Company: PNBK
Filing Date: 2025-08-14
Form Type: 10-Q
Source: 0001628280-25-040370
Chunk: 213

Company: PATRIOT NATIONAL BANCORP INC
Filing Date: 2025-08-14
Form: 10-Q
Item: Part I, Item 8
Chunk 213
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 held for sale totaled zero as of June 30, 2025 and December 31, 2024. SBA loans held for sale represent the guaranteed portion of SBA loans and are reflected at the lower of aggregate cost or market value. 

As of June 30, 2025 and December 31, 2024, the credit card loans held for sale from Digital Payments division totaled $15.0 million and $11.4 million, respectively. The credit card loans expected to be held for no longer than three days before being sold. The credit card receivable are fully cash-secured by deposits at Patriot. The credit card loans are sold to the third party as a whole loan sale transaction, priced at Par, thus there is no servicing asset or gain or loss on sale.

As of June 30, 2025 and December 31, 2024, the Company reported residential mortgage loans held for sale totaling $283,000 and $4.3 million, respectively. These loans are recorded at the lower of aggregate cost or market value. For the three and six months ended June 30, 2025, a total gain on sale of $43,000 was recorded. A servicing asset of $62,000 was recognized as of June 30, 2025. In April 2025, the Company decided to close the Residential Mortgage Division.

Deferred Taxes

Patriot accounts for income taxes under the liability method of accounting for income taxes. Under the liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. The liability method requires that any tax benefits recognized for net operating loss carry forwards and other items be reduced by a valuation allowance when it is more likely than not that the benefits may not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under the liability method, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

Deferred tax assets ("DTA") were zero both at June 30, 2025 and December 31, 2024 as Patriot recorded a full valuation allowance against all of the DTAs as of September 30, 2024. Patriot evaluates its ability to realize its deferred tax assets on a quarterly basis. In doing so, management considers