Company: PNBK
Filing Date: 2025-05-14
Form Type: 10-Q
Source: 0001628280-25-025485
Chunk: 154

Company: PATRIOT NATIONAL BANCORP INC
Filing Date: 2025-05-14
Form: 10-Q
Item: Part I, Item 8
Chunk 154
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 of ContentsPATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited)

Loans held for sale - Digital Payments LoansThe Bank's Digital Payments Division has entered into a Program Management Agreement with a Buyer. Under the agreement, Patriot originates commercial credit card loans that are marketed by the buyer. As of March 31, 2025 and December 31, 2024, the Bank had credit card loans held for sale totaling $17.6 million and $11.4 million, respectively. The credit card loans are expected to be held for no longer than three days before being sold to the buyer. The credit card loans are fully cash-secured by deposits at Patriot. The credit card loans are sold to the buyer as a whole loan sale transaction, priced at par, thus there is no servicing asset or gain or loss on sale.Loans held for sale Residential Mortgage Loans In 2024, the Bank reentered the residential mortgage business. The Residential Mortgage Division, located in Jacksonville, FL, generates the loans and typically sells them to third parties. As of March 31, 2025 and December 31, 2024, the Company reported residential mortgage loans held for sale totaling $3.2 million and $4.3 million, respectively. These loans are recorded at the lower of aggregate cost or market value. For the three months ended March 31, 2025, a total gain on sale of $43,000 was recorded. A servicing asset of $50,000 was recognized for the three months ended March 31, 2025. No residential mortgage loans held for sale were originated and sold during the three months ended March 31, 2024. During the three months ended March 31, 2025, $1.1 million residential mortgage loans previously classified as held for sale were transferred to held for investment. No residential mortgage held for sale loans were transferred to held for investment in the three months ended March 31, 2024.

The following table presents an analysis of the activity in the servicing assets for SBA loans and residential mortgage loans for the three months ended March 31, 2025 and 2024:Three Month Ended March 31,(In thousands)20252024Beginning balance$766 $857 Servicing rights capitalized26 64 Servicing rights amortized(14)(19)Servicing rights disposed(14)— Ending balance$764 $902 

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