Company: PNBK
Filing Date: 2025-11-14
Form Type: 10-Q
Source: 0001628280-25-052358
Chunk: 77

Company: PATRIOT NATIONAL BANCORP INC
Filing Date: 2025-11-14
Form: 10-Q
Item: Part I, Item 1
Chunk 77
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 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”) in its ACL methodology and calculations in the third quarter of 2025.

Beginning in the second quarter of 2025, the Bank implemented the use of qualitative factors (“Q Factors”) in its ACL methodology and calculations. The application of the chosen Q-Factors added a net 12 bps to the overall reserves for third quarter of 2025 – unchanged from the second quarter of 2025. The model-only ACL yielded 1.10% of total reserves – and the addition of 12 bps of Q-Factors increased the final ACL to 1.22% of total loans.

The Q-Factors are applied to specific loan pools and are quantified using management’s best estimates. As noted below, a total of 15 bps of Q-Factors was applied, but because the application is on a pool-by-pool basis, the net effect is only 12 bps across total loans.

The following table provides detail of activity in the allowance for credit losses on loans for the three and nine months ended September 30, 2025 and 2024:

Three Months Ended September 30,Nine Months Ended September 30,(In thousands)2025202420252024Balance at beginning of the period$7,795 $14,989 $7,305 $15,925 Charge-offs:Commercial Real Estate(144)(124)(779)(282)Residential Real Estate— — — (21)Commercial and Industrial— (122)(130)(936)Consumer and Other(292)(1,266)(1,962)(5,638)Total