Company: PNBK
Filing Date: 2025-08-14
Form Type: 10-Q
Source: 0001628280-25-040370
Chunk: 153

Company: PATRIOT NATIONAL BANCORP INC
Filing Date: 2025-08-14
Form: 10-Q
Item: Part I, Item 8
Chunk 153
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guaranteed portion held in the portfolio as a loan held for investment. SBA loans are for the purpose of providing working capital, financing the purchase of equipment, inventory, or commercial real estate and for other business purposes. Loans are guaranteed by the businesses' major owners. SBA loans are made based primarily on the historical and projected cash flow of the business and secondarily on the underlying collateral provided. SBA loans held for investment are included in the commercial real estate loans and commercial and industrial loan classifications, which totaled $20.8 million and $29.9 million as of June 30, 2025 and December 31, 2024, respectively.In the second quarter of 2025, the Bank made the decision to voluntarily suspend its status as a participant in  SBA’s Preferred Lender Program (“PLP”). This decision was made in response to the Bank’s desire to temporarily exit the SBA lending business and the Bank’s Definitive Agreement with the OCC. It is possible that the Bank will determine in the future that it is prudent to petition to the SBA for reinstatement in the PLP.

Risk characteristics of the Company’s portfolio classes include the following:Commercial Real Estate Loans ("CRE" Loans)In underwriting commercial real estate loans, Patriot evaluates both the prospective borrower’s ability to make timely payments on the loan and the value of the property securing the loans. Repayment of such loans may be negatively impacted should the borrower default, the value of the property collateralizing the loan substantially declines, or there is deterioration  in general economic conditions. Where the owner occupies the property, Patriot also evaluates the business’ ability to repay the loan on a timely basis and may require personal guarantees, lease assignments, and/or the guarantee of the operating company.Real estate mortgage loans consist of loans secured by commercial and residential real estate. Commercial real estate lending includes Non-Owner-Occupied CRE and Owner-Occupied CRE. Non-Owner-Occupied CRE loans are typically repaid with resources primarily generated by rents from leases to third party tenants. Non-Owner-Occupied CRE is dependent upon successful management, marketing and expense supervision necessary to maintain the property. Repayment of these loans may be adversely affected by conditions in the real estate market or the general economy. Owner-Occupied CRE loans are utilized by a business for the purpose of providing the space needs for that business and the running of its operations.  Repayment is dependent on the cash flow and successful operations of the business. Repayment of these loans may