||||||||||||
Commercial and Industrial | 7 | 15 | ||||||||||||||||||||||||
Consumer and Other | 173 | 1 | ||||||||||||||||||||||||
Total recoveries | 180 | 17 | ||||||||||||||||||||||||
Net charge-offs | (1,618) | (168) | ||||||||||||||||||||||||
Impact of CECL adoption | 7,371 | — | ||||||||||||||||||||||||
Provision for credit losses | 1,738 | — | ||||||||||||||||||||||||
Balance at end of the period | $ | 17,801 | $ | 9,737 | ||||||||||||||||||||||
Ratios: | ||||||||||||||||||||||||||
Net charge-offs to average loans | 0.19 | % | 0.02 | % | ||||||||||||||||||||||
Allowance for credit losses to total loans | 2.03 | % | 1.26 | % |
The following table provides an allocation of allowance for loan and leasecredit losses by portfolio segment:
(In thousands) | March 31, 2022 | December 31, 2021 | ||||||||||||||
Allowance for loan and lease losses | Allowance for loan losses | Percent of loans in each category to total loans | Allowance for loan losses | Percent of loans in each category to total loans | ||||||||||||
Commercial Real Estate | $ | 4,889 | 53.41 | % | $ | 5,063 | 49.38 | % | ||||||||
Residential Real Estate | 1,512 | 18.91 | % | 1,700 | 21.45 | % | ||||||||||
Commercial and Industrial | 2,860 | 16.62 | % | 2,532 | 16.61 | % | ||||||||||
Consumer and Other | 319 | 9.21 | % | 253 | 8.03 | % | ||||||||||
Construction | 56 | 1.58 | % | 78 | 2.95 | % | ||||||||||
Construction to permanent - CRE | 9 | 0.27 | % | 41 | 1.58 | % | ||||||||||
Unallocated | 92 | N/A | 238 | N/A | ||||||||||||
Total | $ | 9,737 | 100.00 | % | $ | 9,905 | 100.00 | % |
(In thousands) March 31, 2022 December 31, 2021 Non-accruing loans: Commercial Real Estate Residential Real Estate Commercial and Industrial Consumer and Other Total non-accruing loans Loans past due over 90 days and still accruing Total nonperforming assets Nonperforming assets to total assets Nonperforming loans to total loans, net 2022:(In thousands) March 31, 2023 December 31, 2022 Allowance for credit losses Percent of loans in each category to total loans Allowance for loan losses Percent of loans in each category to total loans Commercial Real Estate $ 9,809 52.85 % $ 6,966 51.57 % Residential Real Estate 853 13.53 % 665 14.63 % Commercial and Industrial 1,799 17.50 % 1,403 16.36 % Consumer and Other 5,272 15.07 % 1,207 16.63 % Construction 21 0.80 % 24 0.58 % Construction to permanent - CRE 47 0.25 % 10 0.23 % Unallocated — N/A 35 N/A Total Allowance for credit losses $ 17,801 100.00 % $ 10,310 100.00 % 20222023 and December 31, 2021: $ 15,643 $ 15,704 3,134 3,148 4,544 4,101 145 142 23,466 23,095 - 2 $ 23,466 $ 23,097 2.41 % 2.44 % 3.07 % 3.17 % (In thousands) March 31, 2023 December 31, 2022 Non-accruing loans: Commercial Real Estate $ 11,367 $ 11,241 Residential Real Estate 2,452 2,470 Commercial and Industrial 7,585 4,833 Consumer and Other 48 49 Construction 2,317 — Total non-accruing loans 23,769 18,593 Loans past due over 90 days and still accruing 3,392 1,155 Total nonperforming assets $ 27,161 $ 19,748 Nonperforming assets to total assets 2.47 % 1.89 % Nonperforming loans to total loans, net 3.15 % 2.36 % 2022,2023, the $23.5$23.8 million of non-accrual loans was comprised of 3133 borrowers, for which a specific reserve of $2.7$7.1 million was established. Three TDR loans of total $9.6 million were included in the non-accrual loans. For collateral dependent loans, the Bank has obtained appraisal reports from independent licensed appraisal firms and discounted those values based on the Bank’s experience selling OREO properties and for estimated selling costs to determine estimated impairment. For cash flow dependent loans, the Bank determined the reserve based on the present value of expected future cash flows discounted at the loan's effective interest rate. Non-accrual loans are included in the impaired loans.As of December 31, 2021, the $23.1 million of non-accrual loans was comprised of 30 borrowers, for which a specific reserve of $2.3 million was established. Three TDR loans of total $9.7 million were included in the non-accrual loans as of December 31, 2021.
Loans held for sale
2023.
(In thousands) | Increase/(Decrease) | |||||||||||||||
March 31, 2022 | December 31, 2021 | $ | % | |||||||||||||
Non-interest bearing: | ||||||||||||||||
Non-interest bearing | $ | 120,835 | $ | 127,420 | $ | (6,585 | ) | (5.17 | )% | |||||||
Prepaid DDA | 116,990 | 99,293 | 17,697 | 17.82 | % | |||||||||||
Total non-interest bearing | 237,825 | 226,713 | 11,112 | 4.90 | % | |||||||||||
Interest bearing: | ||||||||||||||||
Negotiable order of withdrawal accounts | 42,272 | 34,741 | 7,531 | 21.68 | % | |||||||||||
Savings | 105,871 | 109,744 | (3,873 | ) | (3.53 | )% | ||||||||||
Money market | 117,049 | 113,428 | 3,621 | 3.19 | % | |||||||||||
Money market - prepaid deposits | 29,770 | 51,090 | (21,320 | ) | (41.73 | )% | ||||||||||
Certificates of deposit, less than $250,000 | 158,625 | 142,246 | 16,379 | 11.51 | % | |||||||||||
Certificates of deposit, $250,000 or greater | 53,513 | 53,584 | (71 | ) | (0.13 | )% | ||||||||||
Brokered deposits | 34,924 | 17,016 | 17,908 | 105.24 | % | |||||||||||
Total Interest bearing | 542,024 | 521,849 | 20,175 | 3.87 | % | |||||||||||
Total Deposits | $ | 779,849 | $ | 748,562 | $ | 31,287 | 4.18 | % |
(In thousands) | March 31, | December 31, | Increase/(Decrease) | ||||||||||||||||||||
2023 | 2022 | $ | % | ||||||||||||||||||||
Non-interest bearing: | |||||||||||||||||||||||
Non-interest bearing | $ | 124,388 | $ | 118,541 | $ | 5,847 | 4.93 | % | |||||||||||||||
Prepaid DDA | 28,385 | 151,095 | (122,710) | -81.21 | % | ||||||||||||||||||
Total non-interest bearing | 152,773 | 269,636 | (116,863) | -43.34 | % | ||||||||||||||||||
Interest bearing: | |||||||||||||||||||||||
Negotiable order of withdrawal accounts | 29,316 | 34,440 | (5,124) | -14.88 | % | ||||||||||||||||||
Savings | 56,418 | 71,002 | (14,584) | -20.54 | % | ||||||||||||||||||
Money market | 158,641 | 164,827 | (6,186) | -3.75 | % | ||||||||||||||||||
Money market - prepaid deposits | 147,833 | 46,173 | 101,660 | 220.17 | % | ||||||||||||||||||
Certificates of deposit, less than $250,000 | 162,734 | 165,793 | (3,059) | -1.85 | % | ||||||||||||||||||
Certificates of deposit, $250,000 or greater | 43,664 | 59,877 | (16,213) | -27.08 | % | ||||||||||||||||||
Brokered deposits | 105,089 | 48,698 | 56,391 | 115.80 | % | ||||||||||||||||||
Total Interest bearing | 703,695 | 590,810 | 112,885 | 19.11 | % | ||||||||||||||||||
Total Deposits | $ | 856,468 | $ | 860,446 | $ | (3,978) | -0.46 | % | |||||||||||||||
Total Prepaid deposits | $ | 176,218 | $ | 197,268 | $ | (21,050) | -10.67 | % | |||||||||||||||
Total deposits excluding Prepaid deposits | $ | 680,250 | $ | 663,178 | $ | 17,072 | 2.57 | % | |||||||||||||||
Total uninsured deposits | $ | 293,680 | $ | 343,980 | $ | (50,299) | -14.62 | % | |||||||||||||||
Uninsured deposits to total deposits | 34.29 | % | 39.98 | % | |||||||||||||||||||
Uninsured deposits to total deposits excluding prepaid deposits | 17.57 | % | 22.35 | % |
The Bank has improvedexpanded its deposit and funding mix over the past year, while reducing its aggregate cost of funds.
increased from $85.0 million at December 31, 2022 to $150.0 million at March 31, 2023. 2023. .$120.7$180.1 million at bothand $115.2 million as of March 31, 20222023 and December 31, 2021.2022, respectively. Borrowings consist primarily of FHLB advances, senior notes, subordinated notes, junior subordinated debentures and a note payable. The senior notes, subordinated notes and junior subordinated debentures contain affirmative covenants that require the Company to maintain its and its subsidiaries’ legal entity and tax status, pay its income tax obligations on a timely basis, and comply with SEC and FDIC reporting requirements.At March 31, 2022 and December 31, 2021, outstandingOutstanding advances from the FHLB-B both aggregated $90.0 million.2022,2023, the FHLB-B advances of $90.0 million outstanding bore fixed rates of interest ranging from 2.4%2.40% to 4.23%4.95% with maturities ranging from 1.3 year3 days to 2.5 years. The FHLB-B advances with fixed interest rates1.47 years, and have a weighted average interest rate of 3.26%4.45%.2022,2023, collateral for FHLB-B borrowings consisted of a mixture of real estate loans and securities with book value of $233.1$290.6 million. Remaining unused borrowing capacity under this line totaled $65.9$38.1 million at March 31, 2022.20222023 and 2021, no funds had been borrowed under the line of credit.2021 were $737,000, and $733,000, respectively.$5$24.5 million at both March 31, 20222023 and $5 million at December 31, 2021.2022. The purpose of the agreements is to provide a credit facility intended to satisfy overnight federal account balance requirements and to provide for daily settlement of FRB, Automated Clearing House (ACH), and other clearinghouse transactions.20222023 and December 31, 2021. No interest2022. Interest expense incurred for the three months ended March 31, 2023 was $63,000 and none for three months ended March 31, 2022 and 2021.In August 2020, was approvedhas pledged eligible loans as collateral to pledge commercial and industrial loans and leases, commercial real estate, construction loans and one-to-four family first lien loans undersupport borrowing capacity at the Federal Reserve Bank of New York’s (“FRBNY”) Borrower-in-Custody program.. As of March 31, 2022, Patriot had pledged eligible loans with a2023, the book value of $21.5the pledged loans totaled $17.6 million andwith a collateral value of $15.6 million as collateral to support borrowing capacity at the FRBNY.$12.4 million. There was no outstanding balance under the agreementsFRBNY Borrower-in-Custody program at March 31, 2022.2023.
Senior notes
$12 million in aggregate principal amount of 8.50% fixed rate Senior Notes due January 15, 2026 (“2022 Senior Notes”). In connection with the issuance of the Senior Notes, the Company incurred $374,000$381,000 of costs, which are being amortized over the term of the 2022 Senior Notes to recognize a constant rate of interest expense. The unamortized debt issuance cost of was deducted from the face amount of the Senior Notes included in the consolidated balance sheet.
The Senior Notes are unsecured, rank equally with all other senior obligationsdeducted from the face amount of the Company, are not redeemable nor may they be put toSubordinated Notes included in the Company by the holders of the notes, and require no payment of principal until maturity.
consolidated balance sheet, respectively.
for both periods.
The junior subordinated debentures bear interest at three-month LIBOR plus 3.15% (4.11% at March 31, 2022) and mature on March 26, 2033, at which time the principal amount borrowed will be due. The placement fee of $240,000 is amortized and included as a component of the periodic interest expense on the junior subordinated debentures, in order to produce a constant rate of interest expense. As of March 31, 20222023 and December 31, 2021,2022, the unamortized placement fee deducted from the face amount of the junior subordinated debt owed to the unconsolidated trust amounted to $127,000$118,000 and $129,000,$120,000, respectively, and accrued interest on the junior subordinated debentures was $5,000$11,000 and $4,000,$9,000, respectively.
Patriot entered into a receive fixed/pay variable interest rate swap, which was designated as a cash flow hedge. The cash flow hedge interest rate swap contract was terminated in August 2021. No interest income was recognized during the three months ended March 31, 2023 and 2022.
$1.2 million.
(In thousands) | Three Months ended March 31, | |||||||||||||||||||||||
2022 | 2021 | |||||||||||||||||||||||
Average Balance | Interest | Yield | Average Balance | Interest | Yield | |||||||||||||||||||
ASSETS | ||||||||||||||||||||||||
Interest Earning Assets: | ||||||||||||||||||||||||
Loans | $ | 748,256 | $ | 7,664 | 4.15 | % | $ | 702,539 | $ | 7,743 | 4.47 | % | ||||||||||||
Investments | 103,325 | 635 | 2.46 | % | 61,811 | 344 | 2.23 | % | ||||||||||||||||
Cash equivalents and other | 39,728 | 21 | 0.21 | % | 66,080 | 24 | 0.15 | % | ||||||||||||||||
Total interest earning assets | 891,309 | 8,320 | 3.79 | % | 830,430 | 8,111 | 3.96 | % | ||||||||||||||||
Cash and due from banks | 12,940 | 2,874 | ||||||||||||||||||||||
Allowance for loan losses | (9,883 | ) | (10,652 | ) | ||||||||||||||||||||
OREO | - | 1,569 | ||||||||||||||||||||||
Other assets | 63,854 | 60,971 | ||||||||||||||||||||||
Total Assets | $ | 958,220 | $ | 885,192 | ||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||
Interest bearing liabilities: | ||||||||||||||||||||||||
Deposits | $ | 528,896 | $ | 409 | 0.31 | % | $ | 529,567 | $ | 785 | 0.60 | % | ||||||||||||
Borrowings | 95,234 | 737 | 3.14 | % | 90,778 | 733 | 3.27 | % | ||||||||||||||||
Senior notes | 12,000 | 210 | 7.00 | % | 11,935 | 229 | 7.67 | % | ||||||||||||||||
Subordinated debt | 17,933 | 234 | 5.29 | % | 17,895 | 234 | 5.30 | % | ||||||||||||||||
Note Payable and other | 757 | 4 | 2.14 | % | 958 | 4 | 1.69 | % | ||||||||||||||||
Total interest bearing liabilities | 654,820 | 1,594 | 0.99 | % | 651,133 | 1,985 | 1.24 | % | ||||||||||||||||
Demand deposits | 227,074 | 161,588 | ||||||||||||||||||||||
Other liabilities | 9,901 | 8,587 | ||||||||||||||||||||||
Total Liabilities | 891,795 | 821,308 | ||||||||||||||||||||||
Shareholders' equity | 66,425 | 63,884 | ||||||||||||||||||||||
Total Liabilities and Shareholders' Equity | $ | 958,220 | $ | 885,192 | ||||||||||||||||||||
Net interest income | $ | 6,726 | $ | 6,126 | ||||||||||||||||||||
Interest margin | 3.06 | % | 2.99 | % | ||||||||||||||||||||
Interest spread | 2.80 | % | 2.72 | % |
(In thousands) | Three Months Ended March 31, | ||||||||||||||||||||||||||||||||||
March 31, 2023 | March 31, 2022 | ||||||||||||||||||||||||||||||||||
Average Balance | Interest | Yield | Average Balance | Interest | Yield | ||||||||||||||||||||||||||||||
ASSETS | |||||||||||||||||||||||||||||||||||
Interest Earning Assets: | |||||||||||||||||||||||||||||||||||
Loans | $ | 860,291 | $ | 12,550 | 5.92 | % | $ | 748,256 | $ | 7,664 | 4.15 | % | |||||||||||||||||||||||
Investments | 99,699 | 815 | 3.27 | % | 103,325 | 635 | 2.46 | % | |||||||||||||||||||||||||||
Cash equivalents and other | 27,613 | 281 | 4.13 | % | 39,728 | 21 | 0.21 | % | |||||||||||||||||||||||||||
Total interest earning assets | 987,603 | 13,646 | 5.60 | % | 891,309 | 8,320 | 3.79 | % | |||||||||||||||||||||||||||
Cash and due from banks | 5,381 | 12,940 | |||||||||||||||||||||||||||||||||
Allowance for loan losses | (17,033) | (9,883) | |||||||||||||||||||||||||||||||||
Other assets | 68,553 | 63,854 | |||||||||||||||||||||||||||||||||
Total Assets | $ | 1,044,504 | $ | 958,220 | |||||||||||||||||||||||||||||||
Liabilities | |||||||||||||||||||||||||||||||||||
Interest bearing liabilities: | |||||||||||||||||||||||||||||||||||
Deposits | $ | 624,427 | $ | 3,579 | 2.32 | % | $ | 528,892 | $ | 409 | 0.31 | % | |||||||||||||||||||||||
Borrowings | 130,667 | 1,373 | 4.26 | % | 95,234 | 737 | 3.14 | % | |||||||||||||||||||||||||||
Senior notes | 11,620 | 290 | 9.98 | % | 12,000 | 210 | 7.00 | % | |||||||||||||||||||||||||||
Subordinated debt | 17,971 | 326 | 7.36 | % | 17,933 | 234 | 5.29 | % | |||||||||||||||||||||||||||
Note Payable and other | 1,738 | 65 | 15.17 | % | 757 | 4 | 2.14 | % | |||||||||||||||||||||||||||
Total interest bearing liabilities | 786,423 | 5,633 | 2.90 | % | 654,816 | 1,594 | 0.99 | % | |||||||||||||||||||||||||||
Demand deposits | 191,012 | 227,074 | |||||||||||||||||||||||||||||||||
Other liabilities | 11,961 | 9,905 | |||||||||||||||||||||||||||||||||
Total Liabilities | 989,396 | 891,795 | |||||||||||||||||||||||||||||||||
Shareholders' equity | 55,108 | 66,425 | |||||||||||||||||||||||||||||||||
Total Liabilities and Shareholders' Equity | $ | 1,044,504 | $ | 958,220 | |||||||||||||||||||||||||||||||
Net interest income | $ | 8,013 | $ | 6,726 | |||||||||||||||||||||||||||||||
Interest margin | 3.29 | % | 3.06 | % | |||||||||||||||||||||||||||||||
Interest spread | 2.70 | % | 2.80 | % |
Three Months ended March 31, | ||||||||||||
2022 compared to 2021 | ||||||||||||
(In thousands) | Increase/(Decrease) | |||||||||||
Volume | Rate | Total | ||||||||||
Interest Earning Assets: | ||||||||||||
Loans | $ | 437 | $ | (516 | ) | $ | (79 | ) | ||||
Investments | 247 | 44 | 291 | |||||||||
Cash equivalents and other | (9 | ) | 6 | (3 | ) | |||||||
Total interest earning assets | 675 | (466 | ) | 209 | ||||||||
Interest bearing liabilities: | ||||||||||||
Deposit | (30 | ) | (346 | ) | (376 | ) | ||||||
Borrowings | 36 | (32 | ) | 4 | ||||||||
Senior notes | - | (19 | ) | (19 | ) | |||||||
Subordinated debt | 1 | (1 | ) | - | ||||||||
Note payable and other | - | - | - | |||||||||
Total interest bearing liabilities | 7 | (398 | ) | (391 | ) | |||||||
Net interest income | $ | 668 | $ | (68 | ) | $ | 600 |
RESULTS OF OPERATIONS
2022.
Three Months Ended March 31, | |||||||||||||||||||||||||||||||||||
2023 compared to 2022 | |||||||||||||||||||||||||||||||||||
(In thousands) | Increase/(Decrease) | ||||||||||||||||||||||||||||||||||
Volume | Rate | Total | |||||||||||||||||||||||||||||||||
Interest Earning Assets: | |||||||||||||||||||||||||||||||||||
Loans | $ | 1,042 | $ | 3,844 | $ | 4,886 | |||||||||||||||||||||||||||||
Investments | (18) | 198 | 180 | ||||||||||||||||||||||||||||||||
Cash equivalents and other | (7) | 267 | 260 | ||||||||||||||||||||||||||||||||
Total interest earning assets | 1,017 | 4,309 | 5,326 | ||||||||||||||||||||||||||||||||
Interest bearing liabilities: | |||||||||||||||||||||||||||||||||||
Deposit | 165 | 3,005 | 3,170 | ||||||||||||||||||||||||||||||||
Borrowings | 274 | 362 | 636 | ||||||||||||||||||||||||||||||||
Senior notes | (6) | 86 | 80 | ||||||||||||||||||||||||||||||||
Subordinated debt | 1 | 91 | 92 | ||||||||||||||||||||||||||||||||
Note payable and other | 61 | — | 61 | ||||||||||||||||||||||||||||||||
Total interest bearing liabilities | 495 | 3,544 | 4,039 | ||||||||||||||||||||||||||||||||
Net interest income | $ | 522 | $ | 765 | $ | 1,287 |
rates.
Due to a stable economy and improvement in classified loans, no provision for loan losses was recorded for
Non-interest income
program in 2023.
salaries and benefits due to staffing increases needed to support continuing business initiatives.
2022.
2022. The readily available liquidity ratio remained well above the Company's 10% policy minimum.
IMPACT OF INFLATION AND CHANGING PRICES
The tables below set forth examples of changes in estimated net interest income and the estimated net portfolio value based on projected scenarios of interest rate increases and decreases. The analyses indicate the rate risk embedded in the Company’s portfolio at the dates indicated should all interest rates instantaneously rise or fall. The results of these changes are added to or subtracted from the base case; however, there are certain limitations to these types of analyses. Rate changes are rarely instantaneous and these analyses may therefore overstate the impact of short-term repricings. As a result of the historicallyIn certain low interest rate environment,environments, the calculated effects of the 100 and 200 basis point downward shocks cannot absolutely reflect the risk to earnings and equity, since the interest rates on certain balance sheet items have approached their minimums. Therefore, it is not possible for the analyses to fully measure the true impact of these downward shocks.
(In thousands) | |||||||||||||||||||||||||
Net Portfolio Value - Performance Summary | |||||||||||||||||||||||||
As of March 31, 2022 | As of December 31, 2021 | ||||||||||||||||||||||||
Projected Interest | Estimated | Change from | Change from | Estimated | Change from | Change from | |||||||||||||||||||
+200 | $ | 155,940 | $ | (10,562 | ) | -6.3% | $ | 116,941 | $ | (15,137 | ) | -11.5% | |||||||||||||
+100 | 163,752 | (2,750 | ) | -1.7% | 126,152 | (5,926 | ) | -4.5% | |||||||||||||||||
BASE | 166,502 | - | - | 132,078 | - | - | |||||||||||||||||||
-100 | 165,913 | (589 | ) | -0.4% | 135,803 | 3,725 | 2.8% | ||||||||||||||||||
-200 | 158,073 | (8,429 | ) | -5.1% | 134,277 | 2,199 | 1.7% |
(In thousands) | Net Interest Income - Performance Summary | ||||||||||||||||||||||||
March 31, 2022 | December 31, 2021 | ||||||||||||||||||||||||
Projected Interest | Estimated | Change from | Change from | Estimated | Change from | Change from | |||||||||||||||||||
+200 | $ | 35,270 | $ | 1,433 | 4.2% | $ | 31,521 | $ | 45 | 0.1% | |||||||||||||||
+100 | 34,635 | 798 | 2.4% | 31,575 | 99 | 0.3% | |||||||||||||||||||
BASE | 33,837 | - | - | 31,476 | - | - | |||||||||||||||||||
-100 | 33,079 | (758 | ) | -2.2% | 31,587 | 111 | 0.4% | ||||||||||||||||||
-200 | 32,884 | (953 | ) | -2.8% | 31,548 | 72 | 0.2% |
Net Portfolio Value - Performance Summary | ||||||||||||||||||||||||||||||||||||||
(In thousands) | As of March 31, 2023 | As of December 31, 2022 | ||||||||||||||||||||||||||||||||||||
Projected Interest Rate Scenario | Estimated Value | Change from Base ($) | Change from Base (%) | Estimated Value | Change from Base ($) | Change from Base (%) | ||||||||||||||||||||||||||||||||
+200 | $ | 102,750 | $ | (23,099) | (18.35) | % | $ | 146,888 | $ | (15,357) | (9.47) | % | ||||||||||||||||||||||||||
+100 | 117,479 | (8,370) | (6.65) | % | 157,368 | (4,877) | (3.01) | % | ||||||||||||||||||||||||||||||
BASE | 125,849 | — | — | 162,245 | — | — | ||||||||||||||||||||||||||||||||
-100 | 130,528 | 4,679 | 3.72 | % | 163,472 | 1,227 | 0.76 | % | ||||||||||||||||||||||||||||||
-200 | 124,738 | (1,111) | (0.88) | % | 155,386 | (6,859) | (4.23) | % |
Net Interest Income - Performance Summary | ||||||||||||||||||||||||||||||||||||||
(In thousands) | March 31, 2023 | December 31, 2022 | ||||||||||||||||||||||||||||||||||||
Projected Interest Rate Scenario | Estimated Value | Change from Base | Change from Base (%) | Estimated Value | Change from Base ($) | Change from Base (%) | ||||||||||||||||||||||||||||||||
+200 | $ | 39,636 | $ | (3,040) | (7.12) | % | $ | 46,131 | $ | (1,177) | (2.49) | % | ||||||||||||||||||||||||||
+100 | 41,363 | (1,313) | (3.08) | % | 46,938 | (370) | (0.78) | % | ||||||||||||||||||||||||||||||
BASE | 42,676 | — | — | 47,308 | — | — | ||||||||||||||||||||||||||||||||
-100 | 44,132 | 1,456 | 3.41 | % | 47,657 | 349 | 0.74 | % | ||||||||||||||||||||||||||||||
-200 | 45,171 | 2,495 | 5.85 | % | 46,747 | (561) | (1.19) | % |
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Description | ||||||||
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3(i)(A) | ||||||||
3(i)(B) | ||||||||
3(i) (C) | Certificate of Amendment of Certificate of Incorporation of Patriot National Bancorp Inc. dated October 6, 2010 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on October 21, 2010) | |||||||
3(ii) | ||||||||
31(1) | ||||||||
31(2) | ||||||||
32* | ||||||||
101.INS# | Inline XBRL Instance Document | |||||||
101.SCH# | Inline XBRL Schema Document | |||||||
101.CAL# | Inline XBRL Calculation Linkbase Document | |||||||
101.LAB# | Inline XBRL Labels Linkbase Document | |||||||
101.PRE# | Inline XBRL Presentation Linkbase Document | |||||||
101.DEF# | Inline XBRL Definition Linkbase Document | |||||||
104 | Cover Page Interactive Data File (embedded with the Inline XBRL and contained in Exhibit 101) |
SIGNATURES
Date: May | ||||||||||
Patriot National Bancorp, Inc. (Registrant) | ||||||||||
By: | ||||||||||
/s/ Joseph D. Perillo | ||||||||||
Joseph D. Perillo | ||||||||||
Executive Vice President and Chief Financial Officer | ||||||||||
By: | /s/ David Lowery | |||||||||
David Lowery | ||||||||||
President and Chief Executive Officer |