Company: PNBK
Filing Date: 2025-08-14
Form Type: 10-Q
Source: 0001628280-25-040370
Chunk: 76

Company: PATRIOT NATIONAL BANCORP INC
Filing Date: 2025-08-14
Form: 10-Q
Item: Part I, Item 1
Chunk 76
---
 individually evaluated, and the specific reserve was zero. All individually evaluated loans were 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. No individually evaluated loans were cash flow dependent loans.

As of December 31, 2024, the $25.9 million of non-accrual loans was comprised of 335 borrowers. Of which, 14 loans were individually evaluated, and a specific reserve of $463,000 was established. 

53

Loans held for sale

SBA loans 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