Company: PNBK
Filing Date: 2025-08-14
Form Type: 10-Q
Source: 0001628280-25-040370
Chunk: 21

Company: PATRIOT NATIONAL BANCORP INC
Filing Date: 2025-08-14
Form: 10-Q
Item: Part I, Item 1
Chunk 21
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 and the exposure at default. This calculation is forecasted for every year remaining in the life of each loan, and the results are aggregated to determine the necessary level of ACL for the pooled loans.  Forecasted exposure at default can be influenced by prepayments speeds, which management elected to discount in part to reflect the expectation of slower voluntary prepayments in the face of an increasing interest rate environment.

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Table of ContentsPATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited)

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”) in its ACL methodology and calculations in the second quarter of 2025. In the second quarter of 2025, management determined that an adjustment to the Q-factors was warranted.

The Company maintains an ACL on unfunded lending commitments and letters of credit to provide for the risk of loss inherent in these arrangements. The allowance is computed using a methodology similar to that used to determine the ACL for loans, modified to take into account the probability of a drawdown on the commitment. The ACL on unfunded loan commitments is classified as a liability account on the Consolidated Balance Sheets within other liabilities, while the corresponding provision for these credit losses is recorded as a component of provision for credit losses. The allowance for credit losses on unfunded commitments was $81,000 at June 30, 2025 and $182,000 at December 31, 2024. The following tables summarize the activity in the allowance for credit losses, allocated to segments of the loan portfolio, for the six months ended June 30, 2025 and 2024:(In thousands)Commercial Real Estate Residential Real Estate Commercial and Industrial Consumer and Other Construction Construction to Permanent - CRE Total Three Months Ended June 30, 2025Allowance for credit losses:March 31, 2025$2,275 $639 $1,168 $2,607 $8 $32 $6,729 Charge-offs— — (11)(754)— — (765)Recoveries— — 20 209 — — 229 Provisions (credits)161 (120)608 988 (3)(32)1,602 (1)June 30, 202