Company: PNBK
Filing Date: 2025-04-15
Form Type: 10-K
Source: 0001628280-25-017837
Chunk: 93

Company: PATRIOT NATIONAL BANCORP INC
Filing Date: 2025-04-15
Form: 10-K
Item: Item 7
Chunk 93
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 income.

Based on our assessment performed in September 2024, we determined that a full valuation allowance was appropriate against the Company’s U.S. federal and state deferred tax assets. For the year ended December 31, 2024, the Company recorded income tax expense of $23.8 million which includes $25.1 million of expense from the initial recognition of the full valuation allowance.

The key factor for providing a full valuation allowance was our 3-year cumulative operating losses. Once the Company begins generating profits, we will re-evaluate whether a full valuation allowance remains appropriate or if the allowance should be reduced. As deferred tax assets associated with NOL carryforwards are already a direct reduction to Tier 1 Capital, the valuation allowance at September 30, 2024 resulted in a reduction of Tier 1 Capital of $19.9 million.

Derivatives

As of December 31, 2024, the Company had two interest rate swaps outstanding. One swap is held with a loan customer to provide a facility to mitigate the fluctuations in the variable rate on the respective loan. The other swaps is with an outside third party. The customer interest rate swap is matched in offsetting terms to the third-party interest rate swaps. These swaps are reported at fair value in other assets or other liabilities on the Consolidated Balance Sheets. Patriot’s swaps are derivatives, but are not designated as hedging instruments, thus any net gain or loss resulting from changes in the fair value is recognized in other non-interest income.  The Company did not recognize any unrealized and realized gain or loss for the year ended December 31, 2024, 2023 and 2022. 

Further discussion of the final derivatives is set forth in Note 11 and Note 21 to the Consolidated Financial Statements.

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Deposits

The following table is a summary of the Company’s deposits at the dates shown:

(In thousands)December 31,202420232022Non-interest bearing:Non-interest bearing$106,689 $95,109 $118,541 Non-interest bearing DDA- Digital Payments12,523 14,947 151,095 Total non-interest bearing119,212 110,056 269,636 Interest bearing:Negotiable order of withdrawal accounts (NOW)31,549 33,035 34,440 Savings38,743 44,104 71,002 Interest bearing DDA19,630 7,127 — Interest bearing DDA