2 unchanged sentences
- Report of Independent Registered Public Accounting Firm (PCAOB ID:
−Removed: Consolidated Balance Sheets as of December 31, 2021 and 2020
−Removed: Consolidated Statements of Operations for each of the years in the three-year period ended December 31, 2021
−Removed: Consolidated Statements of Comprehensive (Loss) Income for each of the years in the three-year period ended December 31, 2021
−Removed: Consolidated Statements of Shareholders’ Equity for each of the years in the three-year period ended December 31, 2021
−Removed: Consolidated Statements of Cash Flows for each of the years in the three-year period ended December 31, 2021
−Removed: Consolidated Supplemental Statements of Non-Cash Activity for each of the years in the three-year period ended December 31, 2021
+Added: - Consolidated Balance Sheets as of December 31, 2022 and 2021
+Added: - Consolidated Statements of Operations for each of the years in the three-year period ended December 31, 2022
+Added: - Consolidated Statements of Comprehensive (Loss) Income for each of the years in the three-year period ended December 31, 2022
+Added: - Consolidated Statements of Shareholders’ Equity for each of the years in the three-year period ended December 31, 2022
+Added: - Consolidated Statements of Cash Flows for each of the years in the three-year period ended December 31, 2022
- Notes to Consolidated Financial Statements
3 unchanged sentences
We have audited the accompanying consolidated balance sheets of Patriot National Bancorp, Inc.
−Removed: and its subsidiaries (the Company) as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive income (loss), shareholders’
−Removed: equity and cash flows for each of the three years in the period ended December 31, 2021, and the related notes to the consolidated financial statements (collectively, the financial statements).
+Added: and its subsidiaries (the Company) as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive (loss) income, shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2022, and the related notes to the consolidated financial statements (collectively, the financial statements).
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
−Removed: These financial statements are the responsibility of the Company’s management.
−Removed: Our responsibility is to express an opinion on the Company’s financial statements based on our audits.
+Added: These financial statements are the responsibility of the Company’s management.
+Added: Our responsibility is to express an opinion on the Company’s financial statements based on our audits.
We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with U.S.
3 unchanged sentences
The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.
−Removed: As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.
+Added: As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.
Accordingly, we express no such opinion.
8 unchanged sentences
Qualitative Adjustments to the Allowance for Loan and Lease Losses
−Removed: As described in Notes 1 and 4 of the consolidated financial statements, the Company’s allowance for loan and lease losses (allowance) totaled $9.9 million as of December 31, 2021.
+Added: As described in Notes 1 and 4 of the consolidated financial statements, the Company’s allowance for loan and lease losses (allowance) totaled $10.3 million as of December 31, 2022.
The recorded allowance was established based on an allowance of $4.3 million related to loans collectively evaluated for impairment and on an allowance of $6.0 million relating to loans individually evaluated for impairment as of December 31, 2022.
8 unchanged sentences
5) changes in the volume and loss severity of past due loans, the volume of non-accrual loans, and the volume and loss severity of adversely classified or graded loans;
−Removed: 6) changes in the quality of the Company’s loan review system;
+Added: 6) changes in the quality of the Company’s loan review system;
7) changes in the value of underlying collateral for collateral-dependent loans;
2 unchanged sentences
Evaluation of the allowance, in particular the qualitative factor adjustments, requires considerable judgment in order to adequately estimate and provide for the risk of loss inherent in the loan portfolio segments.
−Removed: We identified the qualitative factors adjustments applied to the non-specific allowance as a critical audit matter due to the high degree of auditor judgment in order to evaluate the subjective assumptions made by management within the calculation.
+Added: We identified the qualitative factor adjustments applied to the non-specific allowance as a critical audit matter due to the high degree of auditor judgment in order to evaluate the subjective assumptions made by management within the calculation.
Our audit procedures related to the qualitative factor adjustments applied to the non-specific allowance included the following:
- We tested the completeness and accuracy of data used by management in determining the qualitative factor adjustments by agreeing them to their appropriate internal or external sources.
−Removed: We evaluated the reasonableness of the directional consistency of changes in qualitative factor adjustments as well as the overall magnitude of management’s qualitative factor adjustments applied to each pool based on the data used by management.
+Added: - We evaluated the reasonableness of the directional consistency of changes in the qualitative factor adjustments as well as the overall magnitude of management’s qualitative factor adjustments applied to each pool based on the data used by management.
Goodwill Impairment Assessment
−Removed: As described in Notes 1 and 8 of the consolidated financial statements, the Company’s goodwill balance totaled $1.1 million as of December 31, 2021.
+Added: As described in Notes 1 and 8 of the consolidated financial statements, the Company’s goodwill balance totaled $1.1 million as of December 31, 2022.
The Company performs a goodwill impairment test annually as of October 31, or whenever certain triggering events occur or there are circumstances that would more likely than not reduce the fair value of the reporting unit below its carrying amount are identified.
Management estimates the fair value of the reporting unit by considering multiple valuation techniques, which include subjective assumptions about the future cash flows of the Company, assumptions within the capitalization rate, valuation multiples, and market data used.
−Removed: We identified the impairment assessment of goodwill as a critical audit matter due to the high degree of auditor judgement and subjectivity in order to evaluate the fair value of the reporting unit due to the judgements made by management in the estimation of the Company’s reporting unit fair value, including those related to future cash flows, the capitalization rate, the valuation multiples used, and the market data incorporated into the estimate.
+Added: We identified the impairment assessment of goodwill as a critical audit matter due to the high degree of auditor judgment and subjectivity in order to evaluate the fair value of the reporting unit due to the judgments made by management in the estimation of the Company’s reporting unit fair value, including those related to future cash flows, the capitalization rate, the valuation multiples used, and the market data incorporated into the estimate.
In addition, the increased audit effort involved the use of internal professionals with specialized skill and knowledge in the field of business valuation.
Our audit procedures related to goodwill impairment assessment included the following for the impairment test performed for the year:
−Removed: We evaluated management’s process for developing the fair value estimates of the reporting unit, including an assessment of the appropriateness of the valuation techniques used.
−Removed: We evaluated management’s cash flow projections and significant assumptions incorporated into the business plan by considering the current and past performance by the Company, the Company’s ability to meet financial projections, and the consistency of these assumptions with evidence obtained in other areas of the audit.
+Added: - We evaluated management’s process for developing the fair value estimates of the reporting unit, including an assessment of the appropriateness of the valuation techniques used.
+Added: - We evaluated management’s cash flow projections and significant assumptions incorporated into the business plan by considering the current and past performance by the Company, the Company’s ability to meet financial projections, and the consistency of these assumptions with evidence obtained in other areas of the audit.
- We used the assistance of internal professionals with specialized skill and knowledge to assist in the evaluation of significant assumptions used in the valuation methodology.
1 unchanged sentence
◦ Testing the fair value of the reporting unit through testing of the completeness and accuracy of the data used by management to develop the estimate.
−Removed: Evaluating the reasonableness of the cash flow projections calculations used to develop the estimate.
+Added: ◦ Evaluating the reasonableness of the cash flow projection calculations used to develop the estimate.
◦ Evaluating the capitalization rate, the valuation multiples used, and the market data incorporated into the estimate by assessing the reasonableness, comparability and appropriateness of the market-based information used by agreeing the components to independent source data.
−Removed: Realizability of the Deferred Tax Assets
−Removed: As discussed in Notes 1 and 14 to the consolidated financial statements, the Company has recorded $12.1 million in deferred tax assets and released a valuation allowance of $1.9 million as of and for the period ending December 31, 2021.
−Removed: Management applied significant judgment in assessing the positive and negative evidence available in the determination of the amount of deferred tax assets that were more-likely-than-not to be realized in the future.
−Removed: In evaluating the need or lack of need, for a valuation allowance, management considered the weighting of the positive and negative evidence, which included, among other things, the nature, frequency and severity of current and cumulative taxable income or losses, forecasts of future profitability, the duration of statutory carryforward periods, as well as the Company’s intent and ability to implement tax strategies.
−Removed: We identified the realizability of deferred tax assets as a critical audit matter because of the significant assumptions and judgments used by management in determining the amount of deferred tax assets that were more-likely-than-not to be realized in the future, which in turn led to a high degree of auditor judgment and subjectivity in applying procedures relating to assessing the positive and negative evidence considered by management.
−Removed: Additionally, there was significant audit effort necessary in evaluating the weighting of the positive and negative evidence, including the use of internal professionals with specialized skill and knowledge in the field of income tax accounting.
−Removed: Our audit procedures related to the realizability of the Company’s deferred tax assets included the following, among others:
−Removed: We obtained an understanding and evaluated management’s process over the assessment of the realizability of deferred tax assets, including how it incorporates positive and negative evidence into its evaluation.
−Removed: We evaluated the positive and negative evidence in assessing whether the deferred tax assets are more-likely-than-not to be realized in the future, including evaluating the trends of both the historical financial results and the projected sources of taxable income.
−Removed: We evaluated management’s cash flow projections and significant assumptions incorporated into the business plan by considering the current and past performance by the Company, the Company’s ability to meet financial projections, and the consistency of these assumptions with evidence obtained in other areas of the audit.
−Removed: With the assistance of our internal tax professionals, we evaluated the Company’s application of income tax accounting guidance and regulations used in its realizability analysis.
−Removed: We evaluated the Company’s consideration of cumulative pre-tax losses and the deferred tax position in assessing whether deferred tax assets were more-likely-than-not to be realized in the future, which included:
−Removed: Testing the completeness and accuracy of the data used by management in their analyses.
−Removed: Evaluating the reasonableness of management’s evaluation of whether tax planning strategies were prudent and feasible.
−Removed: Evaluating management’s intent and ability to implement tax strategies in order to realize state net operating losses before expiration.
/s/ RSM US LLP
−Removed: We have served as the Company’s auditor since 2017.
+Added: We have served as the Company’s auditor since 2017.
Hartford, Connecticut
6 unchanged sentences
Noninterest bearing deposits and cash $ 5,182 $ 3,264
−Removed: $ 3,264  
−Removed: $ 3,006  
Interest bearing deposits 33,311 43,781
−Removed: 43,781  
−Removed: 31,630  
Total cash and cash equivalents 38,493 47,045
−Removed: 47,045  
−Removed: 34,636  
Investment securities:
Available-for-sale securities, at fair value 84,520 94,341
−Removed: 94,341  
−Removed: 49,262  
Other investments, at cost 4,450 4,450
Total investment securities 88,970 98,791
−Removed: 98,791  
−Removed: 53,712  
Federal Reserve Bank stock, at cost 2,627 2,843
Federal Home Loan Bank stock, at cost 3,874 4,184
−Removed: Loans receivable (net of allowance for loan losses:
+Added: Loans receivable (net of allowance for loan and lease losses:
$ 10,310 and 2021:
−Removed: 729,583  
−Removed: 719,596  
+Added: 838,006 729,583
Loans held for sale 5,211 3,129
1 unchanged sentence
Premises and equipment, net 30,641 31,500
−Removed: 31,500  
−Removed: 33,423  
−Removed: Other real estate owned
Deferred tax asset 15,527 12,146
−Removed: 12,146  
−Removed: 11,496  
+Added: Goodwill 1,107 1,107
Core deposit intangible, net 249 296
−Removed: 12,035  
−Removed: $ 948,481  
−Removed: $ 880,729  
+Added: Other assets 11,387 12,035
+Added: Total assets $ 1,043,359 $ 948,481
Noninterest bearing deposits $ 269,636 $ 226,713
−Removed: $ 226,713  
−Removed: $ 158,676  
Interest bearing deposits 590,810 521,849
−Removed: 521,849  
−Removed: 526,980  
Total deposits 860,446 748,562
−Removed: 748,562  
−Removed: 685,656  
Federal Home Loan Bank and correspondent bank borrowings 85,000 90,000
−Removed: 90,000  
−Removed: 90,000  
Senior notes, net 11,640 12,000
−Removed: 12,000  
−Removed: 11,927  
Subordinated debt, net 9,840 9,811
Junior subordinated debt owed to unconsolidated trust, net 8,128 8,119
+Added: Note payable 585 791
Advances from borrowers for taxes and insurance 886 1,101
Accrued expenses and other liabilities 7,251 10,753
−Removed: 10,753  
Total liabilities 983,776 881,137
−Removed: 881,137  
−Removed: 817,510  
Commitments and Contingencies
9 unchanged sentences
3,956,492 shares outstanding;
−Removed: 106,479  
−Removed: 106,329  
+Added: 106,565 106,479
Accumulated deficit ( 31,337 ) ( 37,498 )
−Removed: ( 37,498 )  
Accumulated other comprehensive loss ( 15,645 ) ( 1,637 )
−Removed: ( 1,637 )  
Total shareholders' equity 59,583 67,344
−Removed: 67,344  
−Removed: 63,219  
Total liabilities and shareholders' equity $ 1,043,359 $ 948,481
−Removed: $ 948,481  
−Removed: $ 880,729  
See Accompanying Notes to Consolidated Financial Statements.
6 unchanged sentences
Interest and fees on loans $ 40,823 $ 30,115 $ 35,835
−Removed: $ 30,115  
−Removed: $ 35,835  
−Removed: $ 40,568  
Interest on investment securities 2,307 1,924 1,460
2 unchanged sentences
Total interest and dividend income 44,012 32,351 37,903
−Removed: 32,351  
−Removed: 37,903  
−Removed: 43,644  
Interest Expense
Interest on deposits 5,300 2,243 9,154
−Removed: 13,985  
Interest on Federal Home Loan Bank borrowings 3,475 2,986 2,671
3 unchanged sentences
Total interest expense 10,753 7,090 13,750
−Removed: 13,750  
−Removed: 18,218  
Net interest income 33,259 25,261 24,153
−Removed: 25,261  
−Removed: 24,153  
−Removed: 25,426  
−Removed: (Credit) provision for loan losses
−Removed: ( 500 )  
−Removed: Net interest income after (credit) provision for loan losses
−Removed: 25,761  
−Removed: 21,983  
−Removed: 20,455  
+Added: Provision (credit) for loan losses 1,885 ( 500 ) 2,170
+Added: Net interest income after provision (credit) for loan losses 31,374 25,761 21,983
Non-interest Income
4 unchanged sentences
Gain on sale of investment securities — 76 —
+Added: Other income 936 1,410 346
Total non-interest income 3,605 4,423 1,979
1 unchanged sentence
Salaries and benefits 15,506 11,089 14,323
−Removed: 11,089  
−Removed: 14,323  
−Removed: 13,681  
Occupancy and equipment expense 3,428 3,430 3,513
9 unchanged sentences
Total non-interest expense 27,222 25,171 28,118
−Removed: 25,171  
−Removed: 28,118  
−Removed: 26,654  
Income (loss) before income taxes 7,757 5,013 ( 4,156 )
−Removed: ( 4,156 )  
−Removed: Benefit for income taxes
−Removed: ( 81 )  
−Removed: ( 337 )  
+Added: Provision (benefit) for income taxes 1,596 ( 81 ) ( 337 )
Net income (loss) $ 6,161 $ 5,094 $ ( 3,819 )
−Removed: $ 5,094  
−Removed: $ ( 3,819 )  
Basic earnings (loss) per share $ 1.56 $ 1.29 $ ( 0.97 )
−Removed: $ 1.29  
−Removed: $ ( 0.97 )  
Diluted earnings (loss) per share $ 1.55 $ 1.29 $ ( 0.97 )
−Removed: $ 1.29  
−Removed: $ ( 0.97 )  
See Accompanying Notes to Consolidated Financial Statements.
2 unchanged sentences
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
−Removed: (In thousands)
−Removed: Year Ended December 31,
+Added: (In thousands) Year Ended December 31,
+Added: 2022 2021 2020
Net income (loss) $ 6,161 $ 5,094 $ ( 3,819 )
−Removed: $ 5,094  
−Removed: $ ( 3,819 )  
Other comprehensive (loss) income
−Removed: Unrealized holding (loss) gain on securities
−Removed: ( 1,432 )  
−Removed: ( 155 )  
+Added: Unrealized holding loss on securities ( 18,879 ) ( 1,432 ) ( 155 )
Income tax effect 4,871 369 40
Reclassification for realized gain on sale of investment securities — ( 76 ) —
−Removed: ( 76 )  
Income tax effect — 20 —
−Removed: ( 1,119 )  
−Removed: ( 115 )  
+Added: ( 14,008 ) ( 1,119 ) ( 115 )
Derivative instruments:
1 unchanged sentence
Income tax effect — ( 39 ) —
−Removed: ( 39 )  
−Removed: Reclassification adjustement for net gain included in net income
−Removed: ( 149 )  
+Added: Reclassification adjustment for net gain included in net income — ( 149 ) —
Income tax effect — 39 —
−Removed: Total other comprehensive (loss) income
−Removed: ( 1,119 )  
−Removed: ( 115 )  
−Removed: Comprehensive income (loss)
−Removed: $ 3,975  
−Removed: $ ( 3,934 )  
+Added: Total other comprehensive loss ( 14,008 ) ( 1,119 ) ( 115 )
+Added: Comprehensive (loss) income $ ( 7,847 ) $ 3,975 $ ( 3,934 )
See Accompanying Notes to Consolidated Financial Statements.
1 unchanged sentence
AND SUBSIDIARIES
−Removed: CONSOLIDATED STATEMENTS OF SHAREHOLDERS ’
−Removed: (In thousands, except shares)
+Added: CONSOLIDATED STATEMENTS OF SHAREHOLDERS ’ EQUITY
+Added: (In thousands, except shares) Number of
+Added: Shares Common
+Added: Stock Accumulated
+Added: Deficit Accumulated
Comprehensive
−Removed: (Loss) Income
+Added: (Loss) Income Total
Balance at January 1, 2020 3,930,669 $ 106,170 $ ( 38,773 ) $ ( 403 ) $ 66,994
−Removed: 3,910,674  
−Removed: $ 105,956  
−Removed: $ ( 35,790 )  
−Removed: $ ( 826 )  
−Removed: $ 69,340  
−Removed: Comprehensive (loss) income:
−Removed: ( 2,817 )  
−Removed: Unrealized holding gain on available-for-sale securities, net of tax
−Removed: Total comprehensive (loss) income
−Removed: ( 2,817 )  
−Removed: Common stock dividends
−Removed: ( 155 )  
+Added: Comprehensive loss:
+Added: Net loss — — ( 3,819 ) — ( 3,819 )
+Added: Unrealized holding loss on available-for-sale securities, net of tax — — — ( 115 ) ( 115 )
+Added: Total comprehensive loss — — ( 3,819 ) ( 115 ) ( 3,934 )
Share-based compensation expense — 159 — — 159
−Removed: Transition adjustment related to adoption of ASC 842, net of tax
−Removed: ( 11 )  
Vesting of restricted stock 12,903 — — — —
−Removed: 19,995  
Balance at December 31, 2020 3,943,572 106,329 ( 42,592 ) ( 518 ) 63,219
−Removed: 3,930,669  
−Removed: $ 106,170  
−Removed: $ ( 38,773 )  
−Removed: $ ( 403 )  
−Removed: $ 66,994  
−Removed: Comprehensive loss:
−Removed: ( 3,819 )  
+Added: Comprehensive income (loss):
+Added: Net income — — 5,094 — 5,094
Unrealized holding loss on available-for-sale securities, net of tax — — — ( 1,119 ) ( 1,119 )
−Removed: ( 115 )  
−Removed: Total comprehensive loss
−Removed: ( 3,819 )  
−Removed: ( 115 )  
+Added: Total comprehensive income (loss) — — 5,094 ( 1,119 ) 3,975
Share-based compensation expense — 150 — — 150
Vesting of restricted stock 12,920 — — — —
−Removed: 12,903  
Balance at December 31, 2021 3,956,492 106,479 ( 37,498 ) ( 1,637 ) 67,344
−Removed: 3,943,572  
−Removed: $ 106,329  
−Removed: $ ( 42,592 )  
−Removed: $ ( 518 )  
−Removed: $ 63,219  
Comprehensive income (loss):
+Added: Net income — — 6,161 — 6,161
Unrealized holding loss on available-for-sale securities, net of tax — — — ( 14,008 ) ( 14,008 )
−Removed: ( 1,119 )  
Total comprehensive income (loss) — — 6,161 ( 14,008 ) ( 7,847 )
−Removed: ( 1,119 )  
Share-based compensation expense — 86 — — 86
Vesting of restricted stock 8,694 — — — —
−Removed: 12,920  
Balance at December 31, 2022 3,965,186 $ 106,565 $ ( 31,337 ) $ ( 15,645 ) $ 59,583
−Removed: 3,956,492  
−Removed: $ 106,479  
−Removed: $ ( 37,498 )  
−Removed: $ ( 1,637 )  
−Removed: $ 67,344  
See Accompanying Notes to Consolidated Financial Statements.
2 unchanged sentences
CONSOLIDATED STATEMENTS OF CASH FLOWS
−Removed: (In thousands)
−Removed: Year Ended December 31,
+Added: (In thousands) Year Ended December 31,
+Added: 2022 2021 2020
Cash Flows from Operating Activities:
Net income (loss) $ 6,161 $ 5,094 $ ( 3,819 )
−Removed: $ 5,094  
−Removed: $ ( 3,819 )  
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
6 unchanged sentences
Purchase price adjustment expense related to acquisition activity — — 556
−Removed: (Credit) provision for loan losses
−Removed: ( 500 )  
+Added: Provision (credit) for loan losses 1,885 ( 500 ) 2,170
Depreciation and amortization 1,325 1,521 1,505
Gain on sales of available-for-sale securities — ( 76 ) —
−Removed: ( 76 )  
Gain on sale of premises and equipment — ( 550 ) —
−Removed: ( 550 )  
Share-based compensation 86 150 159
−Removed: Increase in deferred income taxes, net
−Removed: ( 261 )  
−Removed: ( 323 )  
+Added: Decrease (increase) in deferred income taxes, net 1,490 ( 261 ) ( 323 )
Originations of SBA loans held for sale ( 23,972 ) ( 16,574 ) ( 2,049 )
−Removed: ( 16,574 )  
−Removed: ( 2,049 )  
Proceeds from sale of SBA loans held for sale 23,077 16,267 12,160
−Removed: 16,267  
−Removed: 12,160  
−Removed: 12,556  
Gains on sale of SBA loans held for sale, net ( 1,461 ) ( 1,886 ) ( 566 )
−Removed: ( 1,886 )  
−Removed: ( 566 )  
Net (gain) loss on sale and write-down of other real estate owned — ( 2 ) 69
Changes in assets and liabilities:
−Removed: Decrease (increase) in accrued interest and dividends receivable
−Removed: ( 3,017 )  
+Added: (Increase) decrease in accrued interest and dividends receivable ( 1,445 ) 798 ( 3,017 )
Increase in other assets ( 879 ) ( 2,124 ) ( 331 )
−Removed: ( 2,124 )  
−Removed: ( 331 )  
−Removed: Increase (decrease) in accrued expenses and other liabilities
−Removed: ( 1,732 )  
−Removed: Net cash provided by (used in) operating activities
+Added: (Decrease) increase in accrued expenses and other liabilities ( 2,085 ) 3,160 ( 1,732 )
+Added: Net cash provided by operating activities 7,036 7,596 6,281
Cash Flows from Investing Activities:
Proceeds from maturity or sales on available-for-sale securities 3,600 77,690 —
−Removed: 77,690  
Principal repayments on available-for-sale securities 6,723 11,667 9,879
−Removed: 11,667  
Purchases of available-for-sale securities ( 19,330 ) ( 136,135 ) ( 11,248 )
−Removed: ( 136,135 )  
−Removed: ( 11,248 )  
−Removed: Proceeds from maturity of other investments
−Removed: (Purchases) redemptions of Federal Reserve Bank stock
−Removed: ( 60 )  
+Added: Redemptions (purchases) of Federal Reserve Bank stock 216 ( 60 ) 114
Redemptions (purchases) of Federal Home Loan Bank stock 310 319 ( 26 )
−Removed: ( 26 )  
−Removed: Decrease in originated loans receivable, net
−Removed: 77,710  
−Removed: 116,635  
−Removed: 18,728  
+Added: Origination of loans receivable ( 211,383 ) ( 220,349 ) ( 36,860 )
Purchases of loans receivable ( 141,412 ) ( 89,338 ) ( 32,785 )
−Removed: ( 89,338 )  
−Removed: ( 32,785 )  
+Added: Payments received on loans receivable 239,639 298,059 153,495
Purchases of premises and equipment ( 414 ) ( 430 ) ( 70 )
−Removed: ( 430 )  
−Removed: ( 70 )  
Proceeds from sale of premises and equipment — 1,464 —
Proceeds from sale of other real estate owned — 1,908 425
−Removed: Refund of escrow deposit related to acquisition activity
Net cash (used in) provided by investing activities ( 122,051 ) ( 55,205 ) 82,924
−Removed: ( 55,205 )  
−Removed: 82,924  
Cash Flows from Financing Activities:
Increase (decrease) in deposits, net 111,884 62,906 ( 133,877 )
−Removed: 62,906  
−Removed: ( 133,877 )  
−Removed: 26,254  
−Removed: Purchases of deposits
−Removed: 49,998  
+Added: Increase in purchased deposits — — 49,998
Repayments of FHLB borrowings ( 5,000 ) — ( 10,000 )
−Removed: ( 10,000 )  
+Added: Repayments of senior notes ( 12,000 ) — —
+Added: Proceeds from issuance of senior notes 12,000 — —
Principal repayments of note payable ( 206 ) ( 203 ) ( 199 )
−Removed: ( 203 )  
−Removed: ( 199 )  
(Increase) decrease in advances from borrowers for taxes and insurance ( 215 ) ( 2,685 ) 105
−Removed: ( 2,685 )  
−Removed: Dividends paid on common stock
Net cash provided by (used in) financing activities 106,463 60,018 ( 93,973 )
−Removed: 60,018  
−Removed: ( 93,973 )  
−Removed: 26,659  
−Removed: Net increase (decrease) in cash and cash equivalents
−Removed: 12,409  
−Removed: ( 4,768 )  
+Added: Net (decrease) increase in cash and cash equivalents ( 8,552 ) 12,409 ( 4,768 )
Cash and cash equivalents at beginning of period 47,045 34,636 39,404
−Removed: 34,636  
−Removed: 39,404  
−Removed: 66,437  
Cash and cash equivalents at end of period $ 38,493 $ 47,045 $ 34,636
−Removed: $ 47,045  
−Removed: $ 34,636  
−Removed: $ 39,404  
PATRIOT NATIONAL BANCORP, INC.
1 unchanged sentence
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
−Removed: (In thousands)
−Removed: Year Ended December 31,
+Added: (In thousands) Year Ended December 31,
+Added: 2022 2021 2020
Supplemental Disclosures of Cash Flow Information:
2 unchanged sentences
Non-cash transactions:
−Removed: Increase in premises and equipment
−Removed: Reclass of premises and equipment to implementation cost
−Removed: Increase in accrued expense and other liabilities
−Removed: Purchases of available-for-sale securities
−Removed: Increase in accrued expense and other liabilities
−Removed: Transfers of loans receivable to other real estate owned
Transfers of SBA loans held for sale to loans receivable $ 274 $ 281 $ 9,542
Transfers of loans receivable to loans held for sale $ — $ — $ 5,022
+Added: Capitalized servicing assets $ 400 $ 335 $ 137
Operating lease right-of-use assets $ 80 $ 373 $ 40
−Removed: Operating lease liabilities
Accrued rent payable - adoption ASC 842 $ — $ — $ 22
−Removed: Capitalized servicing assets
−Removed: (Decrease) increase in interest rate swaps assets
−Removed: Decrease (increase) in interest rate swaps liabilities
−Removed: Deferred cost related to capital raise
−Removed: Accrued expense related to capital raise
+Added: Interest rate swaps $ ( 535 ) $ 449 $ ( 493 )
+Added: Deferred cost for capital raise $ ( 825 ) $ 825 $ —
+Added: Deferred debt issuance costs $ 360 $ — $ —
+Added: Increase in premises and equipment $ — $ 10 $ 290
+Added: Reclassification of premises and equipment to implementation cost $ — $ 52 $ —
+Added: Increase in accrued expense and other liabilities $ — $ ( 62 ) $ ( 290 )
Business Combination Non-Cash Disclosures:
−Removed: Contingent liability assumed in business combination
Decrease in escrow deposit related to acquisition activity $ — $ — $ ( 657 )
9 unchanged sentences
Patriot Bank, N.A.
−Removed: (the "Bank") (collectively, “Patriot”) is a wholly owned subsidiary of the Company.
+Added: (the "Bank") (collectively, “Patriot”) is a wholly owned subsidiary of the Company.
The Bank is a nationally chartered commercial bank whose deposits are insured under the Bank Insurance Fund, which is administered by the Federal Deposit Insurance Corporation.
−Removed: The Bank provides a full range of banking services to commercial and consumer customers through its main office in Stamford, Connecticut, seven branch offices in Connecticut and two branch offices in New York.
+Added: The Bank provides a full range of banking services to commercial and consumer customers through its main office in Stamford, Connecticut, eight branch offices in Connecticut and one branch office in New York.
The Bank's customers are concentrated in Fairfield and New Haven Counties in Connecticut and Westchester County in New York.
−Removed: On March 11, 2003, the Company formed Patriot National Statutory Trust I (the “Trust”) for the purpose of issuing trust preferred securities and investing the proceeds in subordinated debentures issued by the Company, and on March 26, 2003, the first series of trust preferred securities were issued.
−Removed: In accordance with accounting principles generally accepted in the United States of America (“US GAAP”), the Trust is not included in the Company’s consolidated financial statements.
−Removed: On May 10, 2018, the Bank completed its acquisition of Prime Bank, a Connecticut bank headquartered in Orange, CT (“Prime Bank”).
+Added: On March 11, 2003, the Company formed Patriot National Statutory Trust I (the “Trust”) for the purpose of issuing trust preferred securities and investing the proceeds in subordinated debentures issued by the Company, and on March 26, 2003, the first series of trust preferred securities were issued.
+Added: In accordance with accounting principles generally accepted in the United States of America (“US GAAP”), the Trust is not included in the Company’s consolidated financial statements.
+Added: On May 10, 2018, the Bank completed its acquisition of Prime Bank, a Connecticut bank headquartered in Orange, CT (“Prime Bank”).
The closing of the transaction added a new Patriot branch located in the Town of Orange, New Haven County, Connecticut.
−Removed: The results of Prime Bank’s operations are included in the Company’s consolidated financial statements from the date of acquisition.
+Added: The results of Prime Bank’s operations are included in the Company’s consolidated financial statements from the date of acquisition.
The preparation of consolidated financial statements in accordance with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and to disclose contingent assets and liabilities.
Actual results could differ from those estimates.
−Removed: Management has identified accounting for the allowance for loan and lease losses, the analysis and valuation of its investment securities, the valuation of deferred tax assets, the impairment of goodwill, the valuation of derivatives, and the valuation of servicing assets as certain of Patriot’s more significant accounting policies and estimates, in that they are critical to the presentation of Patriot’s financial condition and results of operations.
−Removed: As they concern matters that are inherently uncertain, these estimates require management to make subjective and complex judgments in the preparation of Patriot’s consolidated financial statements.
−Removed: Significant Changes in the Fourth Quarter of 2021:
−Removed: During the fourth quarter of 2021, Patriot announced a merger transaction with American Challenger Development Corp.
−Removed: (“American Challenger”).
−Removed: As a result of the proposed merger transaction, material, non-recurring acquisition-related expenses of $ 1.9  million were incurred for the quarter ended December 31, 2021.
−Removed: The increase in project expenses had the effect of reducing pre-tax income for the fourth quarter of 2021 from $ 2.5 million to $ 633,000 .
−Removed: In addition, the Company fully reversed the valuation allowance of $ 1.9 million recorded as of December 31, 2020, which had effect of reducing the provision for income tax of $ 1.9 million.
−Removed: The net income was increased from $ 1.8  million to $ 1.9  million for the fourth quarter of 2021.
+Added: Management has identified accounting for the allowance for loan and lease losses, the analysis and valuation of its investment securities, the valuation of deferred tax assets, the impairment of goodwill, the valuation of derivatives, and the valuation of servicing assets as certain of Patriot’s more significant accounting policies and estimates, in that they are critical to the presentation of Patriot’s financial condition and results of operations.
+Added: As they concern matters that are inherently uncertain, these estimates require management to make subjective and complex judgments in the preparation of Patriot’s consolidated financial statements.
+Added: Certain prior period amounts have been reclassified to conform to current year presentation.
Summary of Significant Accounting Policies:
7 unchanged sentences
Patriot has not experienced any losses from such concentrations.
+Added: Federal Reserve Bank and Federal Home Loan Bank stock
+Added: The Bank is required to maintain an investment in capital stock of the Federal Home Loan Bank of Boston (“FHLB-B”), as collateral, in an amount equal to a percentage of its outstanding mortgage loans and loans secured by residential properties, including mortgage-backed securities.
+Added: Additionally, the Bank is required to maintain an investment in the capital stock of the Federal Reserve Bank (“FRB”), as collateral, in an amount equal to one percent of six percent of the Bank’s total equity capital as per its latest Report of Condition (“Call Report”) filed with the Federal Deposit Insurance Corporation.
PATRIOT NATIONAL BANCORP, INC.
1 unchanged sentence
Notes to consolidated financial statements
−Removed: Federal Reserve Bank and Federal Home Loan Bank stock
−Removed: The Bank is required to maintain an investment in capital stock of the Federal Home Loan Bank of Boston (“FHLB-B”), as collateral, in an amount equal to a percentage of its outstanding mortgage loans and loans secured by residential properties, including mortgage-backed securities.
−Removed: Additionally, the Bank is required to maintain an investment in the capital stock of the Federal Reserve Bank (“FRB”), as collateral, in an amount equal to one percent of six percent of the Bank’s total equity capital as per its latest Report of Condition (“Call Report”) filed with the Federal Deposit Insurance Corporation.
−Removed: The FRB requires that one -half of the investment in its stock be funded currently, with the remaining amount subject to call when deemed necessary by the FRB Board of Governors.
+Added: requires that one-half of the investment in its stock be funded currently, with the remaining amount subject to call when deemed necessary by the FRB Board of Governors.
Shares in the FHLB-B and FRB are purchased and redeemed based upon their $ 100 par value.
The stocks are non-marketable equity securities, and as such, are considered restricted securities that are carried at cost, and evaluated for impairment in accordance with relevant accounting guidance.
−Removed: In accordance with this guidance, the stocks’
−Removed: values are determined by the ultimate recoverability of the par value rather than by recognizing temporary declines.
+Added: In accordance with this guidance, the stocks’ values are determined by the ultimate recoverability of the par value rather than by recognizing temporary declines.
The determination of whether the par value will ultimately be recovered is influenced by criteria such as:
3 unchanged sentences
and (d) the regulatory capital ratios and liquidity position of the FHLB-B or FRB, as applicable.
−Removed: Included in the Bank’s investment portfolio are shares in the FHLB-B and FRB of $ 7.0  million and $ 7.3  million as of December 
−Removed: 2021 and 2020, respectively.
−Removed: Management has evaluated its investment in the capital stock of the FHLB-B and FRB for impairment, based on the aforementioned criteria, and has determined that as of December 
−Removed: 2021 and 2020 there is no impairment of its investment in either the FHLB-B or FRB.
+Added: Included in the Bank’s investment portfolio are shares in the FHLB-B and FRB of $ 6.5 million and $ 7.0 million as of December 31, 2022 and 2021, respectively.
+Added: Management has evaluated its investment in the capital stock of the FHLB-B and FRB for impairment, based on the aforementioned criteria, and has determined that as of December 31, 2022 and 2021 there is no impairment of its investment in either the FHLB-B or FRB.
Investment Securities
Management determines the appropriate classification of securities at the date individual investment securities are acquired, and the appropriateness of such classification is reassessed at each balance sheet date.
−Removed: Debt securities, if any, that management has the positive intent and ability to hold to maturity are classified as “held to maturity”
−Removed: and are recorded at amortized cost.
−Removed: “Trading”
−Removed: securities, if any, are carried at fair value with unrealized gains and losses recognized in earnings.
−Removed: Securities classified as “available-for-sale”
−Removed: are recorded at fair value, with unrealized gains and losses excluded from earnings and reported in other comprehensive income (loss), net of taxes.
+Added: Debt securities, if any, that management has the positive intent and ability to hold to maturity are classified as “held to maturity” and are recorded at amortized cost.
+Added: “Trading” securities, if any, are carried at fair value with unrealized gains and losses recognized in earnings.
+Added: Securities classified as “available-for-sale” are recorded at fair value, with unrealized gains and losses excluded from earnings and reported in other comprehensive income (loss), net of taxes.
Purchase premiums and discounts are recognized in interest income using the interest method of accounting, in order to achieve a constant effective yield over the contractual term of the securities.
−Removed: Patriot conducts a quarterly review and evaluation of the securities portfolio to determine if a decline in the fair value of any security below its cost basis is an other-than-temporary impairment (“OTTI”).
+Added: Patriot conducts a quarterly review and evaluation of the securities portfolio to determine if a decline in the fair value of any security below its cost basis is an other-than-temporary impairment (“OTTI”).
Our evaluation of OTTI considers the duration and severity of the impairment, our intent to hold the securities, whether or not we will be required to sell the securities, and our assessments of the reason for the decline in value and the likelihood of a near-term recovery.
4 unchanged sentences
Realized gains and losses on the sale of securities are determined using the specific identification method, recorded on the trade date, and reported in non-interest income for the period.
−Removed: At December 
−Removed: 2021 and 2020, the Bank’s investment portfolio includes a $ 4.5 million investment in the Solomon Hess SBA Loan Fund (“SBA Fund”).
+Added: At December 31, 2022 and 2021, the Bank’s investment portfolio includes a $ 4.5 million investment in the Solomon Hess SBA Loan Fund (“SBA Fund”).
The Bank uses this investment to satisfy its Community Reinvestment Act lending requirements.
−Removed: At December 
−Removed: 2021 and 2020, the investment in the SBA Fund is reported in the consolidated balance sheets at cost, which management believes approximates fair value.
−Removed: PATRIOT NATIONAL BANCORP, INC.
−Removed: AND SUBSIDIARIES
−Removed: Notes to consolidated financial statements
+Added: At December 31, 2022 and 2021, the investment in the SBA Fund is reported in the consolidated balance sheets at cost, which management believes approximates fair value.
Loans receivable
−Removed: Loans that Patriot has the intent and ability to hold until maturity or for the foreseeable future generally are reported at their outstanding unpaid principal balances adjusted for unearned income, an allowance for loan and lease losses, if any, and any unamortized discount, premium and deferred fees.
+Added: Loans that Patriot has the intent and ability to hold until maturity or for the foreseeable future generally are reported at their outstanding unpaid principal balances adjusted for deferred costs, an allowance for loan and lease losses, if any, and any unamortized discount, premium and deferred fees.
Interest income is accrued based on unpaid principal balances.
Loan application fees are reported as non-interest income, while other certain direct origination costs, or for purchased loans, any discounts or premiums are deferred and amortized to interest income as a level yield adjustment over the respective term of the loan.
+Added: PATRIOT NATIONAL BANCORP, INC.
+Added: AND SUBSIDIARIES
+Added: Notes to consolidated financial statements
Loans are placed on non-accrual status or charged off when collection of principal or interest is considered doubtful.
8 unchanged sentences
The interest on these loans is accounted for on the cash-basis method until qualifying for return to accrual status.
−Removed: Patriot’s real estate loans are collateralized by real estate located principally in Fairfield and New Haven Counties in Connecticut, and Westchester County and New York City in New York.
−Removed: Accordingly, the ultimate collectability of a substantial portion of Patriot’s loan portfolio is susceptible to regional real estate market conditions.
−Removed: A loan is considered impaired when, based on current information and events, it is probable that Patriot will be unable to collect the scheduled payments of principal or interest when due, according to the loan’s contractual terms.
+Added: Patriot’s real estate loans are collateralized by real estate located principally in Fairfield and New Haven Counties in Connecticut, and Westchester County and New York City in New York.
+Added: Accordingly, the ultimate collectability of a substantial portion of Patriot’s loan portfolio is susceptible to regional real estate market conditions.
+Added: A loan is considered impaired when, based on current information and events, it is probable that Patriot will be unable to collect the scheduled payments of principal or interest when due, according to the loan’s contractual terms.
Factors considered by management in determining impairment include payment status and the probability of collecting scheduled principal and interest payments when due.
Loans that experience insignificant payment delays and shortfalls generally are not classified as impaired.
−Removed: Management determines the significance of payment delays and shortfalls on a case-by-case basis, taking into consideration the circumstances contributing to the borrower’s loan performance issues, including the length of the delay, the reasons for the delay, the borrower’s prior payment history, and the amount of the shortfall in relation to the principal and interest owed.
−Removed: For commercial and real estate loans, impairment is measured for each individual loan based on the present value of the expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or, for collateral dependent loans, the fair value of the collateral less applicable selling costs.
−Removed: Impaired loans also include loans modified in troubled debt restructurings (“TDR”), where concessions have been granted to borrowers experiencing financial difficulties.
+Added: Management determines the significance of payment delays and shortfalls on a case-by-case basis, taking into consideration the circumstances contributing to the borrower’s loan performance issues, including the length of the delay, the reasons for the delay, the borrower’s prior payment history, and the amount of the shortfall in relation to the principal and interest owed.
+Added: For commercial and real estate loans, impairment is measured for each individual loan based on the present value of the expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or, for collateral dependent loans, the fair value of the collateral less applicable selling costs.
+Added: Impaired loans also include loans modified in troubled debt restructurings (“TDR”), where concessions have been granted to borrowers experiencing financial difficulties.
These concessions could include a reduction in the interest rate on the loan, payment or maturity date extensions, forgiveness of principal, forbearance or other actions intended to maximize collection.
3 unchanged sentences
Accordingly, Patriot does not separately identify individual consumer installment loans for impairment, unless such loans are individually evaluated for impairment due to financial difficulties of the borrower.
−Removed: PATRIOT NATIONAL BANCORP, INC.
−Removed: AND SUBSIDIARIES
−Removed: Notes to consolidated financial statements
−Removed: In response to the COVID- 19 pandemic, financial institutions were provided relief from certain TDR accounting and disclosure requirements for qualifying loan modifications through the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).
−Removed: Specifically, Section 4013 of the CARES Act, which was extended by the Consolidated Appropriations Act, 2021, provided temporary relief from certain GAAP requirements for loan modifications related to COVID- 19.
−Removed: In addition, a group of banking regulatory agencies issued a revised Interagency Statement that offered practical expedients for evaluating whether COVID- 19 loan modifications were TDRs.
Acquired Loans
2 unchanged sentences
Fair values for acquired loans are based on a discounted cash flow methodology that involves assumptions and judgments as to credit risk, prepayment risk, liquidity risk, default rates, loss severity, payment speeds, collateral values and discount rate.
−Removed: Acquired Impaired Loans- Purchase Credit Impaired “PCI”
−Removed: Acquired loans that exhibit evidence of deterioration in credit quality since origination and for which it is probable, at acquisition, that the Company will be unable to collect all contractually required payments are accounted for as PCI loans under Accounting Standards Codification (“ASC”) 310 - 30.
+Added: Acquired Impaired Loans- Purchase Credit Impaired “PCI” Loans
+Added: Acquired loans that exhibit evidence of deterioration in credit quality since origination and for which it is probable, at acquisition, that the Company will be unable to collect all contractually required payments are accounted for as PCI loans under Accounting Standards Codification (“ASC”) 310-30.
The excess of undiscounted cash flows expected at acquisition over the estimated fair value is referred to as the accretable discount and is accreted into interest income over the remaining life of the loans using the interest method.
The difference between contractually required payments at acquisition and the undiscounted cash flows expected to be collected at acquisition is referred to as the non-accretable discount.
−Removed: The non-accretable discount represents estimated future credit losses and other contractually required payments that the Company does not expect to collect.
+Added: The non-accretable discount represents estimated future credit losses and other contractually required payments that the Company
+Added: PATRIOT NATIONAL BANCORP, INC.
+Added: AND SUBSIDIARIES
+Added: Notes to consolidated financial statements
+Added: does not expect to collect.
Subsequent decreases in expected cash flows are recognized as impairments through a charge to the provision for loan losses resulting in an increase in the allowance for loan and lease losses.
7 unchanged sentences
The difference between the acquisition date fair value and the outstanding balance represents the fair value adjustment for a loan and includes both credit and interest rate considerations.
−Removed: Fair value adjustments may be discounts (or premiums) to a loan’s cost basis and are accreted (or amortized) to net interest income (or expense) over the loan’s remaining life in accordance with ASC 310 - 20.
+Added: Fair value adjustments may be discounts (or premiums) to a loan’s cost basis and are accreted (or amortized) to net interest income (or expense) over the loan’s remaining life in accordance with ASC 310-20.
Fair value adjustments for revolving loans are accreted (or amortized) using a straight-line method.
1 unchanged sentence
Subsequent to the purchase date, the methods used to estimate the allowance for loan and lease losses for the acquired non-impaired loans are consistent with the policy for allowance for loan and lease losses described below.
−Removed: PATRIOT NATIONAL BANCORP, INC.
−Removed: AND SUBSIDIARIES
−Removed: Notes to consolidated financial statements
Allowance for loan and lease losses
−Removed: The allowance for loan and lease losses (“ALLL”) is regularly evaluated by management, based upon the nature and volume of the loan portfolio, periodic review of loan collectability using historical experience rates, adverse situations potentially affecting individual borrowers’
−Removed: ability to repay, the estimated value of any underlying collateral, and prevailing economic conditions on overall segments of the loan portfolio.
+Added: The allowance for loan and lease losses (“ALLL”) is regularly evaluated by management, based upon the nature and volume of the loan portfolio, periodic review of loan collectability using historical experience rates, adverse situations potentially affecting individual borrowers’ ability to repay, the estimated value of any underlying collateral, and prevailing economic conditions on overall segments of the loan portfolio.
This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available.
1 unchanged sentence
The model is comprised of six distinct loan portfolio segments:
−Removed: Commercial Real Estate, Residential Real Estate, Commercial and Industrial, Consumer and Other, Construction, and Construction to Permanent –
−Removed: Commercial Real Estate (“Construction to permanent –
−Removed: CRE”).
+Added: Commercial Real Estate, Residential Real Estate, Commercial and Industrial, Consumer and Other, Construction, and Construction to Permanent – Commercial Real Estate (“Construction to permanent – CRE”).
Management monitors a distinct set of risk characteristics for each loan segment.
Additionally, management assesses and monitors risk and performance on a disaggregated basis, including an internal risk rating system for loans included in the Commercial loan segment and analyzing the type of collateral, lien position, and loan-to-value (i.e., LTV) ratio for loans included in the Consumer loan segment.
−Removed: Management’s ALLL process first applies historical loss rates to pools of loans with homogeneous risk characteristics.
−Removed: Loss rates are calculated by historical charge-off rates that have occurred within each pool of homogenous loans over its loss emergence period (“LEP”).
+Added: Management’s ALLL process first applies historical loss rates to pools of loans with homogeneous risk characteristics.
+Added: Loss rates are calculated by historical charge-off rates that have occurred within each pool of homogenous loans over its loss emergence period (“LEP”).
The LEP is an estimate of the average amount of time from the point at which a loan loss is incurred to the point in time at which the loan loss is confirmed.
In general, the LEP will be shorter in an economic slowdown or recession and longer during times of economic stability or growth, when adverse conditions are not generally applicable across a class of borrowers and individual customers are better able to manage deteriorating conditions.
−Removed: Another key assumption is the look-back period (“LBP”), which represents the historical data period utilized to calculate loss rates.
+Added: Another key assumption is the look-back period (“LBP”), which represents the historical data period utilized to calculate loss rates.
A three-year LBP is used for each loan segment, in order to capture relevant historical data believed to reflect losses inherent in the loan segment portfolios.
+Added: PATRIOT NATIONAL BANCORP, INC.
+Added: AND SUBSIDIARIES
+Added: Notes to consolidated financial statements
After considering the historic loss calculations, management applies additional qualitative adjustments to the ALLL to reflect the inherent risk of loss that exists in the loan portfolio at the balance sheet date.
Qualitative adjustments are made based upon changes in economic conditions, loan portfolio and asset quality data, and credit process changes, such as credit policies or underwriting standards.
−Removed: Evaluation of the ALLL requires considerable judgment, in order to adequately estimate and provide for the risk of loss inherent in the loan portfolio segments.
−Removed: In 2021, the Company refined its methodology in determining the qualitative factors within the allowance for loan losses.
−Removed: Qualitative adjustments are aggregated into nine categories described in the Interagency Policy Statement (“Interagency Statement”) issued by the bank regulators.
+Added: Evaluation of the ALLL requires considerable judgment, to adequately estimate and provide for the risk of loss inherent in the loan portfolio segments.
+Added: Qualitative adjustments are aggregated into nine categories described in the Interagency Policy Statement (“Interagency Statement”) issued by the bank regulators.
Within the statement, the following qualitative factors are considered:
8 unchanged sentences
• The effect of other external factors such as competition and legal and regulatory requirements on the level of estimated credit losses in our current loan portfolio.
−Removed: PATRIOT NATIONAL BANCORP, INC.
−Removed: AND SUBSIDIARIES
−Removed: Notes to consolidated financial statements
−Removed: The additional risk factor for special mention loans and substandard loans and the risk factor related to COVID- 19 pandemic were eliminated.
−Removed: The separate adjustment for Special Mention and Substandard loans within each pool is now incorporated into the factor for “Changes in the volume and loss severity of past due loans, the volume of non-accrual, and the volume and loss severity of adversely classified or graded loans”, which now includes adjustments for the percentage of Special Mention and Substandard loans in each portfolio segment.
−Removed: The COVID- 19 factor was eliminated since, after more than a year into the pandemic, we consider that the impact on both the economy and our portfolio is now manifest in economic data (GDP, unemployment, retail sales, manufacturing output, etc.) and in our portfolio, as reflected by the volume of Special Mention and Substandard loans that have resulted from deterioration in borrower performance as a direct result of the pandemic.
−Removed: The refining in methodology resulted in better alignment of the credit characteristics of the various risk grades and loan types with the calculated allowance, and did not have any impact on the provision for the year ended December 31, 2021.
Patriot provides for loan losses by consistently applying the documented ALLL methodology.
Loan losses are charged to the allowance as incurred and recoveries are credited to the ALLL.
−Removed: Additions to the ALLL are charged against income, based on various factors which, in management’s judgment, deserve current recognition in estimating probable losses.
+Added: Additions to the ALLL are charged against income, based on various factors which, in management’s judgment, deserve current recognition in estimating probable losses.
Loan losses are charged-off in the period the loans, or portions thereof, are deemed uncollectible.
4 unchanged sentences
(1) Allowances are established for impaired loans (generally defined by Patriot as non-accrual loans, troubled debt restructured loans, and loans that were previously classified as troubled debt restructurings but have been upgraded).
−Removed: The amount of impairment provided as an allowance is represented by the deficiency, if any, between the present value of expected future cash flows discounted at the loan’s original effective interest rate or the underlying collateral value, less estimated costs to sell, if the loan is collateral dependent, and the carrying value of the loan.
+Added: The amount of impairment provided as an allowance is represented by the deficiency, if any, between the present value of expected future cash flows discounted at the loan’s original effective interest rate or the underlying collateral value, less estimated costs to sell, if the loan is collateral dependent, and the carrying value of the loan.
Impaired loans that have no discounted cash flow or collateral deficiency, if applicable, are not considered for general valuation allowances described below.
2 unchanged sentences
Management applies an estimated loss rate to each pool of homogeneous loans.
−Removed: The loss rates applied are based on Patriot’s three -year loss LBP adjusted, as appropriate, for the factors discussed above.
+Added: The loss rates applied are based on Patriot’s three-year loss LBP adjusted, as appropriate, for the factors discussed above.
The evaluation is inherently subjective, as it requires material estimates that may be susceptible to significant revision based on changes in economic and real estate market conditions.
−Removed: Actual loan losses may be more or less than the ALLL management established which could have an effect on Patriot’s financial results.
+Added: Actual loan losses may be more or less than the ALLL management established which could have an effect on Patriot’s financial results.
In addition, a risk rating system is utilized to evaluate the general component of the ALLL.
1 unchanged sentence
Risk ratings are assigned based upon the recommendation of the credit analyst and the originating loan officer.
−Removed: The risk ratings are reviewed and confirmed by the management loan committee of the Board of Directors (the “Loan Committee”).
+Added: The risk ratings are reviewed and confirmed by the management loan committee of the Board of Directors (the “Loan Committee”).
Risk ratings are established at the initiation of transactions and are reviewed and changed, when necessary, during the life of the loan.
Loans assigned a risk rating of six or above are monitored more closely by the credit administration officers and the Loan Committee.
−Removed: An unallocated component of the ALLL is considered when necessary to cover uncertainties that could affect management's estimate of probable losses.
−Removed: The unallocated component of the ALLL reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies applied to estimating specific and general losses in the loan portfolio.
PATRIOT NATIONAL BANCORP, INC.
1 unchanged sentence
Notes to consolidated financial statements
−Removed: In underwriting a loan secured by real property, a property appraisal is required to be performed by an independent licensed appraiser that has been approved by Patriot’s Board of Directors.
+Added: (3) An unallocated component of the ALLL is considered when necessary to cover uncertainties that could affect management's estimate of probable losses.
+Added: The unallocated component of the ALLL reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies applied to estimating specific and general losses in the loan portfolio.
+Added: In underwriting a loan secured by real property, a property appraisal is required to be performed by an independent licensed appraiser that has been approved by Patriot’s Board of Directors.
Appraisals are subject to review by independent third parties hired by Patriot.
4 unchanged sentences
The Bank further segmented its loan pools by Pass, Special Mention, and Substandard risk ratings and assigned additional risk premiums to each group.
−Removed: The qualitative and economic factors for all of the pools and subsegments were also evaluated, with Pass loans receiving adjustments to reflect their credit profile relative to the non-impaired criticized assets. 
+Added: The qualitative and economic factors for all of the pools and subsegments were also evaluated, with Pass loans receiving adjustments to reflect their credit profile relative to the non-impaired criticized assets.
These adjustments generally flow through the qualitative factors addressing severity of past due loans and other similar conditions and the nature and volume of the portfolio and terms of the loans.
−Removed: The Bank’s SBA loan portfolio consists of the unguaranteed portion of certain C&I and Owner-Occupied CRE loans.
+Added: The Bank’s SBA loan portfolio consists of the unguaranteed portion of certain C&I and Owner-Occupied CRE loans.
An additional risk premium was assigned to those loans due to their risk parameters and profile, including higher historical loss rates (based on historical SBA data) than the rest of the C&I and Owner-Occupied CRE portfolio.
Acquired loans are marked to fair value on the date of acquisition and are evaluated on a quarterly basis to ensure the necessary purchase accounting updates are made in parallel with the allowance for loan loss calculation.
−Removed: Acquired loans that have been renewed since acquisition are included in the allowance for loan loss calculation since these loans have been underwritten to the Bank’s guidelines.
+Added: Acquired loans that have been renewed since acquisition are included in the allowance for loan loss calculation since these loans have been underwritten to the Bank’s guidelines.
Acquired loans that have not been renewed since acquisition, or that have a PCI mark, are excluded from the allowance for loan loss calculation.
2 unchanged sentences
The OCC may require Patriot to adjust the ALLL based on its analysis of information available at the time of its examination.
+Added: As discussed further in the section titled “Accounting Standards Issued but not yet adopted”, the current ALLL methodology will be replaced by the measurement of losses under a current expected cumulative loss (CECL) model beginning January 1, 2023 in accordance with new accounting standard ASU 2016-13.
Transfers of financial assets
1 unchanged sentence
Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from Patriot -- put presumptively beyond the reach of Patriot and its creditors, even in bankruptcy or other receivership, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets and no condition both constrains the transferee from taking advantage of that right and provides more than a trivial benefit for Patriot, and (3) Patriot does not maintain effective control over the transferred assets through either (a) an agreement that both entitles and obligates it to repurchase or redeem the assets before maturity or (b) the ability to unilaterally cause the holder to return specific assets, other than through a cleanup call.
+Added: PATRIOT NATIONAL BANCORP, INC.
+Added: AND SUBSIDIARIES
+Added: Notes to consolidated financial statements
Loans Held for Sale
7 unchanged sentences
All criteria for sale accounting must be met in order for the loan sales to occur;
−Removed: see details under the “Transfers of Financial Assets”
−Removed: heading above.
−Removed: PATRIOT NATIONAL BANCORP, INC.
−Removed: AND SUBSIDIARIES
−Removed: Notes to consolidated financial statements
+Added: see details under the “Transfers of Financial Assets” heading above.
Servicing Assets
6 unchanged sentences
Assets acquired through, loan foreclosure or in lieu of, are held for sale and are initially recorded at fair value less cost to sell at the date of foreclosure, establishing a new cost basis.
−Removed: In addition, when Patriot acquires other real estate owned (“OREO”), it obtains a current appraisal to substantiate the net carrying value of the asset.
+Added: In addition, when Patriot acquires other real estate owned (“OREO”), it obtains a current appraisal to substantiate the net carrying value of the asset.
Subsequent to foreclosure, valuations are periodically performed by management and the assets are carried at the lower of carrying amount or fair value less cost to sell.
3 unchanged sentences
Write-downs of foreclosed properties that are required upon transfer to OREO are charged to the ALLL.
−Removed: Thereafter, an allowance for OREO losses is established for any further declines in the property’s value.
+Added: Thereafter, an allowance for OREO losses is established for any further declines in the property’s value.
These losses are included in non-interest expenses in the consolidated statements of operations.
9 unchanged sentences
Intangible Assets
−Removed: Intangible assets include core deposit intangibles (“CDI”) and goodwill arising from acquisitions.
+Added: Intangible assets include core deposit intangibles (“CDI”) and goodwill arising from acquisitions.
The initial and ongoing carrying value of intangible assets is based upon modeling techniques that require management to make estimates regarding the amount and timing of expected future cash flows.
It also requires use of a discount rate that reflects the current return requirements of the market in relation to present risk-free interest rates, required equity market premiums, peer volatility indicators, and company-specific risk indicators.
−Removed: CDI is amortized on straight-line basis over a 10 -year period because that is managements’
−Removed: estimate of the period Patriot will benefit from Prime Bank’s deposit base comprised of funds associated with long-term customer relationships.
+Added: PATRIOT NATIONAL BANCORP, INC.
+Added: AND SUBSIDIARIES
+Added: Notes to consolidated financial statements
+Added: CDI is amortized on straight-line basis over a 10-year period because that is managements’ estimate of the period Patriot will benefit from Prime Bank’s deposit base comprised of funds associated with long-term customer relationships.
CDI is evaluated for impairment whenever events or changes in circumstances indicate that its carrying amount may not be recoverable, with any changes in estimated useful life accounted for prospectively over the revised remaining life.
3 unchanged sentences
The fair value of each reporting unit is compared to the carrying amount of such reporting unit in order to determine if impairment is indicated.
−Removed: PATRIOT NATIONAL BANCORP, INC.
−Removed: AND SUBSIDIARIES
−Removed: Notes to consolidated financial statements
−Removed: Contingent Consideration
−Removed: Contingent consideration represents an estimate of the additional amount of purchase price consideration and is measured based on the probability that certain loans are restructured in accordance with the related acquisition agreement.
−Removed: Resolution of the contingent consideration was finalized as of December 31, 2020 and no further adjustments are expected.
Derivatives are recognized at fair value and included in other assets and other liabilities in the accompanying consolidated balance sheets.
1 unchanged sentence
Cash flows from derivative financial instruments are included in net cash provided by operating activities in the accompanying consolidated statements of cash flows.
−Removed: Derivatives Not Designated in Hedge Relationships Patriot enters into interest rate swap agreements (“swaps”), to provide a facility to mitigate for the borrower the fluctuations in the variable rate on the respective loan.
−Removed: The customer swaps are simultaneously hedge by offsetting derivatives that Patriot entered into with an outside third party.
+Added: Derivatives Not Designated in Hedge Relationships:
+Added: Patriot enters into interest rate swap agreements (“swaps”), to provide a facility to mitigate for the borrower the fluctuations in the variable rate on the respective loan.
+Added: The customer swaps are simultaneously hedged by offsetting derivatives that Patriot entered into with an outside third party.
The swaps are reported at fair value in other assets or other liabilities.
−Removed: These swaps qualify as 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 noninterest income.
+Added: These swaps qualify as 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 credit risk associated with derivatives executed with customers is similar as that involved in extending loans and is subject to normal credit policies.
−Removed: Collateral is obtained based on management’s assessment of the customer.
−Removed: The positions of customer derivatives are recorded at fair value and changes in value are included in noninterest income on the consolidated statement of operations.
+Added: Collateral is obtained based on management’s assessment of the customer.
+Added: The positions of customer derivatives are recorded at fair value and changes in value are included in non-interest income on the consolidated statement of operations.
Derivatives Designated in Hedge Relationships:
7 unchanged sentences
Under this method, deferred tax assets and liabilities are recognized for the estimated tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and loss carry forwards.
−Removed: Deferred tax assets (“DTA”s) and liabilities (“DTL”s) 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.
+Added: Deferred tax assets (“DTA”s) and liabilities (“DTL”s) 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.
The effect on DTAs and DTLs of a change in tax rates is recognized in income in the period that includes the enactment date.
In certain circumstances DTAs are subject to reduction by a valuation allowance.
−Removed: A valuation allowance is subject to ongoing adjustment based on changes in circumstances that affect management’s judgment about the realizability of the deferred tax asset.
+Added: A valuation allowance is subject to ongoing adjustment based on changes in circumstances that affect management’s judgment about the realizability of the deferred tax asset.
Adjustments to increase or decrease the valuation allowance are charged or credited to the deferred tax component of the income tax provision or benefit.
5 unchanged sentences
In addition, management assesses tax attributes including available tax planning strategies and net operating loss carry-forwards that do not begin to expire until the year 2030.
−Removed: As of December 31, 2021, based upon this evidence, management fully reversed the valuation allowance of $ 1.9 million recorded at December 
+Added: As of December 31, 2022, no valuation allowance was recorded.
See Note 14 for more information on the deferred tax valuation allowance.
1 unchanged sentence
Future evidence may indicate that it is more likely than not that a portion of the net deferred tax asset will not be realized at which point the valuation allowance may need to be increased.
−Removed: Patriot had a net deferred tax asset of $ 12.1  million at December 
−Removed: 2021 as compared to a net deferred tax asset of $ 11.5  million at December 31, 2020.
+Added: Patriot had a net deferred tax asset of $ 15.5 million at December 31, 2022 as compared to a net deferred tax asset of $ 12.1 million at December 31, 2021.
On March 27, 2020, the CARES Act was signed into law.
The CARES Act includes provisions relating to refundable payroll tax credits, deferment of the employer portion of certain payroll taxes, net operating loss carryback periods, and modifications to the net interest deduction limitations.
−Removed: While the Company continues to evaluate the impact of the CARES Act, it does not currently believe it will have a material impact on the Company’s income taxes or related disclosures.
+Added: The CARES Act did not have a material impact on the Company’s income taxes or related disclosures.
Unrecognized tax benefits
1 unchanged sentence
The tax benefits recognized in the consolidated financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information.
−Removed: Patriot’s returns for tax years 2018 through 2021 are subject to examination by the Internal Revenue Service (“IRS”) for U.S.
+Added: Patriot’s returns for tax years 2019 through 2022 are subject to examination by the Internal Revenue Service (“IRS”) for U.S.
Federal tax purposes and, for State tax purposes, by the Department of Revenue Services for the State of Connecticut and the State of New York Department of Taxation and Finance.
−Removed: As of December 
−Removed: 2021 and 2020, the Bank did not record any uncertain tax position (“UTP”).
+Added: As of December 31, 2022 and 2021, the Bank did not record any uncertain tax position (“UTP”).
Additionally, Patriot has no pending or on-going audits in any tax jurisdiction.
−Removed: The Company’s policy is to recognize interest and penalties related to income tax matters in income tax expense.
+Added: The Company’s policy is to recognize interest and penalties related to income tax matters in income tax expense.
Earnings per Share
−Removed: Basic earnings per share represents earnings accruing to common shareholders and are computed by dividing net income by the weighted average number of common shares outstanding.
+Added: Basic earnings per share represent earnings accruing to common shareholders and are computed by dividing net income by the weighted average number of common shares outstanding.
Diluted earnings per share reflects additional common shares that would have been outstanding if potentially dilutive securities had been converted to common stock, as well as any adjustments to earnings resulting from the assumed conversion, unless such effect is anti-dilutive.
3 unchanged sentences
Non-employee members of the Board of Directors are treated as employees for any share-based compensation granted in exchange for their service on the Board of Directors.
−Removed: PATRIOT NATIONAL BANCORP, INC.
−Removed: AND SUBSIDIARIES
−Removed: Notes to consolidated financial statements
Patriot does not currently have, nor has it had in the past, any grants of share-based compensation to non-employees.
1 unchanged sentence
A liability will be recognized for the award, which will periodically be adjusted to reflect the then current fair value, and compensation expense will be recognized over the requisite period during which the goods or services are received, so that the fair value at the date of settlement is the compensation expense recognized.
+Added: PATRIOT NATIONAL BANCORP, INC.
+Added: AND SUBSIDIARIES
+Added: Notes to consolidated financial statements
The Compensation Committee of the Board of Directors establishes terms and conditions applicable to the vesting of restricted stock awards and stock options.
5 unchanged sentences
Segment reporting
−Removed: Patriot’s only business segment is Community Banking.
−Removed: During the years ended December 
−Removed: 2021, 2020 and 2019, this segment represented all the revenues and income of Patriot.
+Added: Patriot’s only business segment is Community Banking.
+Added: During the years ended December 31, 2022, 2021 and 2020, this segment represented all the revenues and income of Patriot.
Reserve for Unfunded Commitments
1 unchanged sentence
The unfunded reserve calculation includes factors that are consistent with the ALLL methodology for our loan portfolio as well as a draw down factor applied to the various commitments.
−Removed: The reserve for unfunded commitments is included within other liabilities in the accompanying consolidated balance sheets, and changes in the reserve are reported as a component of other expense in the accompanying consolidated statements of operations.
−Removed: See Note 
+Added: The reserve for unfunded commitments is included within other liabilities in the accompanying consolidated balance sheets, and changes in the reserve are reported as a component of other expenses in the accompanying consolidated statements of operations.
Financial Instruments with Off-Balance-Sheet Risk for further information.
Related Party Transactions
−Removed: Directors and officers of the Company and their affiliates have been customers of and have had transactions with the Company, and it is expected that such persons will continue to have such transactions in the future.
+Added: Directors and officers of the Company and their affiliates have been customers of and have had transactions with the Company, and it is expected that such people will continue to have such transactions in the future.
Management believes that all deposit accounts, loans, services and commitments comprising such transactions were made in the ordinary course of business, on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other customers who are not directors or officers.
8 unchanged sentences
Accordingly, the fair value estimates may not be realized in an immediate sale or settlement of the asset or liability, respectively.
−Removed: Provided in these notes to the consolidated financial statements is a detailed summary of Patriot’s application of fair value measurements and the effect on the assets and liabilities presented in the consolidated financial statements.
+Added: Provided in these notes to the consolidated financial statements is a detailed summary of Patriot’s application of fair value measurements and the effect on the assets and liabilities presented in the consolidated financial statements.
Advertising Costs
Patriot's policy is to expense advertising costs in the period in which they are incurred.
−Removed: PATRIOT NATIONAL BANCORP, INC.
−Removed: AND SUBSIDIARIES
−Removed: Notes to consolidated financial statements
Project expenses
Project expenses represent non-recurring expenses, primarily legal and consulting not directly related to the core business of Community Banking.
−Removed: In 2021, the project expenses consist of material non-recurring costs of $ 1.9  million related to the pending merger with American Challenger.
+Added: The project expenses consist of material non-recurring costs related to the previously planned merger with American Challenger in 2021 and 2022.
+Added: However, the merger was terminated in July 2022.
In 2020, the project expenses consist of an adjustment of goodwill after measurement period of the Prime acquisition in May 2018.
−Removed: In 2019, the project expenses principally were the result of third -party costs related to a formal written agreement (the “Formal Agreement”) with the OCC entered in November 2018, and of a non-recurring nature and primarily consultants and legal.
−Removed: In prior years, the expenses were primarily for merger, tax analysis strategy and planning.
+Added: PATRIOT NATIONAL BANCORP, INC.
+Added: AND SUBSIDIARIES
+Added: Notes to consolidated financial statements
Employee Retention Credit
−Removed: The CARES Act also provided for an employee retention credit (“Employee Retention Credit”), which is a refundable tax credit against certain employment taxes of up to $5,000 per employee for eligible employers for 2020.
+Added: The CARES Act also provided for an employee retention credit (“Employee Retention Credit”), which is a refundable tax credit against certain employment taxes of up to $5,000 per employee for eligible employers for 2020.
In 2021, the tax credit is up to $7,000 for each quarter, equal to 70% of qualified wages paid to employees during a quarter, capped at $10,000 of qualified wages per employee per quarter.
−Removed: The Company adopted a policy to recognize the employee retention credit when earned and to recognize the credit as a reduction to compensation and benefits expense on the Company’s consolidated statements of operations.
−Removed: Accordingly, the Company recorded an employee retention credit of $ 2.9 million for the year ended December 31, 2021, which is included in salaries and benefits non-interest expense on the consolidated statements of operations.
+Added: The Company adopted a policy to recognize the employee retention credit when earned and to recognize the credit as a reduction to compensation and benefits expense on the Company’s consolidated statements of operations.
+Added: Accordingly, the Company recorded an employee retention credit of $ 2.9 million for the year ended December 31, 2021, which was included as a reduction to salaries and benefits non-interest expense on the consolidated statements of operations.
+Added: No employee retention credit was recorded for the year ended December 31, 2022.
Revenue Recognition
6 unchanged sentences
Payment for such performance obligations are generally received at the time the performance obligations are satisfied.
−Removed: PATRIOT NATIONAL BANCORP, INC.
−Removed: AND SUBSIDIARIES
−Removed: Notes to consolidated financial statements
Recently Adopted and Issued Accounting Standards
Accounting Standards Adopted During 2022
−Removed: Effective January 1, 2021, the following new Accounting Standards Updates (ASUs) were adopted by the Company:
−Removed: ASU 2019 - 12
−Removed: ASU 2019 - 12, “
−Removed: Income Taxes (Topic 740 ) - Simplifying the Accounting for Income Taxes.
−Removed: The guidance issued in this update simplifies the accounting for income taxes by eliminating certain exceptions to the guidance in ASC 740 related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period and the recognition for deferred tax liabilities for outside basis differences.
−Removed: ASU 2019 - 12 also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill.
−Removed: The ASU is effective for the Company on January 1, 2021.
−Removed: The adoption of ASU 2019 - 12 did not have any impact on our consolidated financial statements.
−Removed: ASU Update 2020 - 04
−Removed: 2020 - 04, Reference Rate Reform (Topic 848 ):
−Removed: "Facilitation of the Effects of Reference Rate Reform on Financial Reporting." This ASU provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met.
−Removed: The amendments in this update apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform.
−Removed: The amendments in this update are effective for all entities as of March 12, 2020 through December 31, 2022.
−Removed: Optional expedients include that modifications of contracts should be accounted for by prospectively adjusting the effective interest rate and modifications of leases should be accounted for as a continuation of the existing contract with no reassessments of lease classification and discount rate or remeasurements of lease payments.
−Removed: This ASU also provides many practical expedients for derivative accounting.
−Removed: In addition, an entity may elect to sell and/or transfer held to maturity securities that reference a rate affected by the reference rate reform classified as held to maturity prior to January 1, 2020.
−Removed: In particular, the Company made the following elections as it relates to hedging relationships, to continue the method of assessing effectiveness as documented in the original hedge documentation and apply the expedient in ASC 848 - 50 - 35 - 17 so that the reference rate on the hypothetical derivative matches the reference rate on the hedging instrument.
−Removed: The application of this guidance did not have a material impact on the Company's financial statements.
−Removed: ASU 2021 - 01
−Removed: In January 2021, the FASB issued ASU 2021 - 01, “
−Removed: Reference Rate Reform (Topic 848 ) ”.
−Removed: This ASU clarifies certain optional expedients and exceptions in Topic 848 when accounting for derivative contracts and certain hedging relationships affected by changes in interest rates.
−Removed: The amendments are elective and apply to all entities that have derivative instruments that use an interest rate for margining, discounting, or contract price alignment that is modified as a result of reference rate reform.
−Removed: The Update was effective upon issuance for application on either a retrospective basis as of any date from the beginning of an interim period that includes or is subsequent to March 22, 2020, or on a prospective basis beginning on January 7, 2021.
−Removed: The Company adopted the Update on a prospective basis.
−Removed: The adoption of this guidance did not have a material impact on the Company's consolidated financial statements.
+Added: There were no applicable material accounting pronouncements adopted by the Company during 2022.
PATRIOT NATIONAL BANCORP, INC.
2 unchanged sentences
Accounting Standards Issued But Not Yet Adopted
−Removed: ASU 2016 - 13
In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses:
Measurement of Credit Losses on Financial Instruments .
−Removed: The ASU changes the methodology for measuring credit losses on financial instruments measured at amortized cost to a current expected loss (“CECL”) model.
+Added: The ASU changes the methodology for measuring credit losses on financial instruments measured at amortized cost to a current expected loss (“CECL”) model.
Under the CECL model, entities will estimate credit losses over the entire contractual term of a financial instrument from the date of initial recognition of the instrument.
4 unchanged sentences
In November 2019, the FASB issued ASU 2019-10, which amends the effective date of ASC 326 for smaller reporting companies, as defined by the SEC, and other non-SEC reporting entities, and delays the effective date to fiscal years beginning after December 31, 2022, including interim periods within those fiscal periods.
−Removed: As the Company is a small reporting company, the delay will be applicable to the Company.
−Removed: Management is currently evaluating the impact that the standard will have on its consolidated financial statements.
+Added: As the Company is a small reporting company, the delay was applicable to the Company.
+Added: Upon adoption on January 1, 2023, the Company will record a pre-tax adjustment in the range of $ 2.0 million to $ 4.0 million to the allowance for loan losses and a pre-tax adjustment in the range of $ 0.5 million to $ 1.0 million to reserve for unfunded commitments (which will be reflected in other liabilities on the Company’s consolidated balance sheets), and a cumulative-effect adjustment to increase the opening balance of accumulated deficit of $ 1.8 million to $ 3.7 million.
+Added: These impacts will be reflected in the Company's first quarter 2023 financial statements.
ASU Update 2020-02
In January 2020, the FASB issued ASU No.
−Removed: 2020 - 02, “
2020-02, “ Financial Instruments - Credit Losses (Topic 326) and Leases (Topic 842):
8 unchanged sentences
In March 2020, the FASB issued ASU No.
−Removed: 2020 - 3, “
2020-3, “ Codification Improvements to Financial Instruments.
1 unchanged sentence
Amendments related to ASU 2016-13 for entities that have not yet adopted that guidance are effective upon adoption of the amendments in ASU 2016-13.
−Removed: Early adoption is not permitted before an entity’s adoption of ASU 2016 - 13.
+Added: Early adoption is not permitted before an entity’s adoption of ASU 2016-13.
Other amendments are effective upon issuance of this ASU.
See the discussion regarding the adoption of ASU 2016-13 above.
+Added: In March 2022, the FASB issued ASU No.
+Added: 2022-02, "Financial Instruments — Credit Losses (Topic 326):
+Added: Troubled Debt Restructurings and Vintage Disclosures" .
+Added: ASU 2022-02 updates guidance in Topic 326, to eliminate the accounting guidance for TDRs by creditors in Subtopic 310-40, Receivables—Troubled Debt Restructurings by Creditors, while enhancing disclosure requirements for certain loan refinancing and restructurings by creditors when a borrower is experiencing financial difficulty and to require entities to disclose current-period gross write-offs by year of origination for financing receivables and net investments in leases within the scope of Subtopic 326-20, Financial Instruments—Credit Losses—Measured at Amortized Cost.
+Added: ASU 2022-02 is effective for fiscal years beginning after December 15, 2022, with early adoption permitted.
+Added: if an entity has adopted the amendments in Update 2016-03, including adoption in an interim period.
+Added: The adoption of this guidance will not have a material impact on the Company's consolidated financial statements.
+Added: See the discussion regarding the adoption of ASU 2016-13 above.
PATRIOT NATIONAL BANCORP, INC.
1 unchanged sentence
Notes to consolidated financial statements
+Added: On December 21, 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848) “Deferral of the Sunset Date of Topic 848” This ASU defers the sunset date of the temporary, optional expedients related to the accounting for contract modifications and hedging transactions as a result of the anticipated transition away from the use of LIBOR and other interbank offered rates to alternative reference rates.
+Added: In response to the United Kingdom’s Financial Conduct Authority's extension of the cessation date of LIBOR in the United States to June 30, 2023, the FASB has deferred the expiration date of these optional expedients to December 31, 2024.
+Added: The ASU became effective upon issuance and affords the Company an extended period to utilize the currently available optional expedients related to the accounting for contract modifications and hedging transactions as a result of the anticipated transition away from the use of LIBOR and other inter-bank offered rates.
+Added: The adoption of this guidance will not have a material impact on the Company's consolidated financial statements.
Restrictions on Cash and Due from Banks
5 unchanged sentences
Available-for-sale securities
−Removed: At December 
−Removed: 2021 and 2020, the amortized cost, gross unrealized gains, gross unrealized losses and approximate fair value of available-for-sale securities was as follows:
−Removed: (In thousands)
+Added: At December 31, 2022 and 2021, the amortized cost, gross unrealized gains, gross unrealized losses and approximate fair value of available-for-sale securities was as follows:
+Added: (In thousands) Amortized
+Added: (Losses) Fair
December 31, 2022:
Government agency and mortgage-backed securities $ 73,480 $ — $ ( 14,434 ) $ 59,046
−Removed: $ 67,850  
−Removed: $ ( 1,245 )  
−Removed: $ 66,629  
Corporate bonds 19,773 7 ( 5,125 ) 14,655
−Removed: 17,754  
−Removed: ( 951 )  
−Removed: 16,921  
Subordinated notes 5,000 — ( 398 ) 4,602
−Removed: ( 17 )  
SBA loan pools 6,791 — ( 1,073 ) 5,718
−Removed: ( 169 )  
Municipal bonds 561 — ( 62 ) 499
−Removed: $ 96,547  
−Removed: $ ( 2,384 )  
−Removed: $ 94,341  
+Added: 105,605 7 ( 21,092 ) 84,520
December 31, 2021:
Government agency and mortgage-backed securities $ 67,850 $ 24 $ ( 1,245 ) $ 66,629
−Removed: $ 16,719  
−Removed: $ ( 17 )  
−Removed: $ 16,833  
Corporate bonds 17,754 118 ( 951 ) 16,921
−Removed: 18,014  
−Removed: ( 984 )  
−Removed: 17,290  
Subordinated notes 4,608 35 ( 17 ) 4,626
−Removed: ( 128 )  
SBA loan pools 5,772 — ( 169 ) 5,603
−Removed: ( 60 )  
Municipal bonds 563 1 ( 2 ) 562
−Removed: $ 49,960  
−Removed: $ ( 1,189 )  
−Removed: $ 49,262  
+Added: $ 96,547 $ 178 $ ( 2,384 ) $ 94,341
PATRIOT NATIONAL BANCORP, INC.
1 unchanged sentence
Notes to consolidated financial statements
−Removed: The following table presents available-for-sale securities’
−Removed: gross unrealized losses and fair value, aggregated by the length of time the individual securities have been in a continuous loss position as of December 
−Removed: 2021 and 2020:
−Removed: (In thousands)
−Removed: Less than 12 Months
−Removed: 12 Months or More
+Added: The following table presents available-for-sale securities’ gross unrealized losses and fair value, aggregated by the length of time the individual securities have been in a continuous loss position as of December 31, 2022 and 2021:
+Added: (In thousands) Less than 12 Months 12 Months or More Total
+Added: Value Unrealized
+Added: Value Unrealized
+Added: Value Unrealized
December 31, 2022:
Government agency and mortgage-backed securities $ 11,126 $ ( 633 ) $ 47,920 $ ( 13,801 ) $ 59,046 $ ( 14,434 )
−Removed: $ 60,606  
−Removed: $ ( 1,196 )  
−Removed: $ 1,610  
−Removed: $ ( 49 )  
−Removed: $ 62,216  
Corporate bonds 1,959 ( 64 ) 10,934 ( 5,061 ) 12,893 ( 5,125 )
−Removed: 15,042  
−Removed: ( 951 )  
−Removed: 15,042  
Subordinated notes 4,602 ( 398 ) — — 4,602 ( 398 )
−Removed: ( 17 )  
SBA loan pools 1,437 ( 12 ) 4,280 ( 1,061 ) 5,717 ( 1,073 )
−Removed: ( 169 )  
Municipal bonds — — 498 ( 62 ) 498 ( 62 )
−Removed: $ 81,657  
−Removed: $ ( 2,318 )  
−Removed: $ 2,702  
−Removed: $ ( 66 )  
−Removed: $ 84,359  
+Added: $ 19,124 $ ( 1,107 ) $ 63,632 $ ( 19,985 ) $ 82,756 $ ( 21,092 )
December 31, 2021:
Government agency and mortgage-backed securities $ 60,606 $ ( 1,196 ) $ 1,610 $ ( 49 ) $ 62,216 $ ( 1,245 )
−Removed: $ 5,797  
−Removed: $ ( 14 )  
−Removed: $ 1,476  
−Removed: $ ( 3 )  
−Removed: $ 7,273  
Corporate bonds 15,042 ( 951 ) — — 15,042 ( 951 )
−Removed: 13,015  
−Removed: ( 984 )  
−Removed: 13,015  
Subordinated notes — — 1,092 ( 17 ) 1,092 ( 17 )
−Removed: ( 122 )  
SBA loan pools 5,603 ( 169 ) — — 5,603 ( 169 )
−Removed: ( 12 )  
−Removed: ( 48 )  
−Removed: $ 9,208  
−Removed: $ ( 148 )  
−Removed: $ 19,628  
−Removed: $ ( 1,041 )  
−Removed: $ 28,836  
−Removed: At December 
−Removed: 2021 and 2020, thirty-two of thirty-nine and twenty-two of thirty-seven available-for-sale securities had unrealized losses with an aggregate depreciation of 2.7 % and 4.0 % from amortized cost, respectively.
+Added: Municipal bonds 406 ( 2 ) — — 406 ( 2 )
+Added: $ 81,657 $ ( 2,318 ) $ 2,702 $ ( 66 ) $ 84,359 $ ( 2,384 )
+Added: At December 31, 2022 and 2021, forty-six of forty-seven and thirty-two of thirty-nine available-for-sale securities had unrealized losses with an aggregate depreciation of 20.3 % and 2.7 % from amortized cost, respectively.
Management believes that none of the losses on available-for-sale securities noted above constitute OTTI.
8 unchanged sentences
Since Patriot is not more-likely-than-not to be required to sell the investments before recovery of the amortized cost basis and does not intend to sell the securities at a loss, none of the available-for-sale securities noted are considered to be OTTI as of December 31, 2022.
−Removed: As of December 31, 2021 and 2020, available-for-sale securities of $ 36.6 million and $ 6.1 million were pledged primarily to secure municipal deposits, respectively.
−Removed: The securities were pledged to the Federal Reserve Bank (“FRB”).
+Added: As of December 31, 2022 and 2021, available-for-sale securities of $ 30.8 million and $ 36.6 million were pledged primarily to secure municipal deposits and FHLB borrowing, respectively.
+Added: The securities were pledged to the FRB and FHLB.
PATRIOT NATIONAL BANCORP, INC.
1 unchanged sentence
Notes to consolidated financial statements
−Removed: The following summarizes, by class and contractual maturity, the amortized cost and estimated fair value of available-for-sale debt securities held at December 
−Removed: 2021 and 2020.
+Added: The following summarizes, by class and contractual maturity, the amortized cost and estimated fair value of available-for-sale debt securities held at December 31, 2022 and 2021.
The mortgages underlying the mortgage-backed securities are not due at a single maturity date.
1 unchanged sentence
For convenience, mortgage-backed securities have been included in the summary as a separate line item.
−Removed: (In thousands)
−Removed: Amortized Cost
+Added: (In thousands) Amortized Cost Fair Value
+Added: 5 years Due After
+Added: 10 years Total Due
+Added: 5 years Due After
+Added: 10 years Total
December 31, 2022:
Corporate bonds $ 3,778 $ 15,995 $ — $ 19,773 $ 3,721 $ 10,934 $ — $ 14,655
−Removed: $ 17,754  
−Removed: $ 17,754  
−Removed: $ 16,921  
−Removed: $ 16,921  
Subordinated notes 3,000 2,000 — 5,000 2,830 1,772 — 4,602
2 unchanged sentences
Available-for-sale securities with stated maturity dates 6,932 19,851 5,342 32,125 6,690 14,504 4,280 25,474
−Removed: 17,754  
−Removed: 28,697  
−Removed: 16,921  
−Removed: 27,712  
Government agency and mortgage-backed securities — 5,276 68,204 73,480 — 4,129 54,917 59,046
−Removed: 13,876  
−Removed: 53,974  
−Removed: 67,850  
−Removed: 13,835  
−Removed: 52,794  
−Removed: 66,629  
−Removed: $ 31,630  
−Removed: $ 5,171  
−Removed: $ 59,746  
−Removed: $ 96,547  
−Removed: $ 30,756  
−Removed: $ 5,188  
−Removed: $ 58,397  
−Removed: $ 94,341  
+Added: $ 6,932 $ 25,127 $ 73,546 $ 105,605 $ 6,690 $ 18,633 $ 59,197 $ 84,520
December 31, 2021:
Corporate bonds $ 17,754 $ — $ — $ 17,754 $ 16,921 $ — $ — $ 16,921
−Removed: $ 4,014  
−Removed: $ 14,000  
−Removed: $ 18,014  
−Removed: $ 4,274  
−Removed: $ 13,016  
−Removed: $ 17,290  
Subordinated notes — 4,608 — 4,608 — 4,626 — 4,626
2 unchanged sentences
Available-for-sale securities with stated maturity dates 17,754 5,171 5,772 28,697 16,921 5,188 5,603 27,712
−Removed: 25,306  
−Removed: 33,241  
−Removed: 24,253  
−Removed: 32,429  
Government agency and mortgage-backed securities 13,876 — 53,974 67,850 13,835 — 52,794 66,629
−Removed: 11,889  
−Removed: 16,719  
−Removed: 11,979  
−Removed: 16,833  
−Removed: $ 11,299  
−Removed: $ 26,772  
−Removed: $ 11,889  
−Removed: $ 49,960  
−Removed: $ 11,539  
−Removed: $ 25,744  
−Removed: $ 11,979  
−Removed: $ 49,262  
+Added: $ 31,630 $ 5,171 $ 59,746 $ 96,547 $ 30,756 $ 5,188 $ 58,397 $ 94,341
PATRIOT NATIONAL BANCORP, INC.
1 unchanged sentence
Notes to consolidated financial statements
−Removed: Loan Receivables and Allowance for Loan and Lease Losses
−Removed: As of December 
−Removed: 2021 and 2020, loans receivable, net, consisted of the following:
+Added: Loans Receivables and Allowance for Loan and Lease Losses
+Added: As of December 31, 2022 and 2021, loans receivable, net, consisted of the following:
(In thousands) 2022 2021
1 unchanged sentence
Commercial Real Estate $ 437,443 $ 365,247
−Removed: $ 365,247  
−Removed: $ 282,378  
Residential Real Estate 124,140 158,591
−Removed: 158,591  
−Removed: 153,851  
Commercial and Industrial 138,787 122,810
−Removed: 122,810  
−Removed: 144,297  
Consumer and Other 141,091 59,364
−Removed: 59,364  
−Removed: 67,635  
−Removed: 21,781  
−Removed: 66,984  
+Added: Construction 4,922 21,781
Construction to Permanent - CRE 1,933 11,695
−Removed: 11,695  
−Removed: 15,035  
Loans receivable, gross 848,316 739,488
−Removed: 739,488  
−Removed: 730,180  
Allowance for loan and lease losses ( 10,310 ) ( 9,905 )
−Removed: ( 9,905 )  
Loans receivable, net $ 838,006 $ 729,583
−Removed: $ 729,583  
−Removed: $ 719,596  
Patriot's lending activities are conducted principally in Fairfield and New Haven Counties in Connecticut and Westchester County in New York, and the five Boroughs of New York City.
5 unchanged sentences
Unless extenuating circumstances exist, Patriot limits the extension of credit on commercial real estate loans to 75 % of the market value of the underlying collateral.
−Removed: Patriot’s loan origination policy for multi-family residential real estate is limited to 80 % of the market value of the underlying collateral.
−Removed: In the case of construction loans, the maximum loan-to-value is 75 % of the “as completed”
−Removed: appraised value of the real estate project.
+Added: Patriot’s loan origination policy for multi-family residential real estate is limited to 80 % of the market value of the underlying collateral.
+Added: In the case of construction loans, the maximum loan-to-value is 75 % of the “as completed” appraised value of the real estate project.
Management monitors the appraised value of collateral on an on-going basis and additional collateral is requested when warranted.
2 unchanged sentences
A subset of these loans was determined to have evidence of credit deterioration at the acquisition date, which was accounted for in accordance with ASC 310-30.
−Removed: The purchased credit impaired (“PCI”) loans presently maintain a carrying value of zero as of December 
−Removed: 2021 and 2020.
+Added: The purchased credit impaired (“PCI”) loans presently maintain a carrying value of zero as of December 31, 2022 and 2021.
The loans were evaluated for impairment through the periodic reforecasting of expected cash flows.
2 unchanged sentences
The remaining non-accretable difference represents cash flows not expected to be collected.
−Removed: There were no PCI loans transactions in 2021.
−Removed: A summary of changes in the accretable discount for PCI loans for the year ended December 
−Removed: 2020 and 2019 follows:
−Removed: (In thousands)
−Removed: Year Ended December 31,
+Added: There were no PCI loans transactions in 2022 and 2021.
+Added: A summary of changes in the accretable discount for PCI loans for the year ended December 31, 2020 follows:
+Added: (In thousands) Year Ended December 31, 2020
Accretable discount, beginning of period $ ( 47 )
−Removed: $ ( 47 )  
Other changes, net 45
3 unchanged sentences
Notes to consolidated financial statements
−Removed: The accretion of the accretable discount for PCI loans for the year end December 31, 2020 and 2019 was $ 2,000 and $ 47,000 , respectively.
+Added: The accretion of the accretable discount for PCI loans for the year end December 31, 2020 was $ 2,000 .
The other changes represent primarily loans that were either fully paid-off or totally charged off.
−Removed: Risk characteristics of the Company ’
−Removed: s portfolio classes include the following:
+Added: Risk characteristics of the Company ’ s portfolio classes include the following:
Commercial Real Estate Loans
−Removed: In underwriting commercial real estate loans, Patriot evaluates both the prospective borrower’s ability to make timely payments on the loan and the value of the property securing the loans.
+Added: In underwriting commercial real estate loans, Patriot evaluates both the prospective borrower’s ability to make timely payments on the loan and the value of the property securing the loans.
Repayment of such loans may be negatively impacted should the borrower default, the value of the property collateralizing the loan substantially decline, or there are declines in general economic conditions.
−Removed: Where the owner occupies the property, Patriot also evaluates the business’
−Removed: ability to repay the loan on a timely basis and may require personal guarantees, lease assignments, and/or the guarantee of the operating company.
+Added: Where the owner occupies the property, Patriot also evaluates the business’ ability to repay the loan on a timely basis and may require personal guarantees, lease assignments, and/or the guarantee of the operating company.
+Added: During 2022, Patriot purchased $ 20.7 million of commercial real estate loans.
+Added: There were no commercial real estate loans purchased during 2021.
Residential Real Estate Loans
1 unchanged sentence
Repayment of residential real estate loans may be negatively impacted should the borrower have financial difficulties, should there be a significant decline in the value of the property securing the loan, or should there be declines in general economic conditions.
−Removed: In 2021 and 2020, Patriot purchased $ 72.3 million and $ 17.9 million of residential real estate loans, respectively.
+Added: In 2022 and 2021, Patriot purchased $ 0 and $ 72.3 million of residential real estate loans, respectively.
Commercial and Industrial Loans
−Removed: Patriot’s commercial and industrial loan portfolio consists primarily of commercial business loans and lines of credit to businesses and professionals.
+Added: Patriot’s commercial and industrial loan portfolio consists primarily of commercial business loans and lines of credit to businesses and professionals.
These loans are generally for the financing of accounts receivable, purchases of inventory, purchases of new or used equipment, or for other short- or long-term working capital purposes.
These loans are generally secured by business assets but are also occasionally offered on an unsecured basis.
−Removed: In granting these types of loans, Patriot considers the borrower’s cash flow as the primary source of repayment, supported by the value of collateral, if any, and personal guarantees, as applicable.
−Removed: Repayment of commercial and industrial loans may be negatively impacted by adverse changes in economic conditions, ineffective management, claims on the borrower’s assets by others that are superior to Patriot’s claims, a loss of demand for the borrower’s products or services, or the death or disability of the borrower or other key management personnel.
−Removed: Patriot’s syndicated and leveraged loan portfolios totaled $ 19.6 million and $ 55.0 million at December 
−Removed: 2021 and 2020, respectively.
+Added: In granting these types of loans, Patriot considers the borrower’s cash flow as the primary source of repayment, supported by the value of collateral, if any, and personal guarantees, as applicable.
+Added: Repayment of commercial and industrial loans may be negatively impacted by adverse changes in economic conditions, ineffective management, claims on the borrower’s assets by others that are superior to Patriot’s claims, a loss of demand for the borrower’s products or services, or the death or disability of the borrower or other key management personnel.
+Added: Patriot’s syndicated and leveraged loan portfolios totaled $ 5.8 million and $ 19.6 million at December 31, 2022 and 2021, respectively.
The syndicated and leveraged loans are included in the commercial and industrial loan classification and are primarily comprised of loan transactions led by major financial institutions and regional banks, which are the Agent Bank or Lead Arranger, and are referred to as syndicated loans or "Shared National Credits (SNC)".
−Removed: SNC loans were determined to be complementary to the Bank’s existing commercial and industrial loan portfolio and product offerings.
+Added: SNC loans were determined to be complementary to the Bank’s existing commercial and industrial loan portfolio and product offerings.
Further originations in this loan class are not expected.
5 unchanged sentences
Subprime lending generally targets borrowers with weakened credit histories that are typically characterized by payment delinquencies, previous charge-offs, judgments against the consumer, a history of bankruptcies, or borrowers with questionable repayment capacity as evidenced by low credit scores or high debt-burdened ratios.
−Removed: During 2021, Patriot purchased $ 17.0 million unsecured consumer loans, and no education loans were purchased.
−Removed: For the year ended December 31, 2020, $ 14.9 million education loans were purchased.
PATRIOT NATIONAL BANCORP, INC.
1 unchanged sentence
Notes to consolidated financial statements
+Added: During 2022 and 2021, Patriot purchased unsecured consumer loans of $ 90.1 million and $ 17.0 million, respectively.
+Added: Total outstanding from this program totaled $ 78.9 million and $ 15.7 million as of December 31, 2022 and 2021, respectively.
+Added: These loans carry higher rates of return than the Bank’s commercial portfolio, with an overall yield of 8.70 % , and incurred net charge-offs of $ 1.6 million for the year ended December 31, 2022.
+Added: No charge-off was recorded in 2021.
+Added: Patriot purchased home equity line of credit loans (“HELOC”) of $ 30.6 million for the year ended December 31, 2022.
+Added: No HELOC loan was purchases in 2021.
Construction Loans
4 unchanged sentences
Repayment of such loans may be negatively impacted by an inability to complete construction, a downturn in the market for new construction, by a significant increase in interest rates, or by decline in general economic conditions.
−Removed: Construction to Permanent - Commercial Real Estate (“CRE”)
+Added: Construction to Permanent - Commercial Real Estate (“CRE”)
Loans in this category represent a one-time close of a construction facility with simultaneous conversion to an amortizing mortgage loan.
−Removed: Construction to Permanent loans combine a short-term period similar to a construction loan, generally with a variable rate, and a longer term CRE loan typically 20 - 25 years, resetting every five years to the Federal Home Loan Bank (“FHLB”) rate.
+Added: Construction to Permanent loans combine a short-term period similar to a construction loan, generally with a variable rate, and a longer term CRE loan typically 20 - 25 years, resetting every five years to the Federal Home Loan Bank (“FHLB”) rate.
Close of the permanent facility typically occurs when events dictate, such as receipt of a certificate of occupancy and property stabilization, which is defined as cash flow sufficient to support a pre-defined minimum debt coverage ratio and other conditions and covenants particular to the loan.
2 unchanged sentences
However, during the pandemic in 2021, the SBA temporarily increased the guarantees to 90 % and reverted to 75 % on October 1, 2021.
−Removed: The guaranteed portion of the Company’s SBA loans is generally sold in the secondary market with the unguaranteed portion held in the portfolio as a loan held for investment.
+Added: The guaranteed portion of the Company’s SBA loans is generally sold in the secondary market with the unguaranteed portion held in the portfolio as a loan held for investment.
SBA loans are for the purpose of providing working capital, financing the purchase of equipment, inventory or commercial real estate and for other business purposes.
1 unchanged sentence
SBA loans are made based primarily on the historical and projected cash flow of the business and secondarily on the underlying collateral provided.
−Removed: SBA loans held for investment are included in the commercial real estate loans and commercial and industrial loan classifications, which totaled $ 27.1 million and $ 21.6 million at December 
−Removed: 2021 and 2020, respectively.
+Added: SBA loans held for investment are included in the commercial real estate loans and commercial and industrial loan classifications, which totaled $( 0.8 ) million and $ 27.1 million at December 31, 2022 and 2021, respectively.
Small Business Administration Paycheck Protection Program
−Removed: The CARES Act created the SBA’s Paycheck Protection Program.
+Added: The CARES Act created the SBA’s Paycheck Protection Program.
Under the Paycheck Protection Program, $669 billion was authorized for small business loans to pay payroll and group health costs, salaries and commissions, mortgage and rent payments, utilities, and interest on other debt.
The loans are provided through participating financial institutions that process loan applications and service the loans.
−Removed: The Bank started participating in the SBA’s Paycheck Protection Program in January 2021.
−Removed: Paycheck Protection Program loans totaled $ 919,000 as of December 31, 2021, which are included in the commercial and industrial loan classifications.
+Added: The Bank participated in the SBA’s Paycheck Protection Program in 2021.
+Added: Paycheck Protection Program loans totaled $ 31,700,000 and $ 919,000 as of December 31, 2022 and 2021, respectively, which are included in the commercial and industrial loan classifications.
PATRIOT NATIONAL BANCORP, INC.
2 unchanged sentences
Allowance for Loan and Lease Losses
−Removed: The following tables summarize the activity in the allowance for loan and lease losses, allocated to segments of the loan portfolio, for each year in the three -year period ended December 
−Removed: (In thousands)
−Removed: Construction to
+Added: The following tables summarize the activity in the allowance for loan and lease losses, allocated to segments of the loan portfolio, for each year in the three-year period ended December 31, 2022:
+Added: (In thousands) Commercial
+Added: Real Estate Residential
+Added: Real Estate Commercial
+Added: Industrial Consumer
+Added: Other Construction Construction to
+Added: - CRE Unallocated Total
As of and for the year ended December 31, 2022
1 unchanged sentence
December 31, 2021 $ 5,063 $ 1,700 $ 2,532 $ 253 $ 78 $ 41 $ 238 $ 9,905
−Removed: $ 4,485  
−Removed: $ 1,379  
−Removed: $ 3,284  
−Removed: $ 10,584  
−Removed: ( 51 )  
−Removed: ( 212 )  
−Removed: ( 23 )  
−Removed: ( 69 )  
+Added: Charge-offs — — ( 70 ) ( 1,690 ) ( 68 ) — — ( 1,828 )
+Added: Recoveries 154 4 69 121 — — — 348
Provisions (credits) 1,749 ( 1,039 ) ( 1,128 ) 2,523 14 ( 31 ) ( 203 ) 1,885
−Removed: ( 605 )  
−Removed: ( 130 )  
−Removed: ( 592 )  
−Removed: ( 121 )  
December 31, 2022 $ 6,966 $ 665 $ 1,403 $ 1,207 $ 24 $ 10 $ 35 $ 10,310
−Removed: $ 5,063  
−Removed: $ 1,700  
−Removed: $ 2,532  
−Removed: $ 9,905  
As of and for the year ended December 31, 2021
1 unchanged sentence
December 31, 2020 $ 4,485 $ 1,379 $ 3,284 $ 295 $ 739 $ 162 $ 240 $ 10,584
−Removed: $ 3,789  
−Removed: $ 1,038  
−Removed: $ 4,340  
−Removed: $ 10,115  
−Removed: ( 1,032 )  
−Removed: ( 24 )  
−Removed: ( 677 )  
−Removed: ( 45 )  
+Added: Charge-offs ( 51 ) ( 3 ) ( 212 ) ( 23 ) ( 69 ) — — ( 358 )
+Added: Recoveries — 3 65 111 — — — 179
Provisions (credits) 629 321 ( 605 ) ( 130 ) ( 592 ) ( 121 ) ( 2 ) ( 500 )
−Removed: ( 449 )  
December 31, 2021 $ 5,063 $ 1,700 $ 2,532 $ 253 $ 78 $ 41 $ 238 $ 9,905
−Removed: $ 4,485  
−Removed: $ 1,379  
−Removed: $ 3,284  
−Removed: $ 10,584  
As of and for the year ended December 31, 2020
1 unchanged sentence
December 31, 2019 $ 3,789 $ 1,038 $ 4,340 $ 341 $ 477 $ 130 $ — $ 10,115
−Removed: $ 1,866  
−Removed: $ 1,059  
−Removed: $ 3,558  
−Removed: $ 7,609  
−Removed: ( 118 )  
−Removed: ( 2,418 )  
−Removed: ( 123 )  
+Added: Charge-offs ( 1,032 ) ( 24 ) ( 677 ) ( 45 ) — — — ( 1,778 )
+Added: Recoveries — 1 70 6 — — — 77
Provisions (credits) 1,728 364 ( 449 ) ( 7 ) 262 32 240 2,170
−Removed: ( 187 )  
−Removed: ( 27 )  
December 31, 2020 $ 4,485 $ 1,379 $ 3,284 $ 295 $ 739 $ 162 $ 240 $ 10,584
−Removed: $ 3,789  
−Removed: $ 1,038  
−Removed: $ 4,340  
−Removed: $ 10,115  
PATRIOT NATIONAL BANCORP, INC.
1 unchanged sentence
Notes to consolidated financial statements
−Removed: The following tables summarize, by loan portfolio segment, the amount of loans receivable evaluated individually and collectively for impairment as of December 
−Removed: 2021 and 2020:
−Removed: (In thousands)
−Removed: Construction to
+Added: The following tables summarize, by loan portfolio segment, the amount of loans receivable evaluated individually and collectively for impairment as of December 31, 2022 and 2021:
+Added: (In thousands) Commercial
+Added: Real Estate Residential
+Added: Real Estate Commercial
+Added: Industrial Consumer
+Added: Other Construction Construction to
+Added: - CRE Unallocated Total
December 31, 2022
1 unchanged sentence
Individually evaluated for impairment $ 5,430 $ 5 $ 608 $ — $ — $ — $ — $ 6,043
−Removed: $ 1,567  
−Removed: $ 2,292  
Collectively evaluated for impairment 1,536 660 795 1,207 24 10 35 4,267
Total allowance for loan and lease losses $ 6,966 $ 665 $ 1,403 $ 1,207 $ 24 $ 10 $ 35 $ 10,310
−Removed: $ 5,063  
−Removed: $ 1,700  
−Removed: $ 2,532  
−Removed: $ 9,905  
Loans receivable, gross:
Individually evaluated for impairment $ 11,241 $ 2,508 $ 4,653 $ 514 $ — $ — $ — $ 18,916
−Removed: $ 15,704  
−Removed: $ 2,954  
−Removed: $ 4,031  
−Removed: $ 23,212  
Collectively evaluated for impairment 426,202 121,632 134,134 140,577 4,922 1,933 — 829,400
−Removed: 349,543  
−Removed: 155,637  
−Removed: 118,779  
−Removed: 58,841  
−Removed: 21,781  
−Removed: 11,695  
−Removed: 716,276  
Total loans receivable, gross $ 437,443 $ 124,140 $ 138,787 $ 141,091 $ 4,922 $ 1,933 $ — $ 848,316
−Removed: $ 365,247  
−Removed: $ 158,591  
−Removed: $ 122,810  
−Removed: $ 59,364  
−Removed: $ 21,781  
−Removed: $ 11,695  
−Removed: $ 739,488  
−Removed: (In thousands)
−Removed: Construction to
+Added: (In thousands) Commercial
+Added: Real Estate Residential
+Added: Real Estate Commercial
+Added: Industrial Consumer
+Added: Other Construction Construction to
+Added: - CRE Unallocated Total
December 31, 2021
1 unchanged sentence
Individually evaluated for impairment $ 1,567 $ 3 $ 722 $ — $ — $ — $ — $ 2,292
−Removed: $ 1,398  
−Removed: $ 1,412  
Collectively evaluated for impairment 3,496 1,697 1,810 253 78 41 238 7,613
Total allowance for loan losses $ 5,063 $ 1,700 $ 2,532 $ 253 $ 78 $ 41 $ 238 $ 9,905
−Removed: $ 4,485  
−Removed: $ 1,379  
−Removed: $ 3,284  
−Removed: $ 10,584  
Loans receivable, gross:
Individually evaluated for impairment $ 15,704 $ 2,954 $ 4,031 $ 523 $ — $ — $ — $ 23,212
−Removed: $ 14,534  
−Removed: $ 3,962  
−Removed: $ 4,700  
−Removed: $ 1,187  
−Removed: $ 24,383  
Collectively evaluated for impairment 349,543 155,637 118,779 58,841 21,781 11,695 — 716,276
−Removed: 267,844  
−Removed: 149,889  
−Removed: 139,597  
−Removed: 66,448  
−Removed: 66,984  
−Removed: 15,035  
−Removed: 705,797  
Total loans receivable, gross $ 365,247 $ 158,591 $ 122,810 $ 59,364 $ 21,781 $ 11,695 $ — $ 739,488
−Removed: $ 282,378  
−Removed: $ 153,851  
−Removed: $ 144,297  
−Removed: $ 67,635  
−Removed: $ 66,984  
−Removed: $ 15,035  
−Removed: $ 730,180  
Patriot monitors the credit quality of its loans receivable on an ongoing basis.
4 unchanged sentences
Patriot employs a risk rating system as part of the risk assessment of its loan portfolio.
−Removed: At origination, credit officers are required to assign a risk rating to each loan in their portfolio, which is ratified or modified by the Loan Committee to which the loan is submitted for approval.
−Removed: If financial developments occur on a loan in the credit officer’s portfolio of responsibility, the risk rating is reviewed and adjusted, as applicable.
+Added: At origination, credit officers are required to assign a risk rating to each loan in their portfolio, which is ratified or modified by the Loan Committee to which the loan is submitted for approval.
+Added: If financial developments occur on a loan in the credit officer’s portfolio of responsibility, the risk rating is reviewed and adjusted, as applicable.
In carrying out its oversight responsibilities, the Loan Committee can adjust a risk rating based on available information.
−Removed: In addition, the risk ratings on all commercial loans over $250,000 are reviewed by the Credit Department either annually or biannually, depending upon the amount of the bank’s exposure.
+Added: In addition, the risk ratings on all commercial loans over $250,000 are reviewed by the Credit Department either annually or biannually, depending upon the amount of the bank’s exposure.
Additionally, Patriot retains an independent third-party loan review expert to perform a quarterly analysis of the results of its risk rating process.
1 unchanged sentence
Any changes to the assigned risk ratings, based on the semi-annual review, are required to be reported to the Board Audit Committee.
−Removed: When assigning a risk rating to a loan, management utilizes the Bank’s internal eleven -point risk rating system.
−Removed: An asset is considered “special mention”
−Removed: when it has a potential weakness based on objective evidence, but does not currently expose the Company to sufficient risk to warrant classification in one of the following categories:
−Removed: An asset is classified “substandard” if it is not adequately protected by the current net worth and paying capacity of the obligor or the collateral pledged, if any.
+Added: When assigning a risk rating to a loan, management utilizes the Bank’s internal eleven-point risk rating system.
+Added: An asset is considered “special mention” when it has a potential weakness based on objective evidence, but does not currently expose the Company to sufficient risk to warrant classification in one of the following categories:
+Added: • Substandard:
+Added: An asset is classified “substandard” if it is not adequately protected by the current net worth and paying capacity of the obligor or the collateral pledged, if any.
Substandard assets have well defined weaknesses based on objective evidence, and are characterized by the distinct possibility that the Company will sustain some loss, if noted deficiencies are not corrected.
−Removed: Assets classified as “doubtful” have all of the weaknesses inherent in those classified as “substandard”, with the added characteristic that the identified weaknesses make collection or liquidation-in-full improbable, on the basis of currently existing facts, conditions, and values.
+Added: Assets classified as “doubtful” have all of the weaknesses inherent in those classified as “substandard”, with the added characteristic that the identified weaknesses make collection or liquidation-in-full improbable, on the basis of currently existing facts, conditions, and values.
Charge-offs of loans to reduce the loan to its recoverable value that are solely collateral dependent, generally occur immediately upon confirmation of the partial loss amount.
2 unchanged sentences
Charge-offs on cash flow dependent loans also generally occur immediately upon confirmation of the partial loss amount.
−Removed: If either type of loan is classified as “Loss”, meaning full loss on the loan is expected, the full balance of the loan receivable is charged off, regardless of the potential recovery from a sale of the underlying collateral.
−Removed: Any amount that may be recovered on the sale of collateral underlying a loan is recognized as a “recovery”
−Removed: in the period in which the collateral is sold.
−Removed: In accordance with Federal Financial Institutions Examination Council published policies establishing uniform criteria for the classification of retail credit based on delinquency status, “Open-end”
−Removed: and “Closed-end”
−Removed: credits are charged off when 180 days and 120 days delinquent, respectively.
+Added: If either type of loan is classified as “Loss”, meaning full loss on the loan is expected, the full balance of the loan receivable is charged off, regardless of the potential recovery from a sale of the underlying collateral.
+Added: Any amount that may be recovered on the sale of collateral underlying a loan is recognized as a “recovery” in the period in which the collateral is sold.
+Added: In accordance with Federal Financial Institutions Examination Council published policies establishing uniform criteria for the classification of retail credit based on delinquency status, “Open-end” and “Closed-end” credits are charged off when 180 days and 120 days delinquent, respectively.
+Added: Loans receivable that are part of the unsecured loan purchase program are charged-off in full when the loan is 90 days past due.
The allowance for loan losses may increase to reflect the decline in the performance of the loan portfolio and the higher level of incurred losses.
3 unchanged sentences
Loan Portfolio Aging Analysis
−Removed: The following tables summarize performing and non-performing (i.e., non-accruing) loans receivable by portfolio segment, by aging category, by delinquency status as of December 
−Removed: (In thousands)
−Removed: Performing (Accruing) Loans
+Added: The following tables summarize performing and non-performing (i.e., non-accruing) loans receivable by portfolio segment, by aging category, by delinquency status as of December 31, 2022.
+Added: (In thousands) Performing (Accruing) Loans
As of December 31, 2022:
+Added: Past Due 60 - 89
+Added: Past Due 90 Days
+Added: Past Due Total
+Added: Past Due Current Total
Loan portfolio segment:
Commercial Real Estate:
−Removed: $ 324,858  
−Removed: $ 325,554  
−Removed: $ 325,554  
+Added: Pass $ — $ — $ — $ — $ 401,313 $ 401,313 $ — $ 401,313
Special mention — — — — 24,559 24,559 — 24,559
−Removed: 16,625  
−Removed: 16,625  
−Removed: 16,625  
−Removed: 15,704  
−Removed: 23,068  
−Removed: 348,847  
−Removed: 349,543  
−Removed: 15,704  
−Removed: 365,247  
+Added: Substandard 330 — — 330 — 330 11,241 11,571
+Added: 330 — — 330 425,872 426,202 11,241 437,443
Residential Real Estate:
−Removed: $ 154,044  
−Removed: 154,044  
−Removed: 154,044  
+Added: Pass 330 — — 330 120,715 121,045 — 121,045
Special mention — — — — 625 625 — 625
−Removed: 155,443  
−Removed: 155,443  
−Removed: 158,591  
+Added: Substandard — — — — — — 2,470 2,470
+Added: 330 — — 330 121,340 121,670 2,470 124,140
Commercial and Industrial:
−Removed: $ 114,306  
−Removed: 114,549  
−Removed: 114,549  
+Added: Pass 2 — 230 232 131,092 131,324 — 131,324
Special mention — — — — 597 597 — 597
−Removed: 118,466  
−Removed: 118,709  
−Removed: 122,810  
+Added: Substandard 1,488 412 — 1,900 133 2,033 4,833 6,866
+Added: 1,490 412 230 2,132 131,822 133,954 4,833 138,787
Consumer and Other:
−Removed: $ 59,171  
−Removed: 59,199  
−Removed: 59,199  
−Removed: 59,194  
−Removed: 59,222  
−Removed: 59,364  
+Added: Pass 929 3,175 925 5,029 135,990 141,019 — 141,019
+Added: Substandard — — — — 23 23 49 72
+Added: 929 3,175 925 5,029 136,013 141,042 49 141,091
Construction:
−Removed: $ 21,781  
−Removed: 21,781  
−Removed: 21,781  
−Removed: 21,781  
−Removed: 21,781  
−Removed: 21,781  
+Added: Pass 895 — — 895 3,503 4,398 — 4,398
+Added: Special mention — — — — 524 524 — 524
+Added: 895 — — — — — 895 — 4,027 — 4,922 — 4,922
Construction to Permanent -CRE:
−Removed: $ 11,695  
−Removed: 11,695  
−Removed: 11,695  
−Removed: 11,695  
−Removed: 11,695  
−Removed: 11,695  
−Removed: $ 715,426  
−Removed: $ 716,393  
−Removed: $ 23,095  
−Removed: $ 739,488  
+Added: Pass — — — — 1,933 1,933 — 1,933
+Added: — — — — 1,933 1,933 — 1,933
+Added: Total $ 3,974 $ 3,587 $ 1,155 $ 8,716 $ 821,007 $ 829,723 $ 18,593 $ 848,316
Loans receivable, gross:
−Removed: $ 685,855  
−Removed: $ 686,822  
−Removed: $ 686,822  
+Added: Pass 2,156 3,175 1,155 6,486 794,546 801,032 — 801,032
Special mention — — — — 26,305 26,305 — 26,305
−Removed: 19,975  
−Removed: 19,975  
−Removed: 19,975  
−Removed: 23,095  
−Removed: 32,691  
+Added: Substandard 1,818 412 — 2,230 156 2,386 18,593 20,979
Loans receivable, gross $ 3,974 $ 3,587 $ 1,155 $ 8,716 $ 821,007 $ 829,723 $ 18,593 $ 848,316
−Removed: $ 715,426  
−Removed: $ 716,393  
−Removed: $ 23,095  
−Removed: $ 739,488  
PATRIOT NATIONAL BANCORP, INC.
2 unchanged sentences
The following tables summarize performing and non-performing (i.e., non-accruing) loans receivable by portfolio segment, by aging category, by delinquency status as of December 31, 2021.
−Removed: (In thousands)
−Removed: Performing (Accruing) Loans
+Added: (In thousands) Performing (Accruing) Loans
As of December 31, 2021:
+Added: Past Due 60 - 89 Days
+Added: Past Due 90 Days
+Added: Past Due Current Total
+Added: Loans Non-accruing
Loan portfolio segment:
Commercial Real Estate:
−Removed: $ 230,824  
−Removed: $ 230,824  
−Removed: $ 230,824  
+Added: Pass $ 696 $ — $ — $ 696 $ 324,858 $ 325,554 $ — $ 325,554
Special mention — — — — 16,625 16,625 — 16,625
−Removed: 25,658  
−Removed: 25,658  
−Removed: 25,658  
−Removed: 10,999  
−Removed: 11,362  
−Removed: 14,534  
−Removed: 25,896  
−Removed: 267,481  
−Removed: 267,844  
−Removed: 14,534  
−Removed: 282,378  
+Added: Substandard — — — — 7,364 7,364 15,704 23,068
+Added: 696 — — 696 348,847 349,543 15,704 365,247
Residential Real Estate:
−Removed: 145,298  
−Removed: 146,137  
−Removed: 146,137  
+Added: Pass — — — — 154,044 154,044 — 154,044
Special mention — — — — 1,399 1,399 — 1,399
−Removed: 149,158  
−Removed: 149,997  
−Removed: 153,851  
+Added: Substandard — — — — — — 3,148 3,148
+Added: — — — — 155,443 155,443 3,148 158,591
Commercial and Industrial:
−Removed: 102,131  
−Removed: 102,340  
−Removed: 102,340  
+Added: Pass 243 — — 243 114,306 114,549 — 114,549
Special mention — — — — 1,951 1,951 — 1,951
−Removed: 12,881  
−Removed: 12,881  
−Removed: 27,660  
−Removed: 28,376  
−Removed: 29,076  
−Removed: 138,672  
−Removed: 143,597  
−Removed: 144,297  
+Added: Substandard — — — — 2,209 2,209 4,101 6,310
+Added: 243 — — 243 118,466 118,709 4,101 122,810
Consumer and Other:
−Removed: 66,589  
−Removed: 66,597  
−Removed: 66,597  
−Removed: 66,710  
−Removed: 66,718  
−Removed: 67,635  
+Added: Pass — 26 2 28 59,171 59,199 — 59,199
+Added: Substandard — — — — 23 23 142 165
+Added: — 26 2 28 59,194 59,222 142 59,364
Construction:
−Removed: 64,633  
−Removed: 66,984  
−Removed: 66,984  
−Removed: 64,633  
−Removed: 66,984  
−Removed: 66,984  
+Added: Pass — — — — 21,781 21,781 — 21,781
+Added: — — — — 21,781 21,781 — 21,781
Construction to Permanent - CRE:
−Removed: 15,035  
−Removed: 15,035  
−Removed: 15,035  
−Removed: 15,035  
−Removed: 15,035  
−Removed: 15,035  
−Removed: $ 1,436  
−Removed: $ 7,034  
−Removed: $ 8,486  
−Removed: $ 701,689  
−Removed: $ 710,175  
−Removed: $ 20,005  
−Removed: $ 730,180  
+Added: Pass — — — — 11,695 11,695 — 11,695
+Added: — — — — 11,695 11,695 — 11,695
+Added: Total $ 939 $ 26 $ 2 $ 967 $ 715,426 $ 716,393 $ 23,095 $ 739,488
Loans receivable, gross:
−Removed: $ 2,921  
−Removed: $ 3,407  
−Removed: $ 624,510  
−Removed: $ 627,917  
−Removed: $ 627,917  
+Added: Pass $ 939 $ 26 $ 2 $ 967 $ 685,855 $ 686,822 $ — $ 686,822
Special mention — — — — 19,975 19,975 — 19,975
−Removed: 38,399  
−Removed: 42,399  
−Removed: 42,399  
−Removed: 38,780  
−Removed: 39,859  
−Removed: 20,005  
−Removed: 59,864  
+Added: Substandard — — — — 9,596 9,596 23,095 32,691
Loans receivable, gross $ 939 $ 26 $ 2 $ 967 $ 715,426 $ 716,393 $ 23,095 $ 739,488
−Removed: $ 1,436  
−Removed: $ 7,034  
−Removed: $ 8,486  
−Removed: $ 701,689  
−Removed: $ 710,175  
−Removed: $ 20,005  
−Removed: $ 730,180  
PATRIOT NATIONAL BANCORP, INC.
1 unchanged sentence
Notes to consolidated financial statements
−Removed: The following tables summarize non-performing (i.e., non-accruing) loans by aging category and status, within the applicable loan portfolio segment as of December 
−Removed: 2021 and 2020:
−Removed: (In thousands)
−Removed: Non-accruing Loans
+Added: The following tables summarize non-performing (i.e., non-accruing) loans by aging category and status, within the applicable loan portfolio segment as of December 31, 2022 and 2021:
+Added: (In thousands) Non-accruing Loans
+Added: Past Due 60 - 89
+Added: Past Due 90 Days or
+Added: Past Due Current Total
As of December 31, 2022:
1 unchanged sentence
Commercial Real Estate:
−Removed: $ 15,704  
−Removed: $ 15,704  
−Removed: $ 15,704  
+Added: Substandard $ — $ — $ 11,241 $ 11,241 $ — $ 11,241
Residential Real Estate:
+Added: Substandard 657 — 1,796 2,453 17 2,470
Commercial and Industrial:
+Added: Substandard 46 395 3,196 3,637 1,196 4,833
Consumer and Other:
+Added: Substandard — — 27 27 22 49
Total non-accruing loans $ 703 $ 395 $ 16,260 $ 17,358 $ 1,235 $ 18,593
−Removed: $ 20,609  
−Removed: $ 21,194  
−Removed: $ 1,901  
−Removed: $ 23,095  
As of December 31, 2021:
1 unchanged sentence
Commercial Real Estate:
−Removed: $ 5,723  
−Removed: $ 5,723  
−Removed: $ 8,811  
−Removed: $ 14,534  
+Added: Substandard $ — $ — $ 15,704 $ 15,704 $ — $ 15,704
Residential Real Estate:
+Added: Substandard — — 2,419 2,419 729 3,148
Commercial and Industrial:
+Added: Substandard — 491 2,458 2,949 1,152 4,101
Consumer and Other:
+Added: Substandard — 94 28 122 20 142
Total non-accruing loans $ — $ 585 $ 20,609 $ 21,194 $ 1,901 $ 23,095
−Removed: $ 9,398  
−Removed: $ 9,420  
−Removed: $ 10,585  
−Removed: $ 20,005  
−Removed: If non-accrual loans had been performing in accordance with the original contractual terms, additional interest income (net of cash collected) of approximately $ 802,000 , $ 904,000 , and $ 302,000 would have been recognized in income for the years ended December 
−Removed: 2021, 2020, and 2019, respectively.
−Removed: Interest income collected and recognized on non-accruing loans for the year ended December 
−Removed: 2021, 2020 and 2019 was $ 377,000 , $ 156,000 and $ 671,000 , respectively.
+Added: If non-accrual loans had been performing in accordance with the original contractual terms, additional interest income (net of cash collected) of approximately $ 372,000 , $ 802,000 , and $ 904,000 would have been recognized in income for the years ended December 31, 2022, 2021, and 2020, respectively.
+Added: Interest income collected and recognized on non-accruing loans for the year ended December 31, 2022, 2021 and 2020 was $ 329,000 , $ 377,000 and $ 156,000 , respectively.
The accrual of interest on loans is discontinued at the time the loan is 90 days past due for payment unless the loan is well-secured and in process of collection.
8 unchanged sentences
Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current, future payments are reasonably assured, after at least six months of timely payment history.
−Removed: Management considers all non-accrual loans and Trouble Debt Restructurings (“TDR”) for impaired loans.
+Added: Management considers all non-accrual loans and Trouble Debt Restructurings (“TDR”) for impaired loans.
In most cases, loan payments that are past due less than 90 days, well-secured, and in the process of collection are not considered impaired.
The Bank considers consumer installment loans to be pools of smaller homogeneous loan balances, which are collectively evaluated for impairment.
−Removed: Troubled Debt Restructurings ( “
−Removed: On a case-by-case basis, Patriot may agree to modify the contractual terms of a borrower’s loan to assist customers who may be experiencing financial difficulty.
+Added: Troubled Debt Restructurings ( “ TDR ” )
+Added: On a case-by-case basis, Patriot may agree to modify the contractual terms of a borrower’s loan to assist customers who may be experiencing financial difficulty.
If the borrower is experiencing financial difficulties and a concession has been made, the loan is classified as a TDR.
2 unchanged sentences
In addition, when modifying commercial loans, Patriot frequently obtains additional collateral or guarantor support.
−Removed: If the borrower has performed under the existing contractual terms of the loan and Patriot’s underwriters determine that the borrower has the capacity to continue to perform under the terms of the TDR, the loan continues accruing interest.
+Added: If the borrower has performed under the existing contractual terms of the loan and Patriot’s underwriters determine that the borrower has the capacity to continue to perform under the terms of the TDR, the loan continues accruing interest.
Non-accruing TDRs may be returned to accrual status when there has been a sustained period of performance (generally six consecutive months of payments) and both principal and interest are reasonably assured of collection.
The following table summarizes the recorded investment in TDRs as of December 31, 2022 and 2021:
−Removed: (In thousands)
−Removed: December 31, 2021
−Removed: December 31, 2020
+Added: (In thousands) December 31, 2022 December 31, 2021
Loan portfolio segment:
+Added: Loans Recorded
+Added: Investment Number of
+Added: Loans Recorded
Commercial Real Estate 1 $ 8,806 1 $ 8,884
−Removed: $ 8,884  
−Removed: $ 9,884  
Residential Real Estate 3 814 3 870
−Removed: Commercial and Industrial
Consumer and Other 2 537 3 640
Total TDR Loans 6 10,157 7 10,394
−Removed: 10,394  
−Removed: 15,886  
TDRs included in non-accrual loans 2 ( 9,464 ) 3 ( 9,688 )
−Removed: ( 9,688 )  
Total accrual TDR Loans 4 $ 693 4 $ 706
−Removed: $ 4,378  
−Removed: During the year ended December 31, 2021, no loans were modified as TDRs, and no defaults of TDRs.
−Removed: The following loans were modified as TDR during the year ended December 
−Removed: 2020 and 2019.
+Added: During the year ended December 31, 2022 and 2021, no loans were modified as TDRs, and there were no defaults of TDRs.
+Added: The following loans were modified as TDR during the year ended December 31, 2020.
Outstanding Recorded Investment
−Removed: (In thousands)
−Removed: Number of Loans
−Removed: Pre-Modification
−Removed: Post-Modification
+Added: (In thousands) Pre-Modification Post-Modification
Year Ended December 31, 2020 2020 2020
1 unchanged sentence
Commercial Real Estate 2 $ 822 $ 819
−Removed: $ 8,912  
−Removed: $ 8,911  
Commercial and Industrial 1 4,000 4,000
1 unchanged sentence
Total TDR Loans 6 $ 5,235 $ 5,233
−Removed: $ 5,235  
−Removed: $ 8,912  
−Removed: $ 5,233  
−Removed: $ 8,911  
PATRIOT NATIONAL BANCORP, INC.
1 unchanged sentence
Notes to consolidated financial statements
−Removed: The following table provides information on how loans were modified as TDRs during the year ended December 
−Removed: 2020 and 2019.
−Removed: (In thousands)
−Removed: Year Ended December 31,
+Added: The following table provides information on how loans were modified as TDRs during the year ended December 31, 2020.
+Added: (In thousands) Year Ended December 31,
Rate reduction $ 4,819
−Removed: $ 4,819  
Extension of interest only period 121
Payment deferral 293
−Removed: Maturity and rate reduction
−Removed: $ 5,233  
−Removed: $ 8,911  
+Added: Total $ 5,233
The loans modified in a TDR often involve reducing the interest rate for the remaining term of the loan, extending the maturity date at an interest rate lower than the current market rate for new debt with similar risk, extending payment periods for the interest and /or principal, or substituting or adding a co-borrower or guarantor.
−Removed: At December 
−Removed: 2021 and 2020, there were no commitments to advance additional funds under TDRs.
−Removed: The balances reflected here as TDR’s are also included in the non-accruing loan balance included in the prior table - Loan Portfolio Aging Analysis.
−Removed: Pursuant to the CARES Act, loan modifications made between March 1, 2020 and the earlier of i) December 30, 2020 or ii) 60 days after the President declares a termination of the COVID- 19 national emergency are not classified as TDRs if the related loans were not more than 30 days past due as of December 31, 2019.
−Removed: In addition, on April 7, 2020, a group of banking regulatory agencies issued a revised interagency statement that offers practical expedients for evaluating whether COVID- 19 loan modifications are TDRs.
−Removed: The Bank had modified $ 232.7 million of loans to borrowers to defer the payment of interest and/or principal for up to 180 days.
−Removed: The vast majority all of those loans deferred have now resumed normal payments.
−Removed: As of December 31, 2021, seven loans remaining on deferral totaled $ 6.5 million.
−Removed: According to regulatory guidance and CARES Act, these modified loans were not TDRs as of December 31, 2021.
+Added: At December 31, 2022 and 2021, there were no commitments to advance additional funds under TDRs.
+Added: The balances reflected here as TDR’s are also included in the non-accruing loan balance included in the prior table - Loan Portfolio Aging Analysis.
Impaired Loans
Impaired loans may consist of non-accrual loans and/or performing and non-performing TDRs.
−Removed: As of December 
−Removed: 2021 and 2020, based on the on-going monitoring and analysis of the loan portfolio, impaired loans of $ 23.8 million and $ 24.4 million, respectively, were identified, for which $ 2.3 million and $ 1.4 million specific reserves were established, respectively.
−Removed: At December 
−Removed: 2021, exposure to the impaired loans was related to thirty-four borrowers.
+Added: As of December 31, 2022 and 2021, based on the on-going monitoring and analysis of the loan portfolio, impaired loans of $ 19.3 million and $ 23.8 million, respectively, were identified, for which $ 6.0 million and $ 2.3 million specific reserves were established, respectively.
+Added: At December 31, 2022, exposure to the impaired loans was related to thirty-two borrowers.
+Added: Twenty-one out of thirty-two impaired loans were individually evaluated for impairment, and the remaining eleven impaired loans with balances under $ 100,000 , totaling $ 371,000 , with a general reserve of $ 2,000 were collectively evaluated, and not individually evaluated for impairment.
+Added: At December 31, 2021, exposure to the impaired loans was related to thirty-four borrowers.
Twenty-three out of thirty-four impaired loans were individually evaluated for impairment, and the remaining eleven impaired loans with balances under $ 100,000 , totaling $ 590,000 , with a general reserve of $ 7,000 were collectively evaluated, and not individually evaluated for impairment.
−Removed: At December 31, 2020, exposure to the impaired loans was related to twenty-six borrowers.
−Removed: All impaired loans were evaluated individually.
For collateral dependent loans, appraisal reports of the underlying collateral, have been obtained from independent licensed appraisal firms.
−Removed: For non-performing loans, the independently determined appraised values were first reduced by a 5.8 % discount to reflect the Bank’s experience selling Other Real Estate Owned (OREO) properties, and were further reduced by 8 % in selling costs, in order to estimate the potential loss, if any, that may eventually be realized.
+Added: For non-performing loans, the independently determined appraised values were first reduced by a 5.8 % discount to reflect the Bank’s experience selling Other Real Estate Owned (OREO) properties, and were further reduced by 8 % in selling costs, in order to estimate the potential loss, if any, that may eventually be realized.
Performing loans are monitored to determine when, if at all, additional loan loss reserves may be required for a loss of underlying collateral value.
5 unchanged sentences
Notes to consolidated financial statements
−Removed: The following table reflects information about the impaired loans by class as of December 
−Removed: 2021 and 2020:
−Removed: (In thousands)
−Removed: December 31, 2021
−Removed: December 31, 2020
+Added: The following table reflects information about the impaired loans by class as of December 31, 2022 and 2021:
+Added: (In thousands) December 31, 2022 December 31, 2021
+Added: Investment Principal
+Added: Outstanding Related
+Added: Allowance Recorded
+Added: Investment Principal
+Added: Outstanding Related
With no related allowance recorded:
Commercial Real Estate $ 2,435 $ 2,428 $ — $ 6,820 $ 7,776 $ —
−Removed: $ 6,820  
−Removed: $ 7,776  
−Removed: $ 5,723  
−Removed: $ 6,644  
Residential Real Estate 2,402 2,224 — 2,847 2,763 —
1 unchanged sentence
Consumer and Other 514 514 — 523 523 —
−Removed: 10,820  
−Removed: 11,820  
−Removed: 15,453  
−Removed: 16,692  
+Added: 7,290 7,590 — 10,820 11,820 —
With a related allowance recorded:
Commercial Real Estate $ 8,806 $ 8,656 $ 5,430 $ 8,884 $ 8,811 $ 1,567
−Removed: $ 8,884  
−Removed: $ 8,811  
−Removed: $ 1,567  
Residential Real Estate 223 221 6 461 488 8
1 unchanged sentence
Consumer and Other 73 74 — 166 201 1
−Removed: 12,982  
−Removed: 13,416  
+Added: 11,997 12,003 6,045 12,982 13,416 2,299
Impaired Loans, Total:
Commercial Real Estate $ 11,241 $ 11,084 $ 5,430 $ 15,704 $ 16,587 $ 1,567
−Removed: 15,704  
−Removed: 16,587  
−Removed: 14,534  
−Removed: 15,455  
Residential Real Estate 2,625 2,445 6 3,308 3,251 8
2 unchanged sentences
Impaired Loans, Total $ 19,287 $ 19,593 $ 6,045 $ 23,802 $ 25,236 $ 2,299
−Removed: $ 23,802  
−Removed: $ 25,236  
−Removed: $ 2,299  
−Removed: $ 24,383  
−Removed: $ 25,622  
−Removed: $ 1,412  
−Removed: For each year in the three -year period ended December 
−Removed: 2021, the average recorded investment in and interest income recognized on impaired loans without and with a related allowance, by loan portfolio segment, was as follows:
+Added: PATRIOT NATIONAL BANCORP, INC.
+Added: AND SUBSIDIARIES
+Added: Notes to consolidated financial statements
+Added: For each year in the three-year period ended December 31, 2022, the average recorded investment in and interest income recognized on impaired loans without and with a related allowance, by loan portfolio segment, was as follows:
Year Ended December 31,
(In thousands) 2022 2021 2020
+Added: Investment Interest
+Added: Recognized Average
+Added: Investment Interest
+Added: Recognized Average
+Added: Investment Interest
With no related allowance recorded:
Commercial Real Estate $ 6,621 $ 87 $ 7,636 $ 103 $ 5,859 $ 39
−Removed: $ 7,636  
−Removed: $ 5,859  
−Removed: $ 9,829  
Residential Real Estate 3,452 34 4,014 51 3,681 28
1 unchanged sentence
Consumer and Other 342 23 702 16 1,132 47
−Removed: 14,900  
−Removed: 12,783  
−Removed: 19,123  
+Added: 10,980 207 14,900 182 12,783 193
With a related allowance recorded:
3 unchanged sentences
Consumer and Other 342 4 106 7 39 —
−Removed: 11,642  
+Added: 11,321 154 11,642 220 8,934 42
Impaired Loans, Total:
Commercial Real Estate $ 13,717 $ 200 $ 16,505 $ 169 $ 14,720 $ 74
−Removed: 16,505  
−Removed: 14,720  
−Removed: 10,717  
Residential Real Estate 3,970 42 4,442 72 3,715 35
2 unchanged sentences
Impaired Loans, Total $ 22,301 $ 361 $ 26,542 $ 402 $ 21,717 $ 235
−Removed: $ 26,542  
−Removed: $ 21,717  
−Removed: $ 22,695  
PATRIOT NATIONAL BANCORP, INC.
3 unchanged sentences
SBA loans held for sale represent the guaranteed portion of SBA loans originated and are reflected at the lower of aggregate cost or market value.
−Removed: There were $ 3.1 million of SBA loans held for sale at December 31, 2021, consisting of $ 2.6  million SBA commercial and industrial loans and $ 562,000 SBA commercial real estate loans.
−Removed: As of December 31, 2020, SBA loans held for sale consisted of $ 1.2 million of SBA commercial and industrial loans.
−Removed: During 2021 and 2020, $ 281,000 and $ 9.5 million SBA loans previously classified as held for sale were transferred to held for investment, respectively.
−Removed: In September 2020, one commercial and industrial loan of $ 5.0 million was reclassed from loans held for investment to loans held for sale.
+Added: There were $ 5.2 million of SBA loans held for sale at December 31, 2022, consisting of $ 3.1 million SBA commercial and industrial loans and $ 2.1 million SBA commercial real estate loans.
+Added: As of December 31, 2021, SBA loans held for sale totaled $ 3.1 million, consisting of $ 2.6 million of SBA commercial and industrial loans and $ 562,000 SBA commercial real estate loans.
+Added: During 2022 and 2021, $ 274,000 and $ 281,000 SBA loans previously classified as held for sale were transferred to held for investment, respectively.
+Added: In September 2020, one commercial and industrial loan of $ 5.0 million was reclassified from loans held for investment to loans held for sale.
The loan was sold in October 2020 which resulted in proceeds of $ 5.0 million.
−Removed: No held of investment loan was reclassed to held of sale during 2021.
+Added: No held of investment loan was reclassified to held of sale during 2022 and 2021.
The Company generally sells the guaranteed portion of its SBA loans to a third party and retains the servicing, holding the unguaranteed portion in its portfolio.
6 unchanged sentences
Serviced loans sold to others are not included in the accompanying consolidated balance sheets.
−Removed: The total amount of such loans serviced, but owned by third party, amounted to approximately $ 29.6 million and $ 19.4 million at December 
−Removed: 2021 and 2020, respectively.
−Removed: As of December 31, 2021 and 2020, the servicing asset has a carrying value of $ 584,000 and $ 316,000 , respectively, and fair value of $ 617,000 and $ 375,000 , respectively.
−Removed: Income and fees collected for loan servicing are credited to noninterest income when earned, net of amortization on the related servicing assets.
−Removed: The following table presents an analysis of the activity in the SBA servicing assets for the years ended December 
−Removed: 2021, 2020 and 2019:
−Removed: (In thousands)
−Removed: Year Ended December 31,
+Added: The total amount of such loans serviced, but owned by third party, amounted to approximately $ 47.3 million and $ 29.6 million at December 31, 2022 and 2021, respectively.
+Added: As of December 31, 2022 and 2021, the servicing asset has a carrying value of $ 886,000 and $ 584,000 , respectively, and fair value of $ 1.0 million and $ 617,000 respectively.
+Added: Income and fees collected for loan servicing are credited to non-interest income when earned, net of amortization on the related servicing assets.
+Added: The following table presents an analysis of the activity in the SBA servicing assets for the years ended December 31, 2022, 2021 and 2020:
+Added: (In thousands) Year Ended December 31,
+Added: 2022 2021 2020
Beginning balance $ 584 $ 316 $ 201
1 unchanged sentence
Servicing rights amortized ( 87 ) ( 22 ) ( 22 )
−Removed: ( 22 )  
−Removed: ( 22 )  
Servicing rights disposed ( 11 ) ( 45 ) —
−Removed: ( 45 )  
Ending balance $ 886 $ 584 $ 316
4 unchanged sentences
Premises and Equipment
−Removed: At December 
−Removed: 2021 and 2020, premises and equipment consisted of the following:
−Removed: (In thousands)
−Removed: $ 12,819  
−Removed: $ 12,819  
−Removed: 19,046  
−Removed: 20,287  
+Added: At December 31, 2022 and 2021, premises and equipment consisted of the following:
+Added: (In thousands) December 31,
+Added: Land $ 12,819 $ 12,819
+Added: Buildings 19,046 19,046
Leasehold Improvements 3,058 3,058
Furniture, equipment, and software 12,674 12,264
−Removed: 12,264  
−Removed: 12,010  
Construction-in-progress 69 65
Premises and equipment, gross 47,666 47,252
−Removed: 47,252  
−Removed: 49,202  
Accumulated depreciation and amortization ( 17,025 ) ( 15,752 )
−Removed: ( 15,752 )  
Premises and equipment, net $ 30,641 $ 31,500
−Removed: $ 31,500  
−Removed: $ 33,423  
−Removed: In December 2021, the Bank sold a building located in the City New Haven, Connecticut for a cash proceed of $ 1.5 million, and recognized a gain of $ 550,000 , which is included in other income of the consolidated statements of operations.
−Removed: For the years ended December 
−Removed: 2021, 2020 and 2019, depreciation and amortization expense related to premises and equipment totaled $ 1.4 million, $ 1.5 million, and $ 1.6 million, respectively.
−Removed: Other Real Estate Owned ( “
−Removed: OREO ”
−Removed: The OREO balance consists of foreclosed residential properties from loan receivable that were marketed for sale.
−Removed: As of December 
−Removed: 31, 2021 and 2020, OREO aggregated of $ 0 and $ 1.9 million, respectively.
−Removed: The following table presents an analysis of the activity in OREO for the years ended December 
−Removed: 2021, 2020 and 2019:
−Removed: (In thousands)
−Removed: Year Ended December 31,
+Added: In 2021, the Bank sold a building located in the City New Haven, Connecticut for a cash proceed of $ 1.5 million, and recognized a gain of $ 550,000 , which is included in other income of the consolidated statements of operations.
+Added: No property was sold in 2022.
+Added: For the years ended December 31, 2022, 2021 and 2020, depreciation and amortization expense related to premises and equipment totaled $ 1.3 million, $ 1.4 million, and $ 1.5 million, respectively.
+Added: Other Real Estate Owned ( “ OREO ” )
+Added: The OREO balance consists of foreclosed residential properties from loans receivable that were marketed for sale.
+Added: As of December 31, 2022 and 2021, no OREO was recorded.
+Added: The following table presents an analysis of the activity in OREO for the years ended December 31, 2022, 2021 and 2020:
+Added: (In thousands) Year Ended December 31,
+Added: 2022 2021 2020
Beginning balance $ — $ 1,906 $ 2,400
−Removed: $ 1,906  
−Removed: $ 2,400  
−Removed: $ 2,945  
−Removed: ( 1,906 )  
−Removed: ( 446 )  
−Removed: ( 48 )  
+Added: Additions — — —
+Added: Sold — ( 1,906 ) ( 446 )
+Added: Write-downs — — ( 48 )
Ending balance $ — $ — $ 1,906
−Removed: $ 1,906  
−Removed: $ 2,400  
−Removed: All OREO were sold as of December 31, 2021.
+Added: All OREO were sold prior to December 31, 2021.
Patriot recognized a gain of $ 2,000 on the sale of OREO for the year ended December 31, 2021.
−Removed: For the year ended December 31, 2020 and 2019, Patriot recorded losses on sales of OREO properties of $ 69,000 and $ 94,000 , respectively.
+Added: For the year ended December 31, 2020, Patriot recorded losses on sales of OREO properties of $ 69,000 .
The recognized gain and losses are included in the other operating expenses on the consolidated statements of operations.
4 unchanged sentences
Acquisition of Prime Bank
−Removed: The Company’s acquisitions are accounted for under the acquisition method of accounting in accordance with ASC 
−Removed: 805, Business Combinations.
+Added: The Company’s acquisitions are accounted for under the acquisition method of accounting in accordance with ASC 805, Business Combinations.
Both the purchased assets and liabilities assumed are recorded at their respective acquisition date fair values.
3 unchanged sentences
The closing of the transaction added a new Patriot branch located in the Town of Orange, New Haven County, Connecticut.
−Removed: The assets acquired and liabilities assumed from Prime Bank were recorded at their estimated fair value as of the closing date of the acquisition.
−Removed: Goodwill of $ 2.1 million was recorded at the time of the acquisition, and was adjusted to $ 1.7 million as of December 31, 2018, primarily due to updating of fair value of the core deposit intangibles and adjustment of cash and contingent considerations.
−Removed: The goodwill was further adjusted to $ 1.1 million as a result of reducing the estimated amount to be paid pursuant to certain problem loans pending resolution by $ 621,000 as of May 10, 2019.
−Removed: For the year ended December 31, 2020, a purchase price adjustment of $ 556,000 was recognized to project expenses on the consolidated statements of operations.
−Removed: The charge represented an adjustment to the earlier estimate of the final purchase price upon preliminary settlement of the litigation related to a dispute over the final purchase price in 2020.
−Removed: There were no income statement effects resulting from the recorded measurement period adjustments for the year ended December 31, 2019.
−Removed: There was no further adjustment for Goodwill in 2021.
−Removed: The goodwill is all deductible for income taxes over 15 years.
−Removed: Information on goodwill for the year ended December 
−Removed: 2021, 2020 and 2019 is as follows:
+Added: Information on goodwill for the year ended December 31, 2022, 2021 and 2020 is as follows:
Year Ended December 31,
1 unchanged sentence
Balance, beginning of period $ 1,107 $ 1,107 $ 1,107
−Removed: $ 1,107  
−Removed: $ 1,107  
−Removed: $ 1,728  
−Removed: Measurement period adjustments
Balance, end of period $ 1,107 $ 1,107 $ 1,107
−Removed: $ 1,107  
−Removed: $ 1,107  
−Removed: $ 1,107  
Goodwill is evaluated for impairment annually or whenever we identify certain triggering events or circumstances that would more likely than not reduce the fair value of a reporting unit below its carrying amount.
2 unchanged sentences
The fair value of each reporting unit is compared to the carrying amount of such reporting unit in order to determine if impairment is indicated.
−Removed: The Company performed a quantitative assessment as of October 31, 2021, the Company’s annual goodwill impairment measurement date, and concluded that the goodwill was not impaired as of December 
+Added: The Company performed a quantitative assessment as of October 31, 2022, the Company’s annual goodwill impairment measurement date, and concluded that the goodwill was no t impaired as of December 31, 2022.
CDI was recorded as part of the Prime Bank business combination in May 2018.
The CDI is amortized over a 10-year period using the straight-line method.
−Removed: For the year ended December 
−Removed: 2021, 2020 and 2019  the amortization was $ 47,000 , $ 74,000 and 75,000 , respectively.
−Removed: An impairment charge of $ 206,000 was recorded for the year ended December 31, 2020 due to impairment test performed in 2020.
+Added: For the year ended December 31, 2022, 2021 and 2020 the amortization was $ 47,000 , $ 47,000 and 74,000 , respectively.
The Company performed a quantitative assessment for CDI as of October 31, 2022, and concluded that the CDI was not impaired as of December 31, 2022.
The amortization expense and impairment charge were included in the other operating expenses on the consolidated statements of operations.
−Removed: PATRIOT NATIONAL BANCORP, INC.
−Removed: AND SUBSIDIARIES
−Removed: Notes to consolidated financial statements
The table below provides information regarding the carrying amounts and accumulated amortization of amortized intangible assets as of the dates set forth below.
−Removed: (In thousands)
−Removed: As of December 31,
+Added: (In thousands) As of December 31,
Gross carrying amount $ 748 $ 748
Accumulated amortization ( 293 ) ( 246 )
−Removed: ( 246 )  
−Removed: ( 206 )  
+Added: Impairment ( 206 ) ( 206 )
Net carrying amount $ 249 $ 296
+Added: PATRIOT NATIONAL BANCORP, INC.
+Added: AND SUBSIDIARIES
+Added: Notes to consolidated financial statements
Merger and acquisition with American Challenger
−Removed: On November 15, 2021, the Company and American Challenger Development Corp., a Delaware corporation (“American Challenger”), entered into an Agreement and Plan of Merger (the “Original Merger Agreement”), which was subsequently amended on January 26, 2022 and February 28, 2022 ( the Original Merger Agreement, as amended, referred to as the “Merger Agreement”).
−Removed: Pursuant to the Merger Agreement, American Challenger will merge with and into PNBK (the "Merger").
−Removed: Following the Merger, Patriot Bank will adopt a consolidated business plan and will operate as two divisions.
−Removed: The Patriot Bank Division will continue to operate the existing business model.
−Removed: The American Challenger Division will execute the high-growth component of the consolidated business plan.
−Removed: In connection with the merger, the Company incurred $ 1.9  million of project expenses for the year ended December 31, 2021.
−Removed: The pending acquisition is subject to several material conditions including obtaining regulatory and shareholder approval.
−Removed: The following table presents the balance of deposits held, by category, and the related weighted average stated interest rate as of December 
−Removed: 2021 and 2020.
−Removed: December 31, 2021
−Removed: December 31, 2020
−Removed: (In thousands)
−Removed: Weighted Avg.
−Removed: Stated Interest Rate
−Removed: Weighted Avg.
+Added: On November 15, 2021, the Company and American Challenger Development Corp., a Delaware corporation (“American Challenger”), entered into an Agreement and Plan of Merger (the “Original Merger Agreement”), which was subsequently amended on January 26, 2022 and February 28, 2022 (the Original Merger Agreement, as amended, referred to as the “Merger Agreement”).
+Added: On July 18, 2022, Patriot and American Challenger entered into a Termination and Release Agreement pursuant to which the parties mutually agreed to terminate the Merger Agreement.
+Added: The parties mutually determined that not all closing conditions of the Merger Agreement could be satisfied under the current structure and agreement.
+Added: In connection with the merger, the Company has recognized expenses of $ 1.9 million for the full year ended December 31, 2021 and $ 112,000 for the year ended December 31, 2022.
+Added: The following table presents the balance of deposits held, by category, and the related weighted average stated interest rate as of December 31, 2022 and 2021.
+Added: December 31, 2022 December 31, 2021
+Added: (In thousands) Balance Weighted Avg.
+Added: Stated Interest Rate Balance Weighted Avg.
Stated Interest Rate
Non-interest bearing $ 269,636 — $ 226,713 —
−Removed: $ 226,713  
−Removed: $ 158,676  
Interest bearing:
Negotiable order of withdrawal accounts 34,440 0.07 % 34,741 0.07 %
−Removed: 34,741  
−Removed: 0.07 %  
−Removed: 30,529  
−Removed: 109,744  
−Removed: 0.13 %  
−Removed: 98,635  
−Removed: 164,518  
−Removed: 0.23 %  
−Removed: 146,389  
+Added: Savings 71,002 0.61 % 109,744 0.13 %
+Added: Money market 211,000 1.38 % 164,518 0.23 %
Certificates of deposit, less than $250,000 165,793 1.72 % 142,246 0.35 %
−Removed: 142,246  
−Removed: 0.35 %  
−Removed: 160,968  
Certificates of deposit, $250,000 or greater 59,877 1.72 % 53,584 0.40 %
−Removed: 53,584  
−Removed: 0.40 %  
−Removed: 49,172  
Brokered deposits 48,698 2.07 % 17,016 1.05 %
−Removed: 17,016  
−Removed: 1.05 %  
−Removed: 41,287  
Interest bearing, Total 590,810 1.40 % 521,849 0.27 %
−Removed: 521,849  
−Removed: 0.27 %  
−Removed: 526,980  
Total Deposits $ 860,446 0.96 % $ 748,562 0.19 %
−Removed: $ 748,562  
−Removed: 0.19 %  
−Removed: $ 685,656  
On July 22, 2020, the Company completed the purchase of prepaid debit card deposits of $ 50.0 million from a prominent national provider and processor of prepaid debit cards for corporate, consumer and government clients.
−Removed: The prepaid debit card deposits are included in the non-interest-bearing deposits and money market deposits, which totaled approximately $ 138.9  million and $ 74.3  million as of December 31, 2021 and 2020, respectively.
+Added: The prepaid debit card deposits are included in the non-interest-bearing deposits and money market deposits, which totaled approximately $ 197.3 million and $ 150.4 million as of December 31, 2022 and 2021, respectively.
PATRIOT NATIONAL BANCORP, INC.
1 unchanged sentence
Notes to consolidated financial statements
−Removed: The following table presents interest expense, by deposit category, and the related weighted average effective interest rate for each of the years in the three -year period ended December 
−Removed: (In thousands)
−Removed: Year ended December 31,
−Removed: Interest Rate
−Removed: Interest Rate
+Added: The following table presents interest expense, by deposit category, and the related weighted average effective interest rate for each of the years in the three-year period ended December 31, 2022.
+Added: (In thousands) Year ended December 31,
+Added: 2022 2021 2020
+Added: Expense Weighted
+Added: Interest Rate Interest
+Added: Expense Weighted
+Added: Interest Rate Interest
+Added: Expense Weighted
Interest Rate
Negotiable order of withdrawal accounts $ 23 0.07 % $ 24 0.07 % $ 23 0.07 %
−Removed: 0.07 %  
−Removed: 0.07 %  
−Removed: 0.22 %  
−Removed: 0.54 %  
−Removed: 0.30 %  
−Removed: 1.05 %  
+Added: Savings 1,028 1.02 % 238 0.22 % 426 0.54 %
+Added: Money market 1,973 1.09 % 449 0.30 % 1,451 1.05 %
Certificates of deposit, less than $250,000 1,411 0.79 % 899 0.61 % 3,227 1.75 %
−Removed: 0.61 %  
−Removed: 1.75 %  
Certificates of deposit, $250,000 or greater 400 0.68 % 270 0.49 % 1,188 1.95 %
−Removed: 0.49 %  
−Removed: 1.95 %  
Brokered deposits 465 1.39 % 363 1.83 % 2,839 1.88 %
−Removed: 1.83 %  
−Removed: 1.88 %  
−Removed: $ 2,243  
−Removed: 0.43 %  
−Removed: $ 9,154  
−Removed: 1.43 %  
−Removed: $ 13,985  
−Removed: As of December 
−Removed: 2021, contractual maturities of Certificates of Deposit (“CDs”) and brokered deposits are summarized as follows:
−Removed: (In thousands)
+Added: $ 5,300 0.93 % $ 2,243 0.43 % $ 9,154 1.43 %
+Added: As of December 31, 2022, contractual maturities of Certificates of Deposit (“CDs”) and brokered deposits are summarized as follows:
+Added: (In thousands) CDs
+Added: or greater Brokered
+Added: Deposits Total
1 year or less $ 119,299 $ 49,789 $ 43,589 $ 212,677
−Removed: $ 104,971  
−Removed: $ 28,050  
−Removed: $ 15,023  
−Removed: $ 148,044  
More than 1 year through 2 years 22,200 7,581 4,609 34,390
−Removed: 23,259  
−Removed: 24,274  
−Removed: 48,529  
More than 2 years through 3 years 11,588 2,507 500 14,595
1 unchanged sentence
More than 4 years through 5 years 11,655 — — 11,655
−Removed: $ 142,246  
−Removed: $ 53,584  
−Removed: $ 17,016  
−Removed: $ 212,846  
−Removed: As of December 
−Removed: 2021 and 2020, total borrowings were $ 120.7 million and $ 120.8 million, respectively.
+Added: $ 165,793 $ 59,877 $ 48,698 $ 274,368
+Added: PATRIOT NATIONAL BANCORP, INC.
+Added: AND SUBSIDIARIES
+Added: Notes to consolidated financial statements
+Added: As of December 31, 2022 and 2021, total borrowings were $ 115.2 million and $ 120.7 million, respectively.
Borrowings consist primarily of FHLB advances, senior notes, subordinated notes, junior subordinated debentures and a note payable.
The senior notes, subordinated notes, junior subordinated debentures contain affirmative covenants that require the Company to:
−Removed: maintain its and its subsidiaries’
−Removed: legal entity and tax status, pay its income tax obligations on a timely basis, and comply with SEC and FDIC reporting requirements.
+Added: maintain its and its subsidiaries’ legal entity and tax status, pay its income tax obligations on a timely basis, and comply with SEC and FDIC reporting requirements.
Federal Home Loan Bank borrowings
2 unchanged sentences
Qualified collateral, as defined, primarily consists of mortgage-backed securities and loans receivable that are required to be free and clear of liens and encumbrances, and may not be pledged for any other purposes.
−Removed: As of December 
−Removed: 2021, the Bank had $ 73.6 million of available borrowing capacity from the FHLB-B.
−Removed: FHLB-B advances are structured to facilitate the Bank’s management of its balance sheet and liquidity requirements.
−Removed: At December 
−Removed: 2021 and 2020, outstanding advances from the FHLB-B aggregated $ 90.0 million and $ 90.0 million, respectively.
−Removed: PATRIOT NATIONAL BANCORP, INC.
−Removed: AND SUBSIDIARIES
−Removed: Notes to consolidated financial statements
−Removed: At December 
−Removed: 2021, advances of $ 90.0 million outstanding bore fixed rates of interest ranging from 2.40 % to 4.23 % with maturities ranging from 1.5 years to 2.7 years.
−Removed: The FHLB-B advances with fixed interest rates have a weighted average interest rate of 3.26 %.
−Removed: Included in the fixed rate advances are three  advances totaling $ 60.0 million, callable by the FHLB quarterly through October 2023.
−Removed: At December 
−Removed: 2021, collateral for FHLB-B borrowings consisted of a mixture of real estate loans and securities with book value of $ 240.0 million.
−Removed: Borrowing capacity under this line totaled $ 73.6 million at December 31, 2021.
+Added: As of December 31, 2022, the Bank had $ 67.2 million of available borrowing capacity from the FHLB-B.
+Added: FHLB-B advances are structured to facilitate the Bank’s management of its balance sheet and liquidity requirements.
+Added: At December 31, 2022 and 2021, outstanding advances from the FHLB-B aggregated $ 85.0 million and $ 90.0 million, respectively.
+Added: At December 31, 2022, FHLB-B advances of $ 85.0 million outstanding bore fixed rates of interest ranging from 2.40 % to 4.37 % with maturities ranging from 6 days to 1.71 years, and have a weighted average interest rate of 3.69 %.
+Added: At December 31, 2022, collateral for FHLB-B borrowings consisted of a mixture of real estate loans and securities with book value of $ 233.5 million.
+Added: Remaining borrowing capacity under this line totaled $ 67.2 million at December 31, 2022.
In addition, Patriot has a $ 2.0 million revolving line of credit with the FHLB-B.
−Removed: At December 
−Removed: 2021 and 2020, no funds had been borrowed under the line of credit.
−Removed: Interest expense incurred for FHLB-B borrowing for the year ended December 
−Removed: 2021, 2020 and 2019 were $ 3.0 million, $ 2.7 million and $ 2.2 million, respectively.
+Added: At December 31, 2022 and 2021, no funds had been borrowed under the line of credit.
+Added: Interest expense incurred for FHLB-B borrowing for the year ended December 31, 2022, 2021 and 2020 were $ 3.5 million, $ 3.0 million and $ 2.7 million, respectively.
Correspondent Bank - Lines of Credit
Patriot has entered into unsecured federal funds sweep and federal funds line of credit facility agreements with certain correspondent Banks.
−Removed: As of December 
−Removed: 2021 and 2020, borrowings available under the agreements totaled $ 5  million and $ 5  million, respectively.
+Added: As of December 31, 2022 and 2021, borrowings available under the agreements totaled $ 24.5 million and $ 5 million, respectively.
The purpose of the agreements is to provide a credit facility intended to satisfy overnight federal account balance requirements and to provide for daily settlement of FRB, ACH, and other clearinghouse transactions.
−Removed: There was no outstanding balance under the agreements at December 
−Removed: 2021 and 2020.
+Added: There was no outstanding balance under the agreements at December 31, 2022 and 2021.
No interest expense incurred in 2022, 2021 and 2020.
−Removed: Interest expense incurred for the year ended December 
−Removed: 31, 2019 was $ 2,000 .
Other Borrowing
−Removed: In August 2020, Patriot was approved to pledge commercial and industrial loans and leases, commercial real estate, construction loans and one -to- four family first lien loans under the Federal Reserve Bank of New York’s (“FRBNY”) Borrower-in-Custody program.
+Added: In August 2020, Patriot was approved to pledge commercial and industrial loans and leases, commercial real estate, construction loans and one-to-four family first lien loans under the Federal Reserve Bank of New York’s (“FRBNY”) Borrower-in-Custody program.
As of December 31, 2022, Patriot had pledged eligible loans with a book value of $ 19.9 million and a collateral value of $ 13.7 million as collateral to support borrowing capacity at the FRBNY.
There was no outstanding balance under the agreements as of December 31, 2022.
−Removed: On December 22, 2016, the Company issued $ 12 million of senior notes bearing interest at 7 % per annum (the “Senior Notes”).
−Removed: On November 17, 2021, the original maturity date of the Senior Notes was extended from December 22, 2021 to June 30, 2022.
−Removed: Interest on the Senior Notes is payable semi-annually on June 22 and December 22 of each year beginning on June 22, 2017.
−Removed: In connection with the issuance of the Senior Notes, the Company incurred $ 374,000 of costs, which are being amortized over the term of the Senior Notes to recognize a constant rate of interest expense.
−Removed: At December 
−Removed: 2021, the debt issuance cost was fully amortized.
−Removed: As of December 31, 2020, unamortized debt issuance cost of $ 73,000 was deducted from the face amount of the Senior Notes included in the consolidated balance sheet.
−Removed: The Senior Notes are unsecured, rank equally with all other senior obligations of the Company, are not redeemable nor may they be put to the Company by the holders of the notes, and require no payment of principal until maturity.
−Removed: For the year ended December 
−Removed: 2021, 2020 and 2019, the Company recognized interest expense of $ 913,000 , $ 915,000 and $ 915,000 , respectively, at an effective rate of 7.6 %, which amount is greater than the stated interest rate on the Senior Notes due to debt issuance cost amortization expense of $ 73,000 , $ 75,000 and $ 75,000 , respectively.
−Removed: As of December 
−Removed: 2021 and 2020, $ 23,000 and $ 23,000 of interest has been included in the consolidated balance sheet in accrued expenses and other liabilities, respectively.
+Added: On December 22, 2016, the Company issued $ 12 million of senior notes (“2016 Senior Notes”) bearing interest at 7 % per annum.
+Added: On November 17, 2021, the original maturity date of the Senior Notes were extended from December 22, 2021 to June 30, 2022.
PATRIOT NATIONAL BANCORP, INC.
1 unchanged sentence
Notes to consolidated financial statements
+Added: On June 22, 2022, the Company amended and restated the Senior Notes.
+Added: The maturity date of the Senior Notes were further extended to December 31, 2022, and the interest rate increases from (i) 7 % to 7.25 % from July 1, 2022 until September 30, 2022 and (ii) from 7.25 % to 7.50 % thereafter.
+Added: The Senior Notes were repaid in December 2022.
+Added: On December 21, 2022, the Company completed an issuance and sale of $ 12 million in aggregate principal amount of 8.50 % fixed rate Senior Notes due January 15, 2026 (“2022 Senior Notes”).
+Added: In connection with the issuance of the Senior Notes, the Company incurred $ 360,000 of costs, which are being amortized over the term of the 2022 Senior Notes to recognize a constant rate of interest expense.
+Added: As of December 31, 2022, unamortized debt issuance cost of $ 360,000 was deducted from the face amount of the Senior Notes included in the consolidated balance sheet.
+Added: The 2022 Senior Note Purchase Agreement contains certain customary representations, warranties, and covenants made by each of the Company and the Purchasers.
+Added: The 2022 Senior Notes are not subject to any sinking fund and are not convertible into or exchangeable for any other securities or assets of the Company or any of its subsidiaries.
+Added: The 2022 Senior Notes are not subject to redemption at the option of the holders.
+Added: Principal and interest on the 2022 Senior Notes are subject to acceleration only in limited circumstances.
+Added: The 2022 Senior Notes are an unsecured, unsubordinated obligation and ranks equally in right of payment to all of the Company’s existing and future unsecured indebtedness, liabilities and other obligations that are not subordinated in right of payment to the Senior Note, and will be effectively subordinated to any of the Company’s existing and future secured indebtedness, to the extent of the value of the collateral securing such indebtedness.
+Added: The 2022 Senior Notes are the obligations of the Company only and are not obligations of, and are not guaranteed by, any of the Company’s affiliates.
+Added: For the year ended December 31, 2022, 2021 and 2020, the Company recognized interest expense of $ 866,000 , $ 913,000 and $ 915,000 , respectively, and the debt issuance cost amortization expense was $ 0 , $ 73,000 and $ 75,000 , respectively.
+Added: As of December 31, 2022 and 2021, $ 28,000 and $ 23,000 of interest has been included in the consolidated balance sheet in accrued expenses and other liabilities, respectively.
Subordinated notes
−Removed: On June 29, 2018, the Company entered into certain subordinated note purchase agreements with two institutional accredited investors and completed a private placement of $ 10 million of fixed-to-floating rate subordinated notes with the maturity date of September 
−Removed: 30, 2028 (the “Subordinated Notes”) pursuant to Section 4 (a)( 2 ) of the Securities Act of 1933, as amended, and Rule 506 (b) of Regulation D promulgated thereunder.
−Removed: The Subordinated Notes initially bear interest at 6.25 % per annum, from and including June 
−Removed: 2018, to but excluding, June 
−Removed: 2023, payable semi-annually in arrears.
−Removed: From and including June 
−Removed: 30, 2023, until but excluding June 
−Removed: 30, 2028 or an early redemption date, the interest rate shall reset quarterly to an interest rate per annum equal to the then current three -month LIBOR (but not less than zero ) plus 332.5 basis points, payable quarterly in arrears.
−Removed: The Company may, at its option, beginning on June 
−Removed: 30, 2023 and on any scheduled interest payment date thereafter, redeem the Subordinated Notes.
+Added: On June 29, 2018, the Company entered into certain subordinated note purchase agreements with two institutional accredited investors and completed a private placement of $ 10 million of fixed-to-floating rate subordinated notes with the maturity date of September 30, 2028 (the “Subordinated Notes”) pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended, and Rule 506(b) of Regulation D promulgated thereunder.
+Added: The Subordinated Notes initially bear interest at 6.25 % per annum, from and including June 29, 2018, to but excluding, June 30, 2023, payable semi-annually in arrears.
+Added: From and including June 30, 2023, until but excluding June 30, 2028 or an early redemption date, the interest rate shall reset quarterly to an interest rate per annum equal to the then current three-month LIBOR (but not less than zero) plus 332.5 basis points, payable quarterly in arrears.
+Added: The Company may, at its option, beginning on June 30, 2023 and on any scheduled interest payment date thereafter, redeem the Subordinated Notes.
Interest on the Subordinated Notes is payable beginning on December 30, 2018.
−Removed: In connection with the issuance of the Subordinated Notes, the Company incurred $ 291,000 of debt issuance costs, which are being amortized over the term of the Subordinated Notes to recognize a constant rate of interest expense.
−Removed: December 
−Removed: 2021 and 2020, $ 189,000 and $ 218,000 of unamortized debt issuance costs have been deducted from the face amount of the Subordinated Notes included in the consolidated balance sheet, respectively.
−Removed: For the year ended December 
−Removed: 2021, 2020 and 2019, the Company recognized interest expense of $ 654,000 , $ 654,000 and $ 656,000 , respectively.
+Added: In connection with the issuance of the Subordinated Notes, the Company incurred $ 291,000 of debt issuance costs, which are being amortized over the term of the Subordinated Notes to recognize a constant rate of interest expense.
+Added: At December 31, 2022 and 2021, $ 160,000 and $ 189,000 of unamortized debt issuance costs have been deducted from the face amount of the Subordinated Notes included in the consolidated balance sheet, respectively.
+Added: For the year ended December 31, 2022, 2021 and 2020, the Company recognized interest expense of $ 654,000 , $ 654,000 and $ 654,000 , respectively.
Junior subordinated debt owed to unconsolidated trust
−Removed: In 2003, the Patriot National Statutory Trust I (“the Trust”), which has no independent assets and is wholly-owned by the Company, issued $ 8.0 million of trust preferred securities.
+Added: In 2003, the Patriot National Statutory Trust I (“the Trust”), which has no independent assets and is wholly-owned by the Company, issued $ 8.0 million of trust preferred securities.
The proceeds, net of a $ 240,000 placement fee, were invested in junior subordinated debentures issued by the Company, which invested the proceeds in the Bank.
The Bank used the proceeds to fund its operations.
−Removed: Trust preferred securities currently qualify for up to 25 % of the Company’s Tier I Capital, with the excess qualifying as Tier 2 Capital.
+Added: Trust preferred securities currently qualify for up to 25 % of the Company’s Tier I Capital, with the excess qualifying as Tier 2 Capital.
+Added: PATRIOT NATIONAL BANCORP, INC.
+Added: AND SUBSIDIARIES
+Added: Notes to consolidated financial statements
The junior subordinated debentures are unsecured obligations of the Company.
1 unchanged sentence
In addition to its obligations under the junior subordinated debentures and in conjunction with the Trust, the Company issued an unconditional guarantee of the trust preferred securities.
−Removed: The junior subordinated debentures bear interest at three -month LIBOR plus 3.15 % ( 3.37 % at December 
−Removed: 2021 ) and mature on March 26, 2033, at which time the principal amount borrowed will be due.
+Added: The junior subordinated debentures bear interest at three-month LIBOR plus 3.15 % ( 7.79 % at December 31, 2022) and mature on March 26, 2033, at which time the principal amount borrowed will be due.
Beginning in the second quarter of 2009, the Company opted to defer payment of quarterly interest on the junior subordinated debentures for 20 consecutive quarters.
2 unchanged sentences
The placement fee of $ 240,000 is amortized and included as a component of the periodic interest expense on the junior subordinated debentures, in order to produce a constant rate of interest expense.
−Removed: For the years ended December 
−Removed: 2021, 2020 and 2019, $ 9,000 , $ 8,000 and $ 8,000 of debt placement fee amortization has been included in interest expense recognized of $ 279,000 , $ 337,000 and $ 462,000 , respectively.
−Removed: As of December 
−Removed: 2021 and 2020, the unamortized placement fee deducted from the face amount of the junior subordinated debt owed to the unconsolidated trust amounted to $ 129,000 and $ 138,000 , respectively, and accrued interest on the junior subordinated debentures was $ 4,000 and $ 5,000 , respectively.
+Added: For the years ended December 31, 2022, 2021 and 2020, $ 9,000 , $ 9,000 and $ 8,000 of debt placement fee amortization has been included in interest expense recognized of $ 412,000 , $ 279,000 and $ 337,000 , respectively.
+Added: As of December 31, 2022 and 2021, the unamortized placement fee deducted from the face amount of the junior subordinated debt owed to the unconsolidated trust amounted to $ 120,000 and $ 129,000 , respectively, and accrued interest on the junior subordinated debentures was $ 9,000 and $ 4,000 , respectively.
At its option, exercisable on a quarterly basis, the Company may redeem the junior subordinated debentures from the Trust, which would then redeem the trust preferred securities.
−Removed: PATRIOT NATIONAL BANCORP, INC.
−Removed: AND SUBSIDIARIES
−Removed: Notes to consolidated financial statements
In September 2015, the Bank purchased the property in which its Fairfield, Connecticut branch is located for approximately $ 2.0 million, a property it had been leasing until that date.
The purchase price was primarily satisfied by issuing the seller a $ 2.0 million, nine-year , promissory note bearing interest at a fixed rate of 1.75 % per annum.
−Removed: As of December 
−Removed: 2021 and 2020, the note had a balance outstanding of $ 791,000 and $ 994,000 , respectively.
+Added: As of December 31, 2022 and 2021, the note had a balance outstanding of $ 585,000 and $ 791,000 , respectively.
The note matures in August 2024 and requires a balloon payment of approximately $ 234,000 .
The note is secured by a first Mortgage Deed and Security Agreement on the purchased property.
−Removed: Interest expenses incurred for the year ended December 
−Removed: 2021, 2020 and 2019 were $ 15,000 , $ 19,000 and $ 23,000 , respectively.
+Added: Interest expenses incurred for the year ended December 31, 2022, 2021 and 2020 were $ 12,000 , $ 15,000 and $ 19,000 , respectively.
+Added: PATRIOT NATIONAL BANCORP, INC.
+Added: AND SUBSIDIARIES
+Added: Notes to consolidated financial statements
Maturity of borrowings
−Removed: At December 
−Removed: 2021, the contractual maturities of the Company’s borrowings in future periods were as follows:
+Added: At December 31, 2022, the contractual maturities of the Company’s borrowings in future periods were as follows:
(In thousands)
−Removed: Year ending December 31,
−Removed: $ 12,000  
−Removed: 12,206  
−Removed: 60,000  
−Removed: 60,210  
−Removed: 30,000  
−Removed: 30,375  
−Removed: 10,000  
−Removed: 18,248  
+Added: Year ending December 31, FHLB
+Added: Borrowings Senior
+Added: Notes Subordinated
+Added: Payable Total
+Added: 2023 $ 55,000 $ — $ — $ — $ 210 $ 55,210
+Added: 2024 30,000 — — — 375 30,375
+Added: 2025 — — — — — —
+Added: 2026 — 12,000 — — — 12,000
+Added: 2027 — — — — — —
+Added: Thereafter — — 10,000 8,248 — 18,248
Total contractual maturities of borrowings 85,000 12,000 10,000 8,248 585 115,833
−Removed: 90,000  
−Removed: 12,000  
−Removed: 10,000  
−Removed: 121,039  
Unamortized debt issuance costs — ( 360 ) ( 160 ) ( 120 ) — ( 640 )
−Removed: ( 189 )  
−Removed: ( 129 )  
Balance of borrowings as of December 31, 2022 $ 85,000 $ 11,640 $ 9,840 $ 8,128 $ 585 $ 115,193
−Removed: $ 90,000  
−Removed: $ 12,000  
−Removed: $ 9,811  
−Removed: $ 8,119  
−Removed: $ 120,721  
Derivatives Not Designated in Hedge Relationships
2 unchanged sentences
Under a program, Patriot will execute interest rate swaps with commercial lending customers to facilitate their respective risk management strategies.
−Removed: These interest rate swaps with customers are simultaneously offset by interest rate swaps that Patriot executes with a third party, such that Patriot minimizes its net risk exposure resulting from such transactions.
−Removed: Because the interest rate swaps associated with this program do not meet the strict hedge accounting requirements, changes in the fair value of both the customer swaps and the offsetting swaps are recognized directly in earnings.
+Added: Patriot entered into total four interest rate swaps (“swaps”) in November 2018 and May 2019.
+Added: Two swaps are with a loan customer to provide a facility to mitigate the fluctuations in the variable rate on the respective loan.
+Added: The other two swaps are with an outside third party.
+Added: The customer interest rate swaps are matched in offsetting terms to the third party interest rate swaps, such that Patriot minimizes its net risk exposure resulting from such transactions.
+Added: Because the interest rate swaps associated with the program do not meet the strict hedge accounting requirements, changes in the fair value of both the customer swaps and the offsetting swaps are recognized directly in earnings.
The changes in the fair value of the swaps offset each other, except for the credit risk of the counterparties, which is determined by taking into consideration the risk rating, probability of default and loss given default for all counterparties.
−Removed: Patriot entered the two initial interest rate swaps under the program in November 2018;
−Removed: and another two swaps were entered into in May 2019.
−Removed: As of December 
−Removed: 2021 and 2020, Patriot had cash pledged for collateral on its interest rate swaps of $ 1.4 million and $ 1.4 million, respectively.
+Added: The swaps are reported at fair value in other assets or other liabilities on the consolidated balance sheets.
+Added: As of December 31, 2022 and 2021, Patriot had cash pledged for collateral on its interest rate swaps of $ 0.0 million and $ 1.4 million, respectively.
This collateral is included in other assets on the consolidated balance sheets.
−Removed: Patriot did not recognize any net gain or loss in other noninterest income on the consolidated statements of operations during the year ended December 31, 2021 and 2020.
−Removed: The Company recognized $ 30,000 gain on the swaps for the year ended December 31, 2019. 
+Added: Patriot did not recognize any net gain or loss in other non-interest income on the consolidated statements of operations during the year ended December 31, 2022, 2021 and 2020.
PATRIOT NATIONAL BANCORP, INC.
4 unchanged sentences
In April 2021, Patriot entered into an interest rate swap, which was designated as a cash flow hedge that effectively converted variable-rate receivable into fixed-rate receivable.
−Removed: The Company’s objectives in using the cash flow hedge are to add stability to interest receivable and to manage its exposure to contractually specified interest rate movements.
−Removed: Under the term of the swap contract, the Company hedged the cashflows associated with a pool of 1 -month LIBOR floating rate loans by converting a $ 50 million portion of that pool of loans into fixed rates with the swap.
+Added: The Company’s objectives in using the cash flow hedge are to add stability to interest receivable and to manage its exposure to contractually specified interest rate movements.
+Added: Under the term of the swap contract, the Company hedged the cash flows associated with a pool of 1-month LIBOR floating rate loans by converting a $ 50 million portion of that pool of loans into fixed rates with the swap.
The Bank received fixed and paid floating rate based on 1 month LIBOR for a 7-year rolling period beginning April 29, 2021.
4 unchanged sentences
The swap interest income is included in interest and fees on loans on the consolidated statements of operations.
−Removed: In addition, a gain of $ 512,000 was recognized from the termination of the interest rate swap cash flow hedge for the year ended December 31, 2021, which is included in other income on the consolidated statements of operations.
+Added: In addition, a gain of $ 512,000 was recognized from the termination of the interest rate swap cash flow hedge for the year ended December 31, 2021, which was included in other income on the consolidated statements of operations.
+Added: In 2022, no interest income was recognized.
The Company assesses the effectiveness of each hedging relationship by comparing the changes in cash flows of the derivative hedging instrument with the changes in cash flows of the designated hedged item or transaction.
2 unchanged sentences
The following table presents summary information regarding these derivatives for the periods presented (dollars in thousands):
−Removed: (In thousands)
+Added: (In thousands) Notional
+Added: Amount Maturity
+Added: (Years) Fixed Rate Variable
+Added: Rate Fair Value
December 31, 2022
Classified in Other Assets:
−Removed: Customer interest rate swap
−Removed: $ 4,843  
+Added: Customer interest rate swap $ 4,736 6.3 5.25 % 1 Mo.
LIBOR + 1.96 %
−Removed: Customer interest rate swap
+Added: Customer interest rate swap 1,363 6.5 4.38 % 1 Mo.
LIBOR + 2.00 %
Classified in Other Liabilities:
−Removed: 3rd party interest rate swap
−Removed: $ 4,843  
+Added: 3rd party interest rate swap $ 4,736 6.3 5.25 % 1 Mo.
LIBOR + 1.96 %
−Removed: 3rd party interest rate swap
+Added: 3rd party interest rate swap 1,363 6.5 4.38 % 1 Mo.
LIBOR + 2.00 %
1 unchanged sentence
Classified in Other Assets:
−Removed: Customer interest rate swap
−Removed: $ 4,911  
+Added: Customer interest rate swap $ 4,843 7.3 5.25 % 1 Mo.
LIBOR + 1.96 %
−Removed: Customer interest rate swap
+Added: Customer interest rate swap 1,398 7.5 4.38 % 1 Mo.
LIBOR + 2.00 %
Classified in Other Liabilities:
−Removed: 3rd party interest rate swap
−Removed: $ 4,911  
+Added: 3rd party interest rate swap $ 4,843 7.3 5.25 % 1 Mo.
LIBOR + 1.96 %
−Removed: 3rd party interest rate swap
+Added: 3rd party interest rate swap 1,398 7.5 4.38 % 1 Mo.
LIBOR + 2.00 %
3 unchanged sentences
For the year ended December 31, 2021, changes in the consolidated statements of comprehensive income related to interest rate derivatives designated as hedges of cash flows were as follows:
−Removed: (In thousands)
+Added: (In thousands) Year Ended
December 31, 2021
7 unchanged sentences
On January 1, 2019, the Company adopted ASU No.
−Removed: 2016 - 02 “Leases”
−Removed: (Topic 842 ) and all subsequent ASUs that modified Topic 842.
+Added: 2016-02 “Leases” (Topic 842) and all subsequent ASUs that modified Topic 842.
For the Company, Topic 842 primarily affected the accounting treatment for operating lease agreements in which the Company is the lessee.
−Removed: Patriot has eleven non-cancelable operating leases, including four Bank branch locations and four for administrative and operational space, two locations for ITM and ATM, and one equipment lease.
+Added: Patriot has eleven non-cancelable operating leases, including four Bank branch locations and four for administrative and operational space, two locations for an Interactive Teller Machine (“ITM”) and an automated teller machine (“ATM”), and one equipment lease.
The leases expire on various dates through 2032 and some include renewal options.
1 unchanged sentence
The last potential year the leases can be extended through 2037.
−Removed: All of our leases are classified as operating leases, and therefore, were previously not recognized on the Company’s consolidated balance sheets.
−Removed: With the adoption of Topic 842, operating lease agreements are required to be recognized on the consolidated balance sheets as a right-of-use (“ROU”) asset and a corresponding lease liability.
−Removed: Renew periods were included in the future cashflows for purposes of calculating the ROU and lease liability.
+Added: All of our leases are classified as operating leases, and therefore, were previously not recognized on the Company’s consolidated balance sheets.
+Added: With the adoption of Topic 842, operating lease agreements are required to be recognized on the consolidated balance sheets as a right-of-use (“ROU”) asset and a corresponding lease liability.
+Added: Renew periods were included in the future cash flows for purposes of calculating the ROU and lease liability.
The Company has no finance leases (previously referred to as a capital lease).
−Removed: ROU lease assets represent the Company’s right to use an underlying asset for the lease term and lease obligations represent the Company’s obligation to make lease payments arising from the lease.
+Added: ROU lease assets represent the Company’s right to use an underlying asset for the lease term and lease obligations represent the Company’s obligation to make lease payments arising from the lease.
Operating ROU lease assets and obligations are recognized at the commencement date based on the present value of lease payments over the lease term.
−Removed: As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments.
−Removed: The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option.
−Removed: As of December 
−Removed: 2021 and 2020, the Company recognized ROU assets of $ 2.6 million and $ 2.7 million, respectively, and lease liabilities of $ 2.8 million and $ 2.9 million, respectively.
+Added: As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments.
+Added: The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option.
+Added: As of December 31, 2022 and 2021, the Company recognized ROU assets of $ 2.2 million and $ 2.6 million, respectively, and lease liabilities of $ 2.4 million and $ 2.8 million, respectively.
ROU lease assets are included in other assets on the consolidated balance sheet.
6 unchanged sentences
The variable lease cost primarily represents variable payments such as common area maintenance and utilities, which are included in the occupancy and equipment expenses on the consolidated statements of operations.
−Removed: For the year ended December 
−Removed: 2021, the fixed lease costs and variable lease costs for the non-cancelable operating leases were $ 571,000 and $ 38,000 , respectively.
−Removed: For the year ended December 
−Removed: 2020, the fixed lease costs and variable lease costs for the non-cancelable operating leases were $ 565,000 and $ 38,000 , respectively.
For the year ended December 31, 2022, the fixed lease costs and variable lease costs for the non-cancelable operating leases were $ 582,000 and $ 39,000 , respectively.
+Added: For the year ended December 31, 2021, the fixed lease costs and variable lease costs for the non-cancelable operating leases were $ 571,000 and $ 38,000 , respectively.
+Added: For the year ended December 31, 2020, the fixed lease costs and variable lease costs for the non-cancelable operating leases were $ 565,000 and $ 38,000 , respectively.
PATRIOT NATIONAL BANCORP, INC.
1 unchanged sentence
Notes to consolidated financial statements
−Removed: The following is a maturity analysis of the operating lease liabilities as of December 
−Removed: (in thousands)
−Removed: Operating lease
+Added: The following is a maturity analysis of the operating lease liabilities as of December 31, 2022:
+Added: (in thousands) Operating lease
Years ending December 31,
+Added: Thereafter 830
Total undiscounted lease payments $ 2,739
−Removed: $ 3,238  
Less imputed interest ( 379 )
Present value of operating lease liabilities $ 2,360
−Removed: $ 2,777  
Operating lease right-of-use asset $ 2,223
−Removed: $ 2,639  
Year Ended December 31,
+Added: 2022 2021 2020
Operating lease cost $ 582 $ 571 $ 565
5 unchanged sentences
Weighted -average discount rate - operating leases 3.35 % 3.30 %
−Removed: 3.30 %  
As of December 31, 2022 and 2021, the undiscounted lease payments were $ 2.7 million and $ 3.2 million, respectively.
−Removed: The lease payments were not reduced by minimum sublease rentals of $ 812,000 and $ 1.7 million due in the future under non-cancelable subleases, respectively.
+Added: The lease payments were not reduced by minimum sublease rentals of $ 964,000 and $ 812,000 due in the future under non-cancelable subleases, respectively.
Rent expense for operating leases is recognized in earnings on a straight-line basis over the base term of the respective lease and is included in the consolidated statement of operations as a component of Occupancy and Equipment expense.
−Removed: For the years ended December 
−Removed: 2021, 2020 and 2019, total rent expense for cancellable and non-cancellable operating leases was $ 583,000 , $ 583,000 , and $ 636,000 , respectively.
−Removed: For the years ended December 
−Removed: 2021, 2020 and 2019, Patriot recognized gross rental income of $ 543,000 , $ 523,000 , and $ 589,000 offset by rental costs of $ 5,000 , $ 5,000 , and $ 5,000 , respectively.
+Added: For the years ended December 31, 2022, 2021 and 2020, total rent expense for cancellable and non-cancellable operating leases was $ 594,000 , $ 583,000 , and $ 583,000 , respectively.
+Added: For the years ended December 31, 2022, 2021 and 2020, Patriot recognized gross rental income of $ 566,000 , $ 543,000 , and $ 523,000 offset by rental costs of $ 5,000 , $ 5,000 , and $ 5,000 , respectively.
PATRIOT NATIONAL BANCORP, INC.
3 unchanged sentences
Employment Agreements
−Removed: The Company has a severance agreement for two Executive Vice Presidents that provides for severance equal to 12 months of current salary, if the EVP is terminated within 12 months of a change of control of Patriot.
+Added: The Company has a severance agreement for two Executive Vice Presidents that provides for severance equal to 12 months of current salary, if the Executive officer is terminated within 12 months of a change of control of Patriot.
Legal Matters
1 unchanged sentence
Management is of the opinion that the ultimate disposition of these routine legal matters will not have a material adverse effect on the consolidated financial condition, results of operations, or liquidity of Patriot.
−Removed: Following is a summary of the components of the federal and state income tax expense (benefit) for each of the years in the three -year period ended December 
−Removed: (In thousands)
−Removed: Year Ended December 31,
−Removed: $ ( 100 )  
−Removed: ( 14 )  
−Removed: ( 2,448 )  
−Removed: ( 2,121 )  
−Removed: ( 261 )  
−Removed: ( 323 )  
−Removed: Income tax benefit
−Removed: $ ( 81 )  
−Removed: $ ( 337 )  
−Removed: For each of the years in the three -year period ended December 
−Removed: 2021, the difference between the federal statutory income tax rate and Patriot’s effective income tax rate reconciles as follows:
−Removed: (In thousands)
−Removed: Year Ended December 31,
+Added: Following is a summary of the components of the federal and state income tax expense (benefit) for each of the years in the three-year period ended December 31, 2022.
+Added: (In thousands) Year Ended December 31,
+Added: 2022 2021 2020
+Added: Federal $ 44 $ — $ ( 100 )
+Added: State 62 180 86
+Added: 106 180 ( 14 )
+Added: Federal 1,117 1,860 ( 2,448 )
+Added: State 373 ( 2,121 ) 2,125
+Added: 1,490 ( 261 ) ( 323 )
+Added: Income tax expense (benefit) $ 1,596 $ ( 81 ) $ ( 337 )
+Added: For each of the years in the three-year period ended December 31, 2022, the difference between the federal statutory income tax rate and Patriot’s effective income tax rate reconciles as follows:
+Added: (In thousands) Year Ended December 31,
+Added: 2022 2021 2020
Income taxes at statutory Federal rate $ 1,629 $ 1,053 $ ( 873 )
−Removed: $ 1,053  
−Removed: $ ( 873 )  
State taxes, net of Federal benefit 343 404 ( 191 )
−Removed: ( 191 )  
+Added: Project expenses for merger and acquisition ( 383 ) 383 —
Deferred tax valuation allowance — ( 1,938 ) 1,938
−Removed: ( 1,938 )  
Reversal UTP on Federal DTA — — ( 1,132 )
−Removed: ( 1,132 )  
Nondeductible expenses ( 3 ) ( 10 ) 8
−Removed: ( 10 )  
−Removed: Project expenses for merger and acquisition
−Removed: ( 87 )  
−Removed: Income tax benefit
−Removed: $ ( 81 )  
−Removed: $ ( 337 )  
−Removed: The effective tax rate for the years ended December 
−Removed: 2021, 2020 and 2019 was ( 1.6 %), 8.1 %, and 24.2 %, respectively.
−Removed: The decrease in the effective tax rate for 2021 was primarily due to the full reversal of $ 1.9 million deferred tax asset valuation allowance recorded at December 31, 2020.
−Removed: There were no significant changes to the effective tax rate in 2019.
+Added: Other 10 27 ( 87 )
+Added: Income tax expense (benefit) $ 1,596 $ ( 81 ) $ ( 337 )
PATRIOT NATIONAL BANCORP, INC.
1 unchanged sentence
Notes to consolidated financial statements
+Added: The effective tax rate for the years ended December 31, 2022, 2021 and 2020 was 20.6 %, ( 1.6 )%, and 8.1 %, respectively.
+Added: The effective tax rate for 2022 was decreased by the reversal of project expenses.
+Added: The decrease in the effective tax rate for 2021 was primarily due to the full reversal of $ 1.9 million deferred tax asset valuation allowance recorded at December 31, 2020.
+Added: There were no significant changes to the effective tax rate in 2020.
Deferred Tax Assets and Liabilities
−Removed: The significant components of Patriot’s net deferred tax assets at December 
−Removed: 2021 and 2020 are presented below.
−Removed: (In thousands)
+Added: The significant components of Patriot’s net deferred tax assets at December 31, 2022 and 2021 are presented below.
+Added: (In thousands) December 31,
Deferred tax assets:
Federal NOL carryforward benefit $ 3,321 $ 3,605
−Removed: $ 3,605  
−Removed: $ 4,576  
NOL write-off for Sec 382 Limit ( 3,258 ) ( 3,258 )
−Removed: ( 3,258 )  
Capitalized cost temporary item 3,023 3,325
10 unchanged sentences
Gross deferred tax assets 16,488 12,862
−Removed: 12,862  
−Removed: 14,231  
−Removed: Less deferred taxasset valuation allowance
Total deferred tax assets $ 16,488 $ 12,862
−Removed: $ 12,862  
−Removed: $ 12,294  
Deferred tax liabilities:
Right-of-use assets ( 597 ) ( 709 )
−Removed: ( 709 )  
−Removed: Depreciation of premises and equipment  
+Added: Prepaid Expenses ( 337 ) —
+Added: Other ( 27 ) ( 7 )
Gross deferred tax liabilities ( 961 ) ( 716 )
−Removed: ( 716 )  
Net deferred tax asset $ 15,527 $ 12,146
−Removed: 12,146  
−Removed: 11,496  
−Removed: As of December 
−Removed: 2021, Patriot had available approximately $ 17.2 million of Federal net operating loss carryforwards (“NOL”) that is offset by $ 15.5 million in §382 limitations imposed by the Internal Revenue Code.
−Removed: Of the NOL of $ 17.2  million, approximately $ 15.8 million will expire between 2030 and 2033 and $ 1.4 million do not expire.
−Removed: Patriot has approximately $ 53.5 million of NOLs available for Connecticut tax purposes at December 
−Removed: 2021, which may be used to offset up to 50 % of taxable income in any year.
+Added: As of December 31, 2022, Patriot had available approximately $ 15.8 million of Federal net operating loss carryforwards (“NOL”) that is offset by $ 15.5 million in §382 limitations imposed by the Internal Revenue Code.
+Added: Of the NOL of $ 15.8 million, approximately $ 15.5 million will expire between 2030 and 2033 and $ 0.3 million do not expire.
+Added: Patriot has approximately $ 52.8 million of NOLs available for Connecticut tax purposes at December 31, 2022, which may be used to offset up to 50 % of taxable income in any year.
The NOLs will expire between 2030 and 2040.
9 unchanged sentences
The Company regularly reviews the deferred tax assets for recoverability based on historical taxable income, projected future taxable income, the expected timing of the reversals of existing temporary differences and prudent and feasible tax planning strategies.
−Removed: The Company’s judgments regarding future profitability may change due to many factors, including future market conditions and the ability to successfully execute its business plans.
+Added: The Company’s judgments regarding future profitability may change due to many factors, including future market conditions and the ability to successfully execute its business plans.
Should there be a change in the ability to recover deferred tax assets, the tax provision would increase or decrease in the period in which the assessment is changed.
−Removed: During December 31, 2021, Patriot fully reversed the valuation allowance of $ 1.9 million primarily against its deferred tax asset related to state net operating loss carryforwards.
For the year ended December 31, 2022, Patriot was in a cumulative income position.
2 unchanged sentences
Patriot used the average adjusted pre-tax income for the current and prior three years as the basis for objectively estimating future taxable income.
−Removed: Patriot will continue to evaluate the need for valuation allowances
+Added: Patriot will continue to evaluate the need for a valuation allowances.
Secondly, Patriot has a tax planning strategy available under ASC 740 that would be implemented to prevent a carry-forward state net operating losses from expiring.
The strategy consists of capitalizing loan costs to increase income and avoid state net operating losses from expiring unused.
−Removed: As of December 31, 2021, based on Patriot’s objective projection of future taxable income and tax planning, Patriot fully reversed the partial valuation allowance of $1.9 million recorded at December 31, 2020.
+Added: As of December 31, 2021, based on Patriot’s objective projection of future taxable income and tax planning, Patriot fully reversed the partial valuation allowance of $ 1.9 million recorded at December 31, 2020.
+Added: As of December 31, 2022, no valuation allowance was recorded.
Patriot will review the valuation allowance quarterly to determine if an adjustment, to either increase or decrease, the allowance is required.
2 unchanged sentences
The tax benefits recognized in the consolidated financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information.
−Removed: As of December 
−Removed: 2021 and 2020, the Bank did not record any uncertain tax position related to the utilization of certain federal net operating losses. At December 31, 2021 Patriot no longer has a liability for unrecognized tax benefits.
+Added: As of December 31, 2022 and 2021, the Bank did not record any uncertain tax position related to the utilization of certain federal net operating losses.
+Added: At December 31, 2022 and 2021, Patriot no longer has a liability for unrecognized tax benefits.
Additionally, Patriot has no pending or on-going audits in any tax jurisdiction.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
−Removed: (In thousands)
−Removed: Year Ended December 31,
+Added: (In thousands) Year Ended December 31,
+Added: 2022 2021 2020
Balance, beginning of year $ — $ — $ 1,220
−Removed: $ 1,220  
−Removed: $ 1,132  
Increases due to tax positions related to a prior year — — 65
Decreases to tax positions as a result of a lapse of statute — — ( 1,285 )
−Removed: ( 1,285 )  
Balance, end of year $ — $ — $ —
−Removed: $ 1,220  
−Removed: The Company’s policy is to recognize interest and penalties related to income tax matters in income tax expense.
−Removed: Patriot’s returns for tax years 2018 through 2021 are subject to examination by the IRS for U.S.
+Added: The Company’s policy is to recognize interest and penalties related to income tax matters in income tax expense.
+Added: Patriot’s returns for tax years 2019 through 2022 are subject to examination by the IRS for U.S.
Federal tax purposes and, for State tax purposes, by the Department of Revenue Services for the State of Connecticut and the State of New York Department of Taxation and Finance.
4 unchanged sentences
In 2011, the Company adopted the Patriot National Bancorp, Inc.
−Removed: 2012 Stock Plan (the “2012 Plan”).
+Added: 2012 Stock Plan (the “2012 Plan”).
The 2012 Plan was amended in 2020 and renamed as the Patriot National Bancorp, Inc.
−Removed: 2020 Restricted Stock Award Plan (the “2020 Plan”).
−Removed: A copy of the 2020 Plan was filed as Exhibit 10.1 to the Company’s Amendment No.
+Added: 2020 Restricted Stock Award Plan (the “2020 Plan”).
+Added: A copy of the 2020 Plan was filed as Exhibit 10.1 to the Company’s Amendment No.
1 to Annual Report on Form 10-K/A for the year ended December 31, 2020 filed on April 30, 2021.
−Removed: The 2020 Plan provides an incentive to directors and employees of the Company by the grant of restricted stock awards (“RSA”).
−Removed: The 2020 Plan authorizes 3,000,000 shares of the Company’s common stock for issuance.
−Removed: As of December 
−Removed: 2021, 2,834,617 shares of stock are available for issuance under the Plan.
+Added: The 2020 Plan provides an incentive to directors and employees of the Company by the grant of restricted stock awards (“RSA”).
+Added: On November 10, 2022, the Board of Directors approved the Amendment and Restatement of the 2020 Plan (the “Amended and Restated 2020 Plan”), which was approved and ratified by shareholders of the Company on December 14, 2022.
+Added: The 2020 Plan was amended primarily to (i) reduce the total number of shares authorized for issuance thereunder from 3,000,000 shares to 400,000 shares;
+Added: and (ii) limit the maximum number of shares of Company’s Common Stock granted during a single fiscal year to any non-employee director, together with any cash fees paid to such director, to be no more than a total value of $ 300,000 .
+Added: As of December 31, 2022, 224,731 shares of stock are available for issuance under the Plan.
In accordance with the terms of the Plan, the vesting of RSAs may be accelerated at the discretion of the Compensation Committee of the Board of Directors.
1 unchanged sentence
RSAs granted to directors and employees generally vest in quarterly or annual installments over a three , four or five year period from the date of grant.
−Removed: The following is a summary of the status of the Company’s restricted share awards as of and for each of the years in the three -year period ended December 
−Removed: Shares Awarded
−Removed: Weighted Average
+Added: The following is a summary of the status of the Company’s restricted share awards as of and for each of the years in the three-year period ended December 31, 2022.
+Added: Shares Awarded Weighted Average
Unvested at December 31, 2019 21,470 $ 12.91
−Removed: 31,790  
−Removed: $ 14.06  
−Removed: $ 15.52  
−Removed: ( 19,995 )  
−Removed: $ 15.99  
+Added: Granted 12,484 $ 6.12
+Added: Vested ( 12,903 ) $ 13.82
+Added: Forfeited ( 2,553 ) $ 15.86
Unvested at December 31, 2020 18,498 $ 7.29
−Removed: 21,470  
−Removed: $ 12.91  
−Removed: 12,484  
−Removed: $ 6.12  
−Removed: ( 12,903 )  
−Removed: $ 13.82  
−Removed: ( 2,553 )  
−Removed: $ 15.86  
+Added: Granted 20,476 $ 10.48
+Added: Vested ( 12,920 ) $ 12.95
+Added: Forfeited ( 4,586 ) $ 9.39
Unvested at December 31, 2021 21,468 $ 6.48
−Removed: 18,498  
−Removed: $ 7.29  
−Removed: 20,476  
−Removed: $ 10.48  
−Removed: ( 12,920 )  
−Removed: $ 12.95  
−Removed: ( 4,586 )  
−Removed: $ 9.39  
+Added: Granted 9,886 $ 11.94
+Added: Vested ( 8,694 ) $ 11.05
Unvested at December 31, 2022 22,660 $ 7.11
−Removed: 21,468  
−Removed: $ 6.48  
The Company recognizes compensation expense for all director and employee share-based compensation awards on a straight-line basis over the requisite service period, which is equal to the vesting schedule of each award, for each vesting portion of an award equal to its grant date fair value.
−Removed: For the years ended December 
−Removed: 2021, 2020 and 2019, the Company recognized share-based compensation expense of $ 150,000 , $ 159,000 , and $ 214,000 , respectively.
−Removed: For the years ended December 
−Removed: 2021, 2020 and 2019, share-based compensation attributable to employees of Patriot amounted to $ 90,000 , $ 80,000 , and $ 117,000 , respectively.
−Removed: The share-based compensation expense attributable to Patriot’s external Directors for the years ended December 
−Removed: 2021, 2020, and 2019 was $ 60,000 , $ 79,000 , and $ 97,000 , respectively.
+Added: For the years ended December 31, 2022, 2021 and 2020, the Company recognized share-based compensation expense of $ 86,000 , $ 150,000 , and $ 159,000 , respectively.
+Added: For the years ended December 31, 2022, 2021 and 2020, share-based compensation attributable to employees of Patriot amounted to $ 32,000 , $ 90,000 , and $ 80,000 , respectively.
+Added: The share-based compensation expense attributable to Patriot’s external Directors for the years ended December 31, 2022, 2021, and 2020 was $ 54,000 , $ 60,000 , and $ 79,000 , respectively.
For each of those years, the Directors received total compensation of $ 248,000 , $ 325,000 , and $ 429,000 , respectively, which amounts are included in Other Operating Expenses in the consolidated statements of operations.
−Removed: Unrecognized compensation expense attributable to the unvested restricted shares outstanding as of December 
−Removed: 2021 amounted to $ 205,000 , which amount is expected to be recognized over the weighted average remaining life of the awards of 3.29 years.
PATRIOT NATIONAL BANCORP, INC.
1 unchanged sentence
Notes to consolidated financial statements
−Removed: Shareholders ’
−Removed: On December 16, 2009, the Company entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with PNBK Holdings, LLC, a limited liability company controlled by Michael Carrazza (“Holdings”).
−Removed: Pursuant to the Securities Purchase Agreement, on October 15, 2010, the Company issued 3.36 million shares of common stock to Holdings at $ 15.00 per share, for an aggregate issuance value of $ 50.4 million.
−Removed: The shares issued to Holdings represented 87.6 % of the Company’s then issued and outstanding common stock.
−Removed: In connection with the equity interest obtained by Holdings, Michael Carrazza became Patriot’s Chairman of the Board and nominees of Holdings replaced certain directors and officers who resigned.
−Removed: Additionally, the Company reduced the par value of its common stock from $ 2 to $ 0.01 per share, increased the number of its authorized common shares to 100 million.
+Added: Unrecognized compensation expense attributable to the unvested restricted shares outstanding as of December 31, 2022 amounted to $ 236,000 , which amount is expected to be recognized over the weighted average remaining life of the awards of 2.78 years.
+Added: Shareholders ’ Equity
+Added: On December 16, 2009, the Company entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with PNBK Holdings, LLC, a limited liability company controlled by Michael Carrazza (“Holdings”).
+Added: Pursuant to the Securities Purchase Agreement, on October 15, 2010, the Company issued 3,360,000 shares of common stock to Holdings at $ 15.00 per share, for an aggregate issuance value of $ 50.4 million.
+Added: The shares issued to Holdings represented 87.6 % of the Company’s then issued and outstanding common stock.
+Added: In connection with the equity interest obtained by Holdings, Michael Carrazza became Patriot’s Chairman of the Board and nominees of Holdings replaced certain directors and officers who resigned.
+Added: Additionally, the Company reduced the par value of its common stock from $ 2 to $ 0.01 per share, increased the number of its authorized common shares to 100,000,000 .
Pursuant to its Operating Agreement, on March 31, 2021, Holdings completed a pro-rata in-kind distribution of shares of restricted common stock of Patriot.
Following these distributions, Holdings no longer owns any shares of Patriot.
−Removed: The Company did not pay any dividends for the year ended December 31, 2021 and 2020 and has temporarily suspended dividend payments pending resolution of the economic uncertainties associated with the Coronavirus pandemic.
−Removed: For the year ended December 
−Removed: 2019, the Company paid cash dividends of $.01 per share of common stock, or an aggregate of $ 155,000 .
+Added: The Company did not pay any dividends for the year ended December 31, 2022, 2021, and 2020, and has suspended dividend payments.
Earnings per Share
8 unchanged sentences
Notes to consolidated financial statements
−Removed: The following is a summary of the computation of basic and diluted earnings per share for each of the years in the three -year period ended December 
−Removed: (Net income in thousands)
−Removed: Year ended December 31,
+Added: The following is a summary of the computation of basic and diluted earnings per share for each of the years in the three-year period ended December 31, 2022.
+Added: (Net income in thousands) Year ended December 31,
+Added: 2022 2021 2020
Basic earnings (loss) per share:
Net income (loss) attributable to Common shareholders $ 6,161 $ 5,094 $ ( 3,819 )
−Removed: $ 5,094  
−Removed: $ ( 3,819 )  
Weighted average shares outstanding 3,957,097 3,946,384 3,934,886
−Removed: 3,946,384  
−Removed: 3,934,886  
−Removed: 3,921,783  
Basic earnings (loss) per common share $ 1.56 $ 1.29 $ ( 0.97 )
−Removed: $ 1.29  
−Removed: $ ( 0.97 )  
Diluted earnings (loss) per share:
Net income (loss) attributable to Common shareholders $ 6,161 $ 5,094 $ ( 3,819 )
−Removed: ( 3,819 )  
Weighted average shares outstanding 3,957,097 3,946,384 3,934,886
−Removed: 3,946,384  
−Removed: 3,934,886  
−Removed: 3,921,783  
Effect of potentially dilutive restricted common shares 5,801 6,270 — (1)
Weighted average diluted shares outstanding 3,962,898 3,952,654 3,934,886
−Removed: 3,952,654  
−Removed: 3,934,886  
−Removed: 3,921,783  
Diluted earnings (loss) per common share $ 1.55 $ 1.29 $ ( 0.97 )
−Removed: $ 1.29  
−Removed: $ ( 0.97 )  
(1) The weighted average diluted shares outstanding does not include 3,039 anti-dilutive restricted common shares for the year ended December 31, 2020.
−Removed: The weighted average diluted shares outstanding does not include 3,555 anti-dilutive restricted common shares for the year ended December 31, 2019.
401(k) Savings Plan
3 unchanged sentences
Under the terms of the 401(k) Plan, participants can contribute up to the maximum amount allowed, subject to Federal limitations.
−Removed: At its discretion, Patriot may match eligible participating employee contributions at the rate of 50 % of the first 6 % of the participants’
−Removed: salary contributed to the 401 (k) Plan.
−Removed: Eligibility for matching contributions is dependent on an employee’s completing 6 consecutive month(s) of service or 500 hours of employment.
−Removed: Participants immediately vest in Patriot’s matching contributions, if applicable.
−Removed: During the years ended December 
−Removed: 2021, 2020, and 2019, Patriot made matching contributions to the 401 (k) Plan of $ 215,000 , $ 253,000 , and $ 251,000 , respectively.
+Added: At its discretion, Patriot may match eligible participating employee contributions at the rate of 50 % of the first 6 % of the participants’ salary contributed to the 401(k) Plan.
+Added: Eligibility for matching contributions is dependent on an employee’s completing 6 consecutive month(s) of service or 500 hours of employment.
+Added: Participants immediately vest in Patriot’s matching contributions, if applicable.
+Added: During the years ended December 31, 2022, 2021, and 2020, Patriot made matching contributions to the 401(k) Plan of $ 251,000 , $ 215,000 , and $ 253,000 , respectively.
PATRIOT NATIONAL BANCORP, INC.
11 unchanged sentences
Management believes that it effectively mitigates the credit risk of these financial instruments through its credit approval processes, establishing credit limits, monitoring the on-going creditworthiness of recipients and grantees, and the receipt of collateral as deemed necessary.
−Removed: At December 
−Removed: 2021 and 2020, financial instruments with credit risk are as follows:
+Added: At December 31, 2022 and 2021 , financial instruments with credit risk are as follows:
(In thousands) 2022 2021
1 unchanged sentence
Unused lines of credit $ 100,986 $ 68,341
−Removed: $ 68,341  
−Removed: $ 61,622  
Undisbursed construction loans 12,000 18,594
−Removed: 18,594  
−Removed: 25,232  
Home equity lines of credit 26,878 16,396
−Removed: 16,396  
−Removed: 19,240  
Future loan commitments 14,365 23,486
−Removed: 23,486  
−Removed: 15,696  
Financial standby letters of credit 78 164
−Removed: $ 126,981  
−Removed: $ 122,394  
+Added: $ 154,307 $ 126,981
Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract.
3 unchanged sentences
Collateral held varies, but may include commercial property, residential property, deposits, and securities.
−Removed: The Bank has established a reserve for credit loss of $ 8,000 and $ 8,000 as of December 
−Removed: 2021 and 2020, respectively.
+Added: The Bank has established a reserve for credit loss of $ 8,000 and $ 8,000 as of December 31, 2022 and 2021, respectively.
Standby letters of credit are written commitments issued by the Bank to guarantee the performance of a customer to a third party.
5 unchanged sentences
Regulatory and Operational Matters
−Removed: In November 2018, the Bank entered into a formal written agreement (the “Agreement”) with the OCC.  Pursuant to the terms of the Agreement, the Bank has appointed a Compliance Committee of three independent outside directors and one member of management responsible for monitoring adherence to the Agreement and has appointed a Lead Independent Director.
−Removed: The Agreement states the Board and Bank would develop, implement and revise written documents and policies related to executive compensation, conflict of interest, internal audit, liquidity and asset/liability management, commercial loan administration, leveraged lending, practices relating to the allowance for loan and lease losses, and assumptions used in the Bank’s interest rate risk model.
−Removed: Under the Agreement the Bank agreed to provide a revised written 3 -year strategic and capital plan for the Bank. 
−Removed: The Bank provided the documents and policies requested in the Agreement.
−Removed: The existence of this agreement also resulted in increased supervision from the SBA with respect to the Bank’s SBA division and the loss of its preferred lender status.
−Removed: On September 1, 2021, the OCC terminated the Agreement concluding that the safety and soundness of the Bank and its now established compliance with laws and regulations does not require continued existence of the Agreement.
−Removed: Shortly after the termination of the formal agreement, the SBA removed increased supervision.
−Removed: The Bank applied for reinstatement of its preferred lender status which was granted before December 31, 2021.
Federal and state regulatory authorities have adopted standards requiring financial institutions to maintain increased levels of capital.
−Removed: Effective January 1, 2015, federal banking agencies imposed four minimum capital requirements on a community bank’s risk-based capital ratios consisting of Total Capital, Tier 1 Capital, Common Equity Tier 1 ( “CET1”
−Removed: ) Capital, and a Tier 1 Leverage Capital ratio.
+Added: Effective January 1, 2015, federal banking agencies imposed four minimum capital requirements on a community bank’s risk-based capital ratios consisting of Total Capital, Tier 1 Capital, Common Equity Tier 1 (“CET1”) Capital, and a Tier 1 Leverage Capital ratio.
The risk-based capital ratios measure the adequacy of a bank's capital against the riskiness of its on- and off-balance sheet assets and activities.
6 unchanged sentences
Capital adequacy is one of the most important factors used to determine the safety and soundness of individual banks and the banking system.
−Removed: A community bank which meets the leverage ratio requirement and other CBLR framework requirements will not be subject to other capital and leverage requirements and will be considered “well capitalized.”
+Added: A community bank which meets the leverage ratio requirement, and other CBLR framework requirements will not be subject to other capital and leverage requirements and will be considered “well capitalized.”
In September 2021, the Bank elected to adopt the CBLR framework.
−Removed: The Bank’s Tier 1 leverage ratio as of December 31, 2021 and 2020 was 9.9 % and 9.8 %, respectively, which satisfied the “greater than 9 percent”
−Removed: leverage ratio requirement under the CBLR framework.
−Removed: Management continuously assesses the adequacy of the Bank’s capital in order to maintain its “well capitalized”
−Removed: The Bank’s Community Bank Leverage Ratio regulatory capital amounts and ratios at December 
−Removed: 2021 and 2020 are summarized as follows:
−Removed: (In thousands)
+Added: The Bank’s Tier 1 leverage ratio as of December 31, 2022 and 2021 was 9.3 % and 9.9 %, respectively, which satisfied the “greater than 9 percent” leverage ratio requirement under the CBLR framework.
+Added: Management continuously assesses the adequacy of the Bank’s capital in order to maintain its “well capitalized” status.
+Added: The Bank’s Community Bank Leverage Ratio regulatory capital amounts and ratios at December 31, 2022 and 2021 are summarized as follows:
+Added: (In thousands) December 31,
Patriot Bank, N.A.
+Added: Amount Ratio Amount Ratio
Tier 1 Leverage Capital (to average assets):
−Removed: $ 93,923  
−Removed: 9.86 %  
−Removed: $ 87,844  
−Removed: 9.79 %  
+Added: Actual $ 100,267 9.27 % $ 93,923 9.86 %
To be Well Capitalized 97,388 9.00 % (1) $ 85,773 9.00 % (1)
−Removed: 85,773  
−Removed: 9.00 %  
−Removed: 80,721  
−Removed: 9.00 %  
(1) Leverage Capital Ratio greater than 9% is considered well-capitalized under the CBLR Framework.
1 unchanged sentence
Such categorization of capital adequacy only applies to insured depository institutions - the Bank.
+Added: Related Party Transactions
+Added: In the normal course of business, the Company grants loans to executive officers, directors and members of their immediate families, as defined, and to entities in which these individuals have more than a 10 % equity ownership.
+Added: No related party loans were outstanding as of December 31, 2022 and 2021.
+Added: As of December 31, 2022 and 2021, deposits from related parties aggregated $ 64,000 and $ 58,000 , respectively.
PATRIOT NATIONAL BANCORP, INC.
1 unchanged sentence
Notes to consolidated financial statements
−Removed: Related Party Transactions
−Removed: In the normal course of business, the Company grants loans to executive officers, directors and members of their immediate families, as defined, and to entities in which these individuals have more than a 10 % equity ownership.
−Removed: The transactions are completed under the same terms applied to transaction with unrelated third parties.
−Removed: No related party loan was outstanding as of December 31, 2021.
−Removed: As of December 31, 2020 one loan of $ 100,000 was outstanding for one member of Board of Director.
−Removed: As of December 
−Removed: 2021 and 2020, deposits by related parties aggregated $ 58,000 and $ 189,000 , respectively.
Fair Value and Interest Rate Risk
1 unchanged sentence
The carrying values of certain assets and liabilities are measured at fair value on a recurring basis, such as available-for-sale securities;
−Removed: while other assets and liabilities are measured at fair value on a non-recurring basis due to external factors requiring management’s judgment to estimate potential losses of value resulting in asset impairments or the establishment of valuation reserves.
+Added: while other assets and liabilities are measured at fair value on a non-recurring basis due to external factors requiring management’s judgment to estimate potential losses of value resulting in asset impairments or the establishment of valuation reserves.
Measuring assets and liabilities at fair value may result in fluctuations to carrying value that have a significant impact on the results of operations or other comprehensive income for the period and period over period.
−Removed: Following is a detailed summary of the guidance provided by US GAAP regarding the application of fair value measurements and Patriot’s application thereof.
+Added: Following is a detailed summary of the guidance provided by US GAAP regarding the application of fair value measurements and Patriot’s application thereof.
Additionally, the following information includes detailed summaries of the effects fair value measurements have on the carrying amounts of asset and liabilities presented in the consolidated financial statements.
3 unchanged sentences
The three levels of the fair value hierarchy consist of:
−Removed: Unadjusted quoted market prices for identical assets or liabilities in active markets that the entity has the ability to access at the measurement date (such as active exchange-traded equity securities and certain U.S.
+Added: Level 1 Unadjusted quoted market prices for identical assets or liabilities in active markets that the entity has ability to access at the measurement date (such as active exchange-traded equity securities and certain U.S.
and government agency debt securities).
−Removed: Observable inputs other than quoted prices included in Level 1, such as:
+Added: Level 2 Observable inputs other than quoted prices included in Level 1, such as:
- Quoted prices for similar assets or liabilities in active markets (such as U.S.
4 unchanged sentences
interest rates, yield curves, prepayment speeds, default rates, etc.).
−Removed: Valuation techniques that require unobservable inputs that are supported by little or no market activity and are significant to the fair value measurement of the asset or liability (such as pricing and discounted cash flow models that typically reflect management’s estimates of the assumptions a market participant would use in pricing the asset or liability).
−Removed: PATRIOT NATIONAL BANCORP, INC.
−Removed: AND SUBSIDIARIES
−Removed: Notes to consolidated financial statements
+Added: Level 3 Valuation techniques that require unobservable inputs that are supported by little or no market activity and are significant to the fair value measurement of the asset or liability (such as pricing and discounted cash flow models that typically reflect management’s estimates of the assumptions a market participant would use in pricing the asset or liability).
A description of the valuation methodologies used for assets and liabilities recorded at fair value, and for estimating fair value for financial and non-financial instruments not recorded at fair value, is set forth below.
4 unchanged sentences
The fair value of securities available-for-sale (carried at fair value) are determined by obtaining quoted market prices on nationally recognized securities exchanges (Level 1), or matrix pricing (Level 2), which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted market prices for the specific securities, but rather by relying on the securities' relationship to other benchmark quoted prices, or using unobservable inputs employing various techniques and assumptions (Level 3).
+Added: PATRIOT NATIONAL BANCORP, INC.
+Added: AND SUBSIDIARIES
+Added: Notes to consolidated financial statements
Other Investments
−Removed: The Bank’s investment portfolio includes the Solomon Hess SBA Loan Fund, which is utilized by the Bank to satisfy its Community Reinvestment Act (“CRA”) lending requirements.
−Removed: As this fund operates as a private fund, shares in the fund are not publicly traded but may be redeemed with 60 days’
−Removed: notice at cost.
−Removed: For that reason, the carrying amount was considered comparable to fair value at both December 
−Removed: 2021 and 2020 due to its short-term nature.
+Added: The Bank’s investment portfolio includes the Solomon Hess SBA Loan Fund, which is utilized by the Bank to satisfy its Community Reinvestment Act (“CRA”) lending requirements.
+Added: As this fund operates as a private fund, shares in the fund are not publicly traded but may be redeemed with 60 days’ notice at cost.
+Added: For that reason, the carrying amount was considered comparable to fair value at both December 31, 2022 and 2021 due to its short-term nature.
Federal Reserve Bank Stock and Federal Home Loan Bank Stock
12 unchanged sentences
Due to the significant unobservable input related to the servicing rights, the SBA servicing asset is classified within Level 3 of the valuation hierarchy.
−Removed: Other Real Estate Owned
−Removed: The fair value of OREO the Bank may obtain is based on current appraised property value less estimated costs to sell.
−Removed: When fair value is based on unadjusted current appraised value, OREO is classified within Level 
−Removed: 2 of the fair value hierarchy.
−Removed: Patriot classifies OREO within Level 3 of the fair value hierarchy when unobservable inputs are used to determine adjustments to appraised values.
−Removed: Patriot does not record OREO at fair value on a recurring basis, but rather initially records OREO at fair value on a non-recurring basis and then monitors property and market conditions that may indicate a change in value is warranted.
−Removed: PATRIOT NATIONAL BANCORP, INC.
−Removed: AND SUBSIDIARIES
−Removed: Notes to consolidated financial statements
Derivative asset (liability) - Interest Rate Swaps
−Removed: The Company’s derivative assets and liabilities consist of transactions as part of management’s strategy to manage interest rate risk.
+Added: The Company’s derivative assets and liabilities consist of transactions as part of management’s strategy to manage interest rate risk.
The valuation of interest rate swap agreements does not contain any counterparty risk.
−Removed: The valuation of the Company’s interest rate swaps is obtained from a third -party pricing service and is determined using a discounted cash flow analysis on the expected cash flows of each derivative.
+Added: The valuation of the Company’s interest rate swaps is obtained from a third-party pricing service and is determined using a discounted cash flow analysis on the expected cash flows of each derivative.
The pricing analysis is based on observable inputs for the contractual terms of the derivatives, including the period to maturity and interest rate curves.
4 unchanged sentences
Patriot does not record deposits at fair value on a recurring basis.
+Added: PATRIOT NATIONAL BANCORP, INC.
+Added: AND SUBSIDIARIES
+Added: Notes to consolidated financial statements
Senior Notes, Subordinated Notes, Junior Subordinated Debt and Note Payable
2 unchanged sentences
The carrying value is considered comparable to fair value.
−Removed: Patriot does not record subordinated notes issued in June 2018 at fair value on a recurring basis.
+Added: Patriot does not record subordinated notes at fair value on a recurring basis.
The fair value of the subordinated notes was estimated by discounting future cash flows at rates at which similar notes would be made.
7 unchanged sentences
Off-balance-sheet financial instruments
−Removed: Off-balance-sheet financial instruments are based on interest rate changes and fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties’
−Removed: credit standing.
+Added: Off-balance-sheet financial instruments are based on interest rate changes and fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties’ credit standing.
The off-balance-sheet financial instruments (i.e., commitments to extend credit) are insignificant and are not recorded on a recurring basis.
2 unchanged sentences
Notes to consolidated financial statements
−Removed: The following table provides a comparison of the carrying amounts and estimated fair values of Patriot’s financial assets and liabilities as of December 
−Removed: 2021 and 2020:
−Removed: (In thousands)
−Removed: December 31, 2021
−Removed: December 31, 2020
+Added: The following table provides a comparison of the carrying amounts and estimated fair values of Patriot’s financial assets and liabilities as of December 31, 2022 and 2021:
+Added: (In thousands) December 31, 2022 December 31, 2021
+Added: Hierarchy Carrying
+Added: Amount Estimated
+Added: Fair Value Carrying
+Added: Amount Estimated
Financial Assets:
−Removed: Cash and noninterest bearing balances due from banks
−Removed: $ 3,264  
−Removed: $ 3,264  
−Removed: $ 3,006  
−Removed: $ 3,006  
−Removed: Interest-bearing deposits due from banks
−Removed: 43,781  
−Removed: 43,781  
−Removed: 31,630  
−Removed: 31,630  
−Removed: Available-for-sale securities
−Removed: 81,161  
−Removed: 81,161  
−Removed: 49,262  
−Removed: 49,262  
−Removed: Available-for-sale securities
−Removed: 13,180  
−Removed: 13,180  
−Removed: Other investments
−Removed: Federal Reserve Bank stock
−Removed: Federal Home Loan Bank stock
−Removed: Loans receivable, net
−Removed: 729,583  
−Removed: 727,733  
−Removed: 719,596  
−Removed: 716,822  
−Removed: Loans held for sale
−Removed: SBA servicing assets
−Removed: Other real estate owned
−Removed: Accrued interest receivable
−Removed: Interest rate swap receivable
+Added: Cash and noninterest bearing balances due from banks Level 1 $ 5,182 $ 5,182 $ 3,264 $ 3,264
+Added: Interest-bearing deposits due from banks Level 1 33,311 33,311 43,781 43,781
+Added: Available-for-sale securities Level 2 75,093 75,093 81,161 81,161
+Added: Available-for-sale securities Level 3 9,427 9,427 13,180 13,180
+Added: Other investments Level 2 4,450 4,450 4,450 4,450
+Added: Federal Reserve Bank stock Level 2 2,627 2,627 2,843 2,843
+Added: Federal Home Loan Bank stock Level 2 3,874 3,874 4,184 4,184
+Added: Loans receivable, net Level 3 838,006 818,960 729,583 727,733
+Added: Loans held for sale Level 2 5,211 5,534 3,129 3,506
+Added: SBA servicing assets Level 3 886 1,013 584 617
+Added: Accrued interest receivable Level 2 7,267 7,267 5,822 5,822
+Added: Interest rate swap receivable Level 2 203 203 738 738
Financial assets, total $ 985,537 $ 966,941 $ 892,719 $ 891,279
−Removed: $ 892,719  
−Removed: $ 891,279  
−Removed: $ 826,476  
−Removed: $ 823,887  
Financial Liabilities:
−Removed: Demand deposits
−Removed: $ 226,713  
−Removed: $ 226,713  
−Removed: $ 158,676  
−Removed: $ 158,676  
−Removed: Savings deposits
−Removed: 109,744  
−Removed: 109,744  
−Removed: 98,635  
−Removed: 98,635  
−Removed: Money market deposits
−Removed: 164,518  
−Removed: 164,518  
−Removed: 146,389  
−Removed: 146,389  
−Removed: 34,741  
−Removed: 34,741  
−Removed: 30,529  
−Removed: 30,529  
−Removed: Time deposits
−Removed: 195,830  
−Removed: 195,048  
−Removed: 210,140  
−Removed: 210,882  
−Removed: Brokered deposits
−Removed: 17,016  
−Removed: 17,003  
−Removed: 41,287  
−Removed: 41,643  
−Removed: FHLB borrowings
−Removed: 90,000  
−Removed: 93,643  
−Removed: 90,000  
−Removed: 97,293  
−Removed: 12,000  
−Removed: 12,045  
−Removed: 11,927  
−Removed: 12,028  
−Removed: Subordinated debt
−Removed: 10,125  
−Removed: Junior subordinated debt owed to unconsolidated trust
−Removed: Accrued interest payable
−Removed: Interest rate swap liability
+Added: Demand deposits Level 2 $ 269,636 $ 269,636 $ 226,713 $ 226,713
+Added: Savings deposits Level 2 71,002 71,002 109,744 109,744
+Added: Money market deposits Level 2 211,000 211,000 164,518 164,518
+Added: Negotiable order of withdrawal accounts Level 2 34,440 34,440 34,741 34,741
+Added: Time deposits Level 2 225,670 221,353 195,830 195,048
+Added: Brokered deposits Level 1 48,698 47,684 17,016 17,003
+Added: FHLB borrowings Level 2 85,000 83,853 90,000 93,643
+Added: Senior notes Level 2 11,640 11,103 12,000 12,045
+Added: Subordinated debt Level 2 9,840 9,680 9,811 9,947
+Added: Junior subordinated debt owed to unconsolidated trust Level 2 8,128 8,128 8,119 8,119
+Added: Note payable Level 3 585 544 791 775
+Added: Accrued interest payable Level 2 585 585 343 343
+Added: Interest rate swap liability Level 2 203 203 738 738
Financial liabilities, total $ 976,427 $ 969,211 $ 870,364 $ 873,377
−Removed: $ 870,364  
−Removed: $ 873,377  
−Removed: $ 808,228  
−Removed: $ 817,066  
−Removed: The carrying amount of cash and noninterest bearing balances due from banks, interest-bearing deposits due from banks, and demand deposits approximates fair value, due to the short-term nature and high turnover of these balances.
+Added: The carrying amount of cash and non-interest-bearing balances due from banks, interest-bearing deposits due from banks, and demand deposits approximates fair value, due to the short-term nature and high turnover of these balances.
These amounts are included in the table above for informational purposes.
3 unchanged sentences
In the normal course of its operations, Patriot assumes interest rate risk (i.e., the risk that general interest rate levels will fluctuate).
−Removed: As a result, the fair value of Patriot’s financial assets and liabilities are affected when interest market rates change, which change may be either favorable or unfavorable.
+Added: As a result, the fair value of Patriot’s financial assets and liabilities are affected when interest market rates change, which change may be either favorable or unfavorable.
Management attempts to mitigate interest rate risk by matching the maturities of its financial assets and liabilities.
3 unchanged sentences
Additionally, management mitigates its overall interest rate risk through its available funds investment strategy.
−Removed: The following tables detail the financial assets measured at fair value on a recurring basis and the valuation techniques utilized relative to the fair value hierarchy, as of December 
−Removed: 2021 and 2020.
−Removed: (In thousands)
−Removed: Quoted Prices in
+Added: The following tables detail the financial assets measured at fair value on a recurring basis and the valuation techniques utilized relative to the fair value hierarchy, as of December 31, 2022 and 2021.
+Added: (In thousands) Quoted Prices in
Active Markets for
Identical Assets
+Added: (Level 1) Significant
Observable Inputs
+Added: (Level 2) Significant
Unobservable Inputs
+Added: (Level 3) Total
December 31, 2022:
Government agency and mortgage-backed securities $ — $ 59,046 $ — $ 59,046
−Removed: $ 66,629  
−Removed: $ 66,629  
Corporate bonds — 5,228 9,427 14,655
−Removed: 13,180  
−Removed: 16,921  
Subordinated notes — 4,602 — 4,602
2 unchanged sentences
Available-for-sale securities $ — $ 75,093 $ 9,427 $ 84,520
−Removed: $ 81,161  
−Removed: $ 13,180  
−Removed: $ 94,341  
Interest rate swap receivable $ — $ 203 $ — $ 203
2 unchanged sentences
Government agency and mortgage-backed securities $ — $ 66,629 $ — $ 66,629
−Removed: $ 16,833  
−Removed: $ 16,833  
Corporate bonds — 3,741 13,180 16,921
−Removed: 17,290  
−Removed: 17,290  
Subordinated notes — 4,626 — 4,626
2 unchanged sentences
Available-for-sale securities $ — $ 81,161 $ 13,180 $ 94,341
−Removed: $ 49,262  
−Removed: $ 49,262  
Interest rate swap receivable $ — $ 738 $ — $ 738
−Removed: $ 1,187  
−Removed: $ 1,187  
Interest rate swap liability $ — $ 738 $ — $ 738
−Removed: $ 1,187  
−Removed: $ 1,187  
Patriot measures certain financial assets and financial liabilities at fair value on a non-recurring basis.
When circumstances dictate (e.g., impairment of long-lived assets, other than temporary impairment of collateral value), the carrying values of such financial assets and financial liabilities are adjusted to fair value or fair value less costs to sell, as may be appropriate.
−Removed: As of December 31, 2021, four corporate bonds purchased in the fourth quarter of 2021, were classified as Level 3 instruments.
−Removed: The fair values of these securities were determined using a present value approach.
−Removed: The discount rate assumed was determined based on unobservable inputs in a pricing model.
−Removed: During the year ended December 
−Removed: 2021 and 2020, the Company had no transfers into or out of Levels 1, 2 or 3.
PATRIOT NATIONAL BANCORP, INC.
1 unchanged sentence
Notes to consolidated financial statements
−Removed: The reconciliation of the beginning and ending balances during 2021 for Level 3 available-for-sale securities is as follows:
−Removed: (In thousands)
−Removed: December 31, 2021
+Added: As of December 31, 2022, four corporate bonds purchased in 2021, were classified as Level 3 instruments.
+Added: The fair values of these securities were determined using a present value approach.
+Added: The discount rate assumed was determined based on unobservable inputs in a pricing model.
+Added: During the years ended December 31, 2022, 2021 and 2020, the Company had no transfers into or out of Levels 1, 2 or 3.
+Added: The reconciliation of the beginning and ending balances for Level 3 available-for-sale securities for the years ended December 31, 2022 and 2021 is as follows:
+Added: (In thousands) Year Ended December 31,
Level 3 fair value, beginning of year $ 13,180 $ —
−Removed: 14,000  
+Added: Purchases — 14,000
Realized gain (loss) — —
2 unchanged sentences
Level 3 fair value, end of year $ 9,427 $ 13,180
−Removed: $ 13,180  
−Removed: The table below presents the valuation methodology and unobservable inputs for level 3 assets measured at fair value on a non-recurring basis as of December 
−Removed: 2021 and 2020:
−Removed: (In thousands)
−Removed: Unobservable Inputs
−Removed: Range of Inputs
+Added: The table below presents the valuation methodology and unobservable inputs for level 3 assets measured at fair value on a non-recurring basis as of December 31, 2022 and 2021:
+Added: (In thousands) Fair Value Valuation
+Added: Methodology Unobservable Inputs Range of Inputs
December 31, 2022:
−Removed: Impaired loans, net
−Removed: $ 20,920  
−Removed: Real Estate Appraisals
−Removed: Discount for appraisal type
−Removed: 5.8 % - 20 %  
−Removed: SBA servicing assets
−Removed: Discounted Cash Flows
−Removed: Market discount rates
−Removed: 14.73 % - 14.90 %  
+Added: Impaired loans, net $ 12,873 Real Estate Appraisals Discount for appraisal type 5.8 % - 20 %
+Added: SBA servicing assets 1,013 Discounted Cash Flows Market discount rates 14.73 % - 14.90 %
December 31, 2021:
−Removed: Impaired loans, net
−Removed: $ 22,971  
−Removed: Real Estate Appraisals
−Removed: Discount for appraisal type
−Removed: 5.8 % - 20 %  
−Removed: Other Real Estate Owned
−Removed: Real Estate Appraisals
−Removed: Discount for appraisal type
−Removed: 5.84 %  
−Removed: SBA servicing assets
−Removed: Discounted Cash Flows
−Removed: Market discount rates
−Removed: 14.73 % - 14.90 %  
+Added: Impaired loans, net $ 20,920 Real Estate Appraisals Discount for appraisal type 5.8 % - 20 %
+Added: SBA servicing assets 617 Discounted Cash Flows Market discount rates 14.73 % - 14.90 %
Patriot discloses fair value information about financial instruments, whether or not recognized in the consolidated balance sheet, for which it is practicable to estimate that value.
Certain financial instruments are excluded from disclosure requirements and, accordingly, the aggregate fair value amounts presented do not necessarily represent the complete underlying value of financial instruments included in the consolidated financial statements.
−Removed: The estimated fair value amounts have been measured as of December 
−Removed: 2021 and 2020 and have not been reevaluated or updated for purposes of these consolidated financial statements subsequent to those respective dates.
+Added: The estimated fair value amounts have been measured as of December 31, 2022 and 2021 and have not been reevaluated or updated for purposes of these consolidated financial statements subsequent to those respective dates.
As such, the estimated fair values of the financial instruments measured may be different than if they had been subsequently valued.
−Removed: The information presented should not be interpreted as an estimate of the total fair value of Patriot’s assets and liabilities, since only a portion of Patriot’s assets and liabilities are required to be measured at fair value for financial reporting purposes.
−Removed: Due to the wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between Patriot’s fair value disclosures and those of other bank holding companies may not be meaningful.
+Added: The information presented should not be interpreted as an estimate of the total fair value of Patriot’s assets and liabilities, since only a portion of Patriot’s assets and liabilities are required to be measured at fair value for financial reporting purposes.
+Added: Due to the wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between Patriot’s fair value disclosures and those of other bank holding companies may not be meaningful.
PATRIOT NATIONAL BANCORP, INC.
5 unchanged sentences
December 31, 2022 and 2021
−Removed: (In thousands)
−Removed: As of December 31,
+Added: (In thousands) As of December 31,
Cash and due from banks $ 11 $ 377
Investment in subsidiary 89,533 96,799
−Removed: 96,799  
−Removed: 91,836  
−Removed: $ 97,325  
−Removed: $ 93,488  
+Added: Other assets 50 149
+Added: Total assets $ 89,594 $ 97,325
LIABILITIES AND SHAREHOLDERS' EQUITY
−Removed: $ 29,930  
−Removed: $ 29,819  
+Added: Borrowings $ 29,608 $ 29,930
Accrued expenses and other liabilities 403 51
Shareholders' equity 59,583 67,344
−Removed: 67,344  
−Removed: 63,219  
Total liabilities and shareholders' equity $ 89,594 $ 97,325
−Removed: $ 97,325  
−Removed: $ 93,488  
CONDENSED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
Years Ended December 31, 2022, 2021 and 2020
−Removed: (In thousands)
−Removed: Year ended December 31,
+Added: (In thousands) Year ended December 31,
+Added: 2022 2021 2020
Interest on subordinated debt $ 1,078 $ 941 $ 1,001
4 unchanged sentences
Benefit for income taxes ( 550 ) ( 540 ) ( 532 )
−Removed: ( 540 )  
−Removed: ( 532 )  
Loss before equity in undistributed net income of subsidiary 1,481 1,487 1,543
Equity in undistributed net income (loss) of subsidiary 7,642 6,581 ( 2,276 )
−Removed: ( 2,276 )  
Net income (loss) 6,161 5,094 ( 3,819 )
−Removed: ( 3,819 )  
−Removed: Equity in subsidiary other comprehensive income, net of subsidiary
−Removed: ( 1,119 )  
−Removed: ( 115 )  
−Removed: Total comprehensive income (loss)
−Removed: $ 3,975  
−Removed: $ ( 3,934 )  
+Added: Equity in subsidiary other comprehensive loss, net of subsidiary ( 14,008 ) ( 1,119 ) ( 115 )
+Added: Total comprehensive (loss) income $ ( 7,847 ) $ 3,975 $ ( 3,934 )
PATRIOT NATIONAL BANCORP, INC.
3 unchanged sentences
Years Ended December 31, 2022, 2021 and 2020
−Removed: (In thousands)
−Removed: Year ended December 31,
+Added: (In thousands) Year ended December 31,
+Added: 2022 2021 2020
Cash Flows from Operating Activities:
Net income (loss) $ 6,161 $ 5,094 $ ( 3,819 )
−Removed: $ 5,094  
−Removed: $ ( 3,819 )  
−Removed: Adjustments to reconcile net income to net cash provided by (used in) operating activities:
−Removed: Equity in undistributed income of subsidiary
−Removed: ( 6,581 )  
+Added: Adjustments to reconcile net income to net cash used in operating activities:
+Added: Equity in undistributed net income (loss) of subsidiary ( 7,642 ) ( 6,581 ) 2,276
Dividends received from Patriot Bank, N.A.
+Added: 900 500 2,000
Share-based compensation expense 86 150 159
2 unchanged sentences
Decrease (increase) in other assets 99 955 ( 540 )
−Removed: ( 540 )  
−Removed: (Increased) decrease in accrued expenses and other liabilities
−Removed: ( 399 )  
−Removed: ( 315 )  
+Added: Decrease in accrued expenses and other liabilities ( 8 ) ( 399 ) ( 315 )
Net cash used in operating activities ( 366 ) ( 170 ) ( 127 )
−Removed: ( 170 )  
−Removed: ( 127 )  
Cash Flows from Investing Activities:
2 unchanged sentences
Cash Flows from Financing Activities:
−Removed: Dividends paid on common stock
+Added: Proceeds from issuance of senior notes 12,000 — — —
+Added: Repayments of senior notes ( 12,000 ) — — —
Net cash used in financing activities — — —
Net decrease in cash and cash equivalents ( 366 ) ( 171 ) ( 119 )
−Removed: ( 171 )  
−Removed: ( 119 )  
Cash and cash equivalents at beginning of year $ 377 $ 548 $ 667
2 unchanged sentences
Cash paid for interest $ 1,897 $ 1,570 $ 1,776
−Removed: $ 1,570  
−Removed: $ 1,776  
−Removed: $ 1,593  
−Removed: Cash paid for income taxes
+Added: Supplemental Disclosure of Non-cash Activity:
+Added: Deferred debt issuance costs $ 360 $ — $ —
PATRIOT NATIONAL BANCORP, INC.
2 unchanged sentences
Subsequent Event
−Removed: As noted in Note 8, PNBK entered into an Agreement and Plan of Merger dated November 14, 2021 ( the “Original Merger Agreement”), with American Challenger, and Next Special, Inc., a Delaware corporation and wholly owned subsidiary of PNBK (“Merger Sub”) (“American Challenger”, and together with PNBK and Merger Sub, the “Parties”).
−Removed: On January 28, 2022, the Parties entered into Amendment No.
−Removed: 1 (“Amendment No.
−Removed: ) to the Original Merger Agreement, in connection with a commercial loan portfolio acquisition.
−Removed: Under a loan purchase agreement, American Challenger agreed to acquire a commercial loan portfolio, with at least $650 million in unpaid principal balance, from a financial services firm and certain of its affiliates (“Sellers”).
−Removed: Under Amendment No.
−Removed: 1, PNBK agreed that immediately following (a) the Merger, (b) the consummation of the Capital Raise, and (c) the time that all conditions precedent related to the consummation of the commercial loan portfolio acquisition, shall have been satisfied or waived, that it will pay to Sellers:
−Removed: (i) the purchase price for the commercial loan portfolio using cash proceeds received in the Capital Raise and (ii) a structuring and advisory fee estimated to be $ 6.5 million plus a reimbursement fee for cash compensation to be paid by Sellers to certain specified employees not to exceed $ 7.8 million plus certain deferred compensation forfeited by such employees with the Sellers in connection with the loan portfolio acquisition not to exceed $ 4.7 million (collectively, the “Additional Payment Amount”), either in cash or by issuing to Sellers warrants for the purchase of PNBK non-voting common stock up to 1,132,000 shares, with one share of PNBK non-voting common stock for every $ 17.69 of the Additional Payment Amount being allocated to the warrants issuable to Sellers.
−Removed: In addition, to the extent that any such employee does not accept employment with American Challenger, following the closing of the Merger, PNBK agreed to pay a monthly fee for up to 18 months equal, for each such employee who does not accept employment with American Challenger, to the total annual deferred compensation offered to such employee by American Challenger divided by eighteen.
−Removed: On February 28, 2022, the Parties entered into Amendment No.
−Removed: 2 (“Amendment No.
−Removed: 2 ) to the Original Merger Agreement.
−Removed: Amendment No.
−Removed: 2 revised the Merger structure to provide that (i) American Challenger will merge with and into PNBK, so that PNBK is the surviving entity in the Merger and American Challenger ceases to exist, (ii) Next Special, Inc.
−Removed: ceased to be a party to the Merger Agreement and (iii) all references to Next Special, Inc.
−Removed: as the “Merger Sub”
−Removed: were removed from the Merger Agreement.
−Removed: federal income tax purposes, it is intended that the Merger qualify as a “reorganization”
−Removed: described in Section 368 (a) of the Internal Revenue Code of 1986, as amended (the “Code”) and, taken together with the Capital Raise as an “exchange”
−Removed: described in Section 351 of the Code.
−Removed: As a result of the proximity of the definitive purchase to the date these consolidated financial statements are available to be issued, Patriot is still evaluating the estimated fair values of the assets to be acquired and the liabilities to be assumed.
−Removed: Accordingly, the amount of any goodwill and other intangible assets to be recognized in the connection with this transaction, as well as acquisition costs incurred and expected to be incurred, are also yet to be determined.
+Added: On March 10, 2023, Silicon Valley Bank Santa Clara, CA was closed by the California Department of Financial Protection & Innovation which appointed the Federal Deposit Insurance Corporation (FDIC) as Receiver.
+Added: To protect depositors, on March 13, 2023, the FDIC transferred all the deposits, both insured and uninsured, of Silicon Valley Bank to Silicon Valley Bridge Bank, N.A.
+Added: a full-service 'bridge bank' that will be operated by the FDIC as it markets the institution to potential bidders.
+Added: The initial FDIC actions created concerns among depositors, investors, and other bank stakeholders that the banking system could be subject to an overall drain on liquidity.
+Added: The Company has no current direct investment in or contractual relationships with Silicon Valley Bank or its holding company.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.