Company: PNBK
Filing Date: 2025-11-14
Form Type: 10-Q
Source: 0001628280-25-052358
Chunk: 115

Company: PATRIOT NATIONAL BANCORP INC
Filing Date: 2025-11-14
Form: 10-Q
Item: Part I, Item 2
Chunk 115
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Total Commercial Real Estate$360,803 100.00 %$419,489 100.00 %

(1) Outside Market consists of loans in all other states, none of which are greater than 5% of the total.

In accordance with OCC Bulletin 2006-46, "Concentrations in Commercial Real Estate Lending, Sound Risk Management Practices: Interagency Guidance on CRE Concentration Risk Management", and the Joint Interagency Guidance (71 FR 74580), the Bank monitors its CRE lending relative to total capital. As of September 30, 2025, the Bank’s CRE concentration was 267% of total Tier 1 capital plus allowance for credit loss, below the Bank’s concentration policy limit of 350%. This concentration level is slightly above the 300% supervisory monitoring threshold outlined in the guidance. Exceeding this threshold does not, by itself, indicate unsafe or unsound banking practices; however, it subjects the Bank to heightened supervisory expectations for portfolio management, risk assessment, and capital planning. Management maintains portfolio management procedures, underwriting standards, and stress testing practices consistent with these regulatory expectations. For purposes of calculating the Bank’s CRE concentration in accordance with this regulatory guidance, owner-occupied CRE loans are excluded from the CRE total and classified as commercial and industrial (“C&I”) loans; however, the CRE portfolio tables above include owner-occupied CRE for presentation purposes.

55

Allowance for Credit Losses ("ACL") on Loans

The allowance for credit losses on loans was $7.2 million as of September 30, 2025, compared to $7.3 million as of December 31, 2024, a reduction of $0.1 million. The reduction in allowance was mainly attributed to a decrease in reserve for loan portfolio sale. Based upon the overall assessment and evaluation of the loan portfolio as of September 30, 2025, management has determined that the $7.2 million allowance for credit loss representing 1.22% of gross loans, is adequate to cover expected credit losses under current economic conditions. This assessment follows current expected credit loss ("CECL") guidance, which requires estimating expected losses over the life of the loans, considering historical data, current conditions, and future forecasts. 

Pursuant to guidance provided in OCC Bulletin 2020-49 and Interagency Policy Statement on Allowances for Credit Losses (May 8, 2020), the Bank refined the use of qualitative factors (“Q-Factors”)