Company: PNBK
Filing Date: 2025-05-14
Form Type: 10-Q
Source: 0001628280-25-025485
Chunk: 186

Company: PATRIOT NATIONAL BANCORP INC
Filing Date: 2025-05-14
Form: 10-Q
Item: Part I, Item 8
Chunk 186
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 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 measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under the liability method, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

Deferred tax assets were zero both at March 31, 2025 and December 31, 2024 as Patriot recorded a full valuation allowance against all of the DTAs as of September 30, 2024. Patriot evaluates its ability to realize its deferred tax assets on a quarterly basis. In doing so, management considers all available evidence, both positive and negative, to determine whether it is more likely than not that the deferred tax assets will be realized. The Company will continue to evaluate its ability to realize its deferred tax assets. If future evidence suggests that it is more likely than not that additional deferred tax assets will be realized, the valuation allowance will be adjusted.

The effective tax provision rate for the three months ended March 31, 2025 was zero, compared to the effective tax rate of 28.33% for the three months ended March 31, 2024. The Company’s effective rate for the three months ended March 31, 2025 was affected by the change in the valuation allowance and for the three months ended March 31, 2024 was affected by state taxes and non-deductible expenses.

As of March 31, 2025, Patriot had available approximately $44.2million of Federal net operating loss carryforwards (“NOL”) that are offset by $15.5million in §382 limitations imposed by the Internal Revenue Code. After applying the limitation at December 31, 2024, Patriot has $28.7 million post-change NOL which do not expire. Patriot has not performed an analysis on the post-change NOL, but the potential impact of any additional limitation would not be material to the financial statements due to the fact that the NOL are fully offset by a valuation allowance.

Patriot has approximately $64.6 million of NOLs available for Connecticut tax purposes at March 31, 2025, which may be used to offset up to 50% of taxable income in any year.