What changed in PATRIOT NATIONAL BANCORP INC's 2023 10-K compared to 2022?

Across the narrative sections we track, PATRIOT NATIONAL BANCORP INC (PNBK) added 172 paragraphs, removed 188, and edited 111 between the 2022 and 2023 10-K filings. The biggest movers are Item 7. Management's Discussion & Analysis (+103/−104), Item 1A. Risk Factors (+37/−48), Item 1. Business (+22/−23).

Did PATRIOT NATIONAL BANCORP INC add new Risk Factors in the 2023 10-K?

Yes — Item 1A Risk Factors shows 37 new/edited paragraphs and 48 removed paragraphs versus the 2022 10-K.

What changed in PATRIOT NATIONAL BANCORP INC's MD&A (Item 7) in 2023?

Item 7 Management's Discussion & Analysis shows 103 new/edited paragraphs and 104 removed paragraphs year-over-year. Read the side-by-side diff to see exactly which revenue, margin, and outlook commentary was rewritten.

Did PATRIOT NATIONAL BANCORP INC's Legal Proceedings (Item 3) change in 2023?

Item 3 shows 1 added/edited paragraphs and 1 removed paragraphs — usually indicating new litigation disclosed or settled cases removed.

Where does this PNBK 10-K diff come from?

The source filings are PATRIOT NATIONAL BANCORP INC's official 2022 and 2023 Form 10-K annual reports from SEC EDGAR. 10q10k.net parses each filing, aligns paragraphs by section (Item 1, 1A, 1C, 2, 3, 7, 7A), and highlights every added, removed and edited sentence side-by-side.

What changed in PATRIOT NATIONAL BANCORP INC's 10-K — 2022 vs 2023

Paragraph-level year-over-year comparison of PATRIOT NATIONAL BANCORP INC's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+172 added−188 removedSource: 10-K (2024-04-01) vs 10-K (2023-03-29)

Top changes in PATRIOT NATIONAL BANCORP INC's 2023 10-K

172 paragraphs added · 188 removed · 111 edited across 8 sections

Item 7. Management's Discussion & Analysis+103 / −104 · 63 edited
Item 1A. Risk Factors+37 / −48 · 28 edited
Item 1. Business+22 / −23 · 11 edited
Item 7A. Quantitative and Qualitative Disclosures About Market Risk+4 / −5 · 3 edited
Item 2. Properties+1 / −3 · 1 edited

Item 1. Business

Business — how the company describes what it does

11 edited+11 added−12 removed60 unchanged

2022 filing

2023 filing

Biggest changeThe larger financial institutions may also offer additional services such as trust and international banking, which the Bank is not equipped or authorized to offer directly. When the need arises, arrangements are made with correspondent financial institutions to provide such services.

Biggest changeThese include larger financial institutions with greater financial resources, larger branch systems and higher lending limits, as well as the ability to conduct larger advertising campaigns to attract business. The larger financial institutions may also offer additional services such as trust and international banking, which the Bank is not equipped or authorized to offer directly.

Financial reform legislation and the implementation of any rules ultimately issued could have adverse implications on the financial industry, the competitive environment, and the Bank’s ability to conduct business. In July 2013, the Fed, the FDIC, and the OCC approved final rules establishing a new comprehensive capital framework for U.S. Banking organizations (the “New Capital Rules”).

Financial reform legislation and the implementation of any rules ultimately issued could have adverse implications on the financial industry, the competitive environment, and the Bank’s ability to conduct business. Capital Requirements In July 2013, the Fed, the FDIC, and the OCC approved final rules establishing a new comprehensive capital framework for U.S. Banking organizations (the “New Capital Rules”).

The Bank has a total of nine branch offices comprised of eight branch offices located in Fairfield and New Haven Counties, Connecticut and one branch office located in Westchester County, New York as of December 31, 2022.

Consumer and commercial deposit accounts offered include: checking, interest‑bearing negotiable order of withdrawal (“NOW”), money market, time certificates of deposit, savings, prepaid deposit accounts, on-line national money market accounts, Certificate of Deposit Account Registry Service (“CDARS”), Individual Retirement Accounts (“IRAs”), and Health Savings Accounts (“HSAs”).

The CARES Act directed the federal banking agencies to issue an interim rule temporarily lowering the CBLR ratio to 8% which the agencies did with a transition back to 9% beginning January 1, 2022. At September 30, 2021, the Bank elected to adopt the CBLR framework.

The CARES Act directed the federal banking agencies to issue an interim rule temporarily lowering the CBLR ratio to 8% which the agencies did with a transition back to 9% beginning January 1, 2022. The Bank adopted the CBLR framework from September 30, 2021 to September 30, 2023.

Other services offered by the Bank include Automated Clearing House (“ACH”) transfers, lockbox, internet banking, bill paying, remote deposit capture, debit cards, money orders, traveler’s checks, and automatic teller machines (“ATMs”). In addition, the Bank may in the future offer other financial services.

The customer base of the Bank generally is meant to be diversified, so that there is not a concentration of either loans or deposits within a single industry, a group of industries, or a single person or groups of people.

The Bank also leverages a presence on social media and does a reasonable amount of advertising online. The customer base of the Bank generally is meant to be diversified, so that there is not a concentration of either loans or deposits within a single industry, a group of industries, or a single person or groups of people.

The Bank’s lending activities are conducted principally in Fairfield and New Haven Counties in Connecticut and Westchester County in New York, although the Bank’s loan business is not necessarily limited to these areas. The Bank previously had offered loans on residential real estate but discontinued doing so during 2013. Since 2016, Patriot has purchased residential real estate loans.

To attract business in this competitive environment, the Bank relies on local promotional activities, personal contact by officers and directors, customer referrals, and its ability to distinguish itself by offering personalized and responsive banking service. The Bank also leverages a presence on social media and does a reasonable amount of advertising online.

When the need arises, arrangements are made with correspondent financial institutions to provide such services. To attract business in this competitive environment, the Bank relies on local promotional activities, personal contact by officers and directors, customer referrals, and its ability to distinguish itself by offering personalized and responsive banking service.

Subsequent to January 1, 2022, all modifications to loan agreements will be evaluated in accordance with all applicable GAAP requirements. 6 Table of Contents Recent Developments with Regulators In November 2018 the Bank entered into a formal written agreement (the “Agreement”) with the Office of the OCC.

Recent Developments with Regulators In November 2018 the Bank entered into a formal written agreement (the “Agreement”) with the Office of the OCC.

The Bank previously had offered loans on residential real estate but discontinued doing so during 2013. Since 2016, Patriot has purchased residential real estate loans. Further information of the purchased residential real estate loans is set forth in Note 4 to the consolidated financial statements.

During 2023, the Bank began the process of establishing its own national mortgage origination business, with new originations expected to begin in early 2024. Further information of the purchased residential real estate loans is set forth in Note 4 to the consolidated financial statements.

Removed

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.

Added

In addition to traditional retail banking services, the Bank generates deposit balances through its digital payments division (DPD). The DPD works with fully vetted and approved program managers to serve as their co-partner in processing high-volume payment transactions. The business is an increasing source of lower cost deposit balances and non-interest income to the Bank.

Removed

Since the time of acquisition, the prepaid deposit balances have grown to approximately $197.3 million as of December 31, 2022 and provide a source of low cost deposits and interchange revenue. 2 Table of Contents The Bank’s branch office locations are summarized as follows: Branch No.

Added

Conditionally guaranteed or Government sponsored, U.S. federal government issues comprise the majority of the Bank’s investment portfolio. Employees As of December 31, 2023, Patriot had 117 full-time equivalent employees. None of Patriot’s employees are covered by a collective bargaining agreement. Competition The Bank competes with a variety of financial institutions for loans and deposits in its market area.

Removed

Conditionally guaranteed or Government sponsored, U.S. federal government issues comprise the majority of the Bank’s investment portfolio. Patriot became an approved lender under the SBA program at the end of 2017, enabling it to approve loans to small businesses and entrepreneurs more quickly and efficiently.

Added

In the fourth quarter of 2023, the Bank elected to shift to the use the risk-based capital framework. Under this framework, the Bank reports leverage and risk-based capital ratios and compares those ratios to its own internally designed risk-based capital policy.

Removed

Since 2018, Patriot has hired people to support new SBA business development in Stamford, Connecticut, Florida, Georgia, Ohio, along with a Rhode Island operations center. Employees As of December 31, 2022, Patriot had 130 full-time equivalent employees. None of Patriot’s employees are covered by a collective bargaining agreement.

Added

Federal regulations require FDIC-insured depository institutions, including national banks, to meet several minimum capital standards: a common equity Tier 1 capital to risk-based assets ratio of 5%, a Tier 1 capital to risk-based assets ratio of 6.0%, a total capital to risk-based assets ratio of 8% and a Tier 1 capital to total assets leverage ratio of 4%.

Removed

Competition The Bank competes with a variety of financial institutions for loans and deposits in its market area. These include larger financial institutions with greater financial resources, larger branch systems and higher lending limits, as well as the ability to conduct larger advertising campaigns to attract business.

Added

For purposes of the regulatory capital requirements, common equity Tier 1 capital is generally defined as common stockholders’ equity and retained earnings. Tier 1 capital is generally defined as common equity Tier 1 and Additional Tier 1 capital.

Removed

In response to disruptions in economic conditions caused by the COVID-19 pandemic, federal and state governments and agencies and government-sponsored enterprises have taken a variety of actions to support people and entities affected by the pandemic, including the passage of the CARES Act in March 2020, the Consolidated Appropriations Act, 2021 in December 2020, and the American Rescue Plan Act of 2021 in March 2021, among others.

Added

Additional Tier 1 capital generally includes certain noncumulative perpetual preferred stock and related surplus and minority interests in equity accounts of consolidated subsidiaries. Total capital includes Tier 1 capital (common equity Tier 1 capital plus Additional Tier 1 capital) and Tier 2 capital.

Removed

For example, the CARES Act established several programs with the Small Business Administration, including the Paycheck Protection Program (the “PPP”), to provide loans to small businesses. The Bank started participating in the PPP in January 2021.

Added

Tier 2 capital is comprised of capital instruments and related surplus meeting specified requirements, and may include cumulative preferred stock and long-term perpetual preferred stock, mandatory convertible securities, intermediate preferred stock and subordinated debt.

Removed

The CARES Act directed federal banking agencies to adopt interim final rules to lower the threshold under the CBLR from 9% to 8% and to provide a reasonable grace period for a community bank that falls below the threshold to regain compliance, in each case until the earlier of the termination date of the national emergency or December 31, 2020.

Added

Also included in Tier 2 capital is the allowance for credit losses limited to a maximum of 1.25% of risk-weighted assets and, for institutions that have exercised an opt-out election regarding the treatment of Accumulated Other Comprehensive Income (“AOCI”), up to 45% of net unrealized gains on available-for-sale equity securities with readily determinable fair market values.

Removed

In April 2020, the federal bank regulatory agencies issued two interim final rules implementing this directive. One interim final rule provided that, as of the second quarter 2020, banking organizations with leverage ratios of 8% or greater (and that met the other existing qualifying criteria) could elect to use the CBLR framework.

Added

Institutions that have not exercised the AOCI opt-out have AOCI incorporated into common equity Tier 1 capital (including unrealized gains and losses on available-for-sale securities). The Bank exercised the opt-out regarding the treatment of AOCI. Calculation of all types of regulatory capital is subject to deductions and adjustments specified in the regulations.

Removed

It also established a two-quarter grace period for qualifying community banking organizations whose leverage ratios fell below the 8% CBLR requirement, so long as the banking organization maintained a leverage ratio of 7% or greater. The second interim final rule provided a transition from the temporary 8% CBLR requirement to a 9% CBLR requirement.

Added

In addition to establishing the minimum regulatory capital requirements, regulations limit capital distributions and certain discretionary bonus payments to management if the institution does not hold a “capital conservation buffer” consisting of 2.5% of common equity Tier 1 capital to risk-weighted assets above the amount necessary to meet its minimum risk-based capital requirements.

Removed

It establishes a minimum CBLR of 8% for the second through fourth quarters of 2020, 8.5% for 2021, and 9% thereafter, and maintains a two-quarter grace period for qualifying community banking organizations whose leverage ratios fall no more than 100 basis points below the applicable CBLR requirement.

Added

The capital conservation buffer requirement was fully implemented at 2.5% on January 1, 2019. 6 Table of Contents At December 31, 2023, the Bank’s capital exceeded all applicable regulatory requirements, the Bank was considered well-capitalized under the prompt corrective action framework, as subsequently discussed, and it had a capital conservation buffer above the applicable requirement.

Removed

The CARES Act also provided financial institutions with the option to suspend certain GAAP requirements for coronavirus-related loan modifications that would otherwise constitute a TDR and further required the federal banking agencies to defer to financial institutions' determinations in making such suspensions, which was extended by the Consolidated Appropriations Act, 2021 until January 1, 2022.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

28 edited+9 added−20 removed73 unchanged

2022 filing

2023 filing

Biggest changeDuring 2010 through 2019, however, the economic climate generally improved, contributing to decreases in the Bank’s problem assets, delinquencies and foreclosures from the levels experienced in the earlier period of economic turbulence. During the course of the COVID-19 pandemic covering all of 2020 and a significant portion of 2021 and 2022, a temporary disruption and level of uncertainty existed.

Biggest changeDuring the course of the COVID-19 pandemic covering all of 2020 and a significant portion of 2021 and 2022, a temporary disruption and level of uncertainty existed. For a period of time, delinquencies, deferrals and problem assets rose, however foreclosures were relatively unaffected due to the moratorium that was issued by many states.

In particular: • Less than optimal economic conditions may continue to affect market confidence levels and may cause adverse changes in payment patterns, thereby causing increased delinquencies, which could affect the Bank’s provision for loan losses and charge-off of loans receivable. • The ability to assess the creditworthiness of the Bank’s customers, or to accurately estimate loan collateral value, may be impaired if the models and approaches the Bank uses becomes less predictive of future behaviors, valuations, assumptions, or estimates due to the unpredictable economic climate. • Increasing consolidation of financial services companies, as a result of current market conditions, could have unexpected adverse effects on the Bank’s ability to compete effectively.

In particular: • Less than optimal economic conditions may continue to affect market confidence levels and may cause adverse changes in payment patterns, thereby causing increased delinquencies, which could affect the Bank’s provision for credit losses and charge-off of loans receivable. • The ability to assess the creditworthiness of the Bank’s customers, or to accurately estimate loan collateral value, may be impaired if the models and approaches the Bank uses becomes less predictive of future behaviors, valuations, assumptions, or estimates due to the unpredictable economic climate. • Increasing consolidation of financial services companies, as a result of current market conditions, could have unexpected adverse effects on the Bank’s ability to compete effectively.

Prepaid deposits coming through the Payments Division will fluctuate on a daily basis based on standard business activity in the underlying customer accounts. Furthermore, changes to the underwriting guidelines for wholesale borrowings, or lending policies may limit or restrict Patriot’s ability to borrow, and could therefore have a significant adverse impact on its liquidity.

Deposits coming through the Payments Division will fluctuate on a daily basis based on standard business activity in the underlying customer accounts. Furthermore, changes to the underwriting guidelines for wholesale borrowings, or lending policies may limit or restrict Patriot’s ability to borrow, and could therefore have a significant adverse impact on its liquidity.

The deterioration of any of these conditions can adversely affect our securities and loan portfolios, our level of charge-offs and provision for loan losses, our capital levels, liquidity and our results of operations. In addition, we are affected by the economic conditions within our Connecticut and New York trade areas.

The deterioration of any of these conditions can adversely affect our securities and loan portfolios, our level of charge-offs and provision for credit losses, our capital levels, liquidity and our results of operations. In addition, we are affected by the economic conditions within our Connecticut and New York trade areas.

The Company is exposed to changes in economic conditions and general downturns in the U.S. economy, and particularly an economic slowdown in the Fairfield or New Haven counties of Connecticut and the New York metropolitan area could result in the following consequences, any of which may have a material detrimental effect on the Bank’s business: • Increases in: - Loan delinquencies; - Problem assets and foreclosures; or • Decreases in: - Demand for the Bank’s products and services; 8 Table of Contents - Customer borrowing power that is caused by declines in the value of assets and/or collateral supporting the Bank’s loans, especially real estate.

The Company is exposed to changes in economic conditions and general downturns in the U.S. economy, and particularly an economic slowdown in the Fairfield or New Haven counties of Connecticut and the New York metropolitan area could result in the following consequences, any of which may have a material detrimental effect on the Bank’s business: • Increases in: - Loan delinquencies; - Problem assets and foreclosures; or • Decreases in: - Demand for the Bank’s products and services; - Customer borrowing power that is caused by declines in the value of assets and/or collateral supporting the Bank’s loans, especially real estate.

Failing to keep pace with technological change could have a material adverse impact on the Bank’s business and therefore on Patriot’s financial condition and results of operations. 13 Table of Contents Regulatory, Compliance and Legal Risks Government regulation may have an adverse effect on Patriot ’ s profitability and growth.

Failing to keep pace with technological change could have a material adverse impact on the Bank’s business and therefore on Patriot’s financial condition and results of operations. 12 Table of Contents Regulatory, Compliance and Legal Risks Government regulation may have an adverse effect on Patriot ’ s profitability and growth.

Patriot’s reputation may be harmed, if it does not continue to comply with these laws, regulations and standards. 14 Table of Contents Competition Risks Strong competition in Patriot ’ s geographical market could limit growth and profitability. Competition in the banking and financial services industry is intense.

Patriot’s reputation may be harmed, if it does not continue to comply with these laws, regulations and standards. 13 Table of Contents Competition Risks Strong competition in Patriot ’ s geographical market could limit growth and profitability. Competition in the banking and financial services industry is intense.

While management believes that the allowance for loan and lease losses is currently adequate to cover inherent losses, further loan deterioration could occur, and therefore, management cannot assure shareholders that there will not be a need to increase the allowance for loan and lease losses, or that the regulators will not require management to increase this allowance.

While management believes that the allowance for credit losses is currently adequate to cover inherent losses, further loan deterioration could occur, and therefore, management cannot assure shareholders that there will not be a need to increase the allowance for credit losses, or that the regulators will not require management to increase this allowance.

The regulatory agencies may require the Bank to change classifications or grades on loans, increase the allowance for loan and lease losses by recognizing additional loan loss provisions, or to recognize further loan charge-offs based upon their judgments, which may differ from the Bank’s.

The regulatory agencies may require the Bank to change classifications or grades on loans, increase the allowance for credit losses by recognizing additional loan loss provisions, or to recognize further loan charge-offs based upon their judgments, which may differ from the Bank’s.

As a result, the Bank’s ability to recover on defaulted loans by selling the underlying real estate will be diminished, and the Bank will be more likely to suffer losses on defaulted loans. The Bank ’ s allowance for loan and lease losses may not be adequate to cover actual losses.

As a result, the Bank’s ability to recover on defaulted loans by selling the underlying real estate will be diminished, and the Bank will be more likely to suffer losses on defaulted loans. The Bank ’ s allowance for credit losses may not be adequate to cover actual losses.

Management does not anticipate an inability to maintain its compliance with the affirmative covenants contained in the senior notes and subordinated notes agreements as such compliance is inherent in the Bank’s continued operation and Patriot’s public company status, as well as management’s overall strategic plan. The Bank is subject to environmental liability risk associated with its lending activities.

Management does not anticipate an inability to maintain its compliance with the affirmative covenants contained in the senior notes and subordinated notes agreements as such compliance is inherent in the Bank’s continued operation and Patriot’s public company status, as well as management’s overall strategic plan. 11 Table of Contents The Bank is subject to environmental liability risk associated with its lending activities.

Maintaining the adequacy of the Bank’s allowance for loan and lease losses may require that the Bank make significant and unanticipated increases in the provision for loan losses, which would materially affect the results of operations and capital adequacy.

Maintaining the adequacy of the Bank’s allowance for credit losses may require that the Bank make significant and unanticipated increases in the provision for credit losses, which would materially affect the results of operations and capital adequacy.

Any increase in the allowance for loan and lease losses required by these regulatory agencies could have a negative effect on the Bank’s results of operations and financial condition.

Any increase in the allowance for credit losses required by these regulatory agencies could have a negative effect on the Bank’s results of operations and financial condition.

Like all financial institutions, the Bank maintains an allowance for loan and lease losses to provide for loan defaults and non-performance. The allowance for loan and lease losses is based on an evaluation of the risks associated with the Bank’s loans receivable, as well as the Bank’s prior loss experience.

Like all financial institutions, the Bank maintains an allowance for credit losses to provide for loan defaults and non-performance. The allowance for credit losses is based on an evaluation of the risks associated with the Bank’s loans receivable, as well as estimates of the current credit risks and future trends.

The dollar amount of future losses is susceptible to changes in economic, operating, and other conditions including changes in interest rates that may be beyond the Bank’s control and which losses may exceed current allowance estimates. Although the current economic environment has improved, conditions remain uncertain and may result in additional risk of loan losses.

Among other factors, the Company’s stock price may be affected by: • Operating results that vary from the expectations of securities analysts and investors; • Developments in its business or in the financial services sector in-general; • Regulatory or legislative changes affecting its business or the financial services sector in-general; • Operating results or securities price performance of companies that investors consider being comparable to the Company; • Changes in estimates or recommendations by securities analysts or rating agencies; • Announcements of strategic developments, acquisitions, dispositions, financings, and other material events by the Company or the Company’s competitors; and • Changes or volatility in global financial markets and economies, general market conditions, interest or foreign exchange rates, stock, commodity, credit, or asset valuations.

Per agreement with Bank regulators, dividends and return of capital from the Bank to the Company are subject to prior approval from the OCC, and dividends from the Company to third parties are also subject to prior approval from FRB.

The loss of mortgage and construction loan asset-value caused many financial institutions to seek additional capital, to merge with larger and financially stronger financial institutions and, in some cases, to fail. Many lenders and institutional investors reduced or ceased providing funding to borrowers, including other financial institutions.

Patriot’s primary sources of liquidity are the deposits the Bank acquires organically through its branch network and through the brokered deposit market, borrowed funds, primarily in the form of collateralized borrowings from the Federal Home Loan Bank, and the cash flows generated through the collection of loan payments and on mortgage-related securities.

Funds are also acquired through the brokered deposit market, borrowed funds, primarily in the form of collateralized borrowings from the Federal Reserve Bank and the Federal Home Loan Bank, and the cash flows generated through the collection of loan payments and on mortgage-related securities.

Accordingly, changes in levels of market interest rates could materially and adversely affect Patriot’s net interest spread, asset quality, levels of prepayments, liquidity and cash flow, as well as the market value of its securities portfolio and overall profitability. 9 Table of Contents Patriot ’ s investment portfolio includes securities that are sensitive to interest rates and variations in interest rates may adversely impact Patriot ’ s profitability.

Risks Related to Our Business Operations Patriot is dependent on its locally-based management team and the loss of its senior executive officers or other key employees could impair its relationship with its customers and adversely affect its business and financial results. The Bank’s success is dependent upon the continued services and skills of its long-term locally-based management team.

Either of these occurrences could materially and adversely affect Patriot’s earnings and profitability. 10 Table of Contents Risks Related to Our Business Operations Patriot is dependent on its locally-based management team and the loss of its senior executive officers or other key employees could impair its relationship with its customers and adversely affect its business and financial results.

Patriot’s security portfolio is classified as available-for-sale and is comprised primarily of corporate debt and mortgage-backed securities, which are insured or guaranteed by the U.S. Government. These securities are sensitive to interest rate fluctuations. Unrealized gains or losses in the available-for-sale portfolio of securities are reported as a separate component of shareholders’ equity.

Patriot ’ s investment portfolio includes securities that are sensitive to interest rates and variations in interest rates may adversely impact Patriot ’ s profitability. Patriot’s security portfolio is classified as available-for-sale and is comprised primarily of corporate debt and mortgage-backed securities, which are insured or guaranteed by the U.S. Government. These securities are sensitive to interest rate fluctuations.

Such events also could affect the stability of our deposit base, impair the ability of borrowers to repay outstanding loans, impair the value of collateral securing loans, cause significant property damage, result in lost revenue or cause us to incur additional expenses. 11 Table of Contents Patriot is subject to certain general affirmative debt covenants, which if it cannot comply, may result in default and actions taken against it by its debt holders.

ITEM 1A. Risk Factors Patriot’s financial condition and results of operation are subject to various risks inherent to its business, including those noted below.

ITEM 1A. Risk Factors Patriot’s financial condition and results of operation are subject to various risks inherent to its business, including those noted below. Risks Related to General Economic and Market Conditions We have been and may continue to be adversely affected by national financial markets and economic conditions, as well as local conditions.

For a period of time, delinquencies, deferrals and problem assets rose, however foreclosures were relatively unaffected due to the moratorium that was issued by many states. Much of this has stabilized and returned to previous operating levels. The Company is unable to predict, however, future economic conditions and their impact on the Company’s business.

Much of this has stabilized and returned to previous operating levels. The Company is unable to predict, however, future economic conditions and their impact on the Company’s business.

Although the current economic environment has improved, conditions remain uncertain and may result in additional risk of loan losses. 10 Table of Contents Federal regulatory agencies, as an integral part of their examination process, review the Bank’s loan portfolio and assess the adequacy of the allowance for loan and lease losses.

Federal regulatory agencies, as an integral part of their examination process, review the Bank’s loan portfolio and assess the adequacy of the allowance for credit losses.

As a result, future interest rate fluctuations may impact shareholders’ equity, causing material fluctuations from quarter to quarter. The inability to hold its securities until market conditions are favorable for a sale, or until payments are received on mortgage-backed securities, could adversely affect Patriot’s earnings and profitability.

The inability to hold its securities until market conditions are favorable for a sale, or until payments are received on mortgage-backed securities, could adversely affect Patriot’s earnings and profitability. 9 Table of Contents Inflationary pressures and rising prices may affect our results of operations and financial condition.

Inflationary pressures and rising prices may affect our results of operations and financial condition. Inflation has risen sharply since the end of 2021 to levels not seen in more than 40 years.

Inflation risk is the risk that the value of assets or income from investments will be worthless in the future as inflation decreases the value of money. Inflation has risen sharply since the end of 2021 to levels not seen in more than 40 years.

Removed

Risks Related to the Pandemic Although we do not currently expect the effects of COVID-19 to have material adverse impact on the Company ’ s business and operations going forward, such expectation may be subject to change depending on future development of the pandemic.

Added

Many lenders and institutional investors reduced or ceased providing funding to borrowers, including other financial institutions. 8 Table of Contents During 2010 through 2019, however, the economic climate generally improved, contributing to decreases in the Bank’s problem assets, delinquencies and foreclosures from the levels experienced in the earlier period of economic turbulence.

Removed

The national economy has largely recovered from the COVID-19 pandemic, as many health and safety restrictions have been lifted and vaccine distribution has increased. Certain adverse consequences of the pandemic continue to impact the macroeconomic environment and may persist, including labor shortages and disruptions of global supply chains.

Added

Unrealized gains or losses in the available-for-sale portfolio of securities are reported as a separate component of shareholders’ equity. As a result, future interest rate fluctuations may impact shareholders’ equity, causing material fluctuations from quarter to quarter.

Removed

The growth in economic activity and demand for goods and services, alongside labor shortages and supply chain complications, has contributed to rising inflationary pressures. Since the inception of the COVID-19 pandemic governmental authorities enacted regulations, and protocols, including governmental programs to provide economic relief to businesses and individuals.

Added

The Bank’s success is dependent upon the continued services and skills of its long-term locally-based management team.

Removed

The application of forbearance and payment deferral policies beyond any statutory requirements has had a minimal impact on the Company’s interest income.

Added

Patriot is subject to certain general affirmative debt covenants, which if it cannot comply, may result in default and actions taken against it by its debt holders.

Removed

Although we do not currently expect the COVID-19 pandemic to have a negative impact on the Company’s operations, the extent to which the consequences of the pandemic may in the future affect the Company’s financial condition, results of operation, and liquidity and capital position will depend on future developments of a number of evolving factors beyond our control, including the severity and duration of any resurgence of COVID-19 variants, their effects and responsive methods taken by governmental authorities.

Added

Patriot’s primary sources of liquidity are the deposits the Bank acquires organically through its branch network and through the activities of its Digital Payments Division.

Removed

Risks Related to General Economic and Market Conditions We have been and may continue to be adversely affected by national financial markets and economic conditions, as well as local conditions.

Added

Consumers and businesses also may change their behavior on their own as a result of these concerns. We and our customers will need to respond to new laws and regulations as well as consumer and business preferences resulting from climate change concerns. We and our customers may face cost increases, asset value reductions, operating process changes and other issues.

Removed

Either of these occurrences could materially and adversely affect Patriot’s earnings and profitability. The implementation of Current Expected Credit Loss (“CECL”), which we expect will result in an increase our allowance for loan losses, could have a material adverse effect on our financial condition and results of operation.

Added

The impact on our customers will likely vary depending on their specific attributes, including reliance on or role in carbon intensive activities. Among the impacts to us could be a drop in demand for our products and services, particularly in certain sectors.

Removed

In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-13, Financial Instruments-Credit Losses: Measurement of Credit Losses on Financial Instruments . The ASU changes the methodology for measuring credit losses on financial instruments measured at amortized cost to a current expected loss (“CECL”) model. The new accounting standard is effective for the Company as of January 1, 2023.

Added

In addition, we could face reductions in creditworthiness on the part of some customers or in the value of assets securing loans.

Removed

CECL requires financial institutions to determine periodic estimates of lifetime expected credit losses on loans, other financial instruments and other commitments to extend credit and provide for the expected credit losses as allowances for credit losses.

Added

Our efforts to take these risks into account in making lending and other decisions, including by increasing our business with climate-focused companies, may not be effective in protecting us from the negative impact of new laws and regulations or changes in consumer or business behavior. ITEM 1B. Unresolved Staff Comments None.

Removed

This will change our current method of providing allowance for loan losses that are probable and we expect to record an allowance for credit losses as of January 1, 2023 in excess of our existing allowance for loan losses.

Removed

CECL also greatly increases the data we need to collect and review to determine the appropriate level of the allowance for credit losses.

Removed

Although we expect the Bank and the Company will continue to meet all applicable capital adequacy requirements following recording of the impact of adoption to shareholders’ equity, future provisioning for expected credit losses under CECL may have a material adverse effect on our financial condition and results of operations.

Removed

There is no assurance that Company will pay dividends in the future. 12 Table of Contents Uncertainty relating to the LIBOR determination process and LIBOR discontinuance may adversely affect our results of operations.

Removed

London Interbank Offered Rate (“LIBOR”) is used extensively in the United States as a benchmark for various commercial and financial contracts, including adjustable rate mortgages, corporate debt, interest rate swaps and other derivatives. LIBOR is set based on interest rate information reported by certain banks.

Removed

The United Kingdom Financial Conduct Authority (“FCA”), which regulates the process for establishing LIBOR, announced in July 2017 that the sustainability of LIBOR cannot be guaranteed.

Removed

The administrator for LIBOR announced on March 5, 2021 that it would permanently cease to publish most LIBOR settings beginning on January 1, 2022 and will cease to publish the overnight, one-month, three-month, six-month and 12-month USD LIBOR settings on July 1, 2023.

Removed

Accordingly, the FCA has stated that it does not intend to persuade or compel banks to submit to LIBOR after such respective dates. Until such time, however, FCA panel banks have agreed to continue to support LIBOR. In October 2021, the federal bank regulatory agencies issued a Joint Statement on Managing the LIBOR Transition.

Removed

In that guidance, the agencies offered their regulatory expectations and outlined potential supervisory and enforcement consequences for banks that fail to adequately plan for and implement the transition away from LIBOR. The failure to properly transition away from LIBOR may result in increased supervisory scrutiny.

Removed

The discontinuance of LIBOR may result in uncertainty or differences in the calculation of the applicable interest rate or payment amount depending on the terms of the governing instruments and may also increase operational and other risks to the Company and the industry. We have derivative contracts and limited loan exposure tied to LIBOR.

Removed

Although we are not yet able to assess what the ultimate impact of the transition from LIBOR will be, failure to adequately manage the transition could have a material adverse effect on our business, financial condition and results of operations.

Item 2. Properties

Properties — owned and leased real estate

1 edited+0 added−2 removed0 unchanged

2022 filing

2023 filing

Biggest changeProperties The following table summarizes Patriot’s owned and leased properties, as of December 31, 2022: Street Address City County State Owned: 233 Post Road Darien Fairfield Connecticut 1755 Black Rock Turnpike Fairfield Fairfield Connecticut 100 Mason Street Greenwich Fairfield Connecticut 900 Bedford Street Stamford Fairfield Connecticut 999 Bedford Street Stamford Fairfield Connecticut 771 Boston Post Road Milford New Haven Connecticut 50 Charles Street Westport Fairfield Connecticut Leased: 16 River Street Norwalk Fairfield Connecticut 415 Post Road East Westport Fairfield Connecticut 495 Central Park Avenue Scarsdale Westchester New York 7 Old Tavern Road Orange New Haven Connecticut 30 Oak Street Stamford Fairfield Connecticut 300 Centerville Rd Warwick Kent County Rhode Island At December 31, 2022, five branch buildings were owned and four branch facilities were leased.

Biggest changeProperties The following table summarizes Patriot’s owned and leased properties, as of December 31, 2023: Street Address City County State Owned: 233 Post Road Darien Fairfield Connecticut 1755 Black Rock Turnpike Fairfield Fairfield Connecticut 100 Mason Street Greenwich Fairfield Connecticut 900 Bedford Street Stamford Fairfield Connecticut 999 Bedford Street Stamford Fairfield Connecticut 771 Boston Post Road Milford New Haven Connecticut 50 Charles Street Westport Fairfield Connecticut Leased: 16 River Street Norwalk Fairfield Connecticut 415 Post Road East Westport Fairfield Connecticut 495 Central Park Avenue Scarsdale Westchester New York 7 Old Tavern Road Orange New Haven Connecticut 30 Oak Street Stamford Fairfield Connecticut 300 Centerville Rd Warwick Kent County Rhode Island

Removed

Additionally, the Bank maintains certain operating and administrative service facilities and additional parking at its main branch banking office, which are subject to eleven non-cancelable operating lease agreements. Patriot’s lease agreements have terms ranging from one year to fifteen years with nine years and seven months remaining on the longest lease term.

Removed

Generally, Patriot’s lease agreements contain rent escalation clauses, and renewals for one or more periods at the Bank’s option. As of December 31, 2022, the Bank has excess space that it leases to four unrelated parties. For additional information, see the Leases footnote disclosure in the consolidated financial statements included herein.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed0 unchanged

2022 filing

2023 filing

Biggest changeITEM 3. Legal Proceedings Other than ordinary routine litigation incidental to its business, neither the Company nor the Bank has any pending legal proceedings to which the Company or the Bank is a party or any of its property is subject. ITEM 4. Mine Safety Disclosures Not applicable. 16 Table of Contents PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

1 edited+0 added−0 removed0 unchanged

2022 filing

2023 filing

Biggest changeITEM 4. Mine Safety Disclosures 16 PART II 17 ITEM 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities 17 ITEM 6.[Reserved] 18 ITEM 7. Management’s Discussion and Analysis - Financial Condition & Results of Operations 18 ITEM 7A. Quantitative and Qualitative Disclosures about Market Risk 35 ITEM 8.

Biggest changeITEM 4. Mine Safety Disclosures 17 PART II 18 ITEM 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities 18 ITEM 6.[Reserved] 19 ITEM 7. Management’s Discussion and Analysis - Financial Condition & Results of Operations 20 ITEM 7A. Quantitative and Qualitative Disclosures about Market Risk 36 ITEM 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

3 edited+0 added−0 removed8 unchanged

2022 filing

2023 filing

Biggest changePeriod Ending 2017 2018 2019 2020 2021 2022 Patriot National Bancorp ("PNBK") 100.00 % 79.83 % 71.48 % 55.69 % 87.11 % 59.38 % Nasdaq Community Bank Index Total Return Index ("XABQ") 100.00 % 82.10 % 99.53 % 88.95 % 124.25 % 101.44 % S&P 500 Total Return Index ("SP500TR") 100.00 % 95.62 % 125.72 % 148.85 % 192.08 % 156.88 %

Biggest changePeriod Ending 2018 2019 2020 2021 2022 2023 Patriot National Bancorp ("PNBK") 100.00 % 89.54 % 69.75 % 109.12 % 74.39 % 26.88 % Nasdaq Community Bank Index Total Return Index ("XABQ") 100.00 % 121.23 % 108.34 % 151.34 % 123.55 % 115.31 % S&P 500 Total Return Index ("SP500TR") 100.00 % 131.49 % 155.68 % 200.88 % 164.08 % 207.21 %

For information regarding our equity compensation plans, see PART III, Item 12, “Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters.” 17 Table of Contents Performance Graph The performance graph compares the Company’s cumulative total shareholder return on its common stock over the last five fiscal years to the NASDAQ Community Bank Total Return Index and the S&P 500 Total Return Index.

For information regarding our equity compensation plans, see PART III, Item 12, “Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters.” 18 Table of Contents Performance Graph The performance graph compares the Company’s cumulative total shareholder return on its common stock over the last five fiscal years to the NASDAQ Community Bank Total Return Index and the S&P 500 Total Return Index.

ITEM 5. Market for Registrant ’ s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities Market Information The Company’s Common Stock is traded on the Nasdaq Global Market under the Symbol “PNBK.” Holders There were approximately 252 shareholders of record of the Company’s Common Stock as of December 31, 2022.

ITEM 5. Market for Registrant ’ s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities Market Information The Company’s Common Stock is traded on the Nasdaq Global Market under the Symbol “PNBK.” Holders There were approximately 243 shareholders of record of the Company’s Common Stock as of December 31, 2023.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

63 edited+40 added−41 removed23 unchanged

2022 filing

2023 filing

Biggest changeThe following table provides detail of activity in the allowance for loan and lease losses: Year Ended December 31, (In thousands) 2022 2021 2020 Balance at beginning of the period $ 9,905 $ 10,584 $ 10,115 Charge-offs: Commercial Real Estate — (51) (1,032) Residential Real Estate — (3) (24) Commercial and Industrial (70) (212) (677) Consumer and Other (1,690) (23) (45) Construction (68) (69) — Total charge-offs (1,828) (358) (1,778) Recoveries: Commercial Real Estate 154 — — Residential Real Estate 4 3 1 Commercial and Industrial 69 65 70 Consumer and Other 121 111 6 Total recoveries 348 179 77 Net charge-offs (1,480) (179) (1,701) Provision (credit) for loan losses 1,885 (500) 2,170 Balance at end of the period $ 10,310 $ 9,905 $ 10,584 Ratios: Net charge-offs to average loans (0.18) % (0.03) % (0.22) % Allowance for loan losses to total loans 1.22 % 1.34 % 1.45 % 25 Table of Contents The following table provides an allocation of allowance for loan and lease losses by portfolio segment and the percentage of the loans to total loans: December 31, (In thousands) 2022 2021 2020 Allowance for loan losses Percent of loans in each category to total loans Allowance for loan losses Percent of loans in each category to total loans Allowance for loan losses Percent of loans in each category to total loans Commercial Real Estate $ 6,966 51.57 % $ 5,063 49.38 % $ 4,485 38.68 % Residential Real Estate 665 14.63 % 1,700 21.45 % 1,379 21.07 % Commercial and Industrial 1,403 16.36 % 2,532 16.61 % 3,284 19.76 % Consumer and Other 1,207 16.63 % 253 8.03 % 295 9.26 % Construction 24 0.58 % 78 2.95 % 739 9.17 % Construction to permanent - CRE 10 0.23 % 41 1.58 % 162 2.06 % Unallocated 35 N/A 238 N/A 240 N/A Total Allowance for loan losses $ 10,310 100.00 % $ 9,905 100.00 % $ 10,584 100.00 % Nonperforming Assets The following table presents non-accrual and accruing loans which were past due by over 90 days for the dates indicated: (In thousands) December 31, 2022 2021 2020 Non-accruing loans: Commercial Real Estate $ 11,241 $ 15,704 $ 14,534 Residential Real Estate 2,470 3,148 3,854 Commercial and Industrial 4,833 4,101 700 Consumer and Other 49 142 917 Construction — — — Total non-accruing loans 18,593 23,095 20,005 Loans past due over 90 days and still accruing 1,155 2 16 Other real estate owned — — 1,906 Total nonperforming assets $ 19,748 $ 23,097 $ 21,927 Nonperforming assets to total assets 1.89 % 2.44 % 2.49 % Nonperforming loans to total loans, net 2.36 % 3.17 % 2.78 % Non-accrual loans decreased $4.5 million, from $23.1 million at December 31, 2021 to $18.6 million at December 31, 2022.

Biggest changeThe Company used the CECL methodology in 2023 while the incurred loss methodology was used in prior years: Year Ended December 31, (In thousands) 2023 2022 2021 Balance at beginning of the period $ 10,310 $ 9,905 $ 10,584 Impact of ASC 326 adoption 13,001 — — Charge-offs: Commercial Real Estate (6,346) — (51) Residential Real Estate (515) — (3) Commercial and Industrial (927) (70) (212) Consumer and Other (10,479) (1,690) (23) Construction (150) (68) (69) Total charge-offs (18,417) (1,828) (358) Recoveries: Commercial Real Estate — 154 — Residential Real Estate 14 4 3 Commercial and Industrial 34 69 65 Consumer and Other 1,080 121 111 Total recoveries 1,128 348 179 Net charge-offs (17,289) (1,480) (179) Provision (credit) for credit losses 9,903 1,885 (500) Balance at end of the period $ 15,925 $ 10,310 $ 9,905 Ratios: Net charge-offs to average loans (1.93) % (0.18) % (0.03) % Allowance for credit losses to total loans 1.88 % 1.22 % 1.34 % 24 Table of Contents The following table provides an allocation of allowance for credit losses by portfolio segment and the percentage of the loans to total loans: December 31, (In thousands) 2023 2022 2021 Allowance for credit losses Percent of loans in each category to total loans Allowance for loan losses Percent of loans in each category to total loans Allowance for loan losses Percent of loans in each category to total loans Commercial Real Estate $ 6,089 55.62 % $ 6,966 51.57 % $ 5,063 49.38 % Residential Real Estate 607 12.58 % 665 14.63 % 1,700 21.45 % Commercial and Industrial 1,269 19.27 % 1,403 16.36 % 2,532 16.61 % Consumer and Other 7,843 11.74 % 1,207 16.63 % 253 8.03 % Construction 4 0.50 % 24 0.58 % 78 2.95 % Construction to permanent - CRE 113 0.29 % 10 0.23 % 41 1.58 % Unallocated — N/A 35 N/A 238 N/A Total Allowance for credit losses $ 15,925 100.00 % $ 10,310 100.00 % $ 9,905 100.00 % Nonperforming Assets The following table presents non-accrual and accruing loans which were past due by over 90 days for the dates indicated: (In thousands) December 31, 2023 2022 2021 Non-accruing loans: Commercial Real Estate $ 12,775 $ 11,241 $ 15,704 Residential Real Estate — 2,470 3,148 Commercial and Industrial 3,921 4,833 4,101 Consumer and Other 977 49 142 Construction 454 — — Total non-accruing loans 18,127 18,593 23,095 Loans past due over 90 days and still accruing 341 1,155 2 Other real estate owned 2,843 — — Total nonperforming assets $ 21,311 $ 19,748 $ 23,097 Nonperforming assets to total assets 1.95 % 1.89 % 2.44 % Nonperforming loans to total loans, net 2.22 % 2.36 % 3.17 % Non-accrual loans decreased $466,000, from $18.6 million at December 31, 2022 to $18.1 million at December 31, 2023.

Derivatives Instruments and Hedging Activities The Company enters into interest rate swap agreements as part of the Company’s interest rate risk management strategy. The Company has derivatives not designated as hedges. Derivatives not designated as hedges are not speculative and result from a service the Company provides to certain loan customers.

Derivatives Instruments The Company enters into interest rate swap agreements as part of the Company’s interest rate risk management strategy. The Company has derivatives not designated as hedges. Derivatives not designated as hedges are not speculative and result from a service the Company provides to certain loan customers.

Management believes the Company’s liquid assets provide sufficient coverage to satisfy loan demand, cover potential fluctuations in deposit accounts, and to meet other anticipated operational cash requirements for next 12 months and beyond. The Company is a member of the Federal Home Loan Bank of Boston ("FHLB-B"). At December 31, 2022, the outstanding advances from the FHLB-B aggregated $85.0 million.

Management believes the Company’s liquid assets provide sufficient coverage to satisfy loan demand, cover potential fluctuations in deposit accounts, and to meet other anticipated operational cash requirements for next 12 months and beyond. The Company is a member of the Federal Home Loan Bank of Boston ("FHLB-B"). At December 31, 2023, the outstanding advances from the FHLB-B aggregated $171.0 million.

Due to prior year losses, dividends have not been paid to shareholders over the most recent three-year period but may resume in future periods. The primary source of liquidity at the Company as a stand-alone parent company is return of capital from the Bank.

Dividends have not been paid to shareholders over the most recent three-year period but may resume in future periods. The primary source of liquidity at the Company as a stand-alone parent company is return of capital from the Bank.

Discussions of fiscal 2021 items and year-to-year comparisons between fiscal 2021 and fiscal 2020 that are not included in this Form 10-K can be found under Item 7 of Part II of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, as filed with the SEC on March 24, 2022.

Discussions of fiscal 2022 items and year-to-year comparisons between fiscal 2022 and fiscal 2021 that are not included in this Form 10-K can be found under Item 7 of Part II of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, as filed with the SEC on March 29, 2023.

Impairment losses on other intangibles are recognized as a charge to expense if carrying amounts exceed fair values. 20 Table of Contents Servicing Assets A servicing asset related to SBA loans is initially recorded when these loans are sold and the servicing rights are retained. The servicing asset is recorded on the balance sheet and included in other assets.

Impairment losses on other intangibles are recognized as a charge to expense if carrying amounts exceed fair values. Servicing Assets A servicing asset related to SBA loans is initially recorded when these loans are sold and the servicing rights are retained. The servicing asset is recorded on the balance sheet and included in other assets.

These capital returns are subject to OCC approval and are needed periodically to provide funds needed to service debt payments at the Company. Return of Capital payments from the Bank to the Company totaled $900,000 for the year ended December 31, 2022, $500,000 for the year ended December 31, 2021, and $2.0 million for the year ended December 31, 2020.

These capital returns are subject to OCC approval and are needed periodically to provide funds needed to service debt payments at the Company. Return of Capital payments from the Bank to the Company totaled $2.5 million for the year ended December 31, 2023, $900,000 for the year ended December 31, 2022, and $500,000 for the year ended December 31, 2021.

Liquidity including readily available off-balance sheet funding sources was 18.0% at December 31, 2022 compared to 21.7% at December 31, 2021. The following categories of assets are considered balance sheet liquidity: cash and due from banks, federal funds sold (if any), short-term investments (if any), unpledged available-for-sale securities, and loans held for sale.

Liquidity including readily available off-balance sheet funding sources was 18.6% at December 31, 2023 compared to 18.0% at December 31, 2022. The following categories of assets are considered balance sheet liquidity: cash and due from banks, federal funds sold (if any), short-term investments (if any), unpledged available-for-sale securities, and loans held for sale.

Approximately 26.00% of the variable rate loan portfolio reprices with changes in interest rates within three months of the rate change. The balance of the loan portfolio has an initial rate for a fixed period, for example one, three or five years and then reprice annually after the initial fixed period.

Approximately 24.4% of the variable rate loan portfolio reprices with changes in interest rates within three months of the rate change. The balance of the loan portfolio has an initial rate for a fixed period, for example one, three or five years and then reprice annually after the initial fixed period.

The decrease in CDI of $47,000 from $296,000 at December 31, 2021 to $249,000 at December 31, 2022, was solely due to the amortization of the CDI for the year ended December 31, 2022. 27 Table of Contents Deferred Taxes As of December 31, 2022, Patriot had available approximately $15.8 million of Federal net operating loss carryforwards (“NOL”) that are offset by $15.5 million in Internal Revenue Code §382 limitations.

The decrease in CDI of $46,000 from $249,000 at December 31, 2022 to $203,000 at December 31, 2023, was solely due to the amortization of the CDI for the year ended December 31, 2023. 26 Table of Contents Deferred Taxes As of December 31, 2023, Patriot had available approximately $15.5 million of Federal net operating loss carryforwards (“NOL”) that are offset by $15.5 million in Internal Revenue Code §382 limitations.

Net interest income Net interest income is the difference between interest income on interest earning assets and interest expense on interest-bearing liabilities. Net interest income depends on the relative amounts of interest earning assets and interest-bearing liabilities and the interest rates earned or paid on them, respectively.

Net interest income depends on the relative amounts of interest earning assets and interest-bearing liabilities and the interest rates earned or paid on them, respectively.

Additionally, 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 expire between 2030 and 2040.

Additionally, Patriot has approximately $47.3 million of NOLs available for Connecticut tax purposes at December 31, 2023, which may be used to offset up to 50% of taxable income in any year. The NOLs will expire between 2030 and 2040.

The swaps are reported at fair value in other assets or other liabilities on the consolidated balance sheets. Patriot’s swaps are derivatives, but are not designated as hedging instruments, thus any net gain or loss resulting from changes in the fair value is recognized in other non-interest income.

The swaps are reported at fair value in other assets or other liabilities. The interest rate 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 additional borrowing capacity available from FHLB-B was $69.2 million, which is comprised of $67.2 million of advances and a $2.0 million overnight line of credit.

The additional borrowing capacity available from FHLB-B was $73.4 million, which is comprised of $71.4 million of advances and a $2.0 million overnight line of credit.

Other financial measures and ratios: As of and for the year ended December 31, 2022 2021 2020 Return on average assets 0.60 % 0.55 % (0.40) % Return on average equity 9.87 % 7.75 % (5.82) % Average equity to average assets 6.09 % 7.13 % 6.86 % We derived the selected balance sheet measures as of December 31, 2022, 2021 and 2020 and the selected statement of income measures for the years ended December 31, 2022, 2021 and 2020 from our audited consolidated financial statements included elsewhere in this annual report.

Other financial measures and ratios: As of and for the year ended December 31, 2023 2022 2021 (Loss) return on average assets (0.39) % 0.60 % 0.55 % (Loss) return on average equity (8.99) % 9.87 % 7.75 % Average equity to average assets 4.34 % 6.09 % 7.13 % We derived the selected balance sheet measures as of December 31, 2023, 2022 and 2021 and the selected statement of income measures for the years ended December 31, 2023, 2022 and 2021 from our audited Consolidated Financial Statements included elsewhere in this annual report.

Comparison of Results of Operations for the years 2022 and 2021 For the year ended December 31, 2022, the Company recorded net income of $6.2 million ($1.56 basic and diluted earnings per share) compared to net income of $5.1 million ($1.29 basic and diluted loss per share) for the year ended December 31, 2021.

Comparison of Results of Operations for the years 2023 and 2022 For the year ended December 31, 2023, the Company recorded net loss of $4.2 million ($(1.05) basic and diluted loss per share) compared to net income of $6.2 million ($1.56 basic and diluted loss per share) for the year ended December 31, 2022.

For the year ended December 31, 2022, interest income increased to $44.0 million, as compared to $32.4 million for the year ended December 31, 2021, which was primarily attributable to an increase of $126.3 million in average loan balances, along with an increase in rates earned on loans reflecting the increase in interest rates during 2022.

For the year ended December 31, 2023, interest income increased to $59.0 million, as compared to $44.0 million for the year ended December 31, 2022, which was primarily attributable to an increase of $64.9 million in average loan balances, along with an increase in rates earned on loans reflecting the increase in interest rates during 2023.

After applying the limitation, at December 31, 2022, Patriot has post-change net operating loss carry-forwards of approximately $0.3 million which do not expire. For the years ended December 31, 2022 and 2021, the Bank did not record any uncertain tax position (“UTP”) related to the utilization of certain federal net operating losses.

After applying the limitation, at December 31, 2022, Patriot has no post-change net operating loss carry-forwards. For the years ended December 31, 2023 and 2022, the Bank did not record any uncertain tax position (“UTP”) related to the utilization of certain federal net operating losses.

As of December 31, 2022, Patriot had a $15.5 million deferred tax asset, comprised of multiple temporary differences, in addition to the previously aforementioned NOLs.

As of December 31, 2023, Patriot had a $24.1 million deferred tax asset, comprised of multiple temporary differences, in addition to the previously aforementioned NOLs.

For the year ended December 31, 2022, total interest expense increased to $10.8 million, as compared to $7.1 million for the year ended December 31, 2021, primarily due to an increase in average deposits balance of $46.8 million. The increase in deposit interest expense reflects higher deposit balances and higher market interest rates.

For the year ended December 31, 2023, total interest expense increased to $30.5 million, as compared to $10.8 million for the year ended December 31, 2022, primarily due to an increase in average deposits balance of $139.2 million. The increase in deposit interest expense reflects higher deposit balances and higher market interest rates.

Pre-tax income was $7.8 million for the year ended December 31, 2022, compared to pre-tax income of $5.0 million for the year ended December 31, 2021.

Pre-tax loss was $5.6 million for the year ended December 31, 2023, compared to pre-tax income of $7.8 million for the year ended December 31, 2022.

This decrease was primarily attributable to the net unrealized loss of $18.9 million for the available-for-sale securities, associated with rising market interest rates, and $10.3 million in repayments and maturity of principal on available-for-sale securities, which was partially offset by purchases of available-for-sale securities of $19.3 million in 2022.

This increase was primarily attributable to the purchases of available-for-sale securities of $10.4 million in 2023, which was partially offset by $4.3 million in repayments and maturity of principal on available-for-sale securities, and net unrealized loss of $216,000 for the available-for-sale securities, associated with rising market interest rates.

Borrowings consist of Federal Home Loan Bank (“FHLB”) advances, senior notes, junior subordinated debentures, and a note payable to the seller from whom the Fairfield branch building was purchased in 2015. Shareholders’ Equity Equity decreased $7.8 million from $67.3 million at December 31, 2021 to $59.6 million at December 31, 2022.

Borrowings consist of Federal Home Loan Bank (“FHLB”) advances, FRB borrowing, senior notes, junior subordinated debentures, and a note payable to the seller from whom the Fairfield branch building was purchased in 2015. Shareholders’ Equity Equity decreased $15.2 million from $59.6 million at December 31, 2022 to $44.4 million at December 31, 2023.

In August 2021, the cash flow hedge interest rate swap contract was terminated. The Company did not recognize any unrealized and realized gain or loss for the year ended December 31, 2022. During the year ended December 31, 2021, the Company recognized $149,000 of accumulated other comprehensive income that was reclassified into interest income.

The Company did not recognize any unrealized and realized gain or loss for the year ended December 31, 2023 and 2022. During the year ended December 31, 2021, the Company recognized $149,000 of accumulated other comprehensive income that was reclassified into interest income.

Net interest income for the years ended December 31, 2022 and 2021 was $33.3 million and $25.3 million, respectively. The Bank’s net interest margin showed improvement, and increased to 3.5% for the year ended December 31, 2022, compared with 2.9% for the year ended December 31, 2021.

Net interest income for the years ended December 31, 2023 and 2022 was $28.5 million and $33.3 million, respectively. The Bank’s net interest margin decreased to 2.8% for the year ended December 31, 2023, compared with 3.5% for the year ended December 31, 2022.

The increase in loans was primarily attributable to $211.4 million in loan origination and $141.4 million in purchases of loans receivable which was partially offset by a net decrease in loan payoffs of $239.6 million for the year ended December 31, 2022.

The increase in loans was primarily attributable to $145.5 million in loan origination and $21.1 million in purchases of loans receivable which was partially offset by a net decrease in loan payoffs of $144.0 million for the year ended December 31, 2023.

Government agency and mortgage-backed securities $ 59,046 $ 66,629 $ 16,833 Corporate bonds 14,655 16,921 17,290 Subordinated notes 4,602 4,626 9,005 SBA loan pools 5,718 5,603 5,567 Municipal bonds 499 562 567 Total available-for-sale securities, at fair value 84,520 94,341 49,262 Other investments, at cost 4,450 4,450 4,450 $ 88,970 $ 98,791 $ 53,712 Total investments decreased $9.8 million or 9.9%, from $98.8 million at December 31, 2021 to $89.0 million at December 31, 2022.

Government agency and mortgage-backed securities $ 65,671 $ 59,046 $ 66,629 Corporate bonds 13,766 14,655 16,921 Subordinated notes 4,227 4,602 4,626 SBA loan pools 5,037 5,718 5,603 Municipal bonds 486 499 562 Total available-for-sale securities, at fair value 89,187 84,520 94,341 Other investments, at cost 4,450 4,450 4,450 $ 93,637 $ 88,970 $ 98,791 Total investments increased $4.6 million or 5.2%, from $89.0 million at December 31, 2022 to $93.6 million at December 31, 2023.

(In thousands) Year Ended December 31, 2022 2021 2020 Average Balance Interest Yield Average Balance Interest Yield Average Balance Interest Yield ASSETS Interest Earning Assets: Loans $ 831,634 $ 40,823 4.91 % $ 705,353 $ 30,115 4.27 % $ 791,626 $ 35,835 4.51 % Investments 96,770 2,691 2.78 % 102,466 2,147 2.10 % 59,668 1,859 3.12 % Cash equivalents and other 32,229 498 1.55 % 57,753 89 0.15 % 49,071 209 0.42 % Total interest earning assets 960,633 44,012 4.58 % 865,572 32,351 3.74 % 900,365 37,903 4.20 % Cash and due from banks 8,091 4,016 2,357 Allowance for loan losses (9,762) (10,384) (10,896) OREO — 893 2,259 Other assets 66,440 61,182 62,086 Total Assets $ 1,025,402 $ 921,279 $ 956,171 Liabilities Interest bearing liabilities: Deposits $ 572,295 $ 5,300 0.93 % $ 525,537 $ 2,243 0.43 % $ 641,981 $ 9,154 1.42 % Borrowings 105,333 3,475 3.30 % 94,511 2,986 3.16 % 92,469 2,671 2.88 % Senior notes 12,002 866 7.22 % 11,963 913 7.63 % 11,888 915 7.70 % Subordinated debt 17,947 1,066 5.94 % 17,910 933 5.21 % 17,872 991 5.53 % Note Payable and other 678 46 6.78 % 881 15 1.70 % 1,086 19 1.74 % Total interest bearing liabilities 708,255 10,753 1.52 % 650,802 7,090 1.09 % 765,296 13,750 1.79 % Demand deposits 244,128 196,287 116,519 Other liabilities 10,610 8,485 8,760 Total Liabilities 962,993 855,574 890,575 Shareholders' equity 62,409 65,705 65,596 Total Liabilities and Shareholders' Equity $ 1,025,402 $ 921,279 $ 956,171 Net interest income $ 33,259 $ 25,261 $ 24,153 Interest margin 3.46 % 2.92 % 2.68 % Interest spread 3.06 % 2.65 % 2.41 % 30 Table of Contents The following table presents the change in interest-earning assets and interest-bearing liabilities by major category and the related change in the interest income earned and interest expense incurred thereon attributable to the change in transactional volume in the financial instruments and the rates of interest applicable thereto, comparing the years ended December 31, 2022 to 2021 and December 31, 2021 to 2020.

(In thousands) Year Ended December 31, 2023 2022 2021 Average Balance Interest Yield Average Balance Interest Yield Average Balance Interest Yield ASSETS Interest Earning Assets: Loans $ 896,500 $ 54,310 6.06 % $ 831,634 $ 40,823 4.91 % $ 705,353 $ 30,115 4.27 % Investments 99,546 3,157 3.17 % 96,770 2,691 2.78 % 102,466 2,147 2.10 % Cash equivalents and restricted cash 25,140 1,490 5.93 % 32,229 498 1.55 % 57,753 89 0.15 % Total interest earning assets 1,021,186 58,957 5.77 % 960,633 44,012 4.58 % 865,572 32,351 3.74 % Cash and due from banks 3,172 8,091 4,016 Allowance for credit losses (22,596) (9,762) (10,384) OREO 138 — 893 Other assets 69,923 66,440 61,182 Total Assets $ 1,071,823 $ 1,025,402 $ 921,279 Liabilities Interest bearing liabilities: Deposits $ 711,479 $ 21,668 3.05 % $ 572,295 $ 5,300 0.93 % $ 525,537 $ 2,243 0.43 % Borrowings 134,570 6,141 4.56 % 106,292 3,509 3.30 % 94,511 2,986 3.16 % Senior notes 11,654 1,159 9.95 % 12,002 866 7.22 % 11,963 913 7.63 % Subordinated debt 17,985 1,481 8.23 % 17,947 1,066 5.94 % 17,910 933 5.21 % Note Payable and other 469 8 1.71 % 678 12 1.77 % 881 15 1.70 % Total interest bearing liabilities 876,157 30,457 3.48 % 709,214 10,753 1.52 % 650,802 7,090 1.09 % Demand deposits 140,654 244,128 196,287 Other liabilities 8,505 9,651 8,485 Total Liabilities 1,025,316 962,993 855,574 Shareholders' equity 46,507 62,409 65,705 Total Liabilities and Shareholders' Equity $ 1,071,823 $ 1,025,402 $ 921,279 Net interest income $ 28,500 $ 33,259 $ 25,261 Interest margin 2.79 % 3.46 % 2.92 % Interest spread 2.29 % 3.06 % 2.65 % 29 Table of Contents The following table presents the change in interest-earning assets and interest-bearing liabilities by major category and the related change in the interest income earned and interest expense incurred thereon attributable to the change in transactional volume in the financial instruments and the rates of interest applicable thereto, comparing the years ended December 31, 2023 to 2022 and December 31, 2022 to 2021.

Based upon the overall assessment and evaluation of the loan portfolio at December 31, 2022 and based upon the prevailing accounting standard (ASC 310-10-35), management believes the allowance for loan and lease losses of $10.3 million, which represents 1.2% of gross loans outstanding, was adequate under prevailing economic conditions to absorb existing losses in the loan portfolio.

Based upon the overall assessment and evaluation of the loan portfolio at December 31, 2023, management believes the allowance for credit losses of $15.9 million, which represents 1.9% of gross loans outstanding, was adequate under prevailing economic conditions to absorb existing losses in the loan portfolio. The following table provides detail of activity in the allowance for credit losses.

The Company performed its annual review of goodwill as of October 31, 2022 and determined that there was no impairment of goodwill. Core deposit intangible ( “ CDI ” ) Core deposit intangible (“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.

Core deposit intangible (“CDI”) Core deposit intangible (“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.

During the year ended December 31, 2021, the Bank sold $58.8 million available-for-sale securities and recognized net gain on sale of securities of $76,000. 22 Table of Contents Loans held for investment The following table provides the composition of the Company’s loan held for investment portfolio as of December 31, for each of the years shown: December 31, (In thousands) 2022 2021 2020 Amount % Amount % Amount % Loan portfolio segment: Commercial Real Estate $ 437,443 51.57 % $ 365,247 49.38 % $ 282,378 38.68 % Residential Real Estate 124,140 14.63 % 158,591 21.45 % 153,851 21.07 % Commercial and Industrial 138,787 16.36 % 122,810 16.61 % 144,297 19.76 % Consumer and Other 141,091 16.63 % 59,364 8.03 % 67,635 9.26 % Construction 4,922 0.58 % 21,781 2.95 % 66,984 9.17 % Construction to permanent - CRE 1,933 0.23 % 11,695 1.58 % 15,035 2.06 % Loans receivable, gross 848,316 100.00 % 739,488 100.00 % 730,180 100.00 % Allowance for loan losses (10,310) (9,905) (10,584) Loans receivable, net $ 838,006 $ 729,583 $ 719,596 The gross loans receivable increased $108.8 million or 14.7%, from $739.5 million at December 31, 2021 to $848.3 million at December 31, 2022.

Loans held for investment The following table provides the composition of the Company’s loan held for investment portfolio as of December 31, for each of the years shown: December 31, (In thousands) 2023 2022 2021 Amount % Amount % Amount % Loan portfolio segment: Commercial Real Estate $ 472,093 55.62 % $ 437,443 51.57 % $ 365,247 49.38 % Residential Real Estate 106,783 12.58 % 124,140 14.63 % 158,591 21.45 % Commercial and Industrial 163,565 19.27 % 138,787 16.36 % 122,810 16.61 % Consumer and Other 99,688 11.74 % 141,091 16.63 % 59,364 8.03 % Construction 4,266 0.50 % 4,922 0.58 % 21,781 2.95 % Construction to permanent - CRE 2,464 0.29 % 1,933 0.23 % 11,695 1.58 % Loans receivable, gross 848,859 100.00 % 848,316 100.00 % 739,488 100.00 % Allowance for credit losses (15,925) (10,310) (9,905) Loans receivable, net $ 832,934 $ 838,006 $ 729,583 22 Table of Contents The gross loans receivable increased $543,000 or 0.1%, from $848.3 million at December 31, 2022 to $848.9 million at December 31, 2023.

The Company’s liquidity position is strong with liquid assets to total assets of 9.3% as of December 31, 2022. Investment securities The following table is a summary of the Company’s available-for-sale securities portfolio and other investments at the dates shown: December 31, (In thousands, except per share amounts) 2022 2021 2020 U. S.

Investment securities The following table is a summary of the Company’s available-for-sale securities portfolio and other investments at the dates shown: December 31, (In thousands) 2023 2022 2021 U. S.

For cash flow dependent loans, the Bank determined the reserve based on the present value of expected future cash flows discounted at the loan's effective interest rate. The Bank evaluated the impaired loans individually and established a specific reserve of $6.0 million as of December 31, 2022.

For cash flow dependent loans, the Bank determined the reserve based on the present value of expected future cash flows discounted at the loan's effective interest rate.

In 2022, management noted improvements in the results of operations, forecasted future period taxable income, the overall quality of the loan portfolio, continued efforts to reduce and control operating expenses, and net operating loss carryforwards that do not begin to expire until the year 2030.

In 2023, management noted forecasted future period taxable income, the overall quality of the loan portfolio, continued efforts to reduce and control operating expenses, and net operating loss carryforwards that do not begin to expire until the year 2030. Based upon this evidence, management concluded there was no need for a valuation allowance as of December 31, 2023.

In developing these fair values, the valuation services and brokers use estimates of cash flows based on historical performance of similar instruments in similar rate environments. Available-for-sale debt securities consist primarily of U.S. Government agency debt and mortgage-backed securities issued by the U.S. government, corporate bonds, subordinated notes and SBA loan pools.

Allowance for Credit Losses - Debt Securities Available for Sale The Company receives estimated fair values of debt securities from independent valuation services and brokers. In developing these fair values, the valuation services and brokers use estimates of cash flows based on historical performance of similar instruments in similar rate environments. Available-for-sale debt securities consist primarily of U.S.

Management continuously reviews its branch locations and corporate offices evaluating operating efficiencies and market share as well as effective customer service and delivery. Other Real Estate Owned ( “ OREO ” ) In 2021, Patriot sold the last OREO of $1.9 million and recognized a gain of $2,000.

Management continuously reviews its branch locations and corporate offices evaluating operating efficiencies and market share as well as effective customer service and delivery. Other Real Estate Owned (“OREO”) As of December 31, 2023, the Bank recorded one OREO of $2.8 million.

Two swaps are with a loan customer to provide a facility to mitigate the fluctuations in the variable rate on the respective loan. The other two swaps are with an outside third party. The customer interest rate swaps are matched in offsetting terms to the third-party interest rate swaps.

As of December 31, 2023, total two interest rate swaps remained outstanding. One swap is held with a loan customer to provide a facility to mitigate the fluctuations in the variable rate on the respective loan. The other swaps is with an outside third party.

If future evidence suggests that it is more likely than not that a portion of the deferred tax assets will not be realized, a valuation allowance will be established. Derivatives As of December 31, 2022, Patriot had entered into four interest rate swaps (“swaps”).

Patriot will continue to evaluate its ability to realize its net deferred tax assets. If future evidence suggests that it is more likely than not that a portion of the deferred tax assets will not be realized, a valuation allowance will be established. Derivatives In December 2023, two back to back interest rate swaps were terminated.

Loans held for sale at December 31, 2022 consisted of $3.1 million SBA commercial and industrial loans and $2.1 million SBA commercial real estate, respectively. SBA loans held for sale at December 31, 2021, consisted of $2.6 million SBA commercial and industrial loans and $562,000 SBA commercial real estate, respectively.

SBA loans held for sale at December 31, 2022, consisted of $3.1 million SBA commercial and industrial loans and $2.1 million SBA commercial real estate. The Company sold $4.6 million SBA loans during the year ended December 31, 2023, compared to $21.6 million for the year ended December 31, 2022.

Year ended December 31, 2022 compared to 2021 2021 compared to 2020 (In thousands) Increase/(Decrease) Increase/(Decrease) Volume Rate Total Volume Rate Total Interest Earning Assets: Loans $ 5,063 $ 5,645 $ 10,708 $ (3,816) $ (1,904) $ (5,720) Investments (115) 659 544 1,252 (964) 288 Cash equivalents and other (42) 451 409 36 (156) (120) Total interest earning assets 4,906 6,755 11,661 (2,528) (3,024) (5,552) Interest bearing liabilities: Deposit 463 2,594 3,057 (2,762) (4,149) (6,911) Borrowings 342 147 489 58 257 315 Senior notes 3 (50) (47) (2) — (2) Subordinated debt 2 131 133 — (58) (58) Note payable and other 31 — 31 (4) — (4) Total interest bearing liabilities 841 2,822 3,663 (2,710) (3,950) (6,660) Net interest income $ 4,065 $ 3,933 $ 7,998 $ 182 $ 926 $ 1,108 31 Table of Contents RESULTS OF OPERATIONS A discussion regarding the financial condition and results of operations for fiscal 2022 compared to fiscal 2021 is presented below.

Year Ended December 31, 2023 compared to 2022 2022 compared to 2021 (In thousands) Increase/(Decrease) Increase/(Decrease) Volume Rate Total Volume Rate Total Interest Earning Assets: Loans $ 3,850 $ 9,637 $ 13,487 $ 5,063 $ 5,645 $ 10,708 Investments 59 407 466 (115) 659 544 Cash equivalents and other (109) 1,101 992 (42) 451 409 Total interest earning assets 3,800 11,145 14,945 4,906 6,755 11,661 Interest bearing liabilities: Deposit 2,430 13,938 16,368 463 2,594 3,057 Borrowings 937 1,695 2,632 376 147 523 Senior notes (27) 320 293 3 (50) (47) Subordinated debt — 415 415 2 131 133 Note payable and other (4) — (4) (3) — (3) Total interest bearing liabilities 3,336 16,368 19,704 841 2,822 3,663 Net interest income $ 464 $ (5,223) $ (4,759) $ 4,065 $ 3,933 $ 7,998 RESULTS OF OPERATIONS A discussion regarding the financial condition and results of operations for fiscal 2023 compared to fiscal 2022 is presented below.

The decrease was primarily due to $14.0 million unrealized loss in investment portfolio for the year ended December 31, 2022, which was partially offset by $6.2 million of net income for the year ended December 31, 2022. 29 Table of Contents The following table presents average balance sheets, interest income, interest expense and the corresponding yields earned, and rates paid for each of the years in the three-year period ended December 31, 2022.

The decrease was primarily due to a cumulative adjustment to the opening balance of accumulated deficit of $11.5 million upon adoption of CECL effective January 1, 2023, and $4.2 million net loss for the year ended December 31, 2023. 28 Table of Contents The following table presents average balance sheets, interest income, interest expense and the corresponding yields earned, and rates paid for each of the years in the three-year period ended December 31, 2023.

The assessment of the potential realizability of the deferred tax assets is based on observation of the condition and future of the Bank, including: • Cumulative pre-tax profit over the last four years; • Forecasted taxable income for 2023 and future periods; • Historical average pre-tax income over the last four years adjusted for a fraud loss and other non-recurring expenses relating to merger and acquisition activity, and a reduced cost of funds now reflected in its most recent results; • Improvements in operations and cost management; and • Net operating loss carry-forwards that do not begin to expire until 2030.

The assessment of the potential realizability of the deferred tax assets is based on observation of the condition and future of the Bank, including cumulative pre-tax profit from the last three years, forecasted taxable income for 2024 and future periods, and net operating loss carry-forwards that do not begin to expire until 2030.

Average balances have been computed using daily averages. LIQUIDITY AND CAPITAL RESOURCES As of December 31, 2022, the Company’s balance sheet liquidity was $97.4 million, which was 9.3% of total assets of $1.0 billion. At December 31, 2021, the balance sheet liquidity was $108.4 million, which was 11.4% of total assets of $948.5 million.

LIQUIDITY AND CAPITAL RESOURCES As of December 31, 2023, the Company’s balance sheet liquidity was $94.9 million, which was 8.7% of total assets of $1.09 billion. At December 31, 2022, the balance sheet liquidity was $97.4 million, which was 9.3% of total assets of $1.04 billion.

Further discussion of the derivatives is set forth in Note 1, Note 11, and Note 21 to the consolidated financial statements. 21 Table of Contents FINANCIAL CONDITION Assets The Company’s total assets increased $94.9 million, or 10.0%, from $948.5 million at December 31, 2021 to $1.0 billion at December 31, 2022, primarily due to an increase in net loans from $729.6 million as of December 31, 2021, to $838.0 million at December 31, 2022.

Further discussion of the derivatives is set forth in Note 1, Note 11, and Note 21 to the consolidated financial statements. FINANCIAL CONDITION Assets The Company’s total assets increased $50.1 million, or 4.8%, from $1.04 billion at December 31, 2022 to $1.09 billion at December 31, 2023.

As of December 31, 2022 and 2021, SBA loans included in the commercial real estate loans were $12.2 million and $9.7 million, respectively. SBA loans included in the commercial and industrial loan were $20.3 million and $17.4 million as of December 31, 2022 and 2021, respectively.

This trend is expected to continue during 2024. SBA loans held for investment were included in the commercial real estate loans and commercial and industrial loan classifications above. As of December 31, 2023 and 2022, SBA loans included in the commercial real estate loans were $12.9 million and $12.2 million, respectively.

Further discussion of the final derivatives is set forth in Note 11 and Note 21 to the consolidated financial statements. 28 Table of Contents Deposits The following table is a summary of the Company’s deposits at the dates shown: (In thousands) December 31, 2022 2021 2020 Non-interest bearing: Non-interest bearing $ 118,541 $ 140,384 $ 99,344 Prepaid DDA 151,095 86,329 59,332 Total non-interest bearing 269,636 226,713 158,676 Interest bearing: Negotiable order of withdrawal accounts 34,440 34,741 30,529 Savings 71,002 109,744 98,635 Money market 164,827 111,957 131,378 Money market - prepaid deposits 46,173 52,561 15,011 Certificates of deposit, less than $250,000 165,793 142,246 160,968 Certificates of deposit, $250,000 or greater 59,877 53,584 49,172 Brokered deposits 48,698 17,016 41,287 Total Interest bearing 590,810 521,849 526,980 Total Deposits $ 860,446 $ 748,562 $ 685,656 The Bank has substantially improved its deposit and funding mix over the past year, while reducing its aggregate cost of funds.

Further discussion of the final derivatives is set forth in Note 11 and Note 21 to the Consolidated Financial Statements. 27 Table of Contents Deposits The following table is a summary of the Company’s deposits at the dates shown: (In thousands) December 31, 2023 2022 2021 Non-interest bearing: Non-interest bearing $ 95,109 $ 118,541 $ 140,384 Non-interest bearing DDA- Digital Payments 14,947 151,095 86,329 Total non-interest bearing 110,056 269,636 226,713 Interest bearing: Negotiable order of withdrawal accounts (NOW) 42,416 34,440 34,741 Savings 44,104 71,002 109,744 Interest bearing DDA - Digital Payments 162,196 — — Money market 166,294 164,827 111,957 Money market - Digital Payments 33,986 46,173 52,561 Certificates of deposit, less than $250,000 175,988 165,793 142,246 Certificates of deposit, $250,000 or greater 64,745 59,877 53,584 Brokered deposits 40,526 48,698 17,016 Total Interest bearing 730,255 590,810 521,849 Total Deposits $ 840,311 $ 860,446 $ 748,562 Total Digital Payments deposits $ 213,383 $ 197,268 $ 138,890 Total retail bank deposits $ 394,819 $ 430,650 $ 493,066 As of December 31, 2023, total deposits decreased $20.1 million, primarily due to a decline in retail branch deposits partially offset by a growth in digital payments deposits.

In 2020, an impairment charge of $206,000 was recorded for the year ended December 31, 2020, due to the decline in interest rates in 2020. The Company performed a review of the CDI as of October 31, 2022 and determined that there was no impairment of the CDI as of December 31, 2022.

The Company performed a review of the CDI as of October 31, 2023 and determined that there was no impairment of the CDI as of December 31, 2023.

Significant variances are summarized below and discussed in detail subsequently: • Interest and dividend income increased $11.7 million; • Interest expense increased $3.7 million; • Net interest income increased $8.0 million; • Provision for loan losses increased $2.4 million; • Non-interest income decreased $818,000; and • Non-interest expense increased $2.1 million.

Significant variances are summarized below and discussed in detail subsequently: • Interest and dividend income increased $14.9 million; • Interest expense increased $19.7 million; • Net interest income decreased $4.8 million; • Provision for credit losses increased $5.5 million; • Non-interest income increased $2.4 million; and • Non-interest expense increased $5.5 million. 30 Table of Contents Net interest income Net interest income is the difference between interest income on interest earning assets and interest expense on interest-bearing liabilities.

Patriot’s swaps are derivatives, but are not designated as hedging instruments, thus any net gain or loss resulting from changes in the fair value is recognized in other non-interest income. No gain on the swaps was recognized for the year ended December 31, 2023, 2022 and 2021.

Loans made by the Bank under the SBA 7(a) program generally are made to small businesses to provide working capital or to provide funding for the purchase of businesses, real estate, or equipment. SBA loans are made based primarily on the historical and projected cash flow of the business and secondarily on the underlying collateral provided.

In comparison, at December 31, 2022, loans held for sale solely for SBA loans amounted to $5.2 million. SBA loans made by the Bank under the SBA 7(a) program generally are made to small businesses to provide working capital or to provide funding for the purchase of businesses, real estate, or equipment.

Provision (Credit) for loan losses For the year ended December 31, 2022, the Bank recorded a provision for loan losses of $1.9 million reflecting the increased loan balance and higher charge-offs associated with a purchased consumer loan portfolio.

For the year ended December 31, 2022, a provision for loan losses of $1.9 million was recorded, with no recorded reserve for the off-balance-sheet exposure .

Additionally, the Bank retains a collateralized borrowing line with the Federal Reserve Bank which totaled $20.4 million at December 31, 2022 and correspondent bank borrowing lines totaling $24.5 million at December 31, 2022. 33 Table of Contents As of December 31, 2022, the maturities of Patriot’s contractual obligations are as follows: (In thousands) Contractual Obligations Due Contractual Obligation Category Less than One Year One to Three Years Three to Five Years Over Five Years Total Certificates of deposit $ 169,088 $ 43,876 $ 12,706 $ — $ 225,670 Brokered deposits 43,589 5,109 — — 48,698 Federal Home Loan Bank borrowings 55,000 30,000 — — 85,000 Senior notes — — 12,000 — 12,000 Subordinated debt — — — 10,000 10,000 Junior subordinated debt — — — 8,248 8,248 Note payable 210 375 — — 585 Operating lease obligations 583 775 551 830 2,739 Total contractual obligations $ 268,470 $ 80,135 $ 25,257 $ 19,078 $ 392,940 Management manages its capital resources by seeking to maintain a capital structure that will ensure an adequate level of capital to support anticipated asset growth and absorb potential losses while effectively leveraging capital to enhance profitability and return to shareholders.

As of December 31, 2023, the maturities of Patriot’s contractual obligations are as follows: (In thousands) Contractual Obligations Due Contractual Obligation Category Less than One Year One to Three Years Three to Five Years Over Five Years Total Certificates of deposit $ 200,178 $ 40,219 $ 336 $ — $ 240,733 Brokered deposits 33,853 6,673 — — 40,526 FHB, FRB and correspondent bank borrowings 171,000 — — — 171,000 Senior notes — 12,000 — — 12,000 Subordinated debt — — 10,000 — 10,000 Junior subordinated debt — — — 8,248 8,248 Note payable 376 — — — 376 Operating lease obligations 457 634 403 679 2,173 Total contractual obligations $ 405,864 $ 59,526 $ 10,739 $ 8,927 $ 485,056 Management manages its capital resources by seeking to maintain a capital structure that will ensure an adequate level of capital to support anticipated asset growth and absorb potential losses while effectively leveraging capital to enhance profitability and return to shareholders.

As of December 31, 2021, the $23.1 million of non-accrual loans was comprised of thirty borrowers, for which a specific reserve of $2.3 million had been established.

The $18.1 million of non-accrual loans at December 31, 2023 was comprised of 139 borrowers. Of these, 19 loans were individually evaluated and a specific reserve of $4.2 million was established as of December 31, 2023.

The increase was primarily attributable to a provision for loan losses of $1.9 million due to increased loan balances and additional specific reserve for one impaired loan, which was partially offset by net charge-offs of $1.5 million for the year ended December 31, 2022.

The increase was primarily due to the adoption of CECL as the Company recorded a transition adjustment of $13.0 million effective January 1, 2023 and a provision for credit losses on loans of $9.9 million, which was partially offset by net charge-offs of $17.3 million for the year ended December 31, 2023.

Patriot sells the guaranteed portion of SBA loans for liquidity purposes and to generate non-interest income. Loans held for sale represent the guaranteed portion of SBA loans and are reflected at the lower of aggregate cost or market value.

Loans held for sale represent the guaranteed portion of SBA loans and are reflected at the lower of aggregate cost or market value. SBA loans held for sale at December 31, 2023 consisted of $3.5 million SBA commercial and industrial loans and $6.4 million SBA commercial real estate.

At December 31, 2022, the net loan to deposit ratio was 97.4% and the net loan to total assets ratio was 80.3%.

SBA loans included in the commercial and industrial loan were $17.1 million and $20.3 million as of December 31, 2023 and 2022, respectively. At December 31, 2023, the net loan to deposit ratio was 99.1% and the net loan to total assets ratio was 76.2%. At December 31, 2022, these ratios were 97.4% and 80.3%, respectively.

Cash and cash equivalents Cash and cash equivalents decreased $8.6 million or 18.2%, from $47.0 million at December 31, 2021 to $38.5 million as of December 31, 2022. The decrease as of December 31, 2022 was primarily attributable to increase in loan origination and purchased loans.

The increase was primarily driven by a rise in cash, cash equivalents and restricted cash of $28.0 million, and an increase in loans held for sale of $15.6 million. 21 Table of Contents Cash, cash equivalents and restricted cash Cash, cash equivalents and restricted cash increased $28.0 million or 72.9%, from $38.5 million at December 31, 2022 to $66.5 million as of December 31, 2023.

There were no sales of available-for-sales securities during the year ended December 31, 2022 and 2020.

During the year ended December 31, 2023, the Bank sold $1.8 million available-for-sale securities and recognized $24,000 net gain on sale. There was no sale of available-for-sales securities during the year ended December 31, 2022. In 2021, the Bank sold $58.8 million available-for-sale securities and recognized net gain on sale of securities of $76,000.

The decrease was primarily attributable to lower net realized gains on sale of SBA loans as premiums available in the SBA secondary market declined during the year. 32 Table of Contents Non-interest expense For the year ended December 31, 2022, non-interest expense increased to $27.2 million, as compared to $25.2 million for 2021.

Non-interest income For the year ended December 31, 2023, non-interest income increased to $6.0 million, as compared to $3.6 million in 2022. The increase was primarily attributable to higher non-interest income from the digital payments program in 2023, partially offset by a lower gain on sale of SBA loans.

The Bank’s Tier 1 leverage ratio as of December 31, 2022 and 2021 was 9.3% and 9.9%, respectively, which is above the well-capitalized required level of 9.0%. Management continuously assesses the adequacy of the Bank’s capital with the goal to maintain a “well capitalized” classification. 34 Table of Contents

That plan established the following capital limits which the Bank exceeded at December 31, 2023: Total Capital to risk weighted assets 10.50% Tier 1 Capital to Risk weighted assets 9.30% Common Equity Tier 1 Capital to Risk weighted assets 9.30% Tier 1 Leverage Capital to average assets 8.10% Management continuously assesses the adequacy of the Bank’s capital with the goal to maintain a “well capitalized” classification. 35 Table of Contents

The decreases in premises and equipment were normal depreciation of the active premises and equipment during the year ended December 31, 2022. In 2021, the Bank sold a building in New Haven, Connecticut, and recognized proceeds from the sale of $1.5 million for the year ended December 31, 2021. The Bank did not sell any property and equipment in 2022.

Premises and equipment As of December 31, 2023 and 2022, Patriot recorded premises and equipment of $29.9 million and $30.6 million, respectively. The decreases in premises and equipment were normal depreciation of the active premises and equipment during the year ended December 31, 2023.

These loans generally are collateralized by the underlying real estate and supported by personal guarantees of the borrowers. 24 Table of Contents Allowance for loan and lease losses The allowance for loan and lease losses increased $405,000 from $9.9 million at December 31, 2021 to $10.3 million at December 31, 2022.

As of December 31, 2023, the investments in Commercial Real Estate and Commercial and Industrial were approximately 74.9% of total loans receivable. These loans generally are collateralized by the underlying real estate and supported by personal guarantees of the borrowers. Allowance for credit losses The Company adopted ASU 2016-13 effective January 1, 2023.

As of December 31, 2022 and 2021, the Bank’s off-balance sheet commitments were $154.3 million and $127.0 million, respectively. REGULATORY CAPITAL REQUIREMENTS In September 2019, the community bank leverage ratio (CBLR) framework was jointly issued by the FDIC, OCC and FRB.

As of December 31, 2023 and 2022, the Bank’s off-balance sheet commitments were $92.5 million and $154.3 million, respectively. 34 Table of Contents REGULATORY CAPITAL REQUIREMENTS The following tables illustrate the Company’s and the Bank’s regulatory capital ratios at December 31, 2023: December 31, 2023 Patriot National Bancorp, Inc. Patriot Bank, N.A.

Removed

Allowance for Loan and Lease Losses (ALLL) The Company maintains an ALLL at a level management believes is sufficient to absorb estimated credit losses incurred as of the report date. Management’s determination of the adequacy of the ALLL is based on periodic evaluations of the loan portfolio and other relevant factors.

Added

Allowance for Credit Losses (ACL) The Company adopted Accounting Standards Update (“ASU”) 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, Accounting Standard Codification (“ASC”) 326, effective January 1, 2023, which introduced the current expected credit loss (“CECL”) methodology for estimating all expected losses over the life of a financial asset.

Removed

However, this evaluation is inherently subjective as it requires significant estimates by management.

Added

The allowance for credit losses represents management’s estimate of expected credit losses over the life of a financial asset carried at amortized cost.

Removed

As applicable, consideration is given to a variety of factors in establishing these estimates including historical losses, peer and industry data, current economic conditions, the size and composition of the loan portfolio, delinquency statistics, criticized and classified assets and impaired loans, results of internal loan reviews, borrowers’ perceived financial and management strengths, the adequacy of underlying collateral, the dependence on collateral, and the strength of the present value of future cash flows and other relevant factors.

Added

Determining the amount of the allowance for credit losses is considered a critical accounting estimate because it requires significant judgment and the use of estimates related to the fair value of the underlying collateral and amount and timing of expected future cash flows on individually assessed financial assets, estimated credit losses on pools of loans with similar risk characteristics, and consideration of reasonable and supportable forecasts of macroeconomic conditions, all of which are susceptible to significant change.

Removed

These factors may be susceptible to significant change. To the extent actual outcomes differ from management’s estimates, additional provisions for loan losses may be required, which may adversely affect the Company’s results of operations in the future.

Added

The Company also maintains an allowance for lending-related commitments, specifically unfunded loan commitments, which relates to certain amounts the Company is committed to lend (not unconditionally cancellable) but for which funds have not yet been disbursed. Loans deemed uncollectible are charged against and reduce the allowance.

Removed

Subsequent to acquisition of purchased-credit-impaired loans, estimates of cash flows expected to be collected are updated each reporting period based on updated assumptions regarding default rates, loss severity, and other factors that are reflective of current market conditions.

Added

A provision for credit losses is charged to current expense and acts to replenish the ACL in order to maintain the allowance at a level that management deems adequate. Determining the allowance involves significant judgments and assumptions by management. Because of the nature of the judgments and assumptions made by management, actual results may differ from these judgments and assumptions.

Removed

Subsequent decreases in expected cash flows will generally result in a provision for loan losses; subsequent increases in expected cash flows may result in a reversal of the provision for loan losses to the extent of prior charges.

Added

Government agency debt and mortgage-backed securities issued by the U.S. government, corporate bonds, subordinated notes and SBA loan pools. Effective January1, 2023, as a result of adopting ASU No. 2016-13, quarterly assessments are conducted to evaluate impairment credit losses on available-for-sale debt securities.

Removed

The new accounting standard, CECL, effective for the Company as of January 1, 2023. will require the Bank to determine periodic estimates of lifetime expected credit losses on loans, other financial instruments and other commitments to extend credit and provide for the expected credit losses as allowances for credit losses.

Added

These evaluations consider factors like fair value deviation from cost, issuer financial health, and the Company's intent to hold securities for fair value recovery. Impairments due to non-credit factors are recorded in other comprehensive income, while credit-related impairments are recognized as allowances for credit losses on the balance sheet.

Removed

This will change our current method of providing allowance for loan losses and require us to record an allowance for credit losses as of January 1,2023 materially in excess of our existing allowance for loan losses.

Added

If a security is likely to be sold before amortized cost basis recovery, the entire impairment is recognized in net income with an adjustment to the security's basis.

Removed

CECL will also greatly increase the data we will need to collect and review to determine the appropriate level of the allowance for credit losses and will likely require larger allowances for credit losses going forward than our current methodology. 19 Table of Contents Unrealized Gains and Losses on Securities Available-for-sale The Company receives estimated fair values of debt securities from independent valuation services and brokers.

… 64 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

3 edited+1 added−2 removed12 unchanged

2022 filing

2023 filing

Biggest change(In thousands) Net Portfolio Value - Performance Summary As of December 31, 2022 As of December 31, 2021 Projected Interest Rate Scenario Estimated Value Change from Base ($) Change from Base (%) Estimated Value Change from Base ($) Change from Base (%) +200 $ 146,888 $ (15,357) (9.47) % $ 116,941 $ (15,137) (11.46) % +100 157,368 (4,877) (3.01) % 126,152 (5,926) (4.49) % BASE 162,245 — — 132,078 — — -100 163,472 1,227 0.76 % 135,803 3,725 2.82 % -200 155,386 (6,859) (4.23) % 134,277 2,199 1.66 % Net Interest Income - Performance Summary December 31, 2022 December 31, 2021 Projected Interest Rate Scenario Estimated Value Change from Base ($) Change from Base (%) Estimated Value Change from Base ($) Change from Base (%) +200 $ 46,131 $ (1,177) (2.49) % $ 31,521 $ 45 0.14 % +100 46,938 (370) (0.78) % 31,575 99 0.31 % BASE 47,308 — — 31,476 — — -100 47,657 349 0.74 % 31,587 111 0.35 % -200 46,747 (561) (1.19) % 31,548 72 0.23 % Impact of Inflation and Changing Prices Patriot’s financial statements have been prepared in terms of historical dollars, without considering changes in relative purchasing power of money over time due to inflation.

Biggest change(In thousands) Net Portfolio Value - Performance Summary As of December 31, 2023 As of December 31, 2022 Projected Interest Rate Scenario Estimated Value Change from Base ($) Change from Base (%) Estimated Value Change from Base ($) Change from Base (%) +200 $ 107,524 $ (5,779) (5.10) % $ 146,888 $ (15,357) (9.47) % +100 112,036 (1,267) (1.12) % 157,368 (4,877) (3.01) % BASE 113,303 — — 162,245 — — -100 114,032 729 0.64 % 163,472 1,227 0.76 % -200 106,718 (6,585) (5.81) % 155,386 (6,859) (4.23) % 36 Table of Contents Net Interest Income - Performance Summary December 31, 2023 December 31, 2022 Projected Interest Rate Scenario Estimated Value Change from Base ($) Change from Base (%) Estimated Value Change from Base ($) Change from Base (%) +200 $ 34,529 $ 483 1.42 % $ 46,131 $ (1,177) (2.49) % +100 34,425 379 1.11 % 46,938 (370) (0.78) % BASE 34,046 — — 47,308 — — -100 34,120 74 0.22 % 47,657 349 0.74 % -200 34,595 549 1.61 % 46,747 (561) (1.19) % Impact of Inflation and Changing Prices Patriot’s financial statements have been prepared in terms of historical dollars, without considering changes in relative purchasing power of money over time due to inflation.

Interest rates do not necessarily move in the same direction or in the same magnitude as the prices of goods and services. Notwithstanding this, inflation can directly affect the value of loan collateral, in particular, real estate. Inflation, or disinflation, could significantly affect Patriot’s earnings in future periods. 36 Table of Contents

Management regularly reviews the potential effect changes in interest rates could have on the repayment of rate sensitive assets and funding requirements of rate sensitive liabilities. 35 Table of Contents The tables below set forth examples of changes in estimated net interest income and the estimated net portfolio value based on projected scenarios of interest rate increases and decreases.

Management regularly reviews the potential effect changes in interest rates could have on the repayment of rate sensitive assets and funding requirements of rate sensitive liabilities. The tables below set forth examples of changes in estimated net interest income and the estimated net portfolio value based on projected scenarios of interest rate increases and decreases.

Removed

Rate changes are rarely instantaneous, and these analyses may therefore overstate the impact of short-term repricing. As a result of the historically low interest rate environment, the calculated effects of the 100 and 200 basis point downward shocks cannot absolutely reflect the risk to earnings and equity, since the interest rates on certain balance sheet items have approached their minimums.

Added

Rate changes are rarely instantaneous, and these analyses may therefore overstate the impact of short-term repricing.

Removed

Therefore, it is not possible for the analyses to fully measure the true impact of these downward shocks.

Top changes in PATRIOT NATIONAL BANCORP INC's 2023 10-K

Item 1. Business

Item 1A. Risk Factors

Item 2. Properties

Item 3. Legal Proceedings

Item 4. Mine Safety Disclosures

Item 5. Market for Registrant's Common Equity

Item 7. Management's Discussion & Analysis

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Other PNBK 10-K year-over-year comparisons