Company: PNBK
Filing Date: 2025-04-15
Form Type: 10-K
Source: 0001628280-25-017837
Chunk: 86

Company: PATRIOT NATIONAL BANCORP INC
Filing Date: 2025-04-15
Form: 10-K
Item: Item 7
Chunk 86
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,844 $309,294 $707,472 

All variable rate loans account for 49.2% of the total loan portfolio. Approximately 20.2% of the variable rate loan portfolio reprices with changes in interest rates within three months of the rate change. The balance of the loan portfolio has an initial rate for a fixed period, for example one, three or five years and then reprice annually after the initial fixed period. These repricing characteristics are reflected in the Bank’s aggregate analysis of net interest sensitivity included in Item 7A. of this report.

As a community bank, the Bank is invested in a local economy, which may be subject to the vagaries of general economic conditions. As of December 31, 2024, the investments in Commercial Real Estate and Commercial and Industrial were approximately 77.6% of total loans receivable. These loans generally are collateralized by the underlying real estate and supported by personal guarantees of the borrowers.

23

Allowance for Credit Losses on Loans

The Company adopted ASU 2016-13 effective January 1, 2023. ASU 2016-13 requires the measurement of expected credit losses for financial assets, including loans and certain off-balance-sheet credit exposures, measured at amortized cost. 

The allowance for credit losses was $7.3 million at December 31, 2024, compared to the allowance for credit losses of $15.9 million at December 31, 2023. The decrease was primarily driven by charge-offs totaling $13.6 million from two large commercial real estate loans in December 2024.

Based upon the overall assessment and evaluation of the loan portfolio at December 31, 2024, management believes the allowance for credit losses of $7.3 million, which represents 1.0% of gross loans outstanding, was adequate under prevailing economic conditions to absorb existing losses in the loan portfolio. 

The following table provides detail of activity in the allowance for credit losses. The Company used the CECL methodology in 2024 and 2023 while the incurred loss methodology was used in 2022:

Year Ended December 31,(In thousands)202420232022Balance at beginning of the period$15,925 $10,310 $9,905 Impact of ASC 326 adoption— 13,001 — Charge-offs:Commercial Real Estate(13,889)(6,346)— Residential Real Estate(21)(515)— Commercial