10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2019

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to ______

Commission file number 000-29599

 PATRIOT NATIONAL BANCORP, INC.

(Exact name of registrant as specified in its charter)

Connecticut	06-1559137
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
900 Bedford Street, Stamford, Connecticut	06901
(Address of principal executive offices)	(Zip Code)

(203) 324-7500

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes   ☒    No ☐

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes ☒    No   ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☒
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes   ☐    No ☒

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

 PROCEEDINGS DURING THE PRECEDING FIVE YEARS: 

Indicate by check mark whether the registrant has filed all documents and reports to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.    Yes   ☐    No   ☐ 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	PNBK	NASDAQ Global Market

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

As of May 10, 2019, there were 3,921,910 shares of the registrant’s common stock outstanding.

1

Table of Contents

Table of Contents			2
PART I- FINANCIAL INFORMATION			3
	Item 1: Consolidated Financial Statements		3
		Consolidated Balance Sheets (Unaudited)	3
		Consolidated Statements of Income (Unaudited)	4
		Consolidated Statements of Comprehensive (Loss) Income  (Unaudited)	5
		Consolidated Statements of Shareholder's Equity (Unaudited)	6
		Consolidated Statements of Cash Flows (Unaudited)	7
		Note to Consolidated Financial Statements (Unaudited)	9
	Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations		39
	Item 3: Quantitative and Qualitative Disclosures about Market Risk		51
	Item 4: Disclosure Controls and Procedures		53
PART II - OTHER INFORMATION			54
	Item 1: Legal Proceedings		54
	Item 5: Other Information		54
	Item 6: Exhibits		55
	SIGNATURES		57

2

PART I- FINANCIAL INFORMATION

Item 1: Consolidated Financial Statements

PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS (Unaudited)

(In thousands, except share data)	March 31, 2019			December 31, 2018
ASSETS
Cash and due from banks:
Noninterest bearing deposits and cash	$	6,661			7,381
Interest bearing deposits		49,971			59,056
Total cash and cash equivalents		56,632			66,437
Investment securities:
Available-for-sale securities, at fair value		40,275			39,496
Other investments, at cost		4,963			4,963
Total investment securities		45,238			44,459
Federal Reserve Bank stock, at cost		2,892			2,866
Federal Home Loan Bank stock, at cost		4,513			4,928
Loans receivable (net of allowance for loan losses: 2019: $7,823, 2018: $7,609)		780,713			772,767
Accrued interest and dividends receivable		3,621			3,766
Premises and equipment, net		35,335			35,435
Other real estate owned		2,945			2,945
Deferred tax asset, net		10,357			10,851
Goodwill		1,107			1,728
Core deposit intangible, net		680			698
Other assets		9,075			4,816
Total assets	$	953,108			951,696
Liabilities
Deposits:
Noninterest bearing deposits	$	82,248			84,471
Interest bearing deposits		670,573			658,810
Total deposits		752,821			743,281
Federal Home Loan Bank and correspondent bank borrowings		90,000			100,000
Senior notes, net		11,796			11,778
Subordinated debt, net		9,731			9,723
Junior subordinated debt owed to unconsolidated trust, net		8,096			8,094
Note payable		1,339			1,388
Advances from borrowers for taxes and insurance		1,922			2,926
Accrued expenses and other liabilities		7,754			5,166
Total liabilities		883,459			882,356
Commitments and Contingencies
Shareholders' equity
Preferred stock, no par value; 1,000,000 shares authorized, no shares issued and outstanding		-			-
Common stock, $.01 par value, 100,000,000 shares authorized; 2019: 3,993,351 shares issued; 3,919,610 shares outstanding. 2018: 3,984,415 shares issued; 3,910,674 shares outstanding		40			40
Additional paid-in capital		107,143			107,095
Accumulated deficit		(35,517	)		(35,790	)
Less: Treasury stock, at cost: 2019 and 2018, 73,741 and 73,741 shares, respectively		(1,179	)		(1,179	)
Accumulated other comprehensive loss		(838	)		(826	)
Total shareholders' equity		69,649			69,340
Total liabilities and shareholders' equity	$	953,108			951,696

See Accompanying Notes to Consolidated Financial Statements.

3

PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

	Three Months Ended March 31,
(In thousands, except per share amounts)	2019		2018
Interest and Dividend Income
Interest and fees on loans	$	9,741		8,774
Interest on investment securities		385		266
Dividends on investment securities		118		121
Other interest income		327		151
Total interest and dividend income		10,571		9,312
Interest Expense
Interest on deposits		3,264		1,657
Interest on Federal Home Loan Bank borrowings		439		257
Interest on senior debt		229		229
Interest on subordinated debt		289		99
Interest on note payable and other		6		7
Total interest expense		4,227		2,249
Net interest income		6,344		7,063
Provision for Loan Losses		165		185
Net interest income after provision for loan losses		6,179		6,878
Non-interest Income
Loan application, inspection and processing fees		14		8
Deposit fees and service charges		127		134
Gains on sales of loans		456		-
Rental Income		130		84
Other income		95		96
Total non-interest income		822		322
Non-interest Expense
Salaries and benefits		3,184		2,769
Occupancy and equipment expense		917		741
Data processing expense		370		317
Professional and other outside services		771		572
Merger and tax initiative project expenses		80		523
Advertising and promotional expense		115		78
Loan administration and processing expense		14		13
Regulatory assessments		315		252
Insurance expense		41		55
Communications, stationary and supplies		134		113
Other operating expense		569		358
Total non-interest expense		6,510		5,791
Income before income taxes		491		1,409
Provision for Income Taxes		168		344
Net income	$	323		1,065
Basic earnings per share	$	0.08		0.27
Diluted earnings per share	$	0.08		0.27

See Accompanying Notes to Consolidated Financial Statements.

4

PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (Unaudited)

(In thousands)	Three Months Ended March 31,
	2019			2018
Net income	$	323			1,065
Other comprehensive income
Unrealized holding loss on securities		(15	)		(307	)
Income tax effect		3			83
Total other comprehensive loss		(12	)		(224	)
Comprehensive income	$	311			841

See Accompanying Notes to Consolidated Financial Statements.

5

PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (Unaudited)

(In thousands, except shares)	Number of Shares		Common Stock		Additional Paid-in Capital		Accumulated Deficit			Treasury Stock			Accumulated Other Comprehensive (Loss) Income			Total
Balance at December 31, 2018		3,910,674	$	40		107,095		(35,790	)		(1,179	)		(826	)		69,340
Comprehensive income:
Net income		-		-		-		323			-			-			323
Unrealized holding loss on available-for-sale securities, net of tax		-		-		-		-			-			(12	)		(12	)
Total comprehensive income		-		-		-		323			-			(12	)		311
Common stock dividends		-		-		-		(39	)		-			-			(39	)
Share-based compensation expense		-		-		48		-			-			-			48
Vesting of restricted stock		8,936		-		-		-			-			-			-
Cumulative effect of adopting ASU 2016-02		-		-		-		(11	)		-			-			(11	)
Balance at March 31, 2019		3,919,610	$	40		107,143		(35,517	)		(1,179	)		(838	)		69,649
Balance at December 31, 2017		3,899,675	$	40		106,875		(38,832	)		(1,179	)		(155	)		66,749
Comprehensive income:
Net income		-		-		-		1,065			-			-			1,065
Unrealized holding loss on available-for-sale securities, net of tax		-		-		-		-			-			(224	)		(224	)
Total comprehensive income		-		-		-		1,065			-			(224	)		841
Common stock dividends		-		-		-		(38	)		-			-			(38	)
Share-based compensation expense		-		-		53		-			-			-			53
Vesting of restricted stock		2,935		-		-		-			-			-			-
Balance at March 31, 2018		3,902,610	$	40		106,928		(37,805	)		(1,179	)		(379	)		67,605

 See Accompanying Notes to Consolidated Financial Statements.

6

PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(In thousands)	Three Months Ended March 31,
	2019			2018
Cash Flows from Operating Activities:
Net income	$	323			1,065
Adjustments to reconcile net income to net cash provided by operating activities:
(Accretion) amortization of investment premiums, net		(11	)		13
Amortization and accretion of purchase loan premiums and discounts		174			176
Amortization of debt issuance costs		28			21
Amortization of core deposit intangible		18			-
Provision for loan losses		165			185
Depreciation and amortization		389			350
Share-based compensation		48			53
Decrease (increase) in deferred income taxes		497			(855	)
Changes in assets and liabilities:
Decrease (increase) in accrued interest and dividends receivable		145			(9	)
(Increase) decrease in other assets		(862	)		102
(Decrease) increase in accrued expenses and other liabilities		(479	)		574
Net cash provided by operating activities		435			1,675
Cash Flows from Investing Activities:
Principal repayments on available-for-sale securities		613			463
Purchases of available-for-sale securities		(1,396	)		-
Purchases of Federal Reserve Bank stock		(26	)		(24	)
Redemptions of Federal Home Loan Bank stock		415			-
Increase in originated loans receivable, net		(3,481	)		(5,081	)
Purchases of loans receivable		(4,804	)		-
Purchase of premises and equipment		(9	)		(630	)
Escrow deposit for pending acquisition		-			(500	)
Net cash used in investing activities		(8,688	)		(5,772	)
Cash Flows from Financing Activities:
Increase in deposits, net		9,540			17,859
Repayments of FHLB borrowings		(10,000	)		-
Principal repayments of note payable		(49	)		(48	)
Decrease in advances from borrowers for taxes and insurance		(1,004	)		(925	)
Dividends paid on common stock		(39	)		(38	)
Net cash (used) provided by financing activities		(1,552	)		16,848
Net (decrease) increase in cash and cash equivalents		(9,805	)		12,751
Cash and cash equivalents at beginning of period		66,437			48,729
Cash and cash equivalents at end of period	$	56,632			61,480

See Accompanying Notes to Consolidated Financial Statements.

7

PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Continued)

(In thousands)	Three Months Ended March 31,
	2019			2018
Supplemental Disclosures of Cash Flow Information:
Cash paid for interest	$	3,950			1,844
Cash paid for income taxes	$	18			125
Purchase of premises and equipment	$	280			-
Increase in accrued expense and other liabilities		(280	)		-
	$	-			-
Initial recognition of operating lease right-of-use assets	$	3,397			-
Initial recognition of operating lease liabilities	$	3,444			-
Contingent liability assumed in business combination	$	621			-

See Accompanying Notes to Consolidated Financial Statements.

8

PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARY

Notes to consolidated financial statements (Unaudited)

Note 1:     Basis of Financial Statement Presentation

The accompanying unaudited condensed consolidated financial statements of Patriot National Bancorp, Inc. (the “Company”) and its wholly-owned subsidiary Patriot Bank, N.A. (the “Bank”) (collectively, “Patriot”), have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) have been omitted. The accompanying unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included on the Annual Report on Form 10-K for the year ended December 31, 2018.

The Consolidated Balance Sheet at December 31, 2018 presented herein has been derived from the audited consolidated financial statements of the Company at that date, but does not include all of the information and footnotes required by US GAAP for complete financial statements.

On May 10, 2018 the Bank completed its acquisition of Prime Bank, a Connecticut bank headquartered in Orange, CT (“Prime Bank”). The closing of the transaction added a new Patriot branch located in the Town of Orange, New Haven County, Connecticut. The results of Prime Bank’s operations are included in the Company’s Consolidated Financial Statements from the date of acquisition.

The preparation of consolidated financial statements in accordance with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and to disclose contingent assets and liabilities. Actual results could differ from those estimates. Management has identified accounting for the allowance for loan and lease losses, the analysis and valuation of its investment securities, the valuation of deferred tax assets, accounting for the business combination, and accounting for leases as certain of Patriot’s more significant accounting policies and estimates, in that they are critical to the presentation of Patriot’s financial condition and results of operations. As they concern matters that are inherently uncertain, these estimates require management to make subjective and complex judgments in the preparation of Patriot’s Consolidated Financial Statements.

Certain prior period amounts have been reclassified to conform to current year presentation.

The information furnished reflects, in the opinion of management, all normal recurring adjustments necessary for a fair presentation of the results for the interim periods presented. The results of operations for the three months ended March 31, 2019 are not necessarily indicative of the results of operations that may be expected for the remainder of 2019.

9

PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARY

Notes to consolidated financial statements (Unaudited)

Note 2:     Recent Accounting Pronouncements     

Accounting Standards Adopted During 2019

Effective January 1, 2019, the following new Accounting Standards Update (ASU) was adopted by the Company:

ASU 2016-02

In February 2016, the FASB issued ASU No. 2016-02, Leases. This ASU was issued to improve the financial reporting of leasing activities and provide a faithful representation of leasing transactions and improve understanding and comparability of a lessee's financial statements. The amendments in this ASU require lessees to recognize, on the balance sheet, assets and liabilities for the rights and obligations created by leases. Accounting by lessors will remain largely unchanged. In July 2018, the FASB issued a subsequent update which introduced a new transition method, under this new transition method, an entity initially applies the new leases standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The guidance was effective for the Company on January 1, 2019, with early adoption permitted. Management elected the transition practical expedient option. The cumulative-effect adjustment was an increase to the opening balance of accumulated deficit at the time of adoption on January 1, 2019. The Company recognized $3.4 million of right-of-use (“ROU”) assets and $3.4 million lease liabilities for operating leases on its Consolidated Balance Sheets. The standard did not have an impact on its Consolidated Income Statements.

Accounting Standards Issued But Not Yet Adopted

ASU 2016-13 

In June 2016, the 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. Under the CECL model, entities will estimate credit losses over the entire contractual term of a financial instrument from the date of initial recognition of the instrument. The ASU also changes the existing impairment model for available-for-sale debt securities. In cases where there is neither the intent nor a more-likely-than-not requirement to sell the debt security, an entity will record credit losses as an allowance rather than a direct write-down of the amortized cost basis. Additionally, ASU 2016-13 notes that credit losses related to available-for-sale debt securities and purchased credit impaired loans should be recorded through an allowance for credit losses. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, with early adoption permitted for fiscal years beginning after December 15, 2018. Management is currently evaluating the impact that the standard will have on its Consolidated Financial Statements.

ASU 2017-04

In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment: The objective of this guidance is to simplify an entity’s required test for impairment of goodwill by eliminating Step 2 from the goodwill impairment test. In Step 2 an entity measured a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. In computing the implied fair value of goodwill, an entity had to determine the fair value at the impairment date of its assets and liabilities, including any unrecognized assets and liabilities, following a procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Under this Update, an entity should perform its annual or quarterly goodwill impairment test by comparing the fair value of the reporting unit with its carrying amount and record an impairment charge for the excess of the carrying amount over the reporting unit’s fair value. The loss recognized should not exceed the total amount of goodwill allocated to the reporting unit and the entity must consider the income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. This guidance is effective for a public business entity that is an SEC filer for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. The adoption of this standard is not expected to have a material impact on the Company’s Consolidated Financial Statements.

10

PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARY

Notes to consolidated financial statements (Unaudited)

ASU 2017-08

In March 2017, the FASB issued ASU 2017-08, Premium Amortization on Purchased Callable Debt Securities, which amends the amortization period for certain purchased callable debt securities held at a premium, shortening such period to the earliest call date. The ASU is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. For all other entities, the ASU is effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Earlier application is permitted for all entities, including adoption in an interim period. If an entity early adopts the ASU in an interim period, any adjustments must be reflected as of the beginning of the fiscal year that includes that interim period. Management is currently evaluating the impact the adoption of ASU 2017-08 will have on its Consolidated Financial Statements.

ASU 2017-12

"Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities." ASU 2017-12 was issued to ease the burden associated with assessing hedge effectiveness and to promote better financial statement alignment of the recognition and presentation of the effects of the hedging instrument and the hedged item. This guidance requires entities to present the earnings effect of the hedging instrument in the same income statement line item with the earnings effect on the hedged item. In October 2018, FASB issued ASU 2018-16, "Derivatives and Hedging (Topic 815): Inclusion of the Secured Overnight Financial Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes." ASU 2018-16 was issued to expand the list of benchmark interest rates for hedge accounting. The effective date for the amendment is the same as the effective date for ASU 2017-12. For public business entities, ASU 2017-12 is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. ASU 2017-12 and ASU 2018-16 are not expected to have any impact on the Consolidated Financial Statements.

ASU 2018-13

In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820) - Changes to the Disclosure Requirements for Fair Value Measurement, to modify the disclosure requirements on fair value measurements. This ASU removes requirements to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, the policy for timing of transfers between levels and the valuation processes for Level 3 fair value measurements. ASU 2018-13 clarifies that disclosure regarding measurement uncertainty is intended to communicate information about the uncertainty in measurement as of the reporting date. ASU 2018-13 adds certain disclosure requirements, including disclosure of changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. The amendments in this update are effective for annual periods and interim periods within those annual periods beginning after December 15, 2019. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements and the narrative description of measurement uncertainty should be applied prospectively, while all other amendments should be applied retrospectively for all periods presented upon their effective date. Management is currently evaluating the impact of adopting the new guidance on the Consolidated Financial Statements, but it is not expected to have a material impact.

11

PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARY

Notes to consolidated financial statements (Unaudited)

Note 3: Available-for-Sale Securities

The amortized cost, gross unrealized gains, gross unrealized losses and fair values of available-for-sale securities at March 31, 2019 and December 31, 2018 are as follows:

(In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Fair Value
March 31, 2019:
U. S. Government agency mortgage-backed securities	$	20,017		84		(125	)		19,976
Corporate bonds		14,000		-		(1,172	)		12,828
Subordinated notes		5,899		81		-			5,980
U.S. Treasury notes		1,488		3		-			1,491
	$	41,404		168		(1,297	)		40,275
December 31, 2018:
U. S. Government agency mortgage-backed securities	$	20,626		43		(196	)		20,473
Corporate bonds		14,000		-		(1,026	)		12,974
Subordinated notes		4,500		64		-			4,564
U.S. Treasury notes		1,484		1		-			1,485
	$	40,610		108		(1,222	)		39,496

The following table presents the available-for-sale securities’ gross unrealized losses and fair value, aggregated by the length of time the individual securities have been in a continuous loss position as of March 31, 2019 and December 31, 2018:

(In thousands)	Less than 12 Months					12 Months or More					Total
	Fair Value		Unrealized (Loss)			Fair Value		Unrealized (Loss)			Fair Value		Unrealized (Loss)
March 31, 2019:
U. S. Government agency mortgage-backed securities	$	2,972		(23	)		3,778		(102	)		6,750		(125	)
Corporate bonds		-		-			12,828		(1,172	)		12,828		(1,172	)
	$	2,972		(23	)		16,606		(1,274	)		19,578		(1,297	)
December 31, 2018:
U. S. Government agency mortgage-backed securities	$	8,024		(38	)		5,422		(158	)		13,446		(196	)
Corporate bonds		-		-			12,974		(1,026	)		12,974		(1,026	)
	$	8,024		(38	)		18,396		(1,184	)		26,420		(1,222	)

At March 31, 2019 and December 31, 2018, ten of seventeen and ten of sixteen available-for-sale securities had unrealized losses with an aggregate decline of 6.2% and 4.4% from the amortized cost of those securities, respectively.

Based on its quarterly reviews, management believes that none of the losses on available-for-sale securities noted above constitute an other-than-temporary impairment (“OTTI”). The noted losses are considered temporary due to market fluctuations in available interest rates on U.S. Government agency debt, mortgage-backed securities issued by U.S. Government agencies, and corporate debt. Management considers the issuers of the securities to be financially sound, the corporate bonds are investment grade, and the collectability of all contractual principal and interest payments is reasonably expected. Since Patriot is not more-likely-than-not to be required to sell the investments before recovery of the amortized cost basis and does not intend to sell the securities at a loss, none of the available-for-sale securities noted are considered to be OTTI as of March 31, 2019.

12

PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARY

Notes to consolidated financial statements (Unaudited)

At March 31, 2019 and December 31, 2018, available-for-sale securities of $6.9 million and $7.0 million were pledged primarily to secure municipal deposits, respectively. As of March 31, 2019 and December 31, 2018, $5.4 million and $5.5 million were pledged to the FRB of New York, and $1.5 million and $1.5 million were pledged to St. Louis Fed, respectively.

The following summarizes, by class and contractual maturity, the amortized cost and estimated fair value of available-for-sale debt securities held at March 31, 2019 and December 31, 2018. The mortgages underlying the mortgage-backed securities are not due at a single maturity date. Additionally, these mortgages often are and generally may be pre-paid without penalty, creating a degree of uncertainty that such investments can be held until maturity. For convenience, mortgage-backed securities have been included in the summary as a separate line item.

(In thousands)	Amortized Cost								Fair Value
	Due Within 5 years		Due After 5 years through 10 years		Due After 10 years		Total		Due Within 5 years		Due After 5 years through 10 years		Due After 10 years		Total
March 31, 2019:
Corporate bonds	$	-		9,000		5,000		14,000		-		8,278		4,550		12,828
Subordinated notes		-		5,899		-		5,899		-		5,980		-		5,980
U.S. Treasury notes		1,488		-		-		1,488		1,491		-		-		1,491
Available-for-sale securities with single maturity dates		1,488		14,899		5,000		21,387		1,491		14,258		4,550		20,299
U. S. Government agency mortgage-backed securities		9,671		2,445		7,901		20,017		9,664		2,368		7,944		19,976
	$	11,159		17,344		12,901		41,404		11,155		16,626		12,494		40,275
December 31, 2018:
Corporate bonds	$	-		9,000		5,000		14,000		-		8,537		4,437		12,974
Subordinated notes		-		4,500		-		4,500		-		4,564		-		4,564
U.S. Treasury notes		1,484		-		-		1,484		1,485		-		-		1,485
Available-for-sale securities with single maturity dates		1,484		13,500		5,000		19,984		1,485		13,101		4,437		19,023
U. S. Government agency mortgage-backed securities		6,842		5,668		8,116		20,626		6,844		5,530		8,099		20,473
	$	8,326		19,168		13,116		40,610		8,329		18,631		12,536		39,496

During the three-month period ended March 31, 2019, the Bank purchased $1.4 million Subordinated notes. There were no sales of the Bank’s available-for-sale securities in the three-month period ended March 31, 2019. There were no sales or purchases of available-for-sale securities in the three-month period ended March 31, 2018.

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PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARY

Notes to consolidated financial statements (Unaudited)

Note 4: Loans Receivable and Allowance for Loan and Lease Losses

As of March 31, 2019 and December 31, 2018, loans receivable, net, consists of the following:

(In thousands)	March 31, 2019			December 31, 2018
Loan portfolio segment:
Commercial Real Estate	$	291,556			274,938
Residential Real Estate		159,985			157,300
Commercial and Industrial		177,866			191,852
Consumer and Other		95,755			94,569
Construction		45,356			46,040
Construction to Permanent - CRE		18,018			15,677
Loans receivable, gross		788,536			780,376
Allowance for loan and lease losses		(7,823	)		(7,609	)
Loans receivable, net	$	780,713			772,767

Patriot's lending activities are conducted principally in Fairfield and New Haven Counties in Connecticut and Westchester County in New York, and the five Boroughs of New York City. Patriot originates commercial real estate loans, commercial business loans, a variety of consumer loans, and construction loans, and has purchased residential loans since 2016. All commercial and residential real estate loans are collateralized primarily by first or second mortgages on real estate. The ability and willingness of borrowers to satisfy their loan obligations is dependent to some degree on the status of the regional economy as well as upon the regional real estate market. Accordingly, the ultimate collectability of a substantial portion of the loan portfolio and the recovery of a substantial portion of any resulting real estate acquired is susceptible to changes in market conditions.

Patriot has established credit policies applicable to each type of lending activity in which it engages and evaluates the creditworthiness of each borrower. Unless extenuating circumstances exist, Patriot limits the extension of credit on commercial real estate loans to 75% of the market value of the underlying collateral. Patriot’s loan origination policy for multi-family residential real estate is limited to 80% of the market value of the underlying collateral. In the case of construction loans, the maximum loan-to-value is 75% of the “as completed” appraised value of the real estate project. Management monitors the appraised value of collateral on an on-going basis and additional collateral is requested when warranted. Real estate is the primary form of collateral, although other forms of collateral do exist and may include such assets as accounts receivable, inventory, marketable securities, time deposits, and other business assets.

In connection with the Prime Bank merger in May 2018, loans were acquired. A subset of these loans was determined to have evidence of credit deterioration at the acquisition date, which was accounted for in accordance with ASC 310-30. The purchased credit impaired (“PCI”) loans presently maintain a carrying value of $439,000 as of March 31, 2019. The loans were evaluated for impairment through the periodic reforecasting of expected cash flows.

Income is recognized on PCI loans pursuant to ASC Topic 310-30. A portion of the fair value discount has been ascribed as an accretable yield that is accreted into interest income over the estimated remaining life of the loans. The remaining non-accretable difference represents cash flows not expected to be collected.

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PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARY

Notes to consolidated financial statements (Unaudited)

A summary of changes in the accretable discount for PCI loans for the three months ended March 31, 2019 follows:

(In thousands)	For the three Months Ended March 31, 2019
Accretable discount, beginning of period	$	(792	)
Accretion		25
Other changes, net		573
Accretable discount, end of period	$	(194	)

The accretion of the accretable discount for PCI loans for the three months ended March 31, 2019 was $25,000. The other changes represent primarily loans that were either fully paid-off or totally charged off in the first quarter of 2019.

Risk characteristics of the Company’s portfolio classes include the following:

Commercial Real Estate Loans

In underwriting commercial real estate loans, Patriot evaluates both the prospective borrower’s ability to make timely payments on the loan and the value of the property securing the loans. Repayment of such loans may be negatively impacted should the borrower default, the value of the property collateralizing the loan substantially decline, or there are declines in general economic conditions. Where the owner occupies the property, Patriot also evaluates the business’ ability to repay the loan on a timely basis and may require personal guarantees, lease assignments, and/or the guarantee of the operating company.

Residential Real Estate Loans

In 2013, Patriot discontinued offering primary mortgages on personal residences. Repayment of residential real estate loans may be negatively impacted should the borrower have financial difficulties, should there be a significant decline in the value of the property securing the loan, or should there be declines in general economic conditions.

During the three months ended March 31, 2019 and 2018, Patriot purchased $4.8 million and $0 of residential real estate loans, respectively.

Commercial and Industrial Loans

Patriot’s commercial and industrial loan portfolio consists primarily of commercial business loans and lines of credit to businesses and professionals. These loans are generally for the financing of accounts receivable, purchases of inventory, purchases of new or used equipment, or for other short- or long-term working capital purposes. These loans are generally secured by business assets, but are also occasionally offered on an unsecured basis. In granting these types of loans, Patriot considers the borrower’s cash flow as the primary source of repayment, supported by the value of collateral, if any, and personal guarantees, as applicable. Repayment of commercial and industrial loans may be negatively impacted by adverse changes in economic conditions, ineffective management, claims on the borrower’s assets by others that are superior to Patriot’s claims, a loss of demand for the borrower’s products or services, or the death or disability of the borrower or other key management personnel.

Patriot originates SBA 7(a) loans, on which the SBA has historically provided guarantees of up to 75 percent of the principal balance. The guaranteed portion of the Company’s SBA loans is generally sold in the secondary market with the unguaranteed portion held in the portfolio as a loan held for investment. SBA loans are for the purpose of providing working capital, financing the purchase of equipment, inventory or commercial real estate and for other business purposes. Loans are guaranteed by the businesses' major owners. SBA loans are made based primarily on the historical and projected cash flow of the business and secondarily on the underlying collateral provided.

Patriot’s syndicated and leveraged loan portfolio are included in the commercial and industrial loan classification and are primarily comprised of loan transactions led by major financial institutions and regional banks, which are the Agent Bank or Lead Arranger, and are referred to as syndicated loans or “Shared National Credits (SNC)”. SNC loans were determined to be complementary to the Bank’s existing C&I portfolio and product offerings and provide diversification from Patriot’s typical direct-to-business lines of credit and term facilities. The Bank will participate in senior secured financings for public and privately-owned companies for acquisitions, working capital, recapitalizations, and general corporate purposes. The Bank’s strategy is to participate in these types of loan transactions.

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PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARY

Notes to consolidated financial statements (Unaudited)

Consumer and Other Loans

Patriot offers individual consumers various forms of credit including installment loans, credit cards, overdraft protection, and reserve lines of credit. Repayments of such loans are generally dependent on the personal income of the borrower, which may be negatively impacted by adverse changes in economic conditions. The Company does not place a high emphasis on originating these types of loans.

The Company does not have any lending programs commonly referred to as subprime lending. Subprime lending generally targets borrowers with weakened credit histories that are typically characterized by payment delinquencies, previous charge-offs, judgments against the consumer, a history of bankruptcies, or borrowers with questionable repayment capacity as evidenced by low credit scores or high debt-burdened ratios.

No education loans or other consumer loans were purchased during the three months period ended March 31, 2019 and 2018.

Construction Loans

Construction loans are of a short-term nature, generally of eighteen-months or less, that are secured by land intended for commercial, residential, or mixed-use development. Loan proceeds may be used for the acquisition of or improvements to the land under development and funds are generally disbursed as phases of construction are completed.

Included in this category are loans to construct single family homes where no contract of sale exists, based upon the experience and financial strength of the builder, the type and location of the property, and other factors. Construction loans tend to be personally guaranteed by the principal(s). Repayment of such loans may be negatively impacted by an inability to complete construction, a downturn in the market for new construction, by a significant increase in interest rates, or by decline in general economic conditions.

Construction to Permanent - Commercial Real Estate (“CRE”)

One time close of a construction facility with simultaneous conversion to an amortizing mortgage loan. Construction to Permanent loans combine a short term period similar to a  construction loan, generally with a variable rate, and a longer term CRE loan typically 20-25 years, resetting every five years to the Federal Home Loan Bank (“FHLB”) rate. 

Close of the construction facility typically occurs when events dictate, such as receipt of a certificate of occupancy and property stabilization, which is defined as cash flow sufficient to support a pre-defined minimum debt coverage ratio and other conditions and covenants particular to the loan. Construction facilities are typically variable rate instruments that, upon conversion to an amortizing mortgage loan, reset to a fixed rate instrument that is the greater of the in-force variable rate plus a predetermined spread over a reference rate (e.g., prime) or a minimum interest rate.

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PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARY

Notes to consolidated financial statements (Unaudited)

Allowance for Loan and Lease Losses

The following tables summarize the activity in the allowance for loan and lease losses, allocated to segments of the loan portfolio, for the three months ended March 31, 2019 and 2018:

(In thousands)	Commercial Real Estate			Residential Real Estate		Commercial and Industrial			Consumer and Other			Construction		Construction to Permanent - CRE		Unallocated			Total
Three months ended March 31, 2019
Allowance for loan and lease losses:
December 31, 2018	$	1,866			1,059		3,558			641			350		108		27			7,609
Charge-offs		-			-		-			-			-		-		-			-
Recoveries		-			-		47			2			-		-		-			49
Provisions (credits)		(4	)		330		(115	)		(51	)		5		15		(15	)		165
March 31, 2019	$	1,862			1,389		3,490			592			355		123		12			7,823
Three months ended March 31, 2018
Allowance for loan and lease losses:
December 31, 2017	$	2,212			959		2,023			568			481		54		-			6,297
Charge-offs		-			-		-			-			-		-		-			-
Recoveries		3			-		-			-			-		-		-			3
Provisions (credits)		265			114		(264	)		(22	)		7		7		78			185
March 31, 2018	$	2,480			1,073		1,759			546			488		61		78			6,485

The following tables summarize, by loan portfolio segment, the amount of loans receivable evaluated individually and collectively for impairment as of March 31, 2019 and December 31, 2018:

(In thousands)	Commercial Real Estate		Residential Real Estate		Commercial and Industrial		Consumer and Other		Construction		Construction to Permanent - CRE		Unallocated		Total
March 31, 2019
Allowance for loan and lease losses:
Individually evaluated for impairment	$	-		563		1,062		-		-		-		-		1,625
Collectively evaluated for impairment		1,862		826		2,428		592		355		123		12		6,198
Total allowance for loan losses	$	1,862		1,389		3,490		592		355		123		12		7,823
Loans receivable, gross:
Individually evaluated for impairment	$	12,026		3,766		4,598		861		8,800		-		-		30,051
PCI loans individually evaluated for impairment		-		-		439		-		-		-		-		439
Collectively evaluated for impairment		279,530		156,219		172,829		94,894		36,556		18,018		-		758,046
Total loans receivable, gross	$	291,556		159,985		177,866		95,755		45,356		18,018		-		788,536

17

PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARY

Notes to consolidated financial statements (Unaudited)

(In thousands)	Commercial Real Estate		Residential Real Estate		Commercial and Industrial		Consumer and Other		Construction		Construction to Permanent - CRE		Unallocated		Total
December 31, 2018
Allowance for loan and lease losses:
Individually evaluated for impairment	$	-		216		1,299		30		-		-		-		1,545
Collectively evaluated for impairment		1,866		843		2,259		611		350		108		27		6,064
Total allowance for loan losses	$	1,866		1,059		3,558		641		350		108		27		7,609
Loans receivable, gross:
Individually evaluated for impairment	$	4,606		2,302		4,646		864		8,800		-		-		21,218
PCI loans individually evaluated for impairment		-		-		615		-		-		-		-		615
Collectively evaluated for impairment		270,332		154,998		186,591		93,705		37,240		15,677		-		758,543
Total loans receivable, gross	$	274,938		157,300		191,852		94,569		46,040		15,677		-		780,376

Patriot monitors the credit quality of its loans receivable on an ongoing basis. Credit quality is monitored by reviewing certain indicators, including loan to value ratios, debt service coverage ratios, and credit scores.

Patriot employs a risk rating system as part of the risk assessment of its loan portfolio. At origination, lending officers are required to assign a risk rating to each loan in their portfolio, which is ratified or modified by the Loan Committee to which the loan is submitted for approval. If financial developments occur on a loan in the lending officer’s portfolio of responsibility, the risk rating is reviewed and adjusted, as applicable. In carrying out its oversight responsibilities, the Loan Committee can adjust a risk rating based on available information. In addition, the risk ratings on all commercial loans over $250,000 are reviewed annually by the Credit Department.

Additionally, Patriot retains an objective and independent third-party loan review expert to perform a quarterly analysis of the results of its risk rating process. The quarterly review is based on a randomly selected sample of loans within established parameters (e.g., value, concentration), in order to assess and validate the risk ratings assigned to individual loans. Any changes to the assigned risk ratings, based on the quarterly review, are required to be approved by the Loan Committee.

When assigning a risk rating to a loan, management utilizes the Bank’s internal eleven-point risk rating system. An asset is considered “special mention” when it has a potential weakness based on objective evidence, but does not currently expose the Company to sufficient risk to warrant classification in one of the following categories:

● Substandard: An asset is classified “substandard” if it is not adequately protected by the current net worth and paying capacity of the obligor or the collateral pledged, if any. Substandard assets have well defined weaknesses based on objective evidence, and are characterized by the distinct possibility that the Company will sustain some loss, if noted deficiencies are not corrected.

● Doubtful: Assets classified as “doubtful” have all of the weaknesses inherent in those classified as “substandard”, with the added characteristic that the identified weaknesses make collection or liquidation-in-full improbable, on the basis of currently existing facts, conditions, and values.

Charge-offs, to reduce the loan to its recoverable value, generally commence after the loan is classified as “doubtful”.

In accordance with Federal Financial Institutions Examination Council published policies establishing uniform criteria for the classification of retail credit based on delinquency status, “Open-end” and “Closed-end” credits are charged off when 180 days and 120 days delinquent, respectively.

If an account is classified as “Loss”, the full balance of the loans receivable is charged off, regardless of the potential recovery from a sale of the underlying collateral. Any amount that may be recovered on the sale of collateral underlying a loan is recognized as a “recovery” in the period in which the collateral is sold.

18

PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARY

Notes to consolidated financial statements (Unaudited)

Loan Portfolio Aging Analysis

The following tables summarize performing and non-performing (i.e., non-accruing) loans receivable by portfolio segment, by aging category, by delinquency status as of March 31, 2019.

(In thousands)	Performing (Accruing) Loans
As of March 31, 2019:	30 - 59 Days Past Due		60 - 89 Days Past Due		90 Days or Greater Past Due		Total Past Due		Current		Total Performing Loans		Non-accruing Loans		Loans Receivable Gross
Loan portfolio segment:
Commercial Real Estate:
Pass	$	208		-		-		208		272,278		272,486		-		272,486
Special mention		-		-		-		-		2,070		2,070		-		2,070
Substandard		583		431		-		1,014		5,033		6,047		10,953		17,000
		791		431		-		1,222		279,381		280,603		10,953		291,556
Residential Real Estate:
Pass		1,293		-		-		1,293		153,481		154,774		-		154,774
Special mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		1,738		1,738		3,473		5,211
		1,293		-		-		1,293		155,219		156,512		3,473		159,985
Commercial and Industrial:
Pass		454		195		600		1,249		160,419		161,668		-		161,668
Special mention		-		-		100		100		1,932		2,032		-		2,032
Substandard		-		338		-		338		9,196		9,534		4,632		14,166
		454		533		700		1,687		171,547		173,234		4,632		177,866
Consumer and Other:
Pass		1,463		168		8		1,639		93,944		95,583		-		95,583
Substandard		-		-		-		-		-		-		172		172
		1,463		168		8		1,639		93,944		95,583		172		95,755
Construction:
Pass		-		-		-		-		36,556		36,556		-		36,556
Substandard		-		-		-		-		-		-		8,800		8,800
		-		-		-		-		36,556		36,556		8,800		45,356
Construction to Permanent - CRE:
Pass		-		-		-		-		18,018		18,018		-		18,018
		-		-		-		-		18,018		18,018		-		18,018
Total	$	4,001		1,132		708		5,841		754,665		760,506		28,030		788,536
Loans receivable, gross:
Pass	$	3,418		363		608		4,389		734,696		739,085		-		739,085
Special mention		-		-		100		100		4,002		4,102		-		4,102
Substandard		583		769		-		1,352		15,967		17,319		28,030		45,349
Loans receivable, gross	$	4,001		1,132		708		5,841		754,665		760,506		28,030		788,536

19

PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARY

Notes to consolidated financial statements (Unaudited)

The following tables summarize performing and non-performing loans (i.e., non-accruing) receivable by portfolio segment, by aging category, by delinquency status as of December 31, 2018.

(In thousands)	Performing (Accruing) Loans
As of December 31, 2018:	30 - 59 Days Past Due		60 - 89 Days Past Due		90 Days or Greater Past Due		Total Past Due		Current		Total Performing Loans		Non-accruing Loans		Loans Receivable Gross
Loan portfolio segment:
Commercial Real Estate:
Pass	$	423		-		-		423		262,435		262,858		-		262,858
Special mention		-		-		958		958		2,673		3,631		-		3,631
Substandard		170		-		-		170		4,754		4,924		3,525		8,449
		593		-		958		1,551		269,862		271,413		3,525		274,938
Residential Real Estate:
Pass		637		817		-		1,454		151,509		152,963		-		152,963
Special mention		-		-		-		-		850		850		-		850
Substandard		-		-		-		-		1,481		1,481		2,006		3,487
		637		817		-		1,454		153,840		155,294		2,006		157,300
Commercial and Industrial:
Pass		150		853		234		1,237		180,293		181,530		-		181,530
Special mention		-		-		101		101		2,378		2,479		-		2,479
Substandard		-		-		-		-		3,162		3,162		4,681		7,843
		150		853		335		1,338		185,833		187,171		4,681		191,852
Consumer and Other:
Pass		20		-		23		43		94,352		94,395		-		94,395
Substandard		-		-		-		-		-		-		174		174
		20		-		23		43		94,352		94,395		174		94,569
Construction:
Pass		-		1,000		-		1,000		36,240		37,240		-		37,240
Substandard		-		-		-		-		-		-		8,800		8,800
		-		1,000		-		1,000		36,240		37,240		8,800		46,040
Construction to Permanent - CRE:
Pass		-		-		-		-		15,677		15,677		-		15,677
		-		-		-		-		15,677		15,677		-		15,677
Total	$	1,400		2,670		1,316		5,386		755,804		761,190		19,186		780,376
Loans receivable, gross:
Pass	$	1,230		2,670		257		4,157		740,506		744,663		-		744,663
Special mention		-		-		1,059		1,059		5,901		6,960		-		6,960
Substandard		170		-		-		170		9,397		9,567		19,186		28,753
Loans receivable, gross	$	1,400		2,670		1,316		5,386		755,804		761,190		19,186		780,376

20

PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARY

Notes to consolidated financial statements (Unaudited)

The following tables summarize non-performing (i.e., non-accruing) loans by aging category and status, within the applicable loan portfolio segment as of March 31, 2019 and December 31, 2018:

(In thousands)	Non-accruing Loans
	30 - 59 Days Past Due		60 - 89 Days Past Due		90 Days or Greater Past Due		Total Past Due		Current		Total Non-accruing Loans
As of March 31, 2019:
Loan portfolio segment:
Commercial Real Estate:
Substandard	$	-		-		1,011		1,011		9,942		10,953
Residential Real Estate:
Substandard		60		-		2,843		2,903		570		3,473
Commercial and Industrial:
Substandard		-		-		3,913		3,913		719		4,632
Consumer and Other:
Substandard		-		102		70		172		-		172
Construction:
Substandard		-		-		-		-		8,800		8,800
Total non-accruing loans	$	60		102		7,837		7,999		20,031		28,030
As of December 31, 2018:
Loan portfolio segment:
Commercial Real Estate:
Substandard	$	1,580		-		1,945		3,525		-		3,525
Residential Real Estate:
Substandard		-		-		2,006		2,006		-		2,006
Commercial and Industrial:
Substandard		-		15		3,941		3,956		725		4,681
Consumer and Other:
Substandard		-		86		11		97		77		174
Construction:
Substandard		-		-		8,800		8,800		-		8,800
Total non-accruing loans	$	1,580		101		16,703		18,384		802		19,186

If non-accrual loans had been performing in accordance with the original contractual terms, additional interest income of approximately $275,000 and $81,000 would have been recognized in income during the three months ended March 31, 2019 and 2018, respectively.

Additionally, certain loans for which the borrower cannot demonstrate sufficient cash flow to continue loan payments in the future and certain troubled debt restructurings (“TDRs”) are placed on non-accrual status. During the three months ended March 31, 2019 and 2018, interest income collected and recognized on non-accruing loans were $150,000 and $0, respectively.

The accrual of interest on loans is discontinued at the time the loan is 90 days past due for payment unless the loan is well-secured and in process of collection. Consumer installment loans are typically charged off no later than 180 days past due. Past due status is based on contractual terms of the loan. In all cases, loans are placed on non-accrual status or charged-off, at an earlier date, if collection of principal or interest is considered doubtful. All interest accrued, but not collected for loans that are placed on non-accrual status or charged off, is reversed against interest income. The interest on these loans is accounted for on the cash-basis method until qualifying for return to accrual status. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current, future payments are reasonably assured, and there is nine months of performance. Management considers all non-accrual loans and TDRs to be impaired. In most cases, loan payments that are past due less than 90 days, based on contractual terms, are considered collection delays and not an indication of loan impairment. The Bank considers consumer installment loans to be pools of smaller homogeneous loan balances, which are collectively evaluated for impairment.

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PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARY

Notes to consolidated financial statements (Unaudited)

Troubled Debt Restructurings (“TDR”)

On a case-by-case basis, Patriot may agree to modify the contractual terms of a borrower’s loan to assist customers who may be experiencing financial difficulty. If the borrower is experiencing financial difficulties and a concession has been made, the loan is classified as a TDR.

Substantially all TDR loan modifications involve lowering the monthly payments on such loans through either a reduction in interest rate below market rate, an extension of the term of the loan, or a combination of adjusting these two contractual attributes. TDR loan modifications may result in the forgiveness of principal or accrued interest. In addition, when modifying commercial loans, Patriot frequently obtains additional collateral or guarantor support. If the borrower has performed under the existing contractual terms of the loan and Patriot’s underwriters determine that the borrower has the capacity to continue to perform under the terms of the TDR, the loan continues accruing interest. Non-accruing TDRs may be returned to accrual status when there has been a sustained period of performance (generally six consecutive months of payments) and both principal and interest are reasonably assured of collection.

The recorded investment in TDRs was $10.9 million at March 31, 2019 and $2.1 million at December 31, 2018, respectively.

(In thousands)	March 31, 2019					December 31, 2018
Loan portfolio segment:	Number of Contracts		Recorded Investment			Number of Contracts		Recorded Investment
Commercial Real Estate		2	$	1,073			2	$	1,081
Residential Real Estate		1		292			1		296
Consumer and Other		2		690			2		689
Construction		1		8,800			-		-
Total TDR Loans		6		10,855			5		2,066
Less:
TDRs included in non-accrual loans		1		(8,800	)		-		-
Total accrual TDR Loans		5	$	2,055			5	$	2,066

During the three months ended March 31, 2019, there was one construction loan with a balance of $8.8 million modified as TDR. The loan was restructured with a maturity and payment concession. The pre-modification and post-modification outstanding recorded investment in the restructured construction loan was $8.8 million.

The construction loans modified in a TDR often involve reducing the interest rate for the remaining term of the loan, extending the maturity date at an interest rate lower than the current market rate for new debt with similar risk, extending the interest-only payment period, or substituting or adding a co-borrower or guarantor. There were no loans modified as TDRs and no defaults of TDRs during the three months ended March 31, 2018. At March 31, 2019 and December 31, 2018, there were no commitments to advance additional funds under TDRs.

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PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARY

Notes to consolidated financial statements (Unaudited)

Impaired Loans

Impaired loans may consist of non-accrual loans and/or performing and non-performing TDRs. As of March 31, 2019 and December 31, 2018, based on the on-going monitoring and analysis of the loan portfolio, impaired loans of $30.0 million and $21.2 million, respectively, were identified, for which $1.6 million and $1.5 million specific reserves were established, respectively. Loans not requiring specific reserves had sufficient collateral values, less costs to sell, supporting the net investment in the loan which includes principal balance, unamortized fees and costs and accrued interest, if any. Once a borrower is in default, Patriot is under no obligation to advance additional funds on unused commitments.

At March 31, 2019 and December 31, 2018, exposure to the impaired loans was related to 29 and 25 borrowers, respectively. In all cases, appraisal reports of the underlying collateral, if any, have been obtained from independent licensed appraisal firms. For non-performing loans, the independently determined appraised values were reduced by an estimate of the costs to sell the assets, in order to estimate the potential loss, if any, that may eventually be realized. Performing loans are monitored to determine when, if at all, additional loan loss reserves may be required for a loss of underlying collateral value.

In addition, the remaining $439,000 PCI loans acquired from Prime Bank acquisition were commercial and industrial loans. The PCI loans were originally recorded at fair value by the Bank on the date of acquisition. At March 31, 2019, those loans were considered individually evaluated for impairment, with no allowance recorded.

The following table reflects information about the impaired loans, excluding PCI loans, by class as of March 31, 2019 and December 31, 2018:

(In thousands)	March 31, 2019						December 31, 2018
	Recorded Investment		Principal Outstanding		Related Allowance		Recorded Investment		Principal Outstanding		Related Allowance
With no related allowance recorded:
Commercial Real Estate	$	12,026		12,145		-		4,606		5,109		-
Residential Real Estate		1,760		1,768		-		670		703		-
Commercial and Industrial		1,589		1,589		-		488		1,281		-
Consumer and Other		861		861		-		827		867		-
Construction		8,800		8,800		-		8,800		8,839		-
		25,036		25,163		-		15,391		16,799		-
With a related allowance recorded:
Commercial Real Estate		-		-		-		-		-		-
Residential Real Estate		2,006		2,006		563		1,632		1,632		216
Commercial and Industrial		3,009		3,009		1,062		4,158		4,208		1,299
Consumer and Other		-		-		-		37		37		30
Construction		-		-		-		-		-		-
		5,015		5,015		1,625		5,827		5,877		1,545
Impaired Loans, Total:
Commercial Real Estate		12,026		12,145		-		4,606		5,109		-
Residential Real Estate		3,766		3,774		563		2,302		2,335		216
Commercial and Industrial		4,598		4,598		1,062		4,646		5,489		1,299
Consumer and Other		861		861		-		864		904		30
Construction		8,800		8,800		-		8,800		8,839		-
Impaired Loans, Total	$	30,051		30,178		1,625		21,218		22,676		1,545

23

PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARY

Notes to consolidated financial statements (Unaudited)

The following tables summarize additional information regarding impaired loans, excluding PCI loans, by class for the three months ended March 31, 2019 and 2018.

(In thousands)	Three Months Ended March 31,
	2019				2018
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial Real Estate	$	6,440		13		2,205		25
Residential Real Estate		942		4		3,342		3
Commercial and Industrial		775		-		739		-
Consumer and Other		841		8		691		7
Construction		8,800		150		-		-
		17,798		175		6,977		35
With a related allowance recorded:
Commercial Real Estate		472		-		-		-
Residential Real Estate		2,089		-		-		-
Commercial and Industrial		3,863		-		393		-
Consumer and Other		21		-		2		-
Construction		-		-		-		-
		6,445		-		395		-
Impaired Loans, Total:
Commercial Real Estate		6,912		13		2,205		25
Residential Real Estate		3,031		4		3,342		3
Commercial and Industrial		4,638		-		1,132		-
Consumer and Other		862		8		693		7
Construction		8,800		150		-		-
Impaired Loans, Total	$	24,243		175		7,372		35

24

PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARY

Notes to consolidated financial statements (Unaudited)

Note 5:     Goodwill and Other Intangible Assets

On May 10, 2018 the Company completed its acquisition of Prime Bank, a Connecticut bank headquartered in Orange, CT. The closing of the transaction added a new Patriot branch located in the Town of Orange, New Haven County, Connecticut.

The assets acquired and liabilities assumed from Prime Bank were recorded at their fair value as of the closing date of the acquisition. Goodwill of $2.1 million was recorded at the time of the acquisition, and was adjusted to $1.7 million as of December 31, 2018, primarily due to updating of fair value of the core deposit intangibles and adjustment of cash and contingent considerations. During the three months ended March 31, 2019, goodwill was adjusted to $1.1 million as a result of reducing the amount expected to be paid pursuant to certain problem loans pending resolution by $621,000. There were no income effects resulting from the recorded measurement period adjustments for the three months ended March 31, 2019. The goodwill is all deductible for income taxes over 15 years.

Note 6:     Deposits

The following table presents the balance of deposits held, by category as of March 31, 2019 and December 31, 2018.

(In thousands)	March 31, 2019		December 31, 2018
Non-interest bearing	$	82,248	$	84,471
Interest bearing:
NOW		24,924		26,100
Savings		67,708		81,912
Money market		88,493		85,197
Certificates of deposit, less than $250,000		217,701		203,683
Certificates of deposit, $250,000 or greater		88,953		78,318
Brokered deposits		182,794		183,600
Interest bearing, Total		670,573		658,810
Total Deposits	$	752,821	$	743,281

As of March 31, 2019, contractual maturities of Certificates of Deposit (“CDs”), and brokered deposits is summarized as follows:

(In thousands)	CDs less than $250,000		CDs $250,000 or greater		Brokered Deposits		Total
1 year or less	$	139,614		58,395		145,508	$	343,517
More than 1 year through 2 years		68,372		28,199		21,320		117,891
More than 2 years through 3 years		7,972		1,519		15,467		24,958
More than 3 years through 4 years		1,316		840		499		2,655
More than 4 years through 5 years		427		-		-		427
	$	217,701		88,953		182,794	$	489,448

25

PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARY

Notes to consolidated financial statements (Unaudited)

Note 7: Share-Based Compensation and Employee Benefit Plan

The Company maintains the Patriot National Bancorp, Inc. 2012 Stock Plan (the “Plan”) to provide an incentive to directors and employees of the Company by the grant of restricted stock awards (“RSA”), options, or phantom stock units. Since 2013, the Company’s practice is to grant RSAs. As of March 31, 2019 and December 31, 2018, there were no options or phantom stock units outstanding, or that have been exercised during the period then ended.

The Plan provides for the issuance of up to 3,000,000 shares of the Company’s common stock subject to certain limitations. As of March 31, 2019, 2,870,113 shares of stock are available for issuance under the Plan. In accordance with the terms of the Plan, the vesting of RSAs and options may be accelerated at the discretion of the Compensation Committee of the Board of Directors. The Compensation Committee sets the terms and conditions applicable to the vesting of RSAs and stock option grants. RSAs granted to directors and employees generally vest in quarterly or annual installments over a three, four or five year period from the date of grant.

The following is a summary of the status of the Company’s restricted shares as of March 31, 2019 and 2018 and changes therein during the periods indicated:

Three months ended March 31, 2019:	Number of Shares Awarded			Weighted Average Grant Date Fair Value
Unvested at December 31, 2018		31,790		$	14.06
Vested		(8,936	)	$	15.07
Unvested at March 31, 2019		22,854		$	13.66
Three months ended March 31, 2018:
Unvested at December 31, 2017		25,870		$	12.15
Granted		14,199		$	17.93
Vested		(2,935	)	$	14.18
Forfeited		(100	)	$	15.50
Unvested at March 31, 2018		37,034		$	14.20

The Company recognizes compensation expense for all director and employee share-based compensation awards on a straight-line basis over the requisite service period, which is equal to the vesting schedule of each award, for each vesting portion of an award equal to its grant date fair value.

For the three months ended March 31, 2019 and 2018, the Company recognized total share-based compensation expense of $48,000 and $53,000, respectively. The share-based compensation attributable to employees of Patriot amounted to $28,000 and $35,000, for the three months ended March 31, 2019 and 2018, respectively. Included in share-based compensation expense for the three months ended March 31, 2019 and 2018, were $20,000 and $18,000 attributable to Patriot’s external directors, who received total compensation of $119,000 and $82,000 for each of those periods, respectively, which amounts are included in Other Operating Expenses in the Consolidated Statements of Income.

Unrecognized compensation expense attributable to the unvested restricted shares outstanding as of March 31, 2019 amounted to $324,000, which amount is expected to be recognized over the weighted average remaining life of the awards of 2.3 years.

RSA Grant - Non-executive Employees

During the three months ended March 31, 2019 and 2018, 0 and 100 granted RSA shares were forfeited, respectively. The remaining 6,000 RSA shares vested fully on January 4, 2019.

26

PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARY

Notes to consolidated financial statements (Unaudited)

Dividends

On July 17, 2017, the Company announced its intention to make quarterly cash dividend payments. For the three months ended March 31, 2019 and 2018, the Company paid cash dividends of $.01 per share of common stock, or an aggregated of $39,000 and $38,000, respectively.

Retirement Plan

The Company offers a 401K retirement plan (the “401K”), which provides for tax-deferred salary deductions for eligible employees. Employees may choose to make voluntary contributions to the 401K, limited to an annual maximum amount as set forth periodically by the Internal Revenue Service. The Company matches 50% of such contributions, up to a maximum of six percent of an employee's annual compensation. During the three months ended March 31, 2019 and 2018 compensation expense under the 401K aggregated $54,000 and $51,000, respectively.

Note 8: Earnings per share

The Company is required to present basic earnings per share and diluted earnings per share in its Consolidated Statements of Income. Basic earnings per share amounts are computed by dividing net income by the weighted average number of common shares outstanding. Diluted earnings per share reflects additional common shares that would have been outstanding if potentially dilutive common shares had been issued, as well as any adjustment to income that would result from the assumed issuance. Potential common shares that may be issued by the Company relate to outstanding unvested RSAs granted to directors and employees. The dilutive effect resulting from these potential shares is determined using the treasury stock method. The Company is also required to provide a reconciliation of the numerator and denominator used in the computation of both basic and diluted earnings per share.

The following table summarizes the computation of basic and diluted earnings per share for the three months ended March 31, 2019 and 2018:

(Net income in thousands)	Three Months Ended March 31,
	2019			2018
Basic earnings per share:
Net income attributable to Common shareholders	$	323		$	1,065
Divided by:
Weighted average shares outstanding		3,917,312			3,900,513
Basic earnings per common share		0.08			0.27
Diluted earnings per share:
Net income attributable to Common shareholders		323			1,065
Weighted average shares outstanding		3,917,312			3,900,513
Effect of potentially dilutive restricted common shares		-			16,601
Divided by:
Weighted average diluted shares outstanding		3,917,312	(1)		3,917,114
Diluted earnings per common share		0.08			0.27

⁽¹⁾  The weighted average diluted shares outstanding did not include 448 anti-dilutive restricted common shares as of March 31, 2019.

27

PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARY

Notes to consolidated financial statements (Unaudited)

Note 9: Financial Instruments with Off-Balance Sheet Risk

In the normal course of business, Patriot is a party to financial instruments with off-balance-sheet risk to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit and involve, to varying degrees, elements of credit and interest rate risk in excess of the amounts recognized in the balance sheet. The contractual amounts of these instruments reflect the extent of involvement Patriot has in particular classes of financial instruments.

The contractual amount of commitments to extend credit and standby letters of credit represents the maximum amount of potential accounting loss should: the contract be fully drawn upon; the customer default; and the value of any existing collateral becomes worthless. Patriot applies its credit policies to entering commitments and conditional obligations and, as with its lending activates, evaluates each customer’s creditworthiness on a case-by-case basis. Management believes that it effectively mitigates the credit risk of these financial instruments through its credit approval processes, establishing credit limits, monitoring the on-going creditworthiness of recipients and grantees, and the receipt of collateral as deemed necessary.

Financial instruments with credit risk at March 31, 2019 are as follows:

(In thousands)	As of March 31, 2019
Commitments to extend credit:
Unused lines of credit	$	58,521
Undisbursed construction loans		31,207
Home equity lines of credit		19,953
Future loan commitments		15,727
Financial standby letters of credit		1,153
	$	126,561

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments to extend credit generally have fixed expiration dates or other termination clauses, and may require payment of a fee by the borrower. Since these commitments could expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The amount of collateral obtained, if deemed necessary upon extending credit, is based on management’s credit evaluation of the customer. Collateral held varies, but may include commercial property, residential property, deposits and securities. Patriot has established a $8,000 reserve for credit loss as of March 31, 2019, which is included in accrued expenses and other liabilities.

Standby letters of credit are written commitments issued by Patriot to guarantee the performance of a customer to a third party. The credit risk involved in issuing standby letters of credit is essentially the same as that involved in extending loan facilities to customers. Guarantees that are not derivative contracts are recorded at fair value and included in the Consolidated Balance Sheet.

28

PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARY

Notes to consolidated financial statements (Unaudited)

Note 10: Regulatory and Operational Matters

In November 2018, the Bank entered into a formal written agreement (the “Agreement”) with the Office of the Comptroller of the Currency (the “OCC”).  Under the terms of the Agreement, the Bank has appointed a Compliance Committee of three independent outside directors and one member of management responsible for monitoring adherence to the Agreement and has appointed a Lead Independent Director.

The Agreement states that by December 31, 2018 the Board and Bank would develop, implement and revise written documents and policies related to executive compensation, conflict of interest, internal audit, liquidity and asset/liability management, commercial loan administration, leveraged lending, practices relating to the allowance for loan and lease losses, and assumptions used in the Bank’s interest rate risk model. Under the Agreement the Bank also agreed to provide a revised written 3-year strategic and capital plan for the Bank by December 31, 2018.  To date, the Bank has addressed each of the items in accordance with the Agreement and continues to respond to any further enhancement requested by the OCC. Further details pertaining to the Agreement are provided in Part II Item 9B: Other information included on the Annual Report on Form 10-K for the year ended December 31, 2018.

Federal and state regulatory authorities have adopted standards requiring financial institutions to maintain increased levels of capital. Effective January 1, 2015, federal banking agencies imposed four minimum capital requirements on a community bank’s risk-based capital ratios consisting of Total Capital, Tier 1 Capital, Common Equity Tier 1 (“CET1”) Capital, and a Tier 1 Leverage Capital ratio. The risk-based capital ratios measure the adequacy of a bank's capital against the riskiness of its on- and off-balance sheet assets and activities. Failure to maintain adequate capital is a basis for "prompt corrective action" or other regulatory enforcement action. In assessing a bank's capital adequacy, regulators also consider other factors such as interest rate risk exposure, liquidity, funding and market risks, quality and level of earnings, concentrations of credit, quality of loans and investments, nontraditional activity risk, policy effectiveness, and management's overall ability to monitor and control risk.

Capital adequacy is one of the most important factors used to determine the safety and soundness of individual banks and the banking system. Under the instituted regulatory framework, to be considered “well capitalized”, a financial institution must generally have a Total Capital ratio of at least 10%, a Tier 1 Capital ratio of at least 8.0%, a CET1 Capital ratio at least 6.5%, and a Tier 1 Leverage Capital ratio of at least 5.0%. However, regardless of a financial institution’s ratios, the OCC may require increased capital ratios or impose dividend restrictions based on the other factors it considers in assessing a bank’s capital adequacy.

Management continuously assesses the adequacy of the Bank’s capital in order to maintain its “well capitalized” status.

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PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARY

Notes to consolidated financial statements (Unaudited)

The Company’s and the Bank’s regulatory capital amounts and ratios at March 31, 2019 and December 31, 2018 are summarized as follows:

(In thousands)	Patriot National Bancorp, Inc.								Patriot Bank, N.A.
	March 31, 2019				December 31, 2018				March 31, 2019				December 31, 2018
	Amount ($)		Ratio (%)		Amount ($)		Ratio (%)		Amount ($)		Ratio (%)		Amount ($)		Ratio (%)
Total Capital (to risk weighted assets):
Actual		91,489		10.332		90,722		10.452		101,239		11.908		99,341		11.500
To be Well Capitalized(1)		-		-		-		-		85,016		10.000		86,384		10.000
For capital adequacy with Capital Buffer(2)		-		-		-		-		89,267		10.500		85,304		9.875
For capital adequacy		70,836		8.000		69,441		8.000		68,013		8.000		69,107		8.000
Tier 1 Capital (to risk weighted assets):
Actual		73,654		8.318		73,101		8.422		93,404		10.987		91,720		10.618
To be Well Capitalized(1)		-		-		-		-		68,013		8.000		69,107		8.000
For capital adequacy with Capital Buffer(2)		-		-		-		-		72,264		8.500		68,027		7.875
For capital adequacy		53,127		6.000		52,081		6.000		51,010		6.000		51,830		6.000
Common Equity Tier 1 Capital (to risk weighted assets):
Actual		65,654		7.415		65,101		7.500		93,404		10.987		91,720		10.618
To be Well Capitalized(1)		-		-		-		-		55,260		6.500		56,149		6.500
For capital adequacy with Capital Buffer(2)		-		-		-		-		59,511		7.000		55,069		6.375
For capital adequacy		39,845		4.500		39,061		4.500		38,257		4.500		38,873		4.500
Tier 1 Leverage Capital (to average assets):
Actual		73,654		7.721		73,101		7.842		93,404		9.789		91,720		9.838
To be Well Capitalized(1)		-		-		-		-		47,707		5.000		46,617		5.000
For capital adequacy		38,160		4.000		37,288		4.000		38,166		4.000		37,294		4.000

⁽¹⁾  Designation as "Well Capitalized" does not apply to bank holding companies - the Company. Such categorization of capital adequacy only applies to insured depository institutions - the Bank.

⁽²⁾  The Capital Conservation Buffer implemented by the FDIC began to be phased in beginning January 1, 2016. It was not applicable to periods prior to that date and does not apply to bank holding companies - the Company.

30

PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARY

Notes to consolidated financial statements (Unaudited)

Under the final capital rules that became effective on January 1, 2015, there was a requirement for a CET1 capital conservation buffer of 2.5% of risk-weighted assets, which is in addition to the other minimum risk-based capital standards in the rule. Institutions that do not maintain this required capital buffer become subject to progressively more stringent limitations on the percentage of earnings that may be distributed to shareholders or used for stock repurchases and on the payment of discretionary bonuses to senior executive management.

The capital buffer requirement is being phased in over three years beginning in 2016. The 1.875% capital conversation buffer for 2018 has been included in the minimum capital adequacy ratios in the 2018 column in the table above. The capital conversation buffer increased to 2.5% for 2019, which has been included in the minimum capital adequacy ratios in the 2019 column above.

The capital buffer requirement effectively raises the minimum required Total Capital ratio to 10.5%, the Tier 1 capital ratio to 8.5% and the CET1 capital ratio to 7.0% on a fully phased-in basis, which will be effective beginning on January 1, 2019. Management believes that, as of March 31, 2019, Patriot satisfies all capital adequacy requirements under the Basel III Capital Rules on a fully phased-in basis, as if all such requirements were currently in effect.

Note 11: Fair Value and Interest Rate Risk

Patriot measures the carrying value of certain financial assets and liabilities at fair value, as required by its policies as a financial institution and by US GAAP. The carrying values of certain assets and liabilities are measured at fair value on a recurring basis, such as available-for-sale securities; while other assets and liabilities are measured at fair value on a non-recurring basis due to external factors requiring management’s judgment to estimate potential losses of value resulting in asset impairments or the establishment of valuation reserves. Measuring assets and liabilities at fair value may result in fluctuations to carrying value that have a significant impact on the results of operations or other comprehensive income for the period and period over period.

Following is a detailed summary of the guidance provided by US GAAP regarding the application of fair value measurements and Patriot’s application thereof. Additionally, the following information includes detailed summaries of the effects fair value measurements have on the carrying amounts of asset and liabilities presented in the Consolidated Financial Statements.

The objective of fair value measurement is to value an asset that may be sold or a liability that may be transferred at the estimated value which might be obtained in a transaction between unrelated parties under current market conditions. US GAAP establishes a framework for measuring assets and liabilities at fair value, as well as certain financial instruments classified in equity. The framework provides a fair value hierarchy, which prioritizes quoted prices in active markets for identical assets and liabilities and minimizes unobservable inputs, which are inputs for which market data are not available and that are developed by management using the best information available to develop assumptions about the value market participants might place on the asset to be sold or liability to be transferred.

The three levels of the fair value hierarchy consist of:

Level 1	Unadjusted quoted market prices for identical assets or liabilities in active markets that the entity has the ability to access at the measurement date (such as active exchange-traded equity securities and certain U.S. and government agency debt securities).
Level 2	Observable inputs other than quoted prices included in Level 1, such as: -  Quoted prices for similar assets or liabilities in active markets (such as U.S. agency and government sponsored mortgage-backed securities) -  Quoted prices for identical or similar assets or liabilities in less active markets (such as certain U.S. and government agency debt securities, and corporate and municipal debt securities that trade infrequently) -  Other inputs that are observable for substantially the full term of the asset or liability (i.e. interest rates, yield curves, prepayment speeds, default rates, etc.).
Level 3	Valuation techniques that require unobservable inputs that are supported by little or no market activity and are significant to the fair value measurement of the asset or liability (such as pricing and discounted cash flow models that typically reflect management’s estimates of the assumptions a market participant would use in pricing the asset or liability).

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PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARY

Notes to consolidated financial statements (Unaudited)

A description of the valuation methodologies used for assets and liabilities recorded at fair value, and for estimating fair value for financial and non-financial instruments not recorded at fair value, is set forth below.

Cash and due from banks, federal funds sold, short-term investments, and accrued interest receivable and payable

The carrying amount is a reasonable estimate of fair value and accordingly these are classified as Level 1. These financial instruments are not recorded at fair value on a recurring basis.

Available-for-sale securities

The fair value of securities available for sale (carried at fair value) are determined by obtaining quoted market prices on nationally recognized securities exchanges (Level 1), or matrix pricing (Level 2), which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted market prices for the specific securities, but rather by relying on the securities' relationship to other benchmark quoted prices, or using unobservable inputs employing various techniques and assumptions (Level 3).

Other Investments 

The Bank’s investment portfolio includes the Solomon Hess SBA Loan Fund totaling $4.45 million. This investment is utilized by the Bank to satisfy its Community Reinvestment Act (“CRA”) lending requirements. As this fund operates as a private fund, shares in the fund are not publicly traded but may be redeemed with 60 days’ notice at cost. For that reason, the carrying amount was considered comparable to fair value at both December 31, 2018 and 2017. The remaining balance in other investments is a $513,000 time deposit that matures on October 6, 2019, which is carried at cost, which approximates fair value due to its short-term nature.

Federal Reserve Bank Stock and Federal Home Loan Bank Stock

Shares in the Federal Reserve Bank (“FRB”) and Federal Home Loan Bank (“FHLB”) are purchased and redeemed based upon their $100 par value. The stocks are non-marketable equity securities, and as such, are considered restricted securities that are carried at cost.

Loans 

The fair value of loans are estimated by discounting the future cash flows using the rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. In connection with the adoption of ASU 2016-01 on January 1, 2018, we refined our methodology to estimate the fair value of our loan portfolio using an exit price notion resulting in prior periods no longer being comparable. The exit price notion requires determination of the price at which willing market participants would transact at the measurement date under current market conditions depending on facts and circumstances, such as origination rates, credit risk, transaction costs, liquidity, national and regional market trends and other adjustments, utilizing publicly available rates and indices. The application of an exit price notion requires the use of significant judgment.

Other Real Estate Owned

The fair value of OREO the Bank may obtain is based on current appraised property value less estimated costs to sell. When fair value is based on unadjusted current appraised value, OREO is classified within Level 2 of the fair value hierarchy. Patriot classifies OREO within Level 3 of the fair value hierarchy when unobservable inputs are used to determine adjustments to appraised values. Patriot does not record OREO at fair value on a recurring basis, but rather initially records OREO at fair value on a non-recurring basis and then monitors property and market conditions that may indicate a change in value is warranted.

Derivative asset (liability) - Interest Rate Swaps

The valuation of the Company’s interest rate swaps is obtained from a third-party pricing service and is determined using a discounted cash flow analysis on the expected cash flows of each derivative. The pricing analysis is based on observable inputs for the contractual terms of the derivatives, including the period to maturity and interest rate curves. The Company has determined that the majority of the inputs used to value its interest rate derivatives fall within Level 2 of the fair value hierarchy.

32

PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARY

Notes to consolidated financial statements (Unaudited)

Deposits

The fair value of demand deposits, regular savings and certain money market deposits is the amount payable on demand at the reporting date.

The fair value of certificates of deposit and other time deposits is estimated using a discounted cash flow calculation that applies interest rates currently being offered for deposits of similar remaining maturities, estimated using local market data, to a schedule of aggregated expected maturities on such deposits. Patriot does not record deposits at fair value on a recurring basis.

Senior Notes, Subordinated Notes, and Junior Subordinated Debt

Patriot does not record senior notes at fair value on a recurring basis. The fair value of the senior notes was estimated by discounting future cash flows at rates at which similar notes would be made. The carrying value is considered comparable to fair value.

Patriot does not record subordinated notes issued in June 2018 at fair value on a recurring basis. The fair value of the subordinated notes was estimated by discounting future cash flows at rates at which similar notes would be made. The carrying value is considered comparable to fair value.

Patriot does not record junior subordinated debt at fair value on a recurring basis. Junior subordinated debt reprices quarterly, as a result, the carrying amount is considered a reasonable estimate of fair value.

Federal Home Loan Bank Borrowings 

The fair value of FHLB advances is estimated using a discounted cash flow calculation that applies current FHLB interest rates for advances of similar maturity to a schedule of maturities of such advances. Patriot does not record FHLB advances at fair value on a recurring basis.

Contingent Consideration Liability

The Company estimates the fair value of the contingent consideration liability by using a discounted cash flow model of future contingent payments based on interest income related to the acquired PCI loans. The estimated fair value of the contingent consideration liability is reviewed on a quarterly basis and any valuation adjustments resulting from a change of estimated future contingent payments based on interest income of the acquired PCI loans affecting the contingent consideration liability will be recorded through noninterest expense. Due to the significant unobservable input related to the interest income, the contingent consideration liability is classified within Level 3 of the valuation hierarchy. An increase in the interest income may result in a higher fair value of the contingent consideration liability. Alternatively, a decrease in the interest income may result in a lower estimated fair value of the contingent consideration liability.

Off-balance sheet financial instruments 

Off-balance sheet financial instruments are based on interest rate changes and fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties’ credit standing. The off-balance-sheet financial instruments (i.e., commitments to extend credit) are insignificant and are not recorded on a recurring basis.

33

PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARY

Notes to consolidated financial statements (Unaudited)

The following table provides a comparison of the carrying amounts and estimated fair values of Patriot’s financial assets and liabilities as of March 31, 2019 and December 31, 2018:

(In thousands)		March 31, 2019				December 31, 2018
	Fair Value Hierarchy	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Financial Assets:
Cash and noninterest bearing balances due from banks	Level 1	$	6,661		6,661		7,381		7,381
Interest-bearing deposits due from banks	Level 1		49,971		49,971		59,056		59,056
U. S. Government agency mortgage-backed securities	Level 2		19,976		19,976		20,473		20,473
Corporate bonds	Level 2		12,828		12,828		12,974		12,974
Subordinated notes	Level 2		5,980		5,980		4,564		4,564
U.S. Treasury notes	Level 2		1,491		1,491		1,485		1,485
Other investments	Level 2		4,963		4,963		4,963		4,963
Federal Reserve Bank stock	Level 2		2,892		2,892		2,866		2,866
Federal Home Loan Bank stock	Level 2		4,513		4,513		4,928		4,928
Loans receivable, net	Level 3		780,713		771,523		772,767		762,581
Accrued interest receivable	Level 2		3,621		3,621		3,766		3,766
Interest swap receivable	Level 2		417		417		286		286
Financial assets, total		$	894,026		884,836		895,509		885,323
Financial Liabilities:
Demand deposits	Level 2	$	82,248		82,248		84,471		84,471
Savings deposits	Level 2		67,708		67,708		81,912		81,912
Money market deposits	Level 2		88,493		88,493		85,197		85,197
NOW accounts	Level 2		24,924		24,924		26,100		26,100
Time deposits	Level 2		306,654		306,260		282,001		280,538
Brokered deposits	Level 1		182,794		182,804		183,600		183,120
FHLB borrowings	Level 2		90,000		92,509		100,000		101,369
Senior notes	Level 2		11,796		11,433		11,778		11,293
Subordinated debt	Level 2		9,731		9,490		9,723		9,348
Junior subordinated debt owed to unconsolidated trust	Level 2		8,096		8,096		8,094		8,094
Note payable	Level 3		1,339		1,222		1,388		1,239
Accrued interest payable	Level 2		1,854		1,854		1,605		1,605
Contingent consideration liability	Level 3		86		86		707		707
Interest swap liability	Level 2		417		417		286		286
Financial liabilities, total		$	876,140		877,544		876,862		875,279

The carrying amount of cash and noninterest bearing balances due from banks, interest-bearing deposits due from banks, and demand deposits approximates fair value, due to the short-term nature and high turnover of these balances. These amounts are included in the table above for informational purposes.

In the normal course of its operations, Patriot assumes interest rate risk (i.e., the risk that general interest rate levels will fluctuate). As a result, the fair value of the Patriot’s financial assets and liabilities are affected when interest market rates change, which change may be either favorable or unfavorable. Management attempts to mitigate interest rate risk by matching the maturities of its financial assets and liabilities. However, borrowers with fixed rate obligations are less likely to prepay their obligations in a rising interest rate environment and more likely to prepay their obligations in a falling interest rate environment. Conversely, depositors receiving fixed rates are more likely to withdraw funds before maturity in a rising interest rate environment and less likely to do so in a falling interest rate environment. Management monitors market rates of interest and the maturities of its financial assets and financial liabilities, adjusting the terms of new loans and deposits in an attempt to minimize interest rate risk. Additionally, management mitigates its overall interest rate risk through its available funds investment strategy.

34

PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARY

Notes to consolidated financial statements (Unaudited)

The following tables detail the financial assets measured at fair value on a recurring basis and the valuation techniques utilized relative to the fair value hierarchy, as of March 31, 2019 and December 31, 2018:

(In thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
March 31, 2019:
U. S. Government agency mortgage-backed securities	$	-		19,976		-		19,976
Corporate bonds		-		12,828		-		12,828
Subordinated notes		-		5,980		-		5,980
U.S. Treasury notes		-		1,491		-		1,491
Available-for-sale securities	$	-		40,275		-		40,275
Impaired PCI Loans, net		-		-		439		439
Contingent consideration liability		-		-		86		86
Interest swap receivable		-		417		-		417
Interest swap liability		-		417		-		417
December 31, 2018:
U. S. Government agency mortgage-backed securities	$	-		20,473		-		20,473
Corporate bonds		-		12,974		-		12,974
Subordinated notes		-		4,564		-		4,564
U.S. Treasury notes		-		1,485		-		1,485
Available-for-sale securities	$	-		39,496		-		39,496
Impaired PCI Loans, net		-		-		615		615
Contingent consideration liability		-		-		707		707
Interest swap receivable		-		286		-		286
Interest swap liability		-		286		-		286

Patriot measures certain financial assets and financial liabilities at fair value on a non-recurring basis. When circumstances dictate (e.g., impairment of long-lived assets, other than temporary impairment of collateral value), the carrying values of such financial assets and financial liabilities are adjusted to fair value or fair value less costs to sell, as may be appropriate.

During the three months ended March 31, 2019, the Company had no transfers into or out of Levels 1, 2 or 3.

35

PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARY

Notes to consolidated financial statements (Unaudited)

The table below presents the valuation methodology and unobservable inputs for level 3 assets measures at fair value on a non-recurring basis as of March 31, 2019 and December 31, 2018:

(In thousands)	Fair Value		Valuation Methodology		Unobservable Inputs		Range of Inputs
March 31, 2019:
Impaired loans, net	$	28,426		Real Estate Appraisals		Discount for appraisal type		8%	-	21%
Other Real Estate Owned		2,945		Real Estate Appraisals		Discount for appraisal type			14%
December 31, 2018:
Impaired loans, net	$	19,673		Real Estate Appraisals		Discount for appraisal type		8%	-	21%
Other Real Estate Owned		2,945		Real Estate Appraisals		Discount for appraisal type			14%

Patriot discloses fair value information about financial instruments, whether or not recognized in the Consolidated Balance Sheet, for which it is practicable to estimate that value. Certain financial instruments are excluded from disclosure requirements and, accordingly, the aggregate fair value amounts presented do not necessarily represent the complete underlying value of financial instruments included in the Consolidated Financial Statements.

The estimated fair value amounts have been measured as of March 31, 2019 and December 31, 2018, and have not been reevaluated or updated for purposes of these consolidated financial statements subsequent to those respective dates. As such, the estimated fair values of the financial instruments measured may be different than if they had been subsequently valued.

The information presented should not be interpreted as an estimate of the total fair value of Patriot’s assets and liabilities, since only a portion of Patriot’s assets and liabilities are required to be measured at fair value for financial reporting purposes. Due to the wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between Patriot’s fair value disclosures and those of other bank holding companies may not be meaningful.

36

PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARY

Notes to consolidated financial statements (Unaudited)

Note 12: Derivatives

Patriot is a party to interest rate derivatives that are not designated as hedging instruments. Under a program, Patriot will execute interest rate swaps with commercial lending customers to facilitate their respective risk management strategies. These interest rate swaps with customers are simultaneously offset by interest rate swaps that Patriot executes with a third party, such that Patriot minimizes its net risk exposure resulting from such transactions. Because the interest rate swaps associated with this program do not meet the strict hedge accounting requirements, changes in the fair value of both the customer swaps and the offsetting swaps are recognized directly in earnings. The changes in the fair value of the swaps offset each other, except for the credit risk of the counterparties, which is determined by taking into consideration the risk rating, probability of default and loss given default for all counterparties. Patriot entered the two initial interest rate swaps under the program in November 2018.

As of March 31, 2019 and December 31, 2018, Patriot had $450,000 and $300,000, respectively, in cash pledged for collateral on its interest rate swaps.

The following table presents summary information regarding these derivatives for the periods presented (dollars in thousands):

(In thousands)	Notional Amount		Maturity (Years)		Fixed Rate			Variable Rate	Fair Value
March 31, 2019:
Classified in Other Assets:
Customer interest rate swap	$	5,000		10.5		5.25	%	1 Mo. LIBOR + 1.96%	$	417
Classified in Other Liabilities:
3rd party interest rate swap	$	5,000		10.5		5.25	%	1 Mo. LIBOR + 1.96%	$	(417	)
December 31, 2018:
Classified in Other Assets:
Customer interest rate swap	$	5,000		10.5		5.25	%	1 Mo. LIBOR + 1.96%	$	286
Classified in Other Liabilities:
3rd party interest rate swap	$	5,000		10.5		5.25	%	1 Mo. LIBOR + 1.96%	$	(286	)

37

PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARY

Notes to consolidated financial statements (Unaudited)

Note 13: Leases

A lease is defined as a contract, or part of a contract, that conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. On January 1, 2019, the Company adopted ASU No. 2016-02 “Leases” (Topic 842) and all subsequent ASUs that modified Topic 842. For the Company, Topic 842 primarily affected the accounting treatment for operating lease agreements in which the Company is the lessee.

Patriot has seven non-cancelable operating leases, including four Bank branch locations and two for administrative and operational space, and one equipment lease. The leases expire on various dates through 2032 and some include renewal options. Most of the leases contain rent escalation provisions, as well as renewal options for one or more periods. The last potential year the leases can be extended through 2037. Substantially all of our leases are classified as operating leases, and therefore, were previously not recognized on the Company’s consolidated balance sheets. With the adoption of Topic 842, operating lease agreements are required to be recognized on the consolidated balance sheets as a right-of-use (“ROU”) asset and a corresponding lease liability. The Company has no finance lease (previously referred to as a capital lease).

The cumulative-effect adjustment was an increase to the opening balance of accumulated deficit at the time of adoption on January 1, 2019. The Company recognized $3.4 million of right-of-use (“ROU”) assets and $3.4 million lease liabilities for operating leases on its Consolidated Balance Sheets. The standard did not have an impact on its Consolidated Income Statements.

Operating leases are recorded as a ROU lease assets and are included in other assets on the consolidated balance sheet. The Company’s corresponding lease obligations are included in accrued expenses and other liabilities on the consolidated balance sheet. ROU lease assets represent the Company’s right to use an underlying asset for the lease term and lease obligations represent the Company’s obligation to make lease payments arising from the lease. Operating ROU lease assets and obligations are recognized at the commencement date based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option.

Lease expense for lease payments is recognized on a straight-line basis over the lease term. Short-term leases are leases having a term of twelve months or less. The Company recognizes short-term leases on a straight-line basis and does not record a related lease asset or liability for such leases, as allowed as practical expedient of the standard. The following is a maturity analysis of the operating lease liabilities as of March 31, 2019:

(in thousands)	Operating lease
Years ending December 31,	Obligation
2019	$	343
2020		464
2021		474
2022		435
2023		397
Thereafter		2,046
Total undiscounted lease payments		4,159
Less imputed interest		(798	)
Present value of operating lease liabilities	$	3,361
Operating lease right-of-use asset	$	3,305

	Three Months Ended
	March 31, 2019
Lease cost
Operating lease cost	$	122
Short-term lease cost	$	25
Other information
Operating cash flows from operating leases	$	114
Weighted -average remaining lease term - operating leases (in years)		11
Weighted -average discount rate - operating leases		3.63	%

38

Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations

"SAFE HARBOR" STATEMENT UNDER PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

Certain statements contained in the Company’s public statements, including this one, and in particular in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” may be forward looking and subject to a variety of risks and uncertainties. These factors include, but are not limited to: (1) changes in prevailing interest rates which would affect the interest earned on the Company’s interest earning assets and the interest paid on its interest bearing liabilities; (2) the timing of repricing of the Company’s interest earning assets and interest bearing liabilities; (3) the effect of changes in governmental monetary policy; (4) the effect of changes in regulations applicable to the Company and the Bank and the conduct of its business; (5) changes in competition among financial service companies, including possible further encroachment of non-banks on services traditionally provided by banks; (6) the ability of competitors that are larger than the Company to provide products and services which it is impracticable for the Company to provide; (7) the state of the economy and real estate values in the Company’s market areas, and the consequent effect on the quality of the Company’s loans; (8) recent governmental initiatives that are expected to have a profound effect on the financial services industry and could dramatically change the competitive environment of the Company; (9) other legislative or regulatory changes, including those related to residential mortgages, changes in accounting standards, and Federal Deposit Insurance Corporation (“FDIC”) premiums that may adversely affect the Company; (10) the application of generally accepted accounting principles, consistently applied; (11) the fact that one period of reported results may not be indicative of future periods; (12) the state of the economy in the greater New York metropolitan area and its particular effect on the Company's customers, vendors and communities and (13) other such factors, including risk factors, as may be described in the Company’s other filings with the SEC. The following discussion should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 filed with the SEC on April 1, 2019 (the “2018 Form 10-K”) and the consolidated financial statements and notes thereto included in Part I, Item 1 of this Form 10-Q.

Although the Company believes that it offers the loan and deposit products and has the resources needed for continued success, future revenues and interest spreads and yields cannot be reliably predicted. These trends may cause the Company to adjust its operations in the future. Because of the foregoing and other factors, recent trends should not be considered reliable indicators of future financial results or stock prices.

CRITICAL ACCOUNTING POLICIES

The preparation of consolidated financial statements in accordance with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and to disclose contingent assets and liabilities. Actual results could differ from those estimates. Management has identified the accounting for the allowance for loan and lease losses, the analysis and valuation of its investment securities, the valuation of deferred tax assets and the valuation of the assets acquired and liabilities assumed in correction with its business combination, as the Company’s most critical accounting policies and estimates in that they are important to the portrayal of the Company’s financial condition and results of operations. They require management’s most subjective and complex judgment as a result of the need to make estimates about the effect of matters that are inherently uncertain. Refer to the 2018 Form 10-K for additional information.

39

Summary

The Company reported net income for the first quarter of 2019 of $323,000 ($0.08 basic and diluted earnings per share) compared to a net income of $1.1 million ($0.27 basic and diluted earnings per share) for the quarter ended March 31, 2018. On a pre-tax basis, the Company earned $491,000 for the three- month period ended March 31, 2019, a decrease of $918,000 compared to $1.4 million for the first quarter of 2018.  The decline from the prior year first quarter was due to a decline in net interest income of $719,000 which was primarily due to higher retail deposit rates, the impact of a higher balance of non-performing loans and the impact of interest on subordinated debt added in mid-2018.  The first quarter results were also impacted by an increase in operating expenses associated with the build-up of its SBA business, expansion of deposit initiatives, and costs incurred in conjunction with enhancing processes, controls and documentation in response to the Formal Agreement with the OCC.

As previously disclosed, on March 30, 2019 the Company and Hana Small Business Lending Inc. mutually agreed to terminate the purchase agreement between the parties entered into in November 2018. The termination agreement provided for the release of escrowed funds back to the Company. The Company received the escrowed funds on May 9, 2019.

The Company expects operating results to build back up during 2019 as it begins to see increasingly positive results from the expansion of its organic SBA business and deposit raising initiatives. The Company will also continue to be focused on taking all actions necessary to resolve the remaining matters associated with the OCC Formal Agreement.

Financial Condition

As of March 31, 2019, total assets increased to $953.1 million, as compared to $951.7 million at December 31, 2018. Net Loan portfolio increased $7.9 million or 1.0% from $772.8 million at December 31, 2018 to $780.7 million at March 31, 2019. Deposits continued to grow to $752.8 million at March 31, 2019, as compared to $743.3 million at December 31, 2018.

Equity increased $309,000 or 0.4%, from $69.3 million at December 31, 2018 to $69.6 million at March 31, 2019, primarily due to $323,000 of net income and $48,000 of equity compensation, which were offset by $12,000 of investment portfolio unrealized losses and $39,000 common stock dividend payments in the three months period ended March 31, 2019.

Cash and Cash Equivalents

Cash and cash equivalents decreased $9.8 million, from $66.4 million at December 31, 2018 to $56.6 million at March 31, 2019. The decrease in the first quarter of 2019 was primarily attributable to $10.0 million in repayments of FHLB borrowings, $4.8 million cash used for loan purchases and $3.5 million cash outflows for increase in net origination of loans receivable, which was partially offset by a $9.5 million cash increase in deposits.

Investments

The following table is a summary of the Company’s available-for-sale securities portfolio, at fair value, at the dates shown:

(In thousands)	March 31,		December 31,		Increase / (Decrease)			Increase / (Decrease)
	2019		2018		($)			(%)
U. S. Government agency mortgage-backed securities	$	19,976		20,473		(497	)		-2.43	%
Corporate bonds		12,828		12,974		(146	)		-1.13	%
Subordinated notes		5,980		4,564		1,416			31.03	%
U.S. Treasury notes		1,491		1,485		6			0.40	%
Total Available-for-Sale Securities	$	40,275		39,496		779			1.97	%

Available-for-sale securities increased $779,000 or 1.97%, from $39.5 million at December 31, 2018 to $40.3 million at March 31, 2019. This increase was primarily attributable to the purchases of $1.4 million in subordinated notes, which was offset by $613,000 in repayments of principal on U.S. Government agency mortgage-backed securities. There were no sales of available-for sales securities in the three month period ended March 31, 2019.

40

Loans

The following table provides the composition of the Company’s loan portfolio as of March 31, 2019 and December 31, 2018:

(In thousands)	March 31,						December 31,
	2019						2018
	Amount			%			Amount			%
Loan portfolio segment:
Commercial Real Estate	$	291,556			36.97	%		274,938			35.23	%
Residential Real Estate		159,985			20.29	%		157,300			20.16	%
Commercial and Industrial		177,866			22.56	%		191,852			24.58	%
Consumer and Other		95,755			12.14	%		94,569			12.12	%
Construction		45,356			5.75	%		46,040			5.90	%
Construction to permanent - CRE		18,018			2.29	%		15,677			2.01	%
Loans receivable, gross		788,536			100.00	%		780,376			100.00	%
Allowance for loan losses		(7,823	)					(7,609	)
Loans receivable, net	$	780,713						772,767

The Company’s gross loan portfolio increased $8.1 million, or 1.0%, from $780.4 million at December 31, 2018 to $788.5 million at March 31, 2019. The increase in loans was primarily attributable to $4.8 million in purchases of loans receivable and net increase in originated loans receivable in the first quarter of 2019. As of March 31, 2019, the loan pipeline is strong. The Company will continue to add to the product lines and enhance service offerings to customers.

At March 31, 2019, the net loan to deposit ratio was 104% and the net loan to total assets ratio was 82%. At December 31, 2018, these ratios were 104% and 81%, respectively.

Allowance for Loan and Lease Losses

The allowance for loan and lease losses increased $214,000 or 2.8% from $7.6 million at December 31, 2018 to $7.8 million at March 31, 2019. The increase was primarily attributable to $165,000 in provision for all loan categories and $47,000 in recoveries in commercial and industrial loans.

The overall credit quality of the loan portfolio is stable. Based upon the overall assessment and evaluation of the loan portfolio at March 31, 2019, management believes $7.8 million in the allowance for loan and lease losses, which represented 1.0% of gross loans outstanding, is adequate under prevailing economic conditions to absorb existing losses in the loan portfolio.

The following table provides detail of activity in the allowance for loan and lease losses for business activities loans:

	March 31,
(In thousands)	2019			2018
Balance at beginning of the period	$	7,609			6,297
Charge-offs:
Total charge-offs		-			-
Recoveries:
Commercial Real Estate		-			3
Commercial and Industrial		47			-
Consumer and Other		2			-
Total recoveries		49			3
Net recoveries		49			3
Provision charged to earnings		165			185
Balance at end of the period	$	7,823			6,485
Ratios:
Net recoveries to average loans		0.006	%		0.000	%
Allowance for loan losses to total loans		0.99	%		0.90	%

41

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:

(In thousands)	March 31, 2019					December 31, 2018
	Allowance for loan losses		% of loans			Allowance for loan losses		% of loans
Commercial Real Estate	$	1,862		36.97	%		1,866		35.23	%
Residential Real Estate		1,389		20.29	%		1,059		20.16	%
Commercial and Industrial		3,490		22.56	%		3,558		24.58	%
Consumer and Other		592		12.14	%		641		12.12	%
Construction		355		5.75	%		350		5.90	%
Construction to permanent - CRE		123		2.29	%		108		2.01	%
Unallocated		12		N/A			27		N/A
Total	$	7,823		100.00	%		7,609		100.00	%

Non-performing Assets

The following table presents non-performing assets as of March 31, 2019 and December 31, 2018:

(In thousands)	March 31,			December 31,
	2019			2018
Non-accruing loans:
Commercial Real Estate	$	10,953			3,525
Residential Real Estate		3,473			2,006
Commercial and Industrial		4,632			4,681
Consumer and Other		172			174
Construction		8,800			8,800
Total non-accruing loans		28,030			19,186
Loans past due over 90 days and still accruing		1,316			1,316
Other real estate owned		2,945			2,945
Total nonperforming assets	$	32,291			23,447
Nonperforming assets to total assets		3.39	%		2.46	%
Nonperforming loans to total loans, net		3.76	%		2.65	%

The $28.0 million of non-accrual loans at March 31, 2019 was comprised of 27 relationships, for which a specific reserve of $1.6 million has been established.

The Company has obtained appraisal reports from independent licensed appraisal firms and discounted those values for estimated selling costs to determine estimated impairment. 

The $19.2 million of non-accrual loans at December 31, 2018 was comprised of 23 borrowers, for which a specific reserve of $1.5 million had been established.

42

Deferred Taxes

Deferred tax assets decreased $494,000, from $10.9 million at December 31, 2018 to $10.4 million at March 31, 2019. The decrease in deferred tax assets resulted primarily from the impact of transaction costs and reclassification of prior year alternative minimum tax credits to refundable tax credits included with other assets.

Our effective tax rate for the three-month period ended March 31, 2019 was 34%, compared to the effective tax rate of 24% for the three-month period ended March 31, 2018. The Company’s effective rates for both periods were affected primarily by state taxes and non-deductible expenses.

Patriot anticipates utilizing the net operating loss carry forwards to reduce income taxes otherwise payable on current year taxable income and net unrealized gains on the investment portfolio to the net operating loss carry forward.

The Company 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.

Deposits

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

(In thousands)	March 31,		December 31,		Inc/(Dec)			Inc/(Dec)
	2019		2018		($)			(%)
Non-interest bearing	$	82,248		84,471		(2,223	)		(2.63	)%
Interest bearing:
NOW		24,924		26,100		(1,176	)		(4.51	)%
Savings		67,708		81,912		(14,204	)		(17.34	)%
Money market		88,493		85,197		3,296			3.87	%
Certificates of deposit, less than $250,000		217,701		203,683		14,018			6.88	%
Certificates of deposit, $250,000 or greater		88,953		78,318		10,635			13.58	%
Brokered deposits		182,794		183,600		(806	)		(0.44	)%
Total Interest bearing		670,573		658,810		11,763			1.79	%
Total Deposits	$	752,821		743,281		9,540			1.28	%

Deposits increased $9.5 million or 1.3%, from $743.3 million at December 31, 2018 to $752.8 million at March 31, 2019, resulting from an increase of $24.6 million in certificates of deposits and $3.2 million in money market deposits partially offset by a decline of $14.2 million in savings deposits as stronger more competitive rates offered in the CD and money market products attracted net new deposit balances.

43

Borrowings

Total borrowings were $121.0 million and $131.0 million as of March 31, 2019 and December 31, 2018, respectively. Borrowings consist primarily of FHLB advances, senior notes, subordinated notes, junior subordinated debentures and a note payable.

Federal Home Loan Bank borrowings

The Company is a member of the Federal Home Loan Bank of Boston ("FHLB-B"). Borrowings from the FHLB-B are limited to a percentage of the value of qualified collateral, as defined on the FHLB-B Statement of Products Policy. Qualified collateral, as defined, primarily consists of mortgage-backed securities and loans receivable that are required to be free and clear of liens and encumbrances, and may not be pledged for any other purposes. As of March 31, 2019, the Bank had $60.1 million of available borrowing capacity from the FHLB-B.

FHLB-B advances are structured to facilitate the Bank’s management of its balance sheet and liquidity requirements. At March 31, 2019 and December 31, 2018, outstanding advances from the FHLB-B aggregated $90.0 million and $100.0 million, respectively. $30.0 million advances outstanding at March 31, 2019 bore fixed rates of interest ranging from 3.01% to 3.2% with maturities ranging from 2.3 years to 2.6 years.

$60.0 million advances from the FHLB-B with a weighted average interest rate of 1.4% are callable in the second half of 2019 and up to October 2020. During their initial term (one or two years), each of these advances carries a floating rate from 100 basis points to 200 basis points below LIBOR. After the initial term, the rates reset to fixed rates between 3.47% and 4.23%, per annum, and the borrowing can be called by the FHLB-B on a quarterly basis.

At March 31, 2018, collateral for FHLB-B borrowings consisted of a mixture of real estate loans and securities with book value of $251.5 million.

In addition, Patriot has a $2.0 million revolving line of credit with the FHLB-B. At March 31, 2019 and December 31, 2018, no funds had been borrowed under the line of credit.

Interest expenses incurred for the three months ended March 31, 2019 and 2018 were $439,000 and $257,000, respectively.

Correspondent Bank - Line of Credit

Patriot has entered into unsecured federal funds sweep and federal funds line of credit facility agreements with certain correspondent Banks. Borrowings available under the agreements totaled $5 million at March 31, 2019 and $26 million at December 31, 2018. The purpose of the agreement is to provide a credit facility intended to satisfy overnight federal account balance requirements and to provide for daily settlement of FRB, ACH, and other clearinghouse transactions.

There was no outstanding balance under the agreements at March 31, 2019 and December 31, 2018. No interest expenses incurred for the three months ended March 31, 2019 and 2018.

Senior notes

On December 22, 2016, the Company issued $12 million of senior notes bearing interest at 7% per annum and maturing on December 22, 2021 (the “Senior Notes”). Interest on the Senior Notes is payable semi-annually on June 22 and December 22 of each year beginning on June 22, 2017.

In connection with the issuance of the Senior Notes, the Company incurred $374,000 of costs, which are being amortized over the term of the Senior Notes to recognize a constant rate of interest expense. At March 31, 2019 and December 31, 2018, $204,000 and $222,000 of unamortized debt issuance costs were deducted from the face amount of the Senior Notes included in the Consolidated Balance Sheet, respectively.

The Senior Notes contain affirmative covenants that require the Company to: maintain its and its subsidiaries’ legal entity and tax status, pay its income tax obligations on a timely basis, and comply with SEC and FDIC reporting requirements. The Senior Notes are unsecured, rank equally with all other senior obligations of the Company, are not redeemable nor may they be put to the Company by the holders of the notes, and require no payment of principal until maturity.

44

For the three months ended March 31, 2019 and 2018, the Company recognized interest expense of $229,000 and $229,000, respectively.

Subordinated notes

On June 29, 2018, the Company entered into certain subordinated note purchase agreements with two institutional accredited investors and completed a private placement of $10 million of fixed-to-floating rate subordinated notes with the maturity date of September 30, 2028 (the “Subordinated Notes”) pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended, and Rule 506(b) of Regulation D promulgated thereunder.

The Subordinated Notes will initially bear interest at 6.25% per annum, from and including June 29, 2018, to but excluding, June 30, 2023, payable semi-annually in arrears. From and including June 30, 2023, until but excluding June 30, 2028 or an early redemption date, the interest rate shall reset quarterly to an interest rate per annum equal to the then current three-month LIBOR (but not less than zero) plus 332.5 basis points, payable quarterly in arrears. The Company may, at its option, beginning on June 30, 2023 and on any scheduled interest payment date thereafter, redeem the Subordinated Notes. Interest on the Subordinated Notes is payable beginning on December 30, 2018.

In connection with the issuance of the Subordinated Notes, the Company incurred $291,000 of debt issuance costs, which are being amortized over the term of the Subordinated Notes to recognize a constant rate of interest expense. At March 31, 2019, $269,000 of unamortized debt issuance costs were deducted from the face amount of the Subordinated Notes included in the Consolidated Balance Sheet.

For the three months ended March 31, 2019 and 2018, the Company recognized interest expense of $168,000 and $0, respectively.

Junior subordinated debt owed to unconsolidated trust

In 2003, the Patriot National Statutory Trust I (“the Trust”), which has no independent assets and is wholly-owned by the Company, issued $8.0 million of trust preferred securities. The proceeds, net of a $240,000 placement fee, were invested in junior subordinated debentures issued by the Company, which invested the proceeds in the Bank. The Bank used the proceeds to fund its operations.

Trust preferred securities currently qualify for up to 25% of the Company’s Tier I Capital, with the excess qualifying as Tier 2 Capital.

The junior subordinated debentures are unsecured obligations of the Company. The debentures are subordinate and junior in right of payment to all present and future senior indebtedness of the Company. In addition to its obligations under the junior subordinated debentures and in conjunction with the Trust, the Company issued an unconditional guarantee of the trust preferred securities.

The junior subordinated debentures bear interest at three-month LIBOR plus 3.15% (5.76% at March 31, 2019) and mature on March 26, 2033, at which time the principal amount borrowed will be due. The placement fee of $240,000 is amortized and included as a component of the periodic interest expense on the junior subordinated debentures, in order to produce a constant rate of interest expense. As of March 31, 2019 and December 31, 2018, the unamortized placement fee deducted from the face amount of the junior subordinated debt owed to the unconsolidated trust amounted to $152,000 and $152,000, respectively, and accrued interest on the junior subordinated debentures was $8,000 and $8,000, respectively.

For the three months ended March 31, 2019 and 2018, the Company recognized interest expense of $121,000 and $99,000 respectively.

At its option, exercisable on a quarterly basis, the Company may redeem the junior subordinated debentures from the Trust, which would then redeem the trust preferred securities.

45

Note Payable

In September 2015, the Bank purchased the property in which its Fairfield, Connecticut branch is located for approximately $2.0 million, a property it had been leasing until that date. The purchase price was primarily satisfied by issuing the seller a $2.0 million, nine-year, promissory note bearing interest at a fixed rate of 1.75% per annum. As of March 31, 2019 and December 31, 2018, the note had a balance outstanding of $1.3 million and $1.4 million, respectively. The note matures in August 2024 and requires a balloon payment of approximately $234,000 at that time. The note is secured by a first Mortgage Deed and Security Agreement on the purchased property.

For the three months ended March 31, 2019 and 2018, the Company recognized interest expense of $6,000 and $7,000 respectively.

Equity

Equity increased $309,000, from $69.3 million at December 31, 2018 to $69.6 million at March 31, 2019, primarily due to $323,000 of net income and $48,000 of equity compensation, which were offset by $12,000 of investment portfolio unrealized losses and $39,000 of common stock dividend payments in the three months period ended March 31, 2019.

Off-Balance Sheet Commitments

The Company’s off-balance sheet commitments, which primarily consist of commitments to lend, decreased $53.5 million from $179.7 million at December 31, 2018 to $126.2 million at March 31, 2019.

Derivatives

In 2018, Patriot entered into two interest rate swaps (“swaps”), one with a loan customer to provide a facility to mitigate the fluctuations in the variable rate on the respective loan, and another with an outside third party. The customer interest rate swap is matched in offsetting terms to the third party interest rate swap. These two swaps are reported at fair value in other assets or other liabilities. Patriot’s swaps qualify as derivatives, but are not designated as hedging instruments, thus any net gain or loss resulting from changes in the fair value is recognized in other noninterest income. No net gain was recognized on the swaps for the three months ended March 31, 2019.

Further discussion of the fair value of derivatives is set forth in Note 11 to the Consolidated Financial Statements.

46

RESULTS OF OPERATIONS

Distribution of Assets, Liabilities and Shareholders’ Equity; Interest Rates and Interest Differential

The following tables present daily average balance sheets, interest income, interest expense and the corresponding yields earned and rates paid for the three months ended March 31, 2019 and 2018:

(In thousands)	Three months ended March 31,
	2019							2018
	Daily Average Balance ($)			Interest ($)		Yield (%)		Daily Average Balance ($)			Interest ($)		Yield (%)
ASSETS
Interest Earning Assets:
Loans	$	784,137			9,741		5.04		726,688			8,774		4.90
Investments		52,829			503		3.81		38,496			387		4.08
Cash equivalents and other		59,217			327		2.24		41,440			151		1.46
Total interest earning assets		896,183			10,571		4.78		806,624			9,312		4.68
Cash and due from banks		7,305							3,897
Allowance for loan losses		(7,592	)						(6,383	)
OREO		2,945							-
Other assets		59,243							50,915
Total Assets	$	958,084							855,053
Liabilities
Interest bearing liabilities:
Deposits	$	675,851			3,264		1.96		571,134			1,657		1.18
Borrowings		90,667			439		1.96		120,000			257		0.87
Senior notes		11,785			229		7.77		11,711			229		7.93
Subordinated debt		17,820			289		6.58		8,087			99		4.96
Note Payable and other		1,357			6		1.79		1,547			7		1.84
Total interest bearing liabilities		797,480			4,227		2.15		712,479			2,249		1.28
Demand deposits		81,224							71,540
Other liabilities		9,173							3,243
Total Liabilities		887,877							787,262
Shareholders' equity		70,207							67,791
Total Liabilities and Shareholders' Equity	$	958,084							855,053
Net interest income					6,344							7,063
Interest margin							2.87							3.55
Interest spread							2.63							3.40

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The following table presents the dollar amount of changes in interest income and interest expense for the major categories of our interest-bearing assets and interest-bearing liabilities for the three months ended March 31, 2019 and 2018:

	Three Months Ended March 31,
	2019 compared to 2018
(In thousands)	Increase/(Decrease)
	Volume			Rate			Total
Interest Earning Assets:
Loans	$	695			272			967
Investments		151			(35	)		116
Cash equivalents and other		62			114			176
Total interest earning assets		908			351			1,259
Interest bearing liabilities:
Deposit		389			1,218			1,607
Borrowings		(63	)		245			182
Senior notes		-			-			-
Subordinated debt		168			22			190
Note payable and other		(1	)		-			(1	)
Total interest bearing liabilities		493			1,485			1,978
Net interest income	$	415			(1,134	)		(719	)

For the quarter ended March 31, 2019, interest income increased $1.3 million or 13.5% as compared to the quarter ended March 31, 2018, as focused growth and diversification in the loan portfolio yielded an increase in interest income. Average loan balances increased $57.4 million or 8% as compared to the quarter ended March 31, 2018. Total interest expense increased $2.0 million or 88% as compared to the quarter ended March 31, 2018, primarily driven by an increase of $1.6 million in deposit interests due to higher deposit rates, an increase of $182,000 in interest on borrowings, and an increase of $190,000 in subordinated debt interest.

Net interest income was $6.3 million for the quarter ended March 31, 2019, which decreased 10% from $7.1 million for the quarter ended March 31, 2018. Net interest margin for the quarter ended March 31, 2019 and 2018, were 2.87% and 3.55%, respectively. The decline in net interest margin reflects the impact of increasing deposit costs associated with higher rates paid on retail deposits, the impact of non-accrual and reduced rate loans,an increased reliance on more expensive wholesale funding sources, and the impact of the subordinated debt issued June 30, 2018.

Provision for Loan Losses

The provision for loan losses for three months ended March 31, 2019 was $165,000, which was consistent with $185,000 for the three months ended March 31, 2018.

Non-interest income

Non-interest income increased $500,000 from $322,000 for the quarter ended March 31, 2018 to $822,000 for the quarter ended March 31, 2019. The increase was primarily attributable to a gain of $456,000 on sale of SBA loans in the first quarter of 2019.  The gain on sale represents a net 6.4% gain on $7.1 million of loans sold in the quarter.

Non-interest expense

Non-interest expense increased $719,000 from $5.8 million for the quarter ended March 31, 2018 to $6.5 million for the quarter ended March 31, 2019, which was primarily driven by increase of $415,000 in salaries and benefits, $211,000 in other operating expenses, $199,000 in professional and other outside services, and $176,000 in occupancy and equipment expenses, due to continued expansion of the Bank’s business activities. The increases were partially offset by reduction of $443,000 in non-recurring merger and tax initiative project expenses.

The increase in salaries and benefits reflects the build-up of the SBA team, additional costs associated with the Prime acquisition, and increased headcount supporting new deposit initiatives and expansion of credit, finance and compliance support functions.

The increase in professional and outside service fees included the impact of costs incurred with SBA origination and sale and additional expenses associated with the expansion of deposit raising initiatives and resolution of documentation and policy matters.
 
The increase in other operating expense primarily due to increase of $76,000 in OREO expenses.

Provision for income taxes

The provision for income taxes for three months ended March 31, 2019 and 2018 were $168,000 and $344,000, respectively. The decrease mainly reflected the lower pre-tax income.

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Liquidity

The Company’s balance sheet liquidity to total assets ratio was 9.7% at March 31, 2019, compared to 10.7% at December 31, 2018. Liquidity including readily available off balance sheet funding sources was 16.7% at March 31, 2019, compared to 19.4% at December 31, 2018. The Company’s available total liquidity (readily available plus brokered deposit availability) to total assets ratio was 21.2% at March 31, 2019, compared to 23.7% at December 31, 2018.

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) and unpledged available-for-sale securities. In addition, off balance sheet funding sources include collateral based borrowing available from the FHLB, correspondent bank borrowing lines, and brokered deposits subject to internal limitations.

Liquidity is a measure of the Company’s ability to generate adequate cash to meet its financial obligations. The principal cash requirements of a financial institution are to cover downward fluctuations in deposit accounts. 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.

Capital

The following table illustrates the Company’s and the Bank’s regulatory capital ratios as of March 31, 2019 and December 31, 2018:

	Patriot National Bancorp, Inc.								Patriot Bank, N.A.
(In thousands)	March 31, 2019				December 31, 2018				March 31, 2019				December 31, 2018
	Amount ($)		Ratio (%)		Amount ($)		Ratio (%)		Amount ($)		Ratio (%)		Amount ($)		Ratio (%)
Total Capital (to risk weighted assets)		91,489		10.332		90,722		10.452		101,239		11.908		99,341		11.500
Tier 1 Capital (to risk weighted assets)		73,654		8.318		73,101		8.422		93,404		10.987		91,720		10.618
Common Equity Tier 1 Capital (to risk weighted assets)		65,654		7.415		65,101		7.500		93,404		10.987		91,720		10.618
Tier 1 Leverage Capital (to average assets)		73,654		7.721		73,101		7.842		93,404		9.789		91,720		9.838

Capital adequacy is one of the most important factors used to determine the safety and soundness of individual banks and the banking system. Under the regulatory framework for prompt correction action, to be considered “well capitalized,” an institution must generally have a leverage capital ratio of at least 5.0%, CET1 capital ratio at least 6.5%, a Tier 1 risk-based capital ratio of at least 8.0% and a total risk-based capital ratio of at least 10%. However, the OCC has the discretion to require increased capital ratios.

Under the final capital rules that became effective on January 1, 2015, there is a requirement for a CET1 Capital conservation buffer of 2.5% of risk-weighted assets, which is in addition to the other minimum risk-based capital standards in the rule. Institutions that do not maintain this required capital buffer become subject to progressively more stringent limitations on the percentage of earnings that may be distributed to shareholders or used for stock repurchases and on the payment of discretionary bonuses to senior executive management.

The capital buffer requirement is being phased in over three years beginning in 2016. The 1.875% capital conversation buffer for 2018 has been included in the minimum capital adequacy ratios in the 2018 column in the table above. The capital conversation buffer increased to 2.5% for 2019, which has been included in the minimum capital adequacy ratios in the 2019 column above.

The capital buffer requirement effectively raises the minimum required Total Capital ratio to 10.5%, the Tier 1 Capital ratio to 8.5%, and the CET1 Capital ratio to 7.0% on a fully phased-in basis, which was effective on January 1, 2019. Management believes that, as of March 31, 2019, Patriot satisfies all capital adequacy requirements under the Basel III Capital Rules on a fully phased-in basis, as if all such requirements were currently in effect.

Management continuously assesses the adequacy of the Bank’s capital with the goal to maintain a “well capitalized” classification.

49

IMPACT OF INFLATION AND CHANGING PRICES

The Company’s Consolidated Financial Statements have been prepared in terms of historical dollars, without considering changes in the relative purchasing power of money over time due to inflation. Unlike most industrial companies, virtually all of the assets and liabilities of a financial institution are monetary in nature. As a result, interest rates have a more significant impact on a financial institution’s performance than the effect of general levels of inflation. Interest rates do not necessarily move in the same direction or with 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, deflation or disinflation could significantly affect the Company’s earnings in future periods.

Stock Repurchase Program

No shares of Patriot’s common stock were repurchased during the three months period ended March 31, 2019.

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Item 3: Quantitative and Qualitative Disclosures about Market Risk

Market risk is defined as the sensitivity of income to fluctuations in interest rates, foreign exchange rates, equity prices, commodity prices and other market-driven rates or prices. The Company’s market risk is primarily limited to interest rate risk.

The Company’s goal is to maximize long term profitability while minimizing its exposure to interest rate fluctuations. The first priority is to structure and price the Company’s assets and liabilities to maintain an acceptable interest rate spread while reducing the net effect of changes in interest rates. In order to accomplish this, the focus is on maintaining a proper balance between the timing and volume of assets and liabilities re-pricing within the balance sheet. One method of achieving this balance is to originate variable rate loans for the portfolio and purchase short-term investments to offset the increasing short term re-pricing of the liability side of the balance sheet. In fact, a number of the interest-bearing deposit products have no contractual maturity. Therefore, deposit balances may run off unexpectedly due to changing market conditions. Additionally, loans and investments with longer term rate adjustment frequencies can be matched against longer term deposits and borrowings to lock in a desirable spread.

The exposure to interest rate risk is monitored by the Management Asset and Liability Committee consisting of senior management personnel. The Committee reviews the interrelationships within the balance sheet to maximize net interest income within acceptable levels of risk. This Committee reports to the Board of Directors. In addition to the Management Asset and Liability Committee, there is a Board Asset and Liability Committee (“ALCO”), which meets quarterly. ALCO monitors the interest rate risk analyses, reviews investment transactions during the period and determines compliance with the Company’s Investment, ALCO and Liquidity policies.

Management analyzes the Company’s interest rate sensitivity position to manage the risk associated with interest rate movements through the use of interest income simulation and gap analysis. The matching of assets and liabilities may be analyzed by examining the extent to which such assets and liabilities are “interest sensitive.” An asset or liability is said to be interest sensitive within a specific time period if it will mature or reprice within that time period.

Management’s goal is to manage asset and liability positions to moderate the effects of interest rate fluctuations on net interest income. Interest income simulations are completed quarterly and presented to ALCO. The simulations provide an estimate of the impact of changes in interest rates on net interest income under a range of assumptions. Changes to these assumptions can significantly affect the results of the simulations. The simulation incorporates assumptions regarding the potential timing in the repricing of certain assets and liabilities when market rates change and the changes in spreads between different market rates.

Simulation analysis is only an estimate of the Company’s interest rate risk exposure at a particular point in time. 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.

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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. The analyses indicate the rate risk embedded in the Company’s portfolio at the dates indicated should all interest rates instantaneously rise or fall. The results of these changes are added to or subtracted from the base case; however, there are certain limitations to these types of analyses. Rate changes are rarely instantaneous and these analyses may therefore overstate the impact of short-term repricings. 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. Therefore, it is not possible for the analyses to fully measure the true impact of these downward shocks.

(In thousands)
	Net Portfolio Value - Performance Summary
	As of March 31, 2019								As of December 31, 2018
Projected Interest Rate Scenario	Estimated Value		Change from Base ($)			Change from Base (%)			Estimated Value		Change from Base ($)			Change from Base (%)
+200		114,889		(1,163	)		(1.0	)		122,002		(3,027	)		(2.4	)
+100		117,335		1,283			1.1			125,681		652			0.5
BASE		116,052		-			-			125,029		-			-
-100		111,871		(4,181	)		(3.6	)		120,108		(4,921	)		(3.9	)
-200		108,851		(7,201	)		(6.2	)		115,924		(9,105	)		(7.3	)

	Net Interest Income - Performance Summary
	March 31, 2019								Year ended December 31, 2018
Projected Interest Rate Scenario	Estimated Value		Change from Base ($)			Change from Base (%)			Estimated Value		Change from Base ($)			Change from Base (%)
+200		29,471		2,578			9.6			32,729		1,712			5.5
+100		28,528		1,635			6.1			32,179		1,162			3.7
BASE		26,893		-			-			31,017		-			-
-100		25,667		(1,226	)		(4.6	)		30,014		(1,003	)		(3.2	)
-200		24,394		(2,499	)		(9.3	)		28,615		(2,402	)		(7.7	)

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Item 4: Disclosure Controls and Procedures 

The Company maintains disclosure controls and procedures that are designed to provide reasonable assurance that information, which is required to be disclosed timely, is accumulated and communicated to management in a timely fashion. In designing and evaluating such controls and procedures, we recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Our management is necessarily required to use judgment in evaluating controls and procedures.

An evaluation of the effectiveness of the Company’s disclosure controls and procedures was performed by the Company’s management, with the participation of the Company’s Chief Executive Officer and its Chief Financial Officer, as of the end of the period covered by this report. As used herein, “disclosure controls and procedures” means controls and other procedures of the Company that are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms.

Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. As described more fully in the following section of Item 4, because of the material weakness in internal control over financial reporting described below, management concluded that Patriot’s disclosure controls and procedures were not effective as of March 31, 2019.

Internal Control over Financial Reporting

A material weakness in the Company’s internal control over financial reporting was disclosed in Item 9A, Controls and Procedures, of the Company’s annual report on Form 10-K, for the year ended December 31, 2018. The Company did not have effective controls over financial reporting as of December 31, 2018 as a result of an identified material weakness resulting from the aggregation of control deficiencies in management’s review of the calculation of the allowance for loan losses, which includes the review of the completeness and accuracy of inputs and other information used in the allowance for loan losses calculation, as well as the precision of management’s review over the allowance for loan losses calculation.

In response to the identified material weakness, management implemented changes to its disclosure controls and procedures and its system of internal control over financial reporting in the quarter ended March 31, 2019, including changes to the process and procedures for establishing allowances for loan loss and enhancements to create a more robust review process. Other implemented enhancements include strengthened controls over the monitoring and valuation of collateral related to loans deemed to be impaired and for which specific reserves have been established. Management is continuing its review of the control processes around the precision of the preparation and review of the calculation of the allowance for loan losses in light of the material weakness identified. Management will continue its review through future reporting periods to determine when the material weakness can be assessed as fully remediated and internal controls over financial reporting can be assessed as effective.

Management believes all necessary disclosure controls and procedures needed to provide reasonable assurance that information will be communicated in a timely fashion to management are now in place.

Changes in Internal Control Over Financial Reporting

Other than as described in this Item 4: Disclosure Controls and Procedures, no other changes in the Company’s internal controls over financial reporting have occurred during the Company’s fiscal quarter ended March 31, 2019 that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.

53

PART II - OTHER INFORMATION 

Item 1:      Legal Proceedings

Neither the Company nor the Bank has any pending legal proceedings, other than ordinary routine litigation incidental to its business, to which the Company or the Bank is a party or any of its property is subject.

Item 5: Other Information

None

54

Item 6:      Exhibits

The exhibits marked with the section symbol (#) are interactive data files.

No.	Description
3(i)	Certificate of Incorporation of Patriot National Bancorp, Inc. (incorporated by reference to Exhibit 3(i) to the Company’s Current Report on Form 8-K filed on December 1, 1999).
3(i)(A)	Certificate of Amendment of Certificate of Incorporation of Patriot National Bancorp, Inc. dated July 16, 2004 (incorporated by reference to Exhibit 3(i)(A) to the Company’s Annual Report on Form 10-KSB for the year ended December 31, 2004 filed on March 25, 2005).
3(i)(B)	Certificate of Amendment of Certificate of Incorporation of Patriot National Bancorp, Inc. dated June 15, 2006 (incorporated by reference to Exhibit 3(i)(B) to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2006 filed on November 14, 2006).
3(i) (C)	Certificate of Amendment of Certificate of Incorporation of Patriot National Bancorp Inc. dated October 6, 2010 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report Form 8-K filed on October 21, 2010)
3(ii)	Amended and Restated By-laws of Patriot National Bancorp, Inc. (incorporated by reference to Exhibit 3(ii) to the Company’s Current Report on Form 8-K filed on November 1, 2010)
4	Form of 6.25% Fixed to Floating Rate Subordinated Note (incorporated by reference to Exhibit 4 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2018 filed on August 14, 2018)
10(1)	2012 Stock Plan of Patriot National Bancorp, Inc. (incorporated by reference from Annex A to the Proxy Statement on Schedule 14C filed on November 1, 2011)
10(2)	Agreement and Plan of Merger by and among Patriot National Bancorp, Inc., Patriot Bank, National Association, Prime Bank and Jasper J. Jaser, as stockholders’ representative, dated as of August 1, 2018 (incorporated by reference to Exhibit 10(a) (21) to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2017 filed on August 11, 2017)
10(3)	Form of Subordinated Note Purchase Agreement (incorporated by reference to Exhibit 10(6) to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2018 filed on August 14, 2018)
10(4)	Form of Agreement with The Comptroller of the Currency, dated as of November 7, 2018 (incorporated by reference to Exhibit 99(1) to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2018 filed on November 14, 2018)

55

31(1)	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
31(2)	Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
32*	Section 1350 Certifications
101.INS#	XBRL Instance Document
101.SCH#	XBRL Schema Document
101.CAL#	XBRL Calculation Linkbase Document
101.LAB#	XBRL Labels Linkbase Document
101.PRE#	XBRL Presentation Linkbase Document
101.DEF#	XBRL Definition Linkbase Document

The exhibits marked with the section symbol (#) are interactive data files.

* The certification is being furnished and shall not be deemed filed.

56

SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: May 15, 2019

Patriot National Bancorp, Inc. (Registrant)
By:	/s/ Joseph D. Perillo
	Joseph D. Perillo
	Executive Vice President and Chief Financial Officer

57

EX-31.1

EXHIBIT 31 (1)

Certification

By Chief Executive Officer

Pursuant to Rule 13a-14

I, Michael A. Carrazza, certify that:

1.   I have reviewed this quarterly report on Form 10-Q of Patriot National Bancorp, Inc;

2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.   The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)  Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)  Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles in the United States of America;

(c)  Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)  Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)  All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Michael A. Carrazza

Michael A. Carrazza,

Chief Executive Officer

(Principal Executive Officer)

May 15, 2019

EX-31.2

EXHIBIT 31 (2)

Certification

By Principal Financial Officer

Pursuant to Rule 13a-14

I, Joseph D. Perillo, certify that:

1.   I have reviewed this quarterly report on Form 10-Q of Patriot National Bancorp, Inc;

2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.   The registrant’s other certifying officer and I, are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)  Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)  Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles in the United States of America;

(c)  Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)  Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)  All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Joseph D. Perillo

Joseph D. Perillo       

Executive Vice President and Chief Financial Officer

(Principal Financial Officer)

May 15, 2019

EX-32

Exhibit 32

Certification Pursuant to

18 U.S.C. Section 1350,

as Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of Patriot National Bancorp, Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, Michael A. Carrazza and Joseph D. Perillo, the Chief Executive Officer and the Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)     The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)     The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Michael A. Carrazza

Michael A. Carrazza

Chief Executive Officer

/s/ Joseph D. Perillo

 Joseph D. Perillo

Chief Financial Officer

May 15, 2019

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

The foregoing certification is being furnished to the Securities and Exchange Commission and shall not be considered filed as part of the Report.

XML

Document And Entity Information - shares	3 Months Ended
	Mar. 31, 2019	May 10, 2019
Document Information [Line Items]
Entity Registrant Name	PATRIOT NATIONAL BANCORP INC
Entity Central Index Key	0001098146
Trading Symbol	pnbk
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Current Reporting Status	Yes
Entity Emerging Growth Company	false
Entity Small Business	true
Entity Common Stock, Shares Outstanding (in shares)		3,921,910
Document Type	10-Q
Document Period End Date	Mar. 31, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q1
Amendment Flag	false

XML

Consolidated Balance Sheets (Current Period Unaudited) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Cash and due from banks:
Noninterest bearing deposits and cash	$ 6,661	$ 7,381
Interest bearing deposits	49,971	59,056
Total cash and cash equivalents	56,632	66,437
Investment securities:
Available-for-sale securities, at fair value	40,275	39,496
Other investments, at cost	4,963	4,963
Total investment securities	45,238	44,459
Federal Reserve Bank stock, at cost	2,892	2,866
Federal Home Loan Bank stock, at cost	4,513	4,928
Loans receivable (net of allowance for loan losses: 2019: $7,823, 2018: $7,609)	780,713	772,767
Accrued interest and dividends receivable	3,621	3,766
Premises and equipment, net	35,335	35,435
Other real estate owned	2,945	2,945
Deferred tax asset, net	10,357	10,851
Goodwill	1,107	1,728
Core deposit intangible, net	680	698
Other assets	9,075	4,816
Total assets	953,108	951,696
Deposits:
Noninterest bearing deposits	82,248	84,471
Interest bearing deposits	670,573	658,810
Total deposits	752,821	743,281
Federal Home Loan Bank and correspondent bank borrowings	90,000	100,000
Senior notes, net	11,796	11,778
Subordinated debt, net	9,731	9,723
Junior subordinated debt owed to unconsolidated trust, net	8,096	8,094
Note payable	1,339	1,388
Advances from borrowers for taxes and insurance	1,922	2,926
Accrued expenses and other liabilities	7,754	5,166
Total liabilities	883,459	882,356
Commitments and Contingencies
Shareholders' equity
Preferred stock, no par value; 1,000,000 shares authorized, no shares issued and outstanding	0	0
Common stock, $.01 par value, 100,000,000 shares authorized; 2019: 3,993,351 shares issued; 3,919,610 shares outstanding. 2018: 3,984,415 shares issued; 3,910,674 shares outstanding	40	40
Additional paid-in capital	107,143	107,095
Accumulated deficit	(35,517)	(35,790)
Less: Treasury stock, at cost: 2019 and 2018, 73,741 and 73,741 shares, respectively	(1,179)	(1,179)
Accumulated other comprehensive loss	(838)	(826)
Total shareholders' equity	69,649	69,340
Total liabilities and shareholders' equity	$ 953,108	$ 951,696

XML

Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Net of allowance for loan and lease losses	$ 7,823	$ 7,609
Preferred stock, par value (in dollars per share)	$ 0	$ 0
Preferred stock, shares authorized (in shares)	1,000,000	1,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	100,000,000	100,000,000
Common stock, shares issued (in shares)	3,993,351	3,984,415
Common stock, shares outstanding (in shares)	3,919,610	3,910,674
Treasury stock, shares held (in shares)	73,741	73,741

XML

Consolidated Statements of Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Interest and Dividend Income
Interest and fees on loans	$ 9,741	$ 8,774
Interest on investment securities	385	266
Dividends on investment securities	118	121
Other interest income	327	151
Total interest and dividend income	10,571	9,312
Interest Expense
Interest on deposits	3,264	1,657
Interest on Federal Home Loan Bank borrowings	439	257
Interest on senior debt	229	229
Interest on subordinated debt	289	99
Interest on note payable and other	6	7
Total interest expense	4,227	2,249
Net interest income	6,344	7,063
Provision for Loan Losses	165	185
Net interest income after provision for loan losses	6,179	6,878
Non-interest Income
Loan application, inspection and processing fees	14	8
Deposit fees and service charges	127	134
Gains on sales of loans	456
Rental Income	130	84
Other income	95	96
Total non-interest income	822	322
Non-interest Expense
Salaries and benefits	3,184	2,769
Occupancy and equipment expense	917	741
Data processing expense	370	317
Professional and other outside services	771	572
Merger and tax initiative project expenses	80	523
Advertising and promotional expense	115	78
Loan administration and processing expense	14	13
Regulatory assessments	315	252
Insurance expense	41	55
Communications, stationary and supplies	134	113
Other operating expense	569	358
Total non-interest expense	6,510	5,791
Income before income taxes	491	1,409
Provision for Income Taxes	168	344
Net income	$ 323	$ 1,065
Basic earnings per share (in dollars per share)	$ 0.08	$ 0.27
Diluted earnings per share (in dollars per share)	$ 0.08	$ 0.27

XML

Consolidated Statements of Comprehensive (Loss) Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Net income	$ 323	$ 1,065
Other comprehensive income:
Unrealized holding loss on securities	(15)	(307)
Income tax effect	3	83
Total other comprehensive loss	(12)	(224)
Comprehensive income	$ 311	$ 841

XML

Consolidated Statements of Shareholders' Equity (Unaudited) - USD ($) $ in Thousands	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Treasury Stock [Member]	AOCI Attributable to Parent [Member]	Total
Balance (in shares) at Dec. 31, 2017	3,899,675
Balance at Dec. 31, 2017	$ 40	$ 106,875	$ (38,832)	$ (1,179)	$ (155)	$ 66,749
Comprehensive income:
Net income			1,065			1,065
Unrealized holding loss on available-for-sale securities, net of tax					(224)	(224)
Total comprehensive income			1,065		(224)	841
Common stock dividends			(38)			(38)
Share-based compensation expense		53				53
Vesting of restricted stock (in shares)	2,935
Balance (in shares) at Dec. 31, 2017	3,899,675
Balance at Dec. 31, 2017	$ 40	106,875	(38,832)	(1,179)	(155)	66,749
Balance (in shares) at Mar. 31, 2018	3,902,610
Balance at Mar. 31, 2018	$ 40	106,928	(37,805)	(1,179)	(379)	67,605
Balance (in shares) at Dec. 31, 2018	3,910,674
Balance at Dec. 31, 2018	$ 40	107,095	(35,790)	(1,179)	(826)	69,340
Comprehensive income:
Net income			323			323
Unrealized holding loss on available-for-sale securities, net of tax					(12)	(12)
Total comprehensive income			323		(12)	311
Common stock dividends			(39)			(39)
Share-based compensation expense		48				48
Vesting of restricted stock (in shares)	8,936
Balance (in shares) at Dec. 31, 2018	3,910,674
Balance at Dec. 31, 2018	$ 40	107,095	(35,790)	(1,179)	(826)	69,340
Balance (in shares) at Mar. 31, 2019	3,919,610
Balance at Mar. 31, 2019	$ 40	107,143	(35,517)	(1,179)	(838)	69,649
Comprehensive income:
Cumulative effect of adopting ASU 2016-02			$ (11)			$ (11)

XML

Consolidated Statements of Cash Flows (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Cash Flows from Operating Activities:
Net income	$ 323,000	$ 1,065,000
Adjustments to reconcile net income to net cash provided by operating activities:
(Accretion) amortization of investment premiums, net	(11,000)	13,000
Amortization and accretion of purchase loan premiums and discounts	174,000	176,000
Amortization of debt issuance costs	28,000	21,000
Amortization of core deposit intangible	18,000
Provision for loan losses	165,000	185,000
Depreciation and amortization	389,000	350,000
Share-based compensation	48,000	53,000
Decrease (increase) in deferred income taxes	497,000	(855,000)
Changes in assets and liabilities:
Decrease (increase) in accrued interest and dividends receivable	145,000	(9,000)
(Increase) decrease in other assets	(862,000)	102,000
(Decrease) increase in accrued expenses and other liabilities	(479,000)	574,000
Net cash provided by operating activities	435,000	1,675,000
Cash Flows from Investing Activities:
Principal repayments on available-for-sale securities	613,000	463,000
Purchases of available-for-sale securities	(1,396,000)
Purchases of Federal Reserve Bank stock	(26,000)	(24,000)
Redemptions of Federal Home Loan Bank stock	415,000
Increase in originated loans receivable, net	(3,481,000)	(5,081,000)
Purchases of loans receivable	(4,804,000)
Purchase of premises and equipment	(9,000)	(630,000)
Escrow deposit for pending acquisition		(500,000)
Net cash used in investing activities	(8,688,000)	(5,772,000)
Cash Flows from Financing Activities:
Increase in deposits, net	9,540,000	17,859,000
Repayments of FHLB borrowings	(10,000,000)
Principal repayments of note payable	(49,000)	(48,000)
Decrease in advances from borrowers for taxes and insurance	(1,004,000)	(925,000)
Dividends paid on common stock	(39,000)	(38,000)
Net cash (used) provided by financing activities	(1,552,000)	16,848,000
Net (decrease) increase in cash and cash equivalents	(9,805,000)	12,751,000
Cash and cash equivalents at beginning of period	66,437,000	48,729,000
Cash and cash equivalents at end of period	56,632,000	61,480,000
Supplemental Disclosures of Cash Flow Information:
Cash paid for interest	3,950,000	1,844,000
Cash paid for income taxes	18,000	125,000
Purchase of premises and equipment	280,000
Increase in accrued expense and other liabilities	(280,000)
Initial recognition of operating lease right-of-use assets	3,397,000
Initial recognition of operating lease liabilities	3,444,000
Contingent liability assumed in business combination	$ 621,000

XML

Note 1 - Basis of Financial Statement Presentation

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Basis of Accounting [Text Block]

Note

1:

     Basis of Financial Statement Presentation

The accompanying unaudited condensed consolidated financial statements of Patriot National Bancorp, Inc. (the “Company”) and its wholly-owned subsidiary Patriot Bank, N.A. (the “Bank”) (collectively, “Patriot”), have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) have been omitted. The accompanying unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included on the Annual Report on Form

10

-K for the year ended

December 

31,

 

2018.

The Consolidated Balance Sheet at

December 31, 2018

presented herein has been derived from the audited consolidated financial statements of the Company at that date, but does

not

include all of the information and footnotes required by US GAAP for complete financial statements.

On

May 10, 2018

the Bank completed its acquisition of Prime Bank, a Connecticut bank headquartered in Orange, CT (“Prime Bank”). The closing of the transaction added a new Patriot branch located in the Town of Orange, New Haven County, Connecticut. The results of Prime Bank’s operations are included in the Company’s Consolidated Financial Statements from the date of acquisition.

The preparation of consolidated financial statements in accordance with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and to disclose contingent assets and liabilities. Actual results could differ from those estimates. Management has identified accounting for the allowance for loan and lease losses, the analysis and valuation of its investment securities, the valuation of deferred tax assets, accounting for the business combination, and accounting for leases as certain of Patriot’s more significant accounting policies and estimates, in that they are critical to the presentation of Patriot’s financial condition and results of operations. As they concern matters that are inherently uncertain, these estimates require management to make subjective and complex judgments in the preparation of Patriot’s Consolidated Financial Statements.

Certain prior period amounts have been reclassified to conform to current year presentation.

The information furnished reflects, in the opinion of management, all normal recurring adjustments necessary for a fair presentation of the results for the interim periods presented. The results of operations for the

three

months ended

March 

31,

 

2019

are

not

necessarily indicative of the results of operations that

may

be expected for the remainder of

2019.

XML

Note 2 - Recent Accounting Pronouncements

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

New Accounting Pronouncements and Changes in Accounting Principles [Text Block]

Note

2:

     

Recent Accounting Pronouncements

Accounting Standards Adopted During

201

9

Effective

January 1, 2019,

the following new Accounting Standards Update (ASU) was adopted by the Company:

ASU

2016

-

02

In

February 2016,

the FASB issued ASU

No.

2016

-

02,

 Leases. This ASU was issued to improve the financial reporting of leasing activities and provide a faithful representation of leasing transactions and improve understanding and comparability of a lessee's financial statements. The amendments in this ASU require lessees to recognize, on the balance sheet, assets and liabilities for the rights and obligations created by leases. Accounting by lessors will remain largely unchanged. In

July 2018,

the FASB issued a subsequent update which introduced a new transition method, under this new transition method, an entity initially applies the new leases standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The guidance was effective for the Company on

January 1, 2019,

with early adoption permitted. Management elected the transition practical expedient option. The cumulative-effect adjustment was an increase to the opening balance of accumulated deficit at the time of adoption on

January 1, 2019.

The Company recognized

$3.4

million of right-of-use (“ROU”) assets and

$3.4

million lease liabilities for operating leases on its Consolidated Balance Sheets. The standard did

not

have an impact on its Consolidated Income Statements.

Accounting Standards Issued But

Not

Yet Adopted

ASU

2016

-

13

 

In

June 2016,

the 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. Under the CECL model, entities will estimate credit losses over the entire contractual term of a financial instrument from the date of initial recognition of the instrument. The ASU also changes the existing impairment model for available-for-sale debt securities. In cases where there is neither the intent nor a more-likely-than-

not

requirement to sell the debt security, an entity will record credit losses as an allowance rather than a direct write-down of the amortized cost basis. Additionally, ASU

2016

-

13

notes that credit losses related to available-for-sale debt securities and purchased credit impaired loans should be recorded through an allowance for credit losses. ASU

2016

-

13

is effective for fiscal years beginning after

December 15, 2019,

including interim periods within those fiscal years, with early adoption permitted for fiscal years beginning after

December 15, 2018.

Management is currently evaluating the impact that the standard will have on its Consolidated Financial Statements.

ASU

2017

-

04

In 

January 2017,

the FASB issued ASU

2017

-

04,

Intangibles-Goodwill and Other (Topic

350

): Simplifying the Test for Goodwill Impairment:

The objective of this guidance is to simplify an entity’s required test for impairment of goodwill by eliminating Step

2

from the goodwill impairment test. In Step

2

an entity measured a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. In computing the implied fair value of goodwill, an entity had to determine the fair value at the impairment date of its assets and liabilities, including any unrecognized assets and liabilities, following a procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Under this Update, an entity should perform its annual or quarterly goodwill impairment test by comparing the fair value of the reporting unit with its carrying amount and record an impairment charge for the excess of the carrying amount over the reporting unit’s fair value. The loss recognized should

not

exceed the total amount of goodwill allocated to the reporting unit and the entity must consider the income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. This guidance is effective for a public business entity that is an SEC filer for its annual or any interim goodwill impairment tests in fiscal years beginning after

December 15, 2019.

The adoption of this standard is

not

expected to have a material impact on the Company’s Consolidated Financial Statements.

ASU

2017

-

08

In

March 2017,

the FASB issued ASU

2017

-

08,

Premium Amortization on Purchased Callable Debt Securities

, which amends the amortization period for certain purchased callable debt securities held at a premium, shortening such period to the earliest call date. The ASU is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after

December 15, 2018.

For all other entities, the ASU is effective for fiscal years beginning after

December 15, 2019,

and interim periods within fiscal years beginning after

December 15, 2020.

Earlier application is permitted for all entities, including adoption in an interim period. If an entity early adopts the ASU in an interim period, any adjustments must be reflected as of the beginning of the fiscal year that includes that interim period. Management is currently evaluating the impact the adoption of ASU

2017

-

08

will have on its Consolidated Financial Statements.

A

SU

2017

-

12

"Derivatives and Hedging (Topic

815

): Targeted Improvements to Accounting for Hedging Activities." ASU

2017

-

12

was issued to ease the burden associated with assessing hedge effectiveness and to promote better financial statement alignment of the recognition and presentation of the effects of the hedging instrument and the hedged item. This guidance requires entities to present the earnings effect of the hedging instrument in the same income statement line item with the earnings effect on the hedged item. In

October 2018,

FASB issued ASU

2018

-

16,

"Derivatives and Hedging (Topic

815

): Inclusion of the Secured Overnight Financial Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes." ASU

2018

-

16

was issued to expand the list of benchmark interest rates for hedge accounting. The effective date for the amendment is the same as the effective date for ASU

2017

-

12.

For public business entities, ASU

2017

-

12

is effective for fiscal years beginning after

December 15, 2018,

and interim periods within those fiscal years. ASU

2017

-

12

and ASU

2018

-

16

are

not

expected to have any impact on the Consolidated Financial Statements.

ASU

2018

-

13

In

August 2018,

the FASB issued ASU

No.

2018

-

13,

Fair Value Measurement (Topic

820

) - Changes to the Disclosure Requirements for Fair Value Measurement

, to modify the disclosure requirements on fair value measurements. This ASU removes requirements to disclose the amount of and reasons for transfers between Level

1

and Level

2

of the fair value hierarchy, the policy for timing of transfers between levels and the valuation processes for Level

3

fair value measurements. ASU

2018

-

13

clarifies that disclosure regarding measurement uncertainty is intended to communicate information about the uncertainty in measurement as of the reporting date. ASU

2018

-

13

adds certain disclosure requirements, including disclosure of changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level

3

fair value measurements held at the end of the reporting period and the range and weighted average of significant unobservable inputs used to develop Level

3

fair value measurements. The amendments in this update are effective for annual periods and interim periods within those annual periods beginning after

December 15, 2019.

The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level

3

fair value measurements and the narrative description of measurement uncertainty should be applied prospectively, while all other amendments should be applied retrospectively for all periods presented upon their effective date. Management is currently evaluating the impact of adopting the new guidance on the Consolidated Financial Statements, but it is

not

expected to have a material impact.

XML

Note 3 - Available-for-sale Securities

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

Note

3

: Available-for

-

Sale Securities

The amortized cost, gross unrealized gains, gross unrealized losses and fair values of available-for-sale securities at

March 

31,

 

2019

and

December 31, 2018

are as follows:

(In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Fair Value
March 31, 2019:
U. S. Government agency mortgage-backed securities	$	20,017		84		(125	)		19,976
Corporate bonds		14,000		-		(1,172	)		12,828
Subordinated notes		5,899		81		-			5,980
U.S. Treasury notes		1,488		3		-			1,491
	$	41,404		168		(1,297	)		40,275
December 31, 2018:
U. S. Government agency mortgage-backed securities	$	20,626		43		(196	)		20,473
Corporate bonds		14,000		-		(1,026	)		12,974
Subordinated notes		4,500		64		-			4,564
U.S. Treasury notes		1,484		1		-			1,485
	$	40,610		108		(1,222	)		39,496

The following table presents the available-for-sale securities’ gross unrealized losses and fair value, aggregated by the length of time the individual securities have been in a continuous loss position as of

March 

31,

 

2019

and

December 31, 2018:

(In thousands)	Less than 12 Months					12 Months or More					Total
	Fair Value		Unrealized (Loss)			Fair Value		Unrealized (Loss)			Fair Value		Unrealized (Loss)
March 31, 2019:
U. S. Government agency mortgage-backed securities	$	2,972		(23	)		3,778		(102	)		6,750		(125	)
Corporate bonds		-		-			12,828		(1,172	)		12,828		(1,172	)
	$	2,972		(23	)		16,606		(1,274	)		19,578		(1,297	)
December 31, 2018:
U. S. Government agency mortgage-backed securities	$	8,024		(38	)		5,422		(158	)		13,446		(196	)
Corporate bonds		-		-			12,974		(1,026	)		12,974		(1,026	)
	$	8,024		(38	)		18,396		(1,184	)		26,420		(1,222	)

At

March 

31,

 

2019

and

December 31, 2018,

ten

of

seventeen

and

ten

of

sixteen

available-for-sale securities had unrealized losses with an aggregate decline of

6.2%

and

4.4%

from the amortized cost of those securities, respectively.

Based on its quarterly reviews, management believes that

none

of the losses on available-for-sale securities noted above constitute an other-than-temporary impairment (“OTTI”). The noted losses are considered temporary due to market fluctuations in available interest rates on U.S. Government agency debt, mortgage-backed securities issued by U.S. Government agencies, and corporate debt. Management considers the issuers of the securities to be financially sound, the corporate bonds are investment grade, and the collectability of all contractual principal and interest payments is reasonably expected. Since Patriot is

not

more-likely-than-

not

to be required to sell the investments before recovery of the amortized cost basis and does

not

intend to sell the securities at a loss,

none

of the available-for-sale securities noted are considered to be OTTI as of

March 

31,

 

2019.

At

March 31, 2019

and

December 31, 2018,

available-for-sale securities of

$6.9

million and

$7.0

million were pledged primarily to secure municipal deposits, respectively. As of

March 31, 2019

and

December 31, 2018,

$5.4

million and

$5.5

million were pledged to the FRB of New York, and

$1.5

million and

$1.5

million were pledged to St. Louis Fed, respectively.

The following summarizes, by class and contractual maturity, the amortized cost and estimated fair value of available-for-sale debt securities held at

March 

31,

 

2019

and

December 31, 2018.

The mortgages underlying the mortgage-backed securities are

not

due at a single maturity date. Additionally, these mortgages often are and generally

may

be pre-paid without penalty, creating a degree of uncertainty that such investments can be held until maturity. For convenience, mortgage-backed securities have been included in the summary as a separate line item.

(In thousands)	Amortized Cost								Fair Value
	Due Within 5 years		Due After 5 years through 10 years		Due After 10 years		Total		Due Within 5 years		Due After 5 years through 10 years		Due After 10 years		Total
March 31, 2019:
Corporate bonds	$	-		9,000		5,000		14,000		-		8,278		4,550		12,828
Subordinated notes		-		5,899		-		5,899		-		5,980		-		5,980
U.S. Treasury notes		1,488		-		-		1,488		1,491		-		-		1,491
Available-for-sale securities with single maturity dates		1,488		14,899		5,000		21,387		1,491		14,258		4,550		20,299
U. S. Government agency mortgage-backed securities		9,671		2,445		7,901		20,017		9,664		2,368		7,944		19,976
	$	11,159		17,344		12,901		41,404		11,155		16,626		12,494		40,275
December 31, 2018:
Corporate bonds	$	-		9,000		5,000		14,000		-		8,537		4,437		12,974
Subordinated notes		-		4,500		-		4,500		-		4,564		-		4,564
U.S. Treasury notes		1,484		-		-		1,484		1,485		-		-		1,485
Available-for-sale securities with single maturity dates		1,484		13,500		5,000		19,984		1,485		13,101		4,437		19,023
U. S. Government agency mortgage-backed securities		6,842		5,668		8,116		20,626		6,844		5,530		8,099		20,473
	$	8,326		19,168		13,116		40,610		8,329		18,631		12,536		39,496

During the

three

-month period ended

March 

31,

 

2019,

the Bank purchased

$1.4

million Subordinated notes. There were

no

sales of the Bank’s available-for-sale securities in the

three

-month period ended

March 

31,

 

2019.

There were

no

sales or purchases of available-for-sale securities in the

three

-month period ended

March 31, 2018.

XML

Note 4 - Loans Receivable and Allowance for Loan and Lease Losses

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

Note

4

: Loans Receivable and

Allowance for

L

oan and

L

ease

L

osses

As of

March 

31,

 

2019

and

December 31, 2018,

loans receivable, net, consists of the following:

(In thousands)	March 31, 2019			December 31, 2018
Loan portfolio segment:
Commercial Real Estate	$	291,556			274,938
Residential Real Estate		159,985			157,300
Commercial and Industrial		177,866			191,852
Consumer and Other		95,755			94,569
Construction		45,356			46,040
Construction to Permanent - CRE		18,018			15,677
Loans receivable, gross		788,536			780,376
Allowance for loan and lease losses		(7,823	)		(7,609	)
Loans receivable, net	$	780,713			772,767

Patriot's lending activities are conducted principally in Fairfield and New Haven Counties in Connecticut and Westchester County in New York, and the

five

Boroughs of New York City. Patriot originates commercial real estate loans, commercial business loans, a variety of consumer loans, and construction loans, and has purchased residential loans since

2016.

All commercial and residential real estate loans are collateralized primarily by

first

or

second

mortgages on real estate. The ability and willingness of borrowers to satisfy their loan obligations is dependent to some degree on the status of the regional economy as well as upon the regional real estate market. Accordingly, the ultimate collectability of a substantial portion of the loan portfolio and the recovery of a substantial portion of any resulting real estate acquired is susceptible to changes in market conditions.

Patriot has established credit policies applicable to each type of lending activity in which it engages and evaluates the creditworthiness of each borrower. Unless extenuating circumstances exist, Patriot limits the extension of credit on commercial real estate loans to

75%

of the market value of the underlying collateral. Patriot’s loan origination policy for multi-family residential real estate is limited to

80%

of the market value of the underlying collateral. In the case of construction loans, the maximum loan-to-value is

75%

of the “as completed” appraised value of the real estate project. Management monitors the appraised value of collateral on an on-going basis and additional collateral is requested when warranted. Real estate is the primary form of collateral, although other forms of collateral do exist and

may

include such assets as accounts receivable, inventory, marketable securities, time deposits, and other business assets.

In connection with the Prime Bank merger in

May 2018,

loans were acquired. A subset of these loans was determined to have evidence of credit deterioration at the acquisition date, which was accounted for in accordance with ASC

310

-

30.

The purchased credit impaired (“PCI”) loans presently maintain a carrying value of

$439,000

as of

March 

31,

 

2019.

The loans were evaluated for impairment through the periodic reforecasting of expected cash flows.

Income is recognized on PCI loans pursuant to ASC Topic

310

-

30.

A portion of the fair value discount has been ascribed as an accretable yield that is accreted into interest income over the estimated remaining life of the loans. The remaining non-accretable difference represents cash flows

not

expected to be collected.

A summary of changes in the accretable discount for PCI loans for the

three

months ended

March 31, 2019

follows:

(In thousands)	For the three Months Ended March 31, 2019
Accretable discount, beginning of period	$	(792	)
Accretion		25
Other changes, net		573
Accretable discount, end of period	$	(194	)

The accretion of the accretable discount for PCI loans for the

three

months ended

March 

31,

 

2019

was

$25,000.

The other changes represent primarily loans that were either fully paid-off or totally charged off in the

first

quarter of

2019.

Risk characteristics of the Company’s portfolio classes include the following:

Commercial Real Estate Loans

In underwriting commercial real estate loans, Patriot evaluates both the prospective borrower’s ability to make timely payments on the loan and the value of the property securing the loans. Repayment of such loans

may

be negatively impacted should the borrower default, the value of the property collateralizing the loan substantially decline, or there are declines in general economic conditions. Where the owner occupies the property, Patriot also evaluates the business’ ability to repay the loan on a timely basis and

may

require personal guarantees, lease assignments, and/or the guarantee of the operating company.

Residential Real Estate Loans

In

2013,

Patriot discontinued offering primary mortgages on personal residences. Repayment of residential real estate loans

may

be negatively impacted should the borrower have financial difficulties, should there be a significant decline in the value of the property securing the loan, or should there be declines in general economic conditions.

During the

three

months ended

March 31, 2019

and

2018,

Patriot purchased

$4.8

million and

$0

of residential real estate loans, respectively.

Commercial and Industrial Loans

Patriot’s commercial and industrial loan portfolio consists primarily of commercial business loans and lines of credit to businesses and professionals. These loans are generally for the financing of accounts receivable, purchases of inventory, purchases of new or used equipment, or for other short- or long-term working capital purposes. These loans are generally secured by business assets, but are also occasionally offered on an unsecured basis. In granting these types of loans, Patriot considers the borrower’s cash flow as the primary source of repayment, supported by the value of collateral, if any, and personal guarantees, as applicable. Repayment of commercial and industrial loans

may

be negatively impacted by adverse changes in economic conditions, ineffective management, claims on the borrower’s assets by others that are superior to Patriot’s claims, a loss of demand for the borrower’s products or services, or the death or disability of the borrower or other key management personnel.

Patriot originates SBA

7

(a) loans, on which the SBA has historically provided guarantees of up to

75

percent of the principal balance. The guaranteed portion of the Company’s SBA loans is generally sold in the secondary market with the unguaranteed portion held in the portfolio as a loan held for investment. SBA loans are for the purpose of providing working capital, financing the purchase of equipment, inventory or commercial real estate and for other business purposes. Loans are guaranteed by the businesses' major owners. SBA loans are made based primarily on the historical and projected cash flow of the business and secondarily on the underlying collateral provided.

Patriot’s syndicated and leveraged loan portfolio are included in the commercial and industrial loan classification and are primarily comprised of loan transactions led by major financial institutions and regional banks, which are the Agent Bank or Lead Arranger, and are referred to as syndicated loans or “Shared National Credits (SNC)”. SNC loans were determined to be complementary to the Bank’s existing C&I portfolio and product offerings and provide diversification from Patriot’s typical direct-to-business lines of credit and term facilities. The Bank will participate in senior secured financings for public and privately-owned companies for acquisitions, working capital, recapitalizations, and general corporate purposes. The Bank’s strategy is to participate in these types of loan transactions.

Consumer and Other Loans

Patriot offers individual consumers various forms of credit including installment loans, credit cards, overdraft protection, and reserve lines of credit. Repayments of such loans are generally dependent on the personal income of the borrower, which

may

be negatively impacted by adverse changes in economic conditions. The Company does

not

place a high emphasis on originating these types of loans.

The Company does

not

have any lending programs commonly referred to as subprime lending. Subprime lending generally targets borrowers with weakened credit histories that are typically characterized by payment delinquencies, previous charge-offs, judgments against the consumer, a history of bankruptcies, or borrowers with questionable repayment capacity as evidenced by low credit scores or high debt-burdened ratios.

No

education loans or other consumer loans were purchased during the

three

months period ended

March 

31,

 

2019

and

2018.

Construction Loans

Construction loans are of a short-term nature, generally of

eighteen

-months or less, that are secured by land intended for commercial, residential, or mixed-use development. Loan proceeds

may

be used for the acquisition of or improvements to the land under development and funds are generally disbursed as phases of construction are completed.

Included in this category are loans to construct single family homes where

no

contract of sale exists, based upon the experience and financial strength of the builder, the type and location of the property, and other factors. Construction loans tend to be personally guaranteed by the principal(s). Repayment of such loans

may

be negatively impacted by an inability to complete construction, a downturn in the market for new construction, by a significant increase in interest rates, or by decline in general economic conditions.

Construction to Permanent - Commercial Real Estate (“CRE”)

One time close of a construction facility with simultaneous conversion to an amortizing mortgage loan. Construction to Permanent loans combine a short term period similar to a  construction loan, generally with a variable rate, and a longer term CRE loan typically

20

-

25

years, resetting every

five

years to the Federal Home Loan Bank (“FHLB”) rate. 

Close of the construction facility typically occurs when events dictate, such as receipt of a certificate of occupancy and property stabilization, which is defined as cash flow sufficient to support a pre-defined minimum debt coverage ratio and other conditions and covenants particular to the loan. Construction facilities are typically variable rate instruments that, upon conversion to an amortizing mortgage loan, reset to a fixed rate instrument that is the greater of the in-force variable rate plus a predetermined spread over a reference rate (e.g., prime) or a minimum interest rate.

Allowance for

L

oan and

L

ease

L

osses

The following tables summarize the activity in the allowance for loan and lease losses, allocated to segments of the loan portfolio, for the

three

months ended

March 

31,

 

2019

and

2018:

(In thousands)	Commercial Real Estate			Residential Real Estate		Commercial and Industrial			Consumer and Other			Construction		Construction to Permanent - CRE		Unallocated			Total
Three months ended March 31, 2019
Allowance for loan and lease losses:
December 31, 2018	$	1,866			1,059		3,558			641			350		108		27			7,609
Charge-offs		-			-		-			-			-		-		-			-
Recoveries		-			-		47			2			-		-		-			49
Provisions (credits)		(4	)		330		(115	)		(51	)		5		15		(15	)		165
March 31, 2019	$	1,862			1,389		3,490			592			355		123		12			7,823
Three months ended March 31, 2018
Allowance for loan and lease losses:
December 31, 2017	$	2,212			959		2,023			568			481		54		-			6,297
Charge-offs		-			-		-			-			-		-		-			-
Recoveries		3			-		-			-			-		-		-			3
Provisions (credits)		265			114		(264	)		(22	)		7		7		78			185
March 31, 2018	$	2,480			1,073		1,759			546			488		61		78			6,485

The following tables summarize, by loan portfolio segment, the amount of loans receivable evaluated individually and collectively for impairment as of

March 

31,

 

2019

and

December 31, 2018:

(In thousands)	Commercial Real Estate		Residential Real Estate		Commercial and Industrial		Consumer and Other		Construction		Construction to Permanent - CRE		Unallocated		Total
March 31, 2019
Allowance for loan and lease losses:
Individually evaluated for impairment	$	-		563		1,062		-		-		-		-		1,625
Collectively evaluated for impairment		1,862		826		2,428		592		355		123		12		6,198
Total allowance for loan losses	$	1,862		1,389		3,490		592		355		123		12		7,823
Loans receivable, gross:
Individually evaluated for impairment	$	12,026		3,766		4,598		861		8,800		-		-		30,051
PCI loans individually evaluated for impairment		-		-		439		-		-		-		-		439
Collectively evaluated for impairment		279,530		156,219		172,829		94,894		36,556		18,018		-		758,046
Total loans receivable, gross	$	291,556		159,985		177,866		95,755		45,356		18,018		-		788,536

(In thousands)	Commercial Real Estate		Residential Real Estate		Commercial and Industrial		Consumer and Other		Construction		Construction to Permanent - CRE		Unallocated		Total
December 31, 2018
Allowance for loan and lease losses:
Individually evaluated for impairment	$	-		216		1,299		30		-		-		-		1,545
Collectively evaluated for impairment		1,866		843		2,259		611		350		108		27		6,064
Total allowance for loan losses	$	1,866		1,059		3,558		641		350		108		27		7,609
Loans receivable, gross:
Individually evaluated for impairment	$	4,606		2,302		4,646		864		8,800		-		-		21,218
PCI loans individually evaluated for impairment		-		-		615		-		-		-		-		615
Collectively evaluated for impairment		270,332		154,998		186,591		93,705		37,240		15,677		-		758,543
Total loans receivable, gross	$	274,938		157,300		191,852		94,569		46,040		15,677		-		780,376

Patriot monitors the credit quality of its loans receivable on an ongoing basis. Credit quality is monitored by reviewing certain indicators, including loan to value ratios, debt service coverage ratios, and credit scores.

Patriot employs a risk rating system as part of the risk assessment of its loan portfolio. At origination, lending officers are required to assign a risk rating to each loan in their portfolio, which is ratified or modified by the Loan Committee to which the loan is submitted for approval. If financial developments occur on a loan in the lending officer’s portfolio of responsibility, the risk rating is reviewed and adjusted, as applicable. In carrying out its oversight responsibilities, the Loan Committee can adjust a risk rating based on available information. In addition, the risk ratings on all commercial loans over

$250,000

are reviewed annually by the Credit Department.

Additionally, Patriot retains an objective and independent

third

-party loan review expert to perform a quarterly analysis of the results of its risk rating process. The quarterly review is based on a randomly selected sample of loans within established parameters (e.g., value, concentration), in order to assess and validate the risk ratings assigned to individual loans. Any changes to the assigned risk ratings, based on the quarterly review, are required to be approved by the Loan Committee.

When assigning a risk rating to a loan, management utilizes the Bank’s internal

eleven

-point risk rating system. An asset is considered “special mention” when it has a potential weakness based on objective evidence, but does

not

currently expose the Company to sufficient risk to warrant classification in

one

of the following categories:

● Substandard: An asset is classified “substandard” if it is not adequately protected by the current net worth and paying capacity of the obligor or the collateral pledged, if any. Substandard assets have well defined weaknesses based on objective evidence, and are characterized by the distinct possibility that the Company will sustain some loss, if noted deficiencies are not corrected.

● Doubtful: Assets classified as “doubtful” have all of the weaknesses inherent in those classified as “substandard”, with the added characteristic that the identified weaknesses make collection or liquidation-in-full improbable, on the basis of currently existing facts, conditions, and values.

Charge-offs, to reduce the loan to its recoverable value, generally commence after the loan is classified as “doubtful”.

In accordance with Federal Financial Institutions Examination Council published policies establishing uniform criteria for the classification of retail credit based on delinquency status, “Open-end” and “Closed-end” credits are charged off when

180

days and

120

days delinquent, respectively.

If an account is classified as “Loss”, the full balance of the loans receivable is charged off, regardless of the potential recovery from a sale of the underlying collateral. Any amount that

may

be recovered on the sale of collateral underlying a loan is recognized as a “recovery” in the period in which the collateral is sold.

Loan Portfolio Aging Analysis

The following tables summarize performing and non-performing (i.e., non-accruing) loans receivable by portfolio segment, by aging category, by delinquency status as of

March 

31,

 

2019.

(In thousands)	Performing (Accruing) Loans
As of March 31, 2019:	30 - 59 Days Past Due		60 - 89 Days Past Due		90 Days or Greater Past Due		Total Past Due		Current		Total Performing Loans		Non-accruing Loans		Loans Receivable Gross
Loan portfolio segment:
Commercial Real Estate:
Pass	$	208		-		-		208		272,278		272,486		-		272,486
Special mention		-		-		-		-		2,070		2,070		-		2,070
Substandard		583		431		-		1,014		5,033		6,047		10,953		17,000
		791		431		-		1,222		279,381		280,603		10,953		291,556
Residential Real Estate:
Pass		1,293		-		-		1,293		153,481		154,774		-		154,774
Special mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		1,738		1,738		3,473		5,211
		1,293		-		-		1,293		155,219		156,512		3,473		159,985
Commercial and Industrial:
Pass		454		195		600		1,249		160,419		161,668		-		161,668
Special mention		-		-		100		100		1,932		2,032		-		2,032
Substandard		-		338		-		338		9,196		9,534		4,632		14,166
		454		533		700		1,687		171,547		173,234		4,632		177,866
Consumer and Other:
Pass		1,463		168		8		1,639		93,944		95,583		-		95,583
Substandard		-		-		-		-		-		-		172		172
		1,463		168		8		1,639		93,944		95,583		172		95,755
Construction:
Pass		-		-		-		-		36,556		36,556		-		36,556
Substandard		-		-		-		-		-		-		8,800		8,800
		-		-		-		-		36,556		36,556		8,800		45,356
Construction to Permanent - CRE:
Pass		-		-		-		-		18,018		18,018		-		18,018
		-		-		-		-		18,018		18,018		-		18,018
Total	$	4,001		1,132		708		5,841		754,665		760,506		28,030		788,536
Loans receivable, gross:
Pass	$	3,418		363		608		4,389		734,696		739,085		-		739,085
Special mention		-		-		100		100		4,002		4,102		-		4,102
Substandard		583		769		-		1,352		15,967		17,319		28,030		45,349
Loans receivable, gross	$	4,001		1,132		708		5,841		754,665		760,506		28,030		788,536

The following tables summarize performing and non-performing loans (i.e., non-accruing) receivable by portfolio segment, by aging category, by delinquency status as of

December 31, 2018.

(In thousands)	Performing (Accruing) Loans
As of December 31, 2018:	30 - 5 9 Days Past Due		60 - 89 Days Past Due		90 Days or Greater Past Due		Total Past Due		Current		Total Performing Loans		Non-accruing Loans		Loans Receivable Gross
Loan portfolio segment:
Commercial Real Estate:
Pass	$	423		-		-		423		262,435		262,858		-		262,858
Special mention		-		-		958		958		2,673		3,631		-		3,631
Substandard		170		-		-		170		4,754		4,924		3,525		8,449
		593		-		958		1,551		269,862		271,413		3,525		274,938
Residential Real Estate:
Pass		637		817		-		1,454		151,509		152,963		-		152,963
Special mention		-		-		-		-		850		850		-		850
Substandard		-		-		-		-		1,481		1,481		2,006		3,487
		637		817		-		1,454		153,840		155,294		2,006		157,300
Commercial and Industrial:
Pass		150		853		234		1,237		180,293		181,530		-		181,530
Special mention		-		-		101		101		2,378		2,479		-		2,479
Substandard		-		-		-		-		3,162		3,162		4,681		7,843
		150		853		335		1,338		185,833		187,171		4,681		191,852
Consumer and Other:
Pass		20		-		23		43		94,352		94,395		-		94,395
Substandard		-		-		-		-		-		-		174		174
		20		-		23		43		94,352		94,395		174		94,569
Construction:
Pass		-		1,000		-		1,000		36,240		37,240		-		37,240
Substandard		-		-		-		-		-		-		8,800		8,800
		-		1,000		-		1,000		36,240		37,240		8,800		46,040
Construction to Permanent - CRE:
Pass		-		-		-		-		15,677		15,677		-		15,677
		-		-		-		-		15,677		15,677		-		15,677
Total	$	1,400		2,670		1,316		5,386		755,804		761,190		19,186		780,376
Loans receivable, gross:
Pass	$	1,230		2,670		257		4,157		740,506		744,663		-		744,663
Special mention		-		-		1,059		1,059		5,901		6,960		-		6,960
Substandard		170		-		-		170		9,397		9,567		19,186		28,753
Loans receivable, gross	$	1,400		2,670		1,316		5,386		755,804		761,190		19,186		780,376

The following tables summarize non-performing (i.e., non-accruing) loans by aging category and status, within the applicable loan portfolio segment as of

March 

31,

 

2019

and

December 31, 2018:

(In thousands)	Non-accruing Loans
	30 - 59 Days Past Due		60 - 89 Days Past Due		90 Days or Greater Past Due		Total Past Due		Current		Total Non-accruing Loans
As of March 31, 2019:
Loan portfolio segment:
Commercial Real Estate:
Substandard	$	-		-		1,011		1,011		9,942		10,953
Residential Real Estate:
Substandard		60		-		2,843		2,903		570		3,473
Commercial and Industrial:
Substandard		-		-		3,913		3,913		719		4,632
Consumer and Other:
Substandard		-		102		70		172		-		172
Construction:
Substandard		-		-		-		-		8,800		8,800
Total non-accruing loans	$	60		102		7,837		7,999		20,031		28,030
As of December 31, 2018:
Loan portfolio segment:
Commercial Real Estate:
Substandard	$	1,580		-		1,945		3,525		-		3,525
Residential Real Estate:
Substandard		-		-		2,006		2,006		-		2,006
Commercial and Industrial:
Substandard		-		15		3,941		3,956		725		4,681
Consumer and Other:
Substandard		-		86		11		97		77		174
Construction:
Substandard		-		-		8,800		8,800		-		8,800
Total non-accruing loans	$	1,580		101		16,703		18,384		802		19,186

If non-accrual loans had been performing in accordance with the original contractual terms, additional interest income of approximately

$275,000

and

$81,000

would have been recognized in income during the

three

months ended

March 

31,

 

2019

and

2018,

respectively.

Additionally, certain loans for which the borrower cannot demonstrate sufficient cash flow to continue loan payments in the future and certain troubled debt restructurings (“TDRs”) are placed on non-accrual status. During the

three

months ended

March 

31,

 

2019

and

2018,

interest income collected and recognized on non-accruing loans were

$150,000

and

$0,

respectively.

The accrual of interest on loans is discontinued at the time the loan is

90

days past due for payment unless the loan is well-secured and in process of collection. Consumer installment loans are typically charged off

no

later than

180

days past due. Past due status is based on contractual terms of the loan. In all cases, loans are placed on non-accrual status or charged-off, at an earlier date, if collection of principal or interest is considered doubtful. All interest accrued, but

not

collected for loans that are placed on non-accrual status or charged off, is reversed against interest income. The interest on these loans is accounted for on the cash-basis method until qualifying for return to accrual status. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current, future payments are reasonably assured, and there is

nine

months of performance. Management considers all non-accrual loans and TDRs to be impaired. In most cases, loan payments that are past due less than

90

days, based on contractual terms, are considered collection delays and

not

an indication of loan impairment. The Bank considers consumer installment loans to be pools of smaller homogeneous loan balances, which are collectively evaluated for impairment.

Troubled Debt Restructurings (“TDR”)

On a case-by-case basis, Patriot

may

agree to modify the contractual terms of a borrower’s loan to assist customers who

may

be experiencing financial difficulty. If the borrower is experiencing financial difficulties and a concession has been made, the loan is classified as a TDR.

Substantially all TDR loan modifications involve lowering the monthly payments on such loans through either a reduction in interest rate below market rate, an extension of the term of the loan, or a combination of adjusting these

two

contractual attributes. TDR loan modifications

may

result in the forgiveness of principal or accrued interest. In addition, when modifying commercial loans, Patriot frequently obtains additional collateral or guarantor support. If the borrower has performed under the existing contractual terms of the loan and Patriot’s underwriters determine that the borrower has the capacity to continue to perform under the terms of the TDR, the loan continues accruing interest. Non-accruing TDRs

may

be returned to accrual status when there has been a sustained period of performance (generally

six

consecutive months of payments) and both principal and interest are reasonably assured of collection.

The recorded investment in TDRs was

$10.9

million at

March 

31,

 

2019

and

$2.1

million at

December 31, 2018,

respectively.

(In thousands)	March 31, 2019					December 31, 2018
Loan portfolio segment:	Number of Contracts		Recorded Investment			Number of Contracts		Recorded Investment
Commercial Real Estate		2	$	1,073			2	$	1,081
Residential Real Estate		1		292			1		296
Consumer and Other		2		690			2		689
Construction		1		8,800			-		-
Total TDR Loans		6		10,855			5		2,066
Less:
TDRs included in non-accrual loans		1		(8,800	)		-		-
Total accrual TDR Loans		5	$	2,055			5	$	2,066

During the

three

months ended

March 31, 2019,

there was

one

construction loan with a balance of

$8.8

million modified as TDR. The loan was restructured with a maturity and payment concession. The pre-modification and post-modification outstanding recorded investment in the restructured construction loan was

$8.8

million.

The construction loans modified in a TDR often involve reducing the interest rate for the remaining term of the loan, extending the maturity date at an interest rate lower than the current market rate for new debt with similar risk, extending the interest-only payment period, or substituting or adding a co-borrower or guarantor. There were

no

loans modified as TDRs and

no

defaults of TDRs during the

three

months ended

March 31, 2018.

At

March 

31,

 

2019

and

December 31, 2018,

there were

no

commitments to advance additional funds under TDRs.

Impaired Loans

Impaired loans

may

consist of non-accrual loans and/or performing and non-performing TDRs. As of

March 

31,

 

2019

and

December 31, 2018,

based on the on-going monitoring and analysis of the loan portfolio, impaired loans of

$30.0

 million and

$21.2

million, respectively, were identified, for which

$1.6

million and

$1.5

million specific reserves were established, respectively. Loans

not

requiring specific reserves had sufficient collateral values, less costs to sell, supporting the net investment in the loan which includes principal balance, unamortized fees and costs and accrued interest, if any. Once a borrower is in default, Patriot is under

no

obligation to advance additional funds on unused commitments.

At

March 

31,

 

2019

and

December 31, 2018,

exposure to the impaired loans was related to

29

and

25

borrowers, respectively. In all cases, appraisal reports of the underlying collateral, if any, have been obtained from independent licensed appraisal firms. For non-performing loans, the independently determined appraised values were reduced by an estimate of the costs to sell the assets, in order to estimate the potential loss, if any, that

may

eventually be realized. Performing loans are monitored to determine when, if at all, additional loan loss reserves

may

be required for a loss of underlying collateral value.

In addition, the remaining

$439,000

PCI loans acquired from Prime Bank acquisition were commercial and industrial loans. The PCI loans were originally recorded at fair value by the Bank on the date of acquisition. At

March 

31,

 

2019,

those loans were considered individually evaluated for impairment, with

no

allowance recorded.

The following table reflects information about the impaired loans, excluding PCI loans, by class as of

March 

31,

 

2019

and

December 31, 2018:

(In thousands)	March 31, 2019						December 31, 2018
	Recorded Investment		Principal Outstanding		Related Allowance		Recorded Investment		Principal Outstanding		Related Allowance
With no related allowance recorded:
Commercial Real Estate	$	12,026		12,145		-		4,606		5,109		-
Residential Real Estate		1,760		1,768		-		670		703		-
Commercial and Industrial		1,589		1,589		-		488		1,281		-
Consumer and Other		861		861		-		827		867		-
Construction		8,800		8,800		-		8,800		8,839		-
		25,036		25,163		-		15,391		16,799		-
With a related allowance recorded:
Commercial Real Estate		-		-		-		-		-		-
Residential Real Estate		2,006		2,006		563		1,632		1,632		216
Commercial and Industrial		3,009		3,009		1,062		4,158		4,208		1,299
Consumer and Other		-		-		-		37		37		30
Construction		-		-		-		-		-		-
		5,015		5,015		1,625		5,827		5,877		1,545
Impaired Loans, Total:
Commercial Real Estate		12,026		12,145		-		4,606		5,109		-
Residential Real Estate		3,766		3,774		563		2,302		2,335		216
Commercial and Industrial		4,598		4,598		1,062		4,646		5,489		1,299
Consumer and Other		861		861		-		864		904		30
Construction		8,800		8,800		-		8,800		8,839		-
Impaired Loans, Total	$	30,051		30,178		1,625		21,218		22,676		1,545

The following tables summarize additional information regarding impaired loans, excluding PCI loans, by class for the

three

months ended

March 

31,

 

2019

and

2018.

(In thousands)	Three Months Ended March 31,
	2019				2018
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial Real Estate	$	6,440		13		2,205		25
Residential Real Estate		942		4		3,342		3
Commercial and Industrial		775		-		739		-
Consumer and Other		841		8		691		7
Construction		8,800		150		-		-
		17,798		175		6,977		35
With a related allowance recorded:
Commercial Real Estate		472		-		-		-
Residential Real Estate		2,089		-		-		-
Commercial and Industrial		3,863		-		393		-
Consumer and Other		21		-		2		-
Construction		-		-		-		-
		6,445		-		395		-
Impaired Loans, Total:
Commercial Real Estate		6,912		13		2,205		25
Residential Real Estate		3,031		4		3,342		3
Commercial and Industrial		4,638		-		1,132		-
Consumer and Other		862		8		693		7
Construction		8,800		150		-		-
Impaired Loans, Total	$	24,243		175		7,372		35

XML

Note 5 - Goodwill and Other Intangible Assets

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Goodwill and Intangible Assets Disclosure [Text Block]

Note

5

:     

Goodwill and Other Intangible Assets

On

May 10, 2018

the Company completed its acquisition of Prime Bank, a Connecticut bank headquartered in Orange, CT. The closing of the transaction added a new Patriot branch located in the Town of Orange, New Haven County, Connecticut.

The assets acquired and liabilities assumed from Prime Bank were recorded at their fair value as of the closing date of the acquisition. Goodwill of

$2.1

million was recorded at the time of the acquisition, and was adjusted to

$1.7

million as of

December 31, 2018,

primarily due to updating of fair value of the core deposit intangibles and adjustment of cash and contingent considerations. During the

three

months ended

March 31, 2019,

goodwill was adjusted to

$1.1

million as a result of reducing the amount expected to be paid pursuant to certain problem loans pending resolution by

$621,000.

There were

no

income effects resulting from the recorded measurement period adjustments for the

three

months ended

March 31, 2019.

The goodwill is all deductible for income taxes over

15

years.

XML

Note 6 - Deposits

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Deposit Liabilities Disclosures [Text Block]

Note

6

:     Deposits

The following table presents the balance of deposits held, by category as of

March 

31,

 

2019

and

December 31, 2018.

(In thousands)	March 31, 2019		December 31, 2018
Non-interest bearing	$	82,248	$	84,471
Interest bearing:
NOW		24,924		26,100
Savings		67,708		81,912
Money market		88,493		85,197
Certificates of deposit, less than $250,000		217,701		203,683
Certificates of deposit, $250,000 or greater		88,953		78,318
Brokered deposits		182,794		183,600
Interest bearing, Total		670,573		658,810
Total Deposits	$	752,821	$	743,281

As of

March 31, 2019,

contractual maturities of Certificates of Deposit (“CDs”), and brokered deposits is summarized as follows:

(In thousands)	CDs less than $250,000		CDs $250,000 or greater		Brokered Deposits		Total
1 year or less	$	139,614		58,395		145,508	$	343,517
More than 1 year through 2 years		68,372		28,199		21,320		117,891
More than 2 years through 3 years		7,972		1,519		15,467		24,958
More than 3 years through 4 years		1,316		840		499		2,655
More than 4 years through 5 years		427		-		-		427
	$	217,701		88,953		182,794	$	489,448

XML

Note 7 - Share-based Compensation and Employee Benefit Plan

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Share-based Payment Arrangement [Text Block]

Note

7

: Share-Based Compensation and Employee Benefit Plan

The Company maintains the Patriot National Bancorp, Inc.

2012

Stock Plan (the “Plan”) to provide an incentive to directors and employees of the Company by the grant of restricted stock awards (“RSA”), options, or phantom stock units. Since

2013,

the Company’s practice is to grant RSAs. As of

March 

31,

 

2019

and

December 31, 2018,

there were

no

options or phantom stock units outstanding, or that have been exercised during the period then ended.

The Plan provides for the issuance of up to

3,000,000

shares of the Company’s common stock subject to certain limitations. As of

March 

31,

 

2019,

2,870,113

shares of stock are available for issuance under the Plan. In accordance with the terms of the Plan, the vesting of RSAs and options

may

be accelerated at the discretion of the Compensation Committee of the Board of Directors. The Compensation Committee sets the terms and conditions applicable to the vesting of RSAs and stock option grants. RSAs granted to directors and employees generally vest in quarterly or annual installments over a

three

,

four

or

five

year period from the date of grant.

The following is a summary of the status of the Company’s restricted shares as of

March 

31,

 

2019

and

2018

and changes therein during the periods indicated:

Three months ended March 31, 2019:	Number of Shares Awarded			Weighted Average Grant Date Fair Value
Unvested at December 31, 2018		31,790		$	14.06
Vested		(8,936	)	$	15.07
Unvested at March 31, 2019		22,854		$	13.66
Three months ended March 31, 2018:
Unvested at December 31, 2017		25,870		$	12.15
Granted		14,199		$	17.93
Vested		(2,935	)	$	14.18
Forfeited		(100	)	$	15.50
Unvested at March 31, 2018		37,034		$	14.20

The Company recognizes compensation expense for all director and employee share-based compensation awards on a straight-line basis over the requisite service period, which is equal to the vesting schedule of each award, for each vesting portion of an award equal to its grant date fair value.

For the

three

months ended

March 

31,

 

2019

and

2018,

the Company recognized total share-based compensation expense of

$48,000

and

$53,000,

respectively. The share-based compensation attributable to employees of Patriot amounted to

$28,000

and

$35,000,

for the

three

months ended

March 

31,

 

2019

and

2018,

respectively. Included in share-based compensation expense for the

three

months ended

March 

31,

 

2019

and

2018,

were

$20,000

and

$18,000

attributable to Patriot’s external directors, who received total compensation of

$119,000

and

$82,000

for each of those periods, respectively, which amounts are included in Other Operating Expenses in the Consolidated Statements of Income.

Unrecognized compensation expense attributable to the unvested restricted shares outstanding as of

March 

31,

 

2019

amounted to

$324,000,

which amount is expected to be recognized over the weighted average remaining life of the awards of

2.3

years.

RSA Grant - Non-executive Employees

During the

three

months ended

March 

31,

 

2019

and

2018,

0

and

100

granted RSA shares were forfeited, respectively. The remaining

6,000

RSA shares vested fully on

January 4, 2019.

Dividends

On

July 17, 2017,

the Company announced its intention to make quarterly cash dividend payments. For the

three

months ended

March 

31,

 

2019

and

2018,

the Company paid cash dividends of

$.01

per share of common stock, or an aggregated of

$39,000

and

$38,000,

respectively.

Retirement Plan

The Company offers a

401K

retirement plan (the

“401K”

), which provides for tax-deferred salary deductions for eligible employees. Employees

may

choose to make voluntary contributions to the

401K,

limited to an annual maximum amount as set forth periodically by the Internal Revenue Service. The Company matches

50%

of such contributions, up to a maximum of

six

percent of an employee's annual compensation. During the

three

months ended

March 

31,

 

2019

and

2018

compensation expense under the

401K

aggregated

$54,000

and

$51,000,

respectively.

XML

Note 8 - Earnings Per Share

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Earnings Per Share [Text Block]

Note

8

: Earnings per share

The Company is required to present basic earnings per share and diluted earnings per share in its Consolidated Statements of Income. Basic earnings per share amounts are computed by dividing net income by the weighted average number of common shares outstanding. Diluted earnings per share reflects additional common shares that would have been outstanding if potentially dilutive common shares had been issued, as well as any adjustment to income that would result from the assumed issuance. Potential common shares that

may

be issued by the Company relate to outstanding unvested RSAs granted to directors and employees. The dilutive effect resulting from these potential shares is determined using the treasury stock method. The Company is also required to provide a reconciliation of the numerator and denominator used in the computation of both basic and diluted earnings per share.

The following table summarizes the computation of basic and diluted earnings per share for the

three

months ended

March 

31,

 

2019

and

2018:

(Net income in thousands)	Three Months Ended March 31,
	2019			2018
Basic earnings per share:
Net income attributable to Common shareholders	$	323		$	1,065
Divided by:
Weighted average shares outstanding		3,917,312			3,900,513
Basic earnings per common share		0.08			0.27
Diluted earnings per share:
Net income attributable to Common shareholders		323			1,065
Weighted average shares outstanding		3,917,312			3,900,513
Effect of potentially dilutive restricted common shares		-			16,601
Divided by:
Weighted average diluted shares outstanding		3,917,312	(1)		3,917,114
Diluted earnings per common share		0.08			0.27

( 1 )   The weighted average diluted shares outstanding did not include 448 anti-dilutive restricted common shares as of March 31, 2019.

XML

Note 9 - Financial Instruments With Off-balance Sheet Risk

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Concentration Risk Disclosure [Text Block]

Note

9

: Financial Instruments with Off-Balance Sheet Risk

In the normal course of business, Patriot is a party to financial instruments with off-balance-sheet risk to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit and involve, to varying degrees, elements of credit and interest rate risk in excess of the amounts recognized in the balance sheet. The contractual amounts of these instruments reflect the extent of involvement Patriot has in particular classes of financial instruments.

The contractual amount of commitments to extend credit and standby letters of credit represents the maximum amount of potential accounting loss should: the contract be fully drawn upon; the customer default; and the value of any existing collateral becomes worthless. Patriot applies its credit policies to entering commitments and conditional obligations and, as with its lending activates, evaluates each customer’s creditworthiness on a case-by-case basis. Management believes that it effectively mitigates the credit risk of these financial instruments through its credit approval processes, establishing credit limits, monitoring the on-going creditworthiness of recipients and grantees, and the receipt of collateral as deemed necessary.

Financial instruments with credit risk at

March 

31,

 

2019

are as follows:

(In thousands)	As of March 31, 2019
Commitments to extend credit:
Unused lines of credit	$	58,521
Undisbursed construction loans		31,207
Home equity lines of credit		19,953
Future loan commitments		15,727
Financial standby letters of credit		1,153
	$	126,561

Commitments to extend credit are agreements to lend to a customer as long as there is

no

violation of any condition established in the contract. Commitments to extend credit generally have fixed expiration dates or other termination clauses, and

may

require payment of a fee by the borrower. Since these commitments could expire without being drawn upon, the total commitment amounts do

not

necessarily represent future cash requirements. The amount of collateral obtained, if deemed necessary upon extending credit, is based on management’s credit evaluation of the customer. Collateral held varies, but

may

include commercial property, residential property, deposits and securities. Patriot has established a

$8,000

reserve for credit loss as of

March 

31,

 

2019,

which is included in accrued expenses and other liabilities.

Standby letters of credit are written commitments issued by Patriot to guarantee the performance of a customer to a

third

party. The credit risk involved in issuing standby letters of credit is essentially the same as that involved in extending loan facilities to customers. Guarantees that are

not

derivative contracts are recorded at fair value and included in the Consolidated Balance Sheet.

XML

Note 10 - Regulatory and Operational Matters

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Regulatory Capital Requirements under Banking Regulations [Text Block]

Note

1

0

: Regulatory and Operational Matters

In

November 2018,

the Bank entered into a formal written agreement (the “Agreement”) with the Office of the Comptroller of the Currency (the “OCC”).  Under the terms of the Agreement, the Bank has appointed a Compliance Committee of

three

independent outside directors and

one

member of management responsible for monitoring adherence to the Agreement and has appointed a Lead Independent Director.

The Agreement states that by

December 31, 2018

the Board and Bank would develop, implement and revise written documents and policies related to executive compensation, conflict of interest, internal audit, liquidity and asset/liability management, commercial loan administration, leveraged lending, practices relating to the allowance for loan and lease losses, and assumptions used in the Bank’s interest rate risk model. Under the Agreement the Bank also agreed to provide a revised written

3

-year strategic and capital plan for the Bank by

December 31, 2018. 

To date, the Bank has addressed each of the items in accordance with the Agreement and continues to respond to any further enhancement requested by the OCC. Further details pertaining to the Agreement are provided in Part II Item

9B:

Other information included on the Annual Report on Form

10

-K for the year ended

December 31, 2018.

Federal and state regulatory authorities have adopted standards requiring financial institutions to maintain increased levels of capital. Effective

January 1, 2015,

federal banking agencies imposed

four

minimum capital requirements on a community bank’s risk-based capital ratios consisting of Total Capital, Tier

1

Capital, Common Equity Tier

1

(

“CET1”

) Capital, and a Tier

1

Leverage Capital ratio. The risk-based capital ratios measure the adequacy of a bank's capital against the riskiness of its on- and off-balance sheet assets and activities. Failure to maintain adequate capital is a basis for "prompt corrective action" or other regulatory enforcement action. In assessing a bank's capital adequacy, regulators also consider other factors such as interest rate risk exposure, liquidity, funding and market risks, quality and level of earnings, concentrations of credit, quality of loans and investments, nontraditional activity risk, policy effectiveness, and management's overall ability to monitor and control risk.

Capital adequacy is

one

of the most important factors used to determine the safety and soundness of individual banks and the banking system. Under the instituted regulatory framework, to be considered “well capitalized”, a financial institution must generally have a Total Capital ratio of at least

10%,

a Tier

1

Capital ratio of at least

8.0%,

a

CET1

Capital ratio at least

6.5%,

and a Tier

1

Leverage Capital ratio of at least

5.0%.

However, regardless of a financial institution’s ratios, the OCC

may

require increased capital ratios or impose dividend restrictions based on the other factors it considers in assessing a bank’s capital adequacy.

Management continuously assesses the adequacy of the Bank’s capital in order to maintain its “well capitalized” status.

The Company’s and the Bank’s regulatory capital amounts and ratios at

March 

31,

 

2019

and

December 31, 2018

are summarized as follows:

(In thousands)	Patriot National Bancorp, Inc.								Patriot Bank, N.A.
	March 31, 2019				December 31, 2018				March 31, 2019				December 31, 2018
	Amount ($)		Ratio (%)		Amount ($)		Ratio (%)		Amount ($)		Ratio (%)		Amount ($)		Ratio (%)
Total Capital (to risk weighted assets):
Actual		91,489		10.332		90,722		10.452		101,239		11.908		99,341		11.500
To be Well Capitalized (1)		-		-		-		-		85,016		10.000		86,384		10.000
For capital adequacy with Capital Buffer (2)		-		-		-		-		89,267		10.500		85,304		9.875
For capital adequacy		70,836		8.000		69,441		8.000		68,013		8.000		69,107		8.000
Tier 1 Capital (to risk weighted assets):
Actual		73,654		8.318		73,101		8.422		93,404		10.987		91,720		10.618
To be Well Capitalized (1)		-		-		-		-		68,013		8.000		69,107		8.000
For capital adequacy with Capital Buffer (2)		-		-		-		-		72,264		8.500		68,027		7.875
For capital adequacy		53,127		6.000		52,081		6.000		51,010		6.000		51,830		6.000
Common Equity Tier 1 Capital (to risk weighted assets):
Actual		65,654		7.415		65,101		7.500		93,404		10.987		91,720		10.618
To be Well Capitalized (1)		-		-		-		-		55,260		6.500		56,149		6.500
For capital adequacy with Capital Buffer (2)		-		-		-		-		59,511		7.000		55,069		6.375
For capital adequacy		39,845		4.500		39,061		4.500		38,257		4.500		38,873		4.500
Tier 1 Leverage Capital (to average assets):
Actual		73,654		7.721		73,101		7.842		93,404		9.789		91,720		9.838
To be Well Capitalized (1)		-		-		-		-		47,707		5.000		46,617		5.000
For capital adequacy		38,160		4.000		37,288		4.000		38,166		4.000		37,294		4.000

( 1 )   Designation as "Well Capitalized" does not apply to bank holding companies - the Company. Such categorization of capital adequacy only applies to insured depository institutions - the Bank.

( 2 )   The Capital Conservation Buffer implemented by the FDIC began to be phased in beginning January 1, 2016. It was not applicable to periods prior to that date and does not apply to bank holding companies - the Company.

Under the final capital rules that became effective on

January 1, 2015,

there was a requirement for a

CET1

capital conservation buffer of

2.5%

of risk-weighted assets, which is in addition to the other minimum risk-based capital standards in the rule. Institutions that do

not

maintain this required capital buffer become subject to progressively more stringent limitations on the percentage of earnings that

may

be distributed to shareholders or used for stock repurchases and on the payment of discretionary bonuses to senior executive management.

The capital buffer requirement is being phased in over

three

years beginning in

2016.

The

1.875%

capital conversation buffer for

2018

has been included in the minimum capital adequacy ratios in the

2018

column in the table above. The capital conversation buffer increased to

2.5%

for

2019,

which has been included in the minimum capital adequacy ratios in the

2019

column above.

The capital buffer requirement effectively raises the minimum required Total Capital ratio to

10.5%,

the Tier

1

capital ratio to

8.5%

and the

CET1

capital ratio to

7.0%

on a fully phased-in basis, which will be effective beginning on

January 

1,

 

2019.

Management believes that, as of

March 

31,

 

2019,

Patriot satisfies all capital adequacy requirements under the Basel III Capital Rules on a fully phased-in basis, as if all such requirements were currently in effect.

XML

Note 11 - Fair Value and Interest Rate Risk

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Fair Value Disclosures [Text Block]

Note

1

1

: Fair Value and Interest Rate Risk

Patriot measures the carrying value of certain financial assets and liabilities at fair value, as required by its policies as a financial institution and by US GAAP. The carrying values of certain assets and liabilities are measured at fair value on a recurring basis, such as available-for-sale securities; while other assets and liabilities are measured at fair value on a non-recurring basis due to external factors requiring management’s judgment to estimate potential losses of value resulting in asset impairments or the establishment of valuation reserves. Measuring assets and liabilities at fair value

may

result in fluctuations to carrying value that have a significant impact on the results of operations or other comprehensive income for the period and period over period.

Following is a detailed summary of the guidance provided by US GAAP regarding the application of fair value measurements and Patriot’s application thereof. Additionally, the following information includes detailed summaries of the effects fair value measurements have on the carrying amounts of asset and liabilities presented in the Consolidated Financial Statements.

The objective of fair value measurement is to value an asset that

may

be sold or a liability that

may

be transferred at the estimated value which might be obtained in a transaction between unrelated parties under current market conditions. US GAAP establishes a framework for measuring assets and liabilities at fair value, as well as certain financial instruments classified in equity. The framework provides a fair value hierarchy, which prioritizes quoted prices in active markets for identical assets and liabilities and minimizes unobservable inputs, which are inputs for which market data are

not

available and that are developed by management using the best information available to develop assumptions about the value market participants might place on the asset to be sold or liability to be transferred.

The

three

levels of the fair value hierarchy consist of:

Level 1	Unadjusted quoted market prices for identical assets or liabilities in active markets that the entity has the ability to access at the measurement date (such as active exchange-traded equity securities and certain U.S. and government agency debt securities).
Level 2	Observable inputs other than quoted prices included in Level 1, such as: -  Quoted prices for similar assets or liabilities in active markets (such as U.S. agency and government sponsored mortgage-backed securities) -  Quoted prices for identical or similar assets or liabilities in less active markets (such as certain U.S. and government agency debt securities, and corporate and municipal debt securities that trade infrequently) -  Other inputs that are observable for substantially the full term of the asset or liability (i.e. interest rates, yield curves, prepayment speeds, default rates, etc.).
Level 3	Valuation techniques that require unobservable inputs that are supported by little or no market activity and are significant to the fair value measurement of the asset or liability (such as pricing and discounted cash flow models that typically reflect management’s estimates of the assumptions a market participant would use in pricing the asset or liability).

A description of the valuation methodologies used for assets and liabilities recorded at fair value, and for estimating fair value for financial and non-financial instruments

not

recorded at fair value, is set forth below.

Cash and due from banks, federal funds sold, short-term investments, and accrued interest receivable and payable

The carrying amount is a reasonable estimate of fair value and accordingly these are classified as Level

1.

These financial instruments are

not

recorded at fair value on a recurring basis.

Available-for-sale securities

The fair value of securities available for sale (carried at fair value) are determined by obtaining quoted market prices on nationally recognized securities exchanges (Level

1

), or matrix pricing (Level

2

), which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted market prices for the specific securities, but rather by relying on the securities' relationship to other benchmark quoted prices, or using unobservable inputs employing various techniques and assumptions (Level 

3

).

Other Investments

The Bank’s investment portfolio includes the Solomon Hess SBA Loan Fund totaling

$4.45

million. This investment is utilized by the Bank to satisfy its Community Reinvestment Act (“CRA”) lending requirements. As this fund operates as a private fund, shares in the fund are

not

publicly traded but

may

be redeemed with

60

days’ notice at cost. For that reason, the carrying amount was considered comparable to fair value at both

December 31, 2018

and

2017.

The remaining balance in other investments is a

$513,000

time deposit that matures on

October 6, 2019,

which is carried at cost, which approximates fair value due to its short-term nature.

Federal Reserve Bank Stock and Federal Home Loan Bank Stock

Shares in the Federal Reserve Bank (“FRB”) and Federal Home Loan Bank (“FHLB”) are purchased and redeemed based upon their

$100

par value. The stocks are non-marketable equity securities, and as such, are considered restricted securities that are carried at cost.

Loans

The fair value of loans are estimated by discounting the future cash flows using the rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. In connection with the adoption of ASU

2016

-

01

on

January 1, 2018,

we refined our methodology to estimate the fair value of our loan portfolio using an exit price notion resulting in prior periods

no

longer being comparable. The exit price notion requires determination of the price at which willing market participants would transact at the measurement date under current market conditions depending on facts and circumstances, such as origination rates, credit risk, transaction costs, liquidity, national and regional market trends and other adjustments, utilizing publicly available rates and indices. The application of an exit price notion requires the use of significant judgment.

Other Real Estate Owned

The fair value of OREO the Bank

may

obtain is based on current appraised property value less estimated costs to sell. When fair value is based on unadjusted current appraised value, OREO is classified within Level

2

of the fair value hierarchy. Patriot classifies OREO within Level

3

of the fair value hierarchy when unobservable inputs are used to determine adjustments to appraised values. Patriot does

not

record OREO at fair value on a recurring basis, but rather initially records OREO at fair value on a non-recurring basis and then monitors property and market conditions that

may

indicate a change in value is warranted.

Derivative asset (liability) - Interest Rate Swaps

The valuation of the Company’s interest rate swaps is obtained from a

third

-party pricing service and is determined using a discounted cash flow analysis on the expected cash flows of each derivative. The pricing analysis is based on observable inputs for the contractual terms of the derivatives, including the period to maturity and interest rate curves. The Company has determined that the majority of the inputs used to value its interest rate derivatives fall within Level

2

of the fair value hierarchy.

Deposits

The fair value of demand deposits, regular savings and certain money market deposits is the amount payable on demand at the reporting date.

The fair value of certificates of deposit and other time deposits is estimated using a discounted cash flow calculation that applies interest rates currently being offered for deposits of similar remaining maturities, estimated using local market data, to a schedule of aggregated expected maturities on such deposits. Patriot does

not

record deposits at fair value on a recurring basis.

Senior Notes, Subordinated Notes, and Junior Subordinated Debt

Patriot does

not

record senior notes at fair value on a recurring basis. The fair value of the senior notes was estimated by discounting future cash flows at rates at which similar notes would be made. The carrying value is considered comparable to fair value.

Patriot does

not

record subordinated notes issued in

June 2018

at fair value on a recurring basis. The fair value of the subordinated notes was estimated by discounting future cash flows at rates at which similar notes would be made. The carrying value is considered comparable to fair value.

Patriot does

not

record junior subordinated debt at fair value on a recurring basis. Junior subordinated debt reprices quarterly, as a result, the carrying amount is considered a reasonable estimate of fair value.

Federal Home Loan Bank Borrowings

 

The fair value of FHLB advances is estimated using a discounted cash flow calculation that applies current FHLB interest rates for advances of similar maturity to a schedule of maturities of such advances. Patriot does

not

record FHLB advances at fair value on a recurring basis.

Contingent Consideration Liability

The Company estimates the fair value of the contingent consideration liability by using a discounted cash flow model of future contingent payments based on interest income related to the acquired PCI loans. The estimated fair value of the contingent consideration liability is reviewed on a quarterly basis and any valuation adjustments resulting from a change of estimated future contingent payments based on interest income of the acquired PCI loans affecting the contingent consideration liability will be recorded through noninterest expense. Due to the significant unobservable input related to the interest income, the contingent consideration liability is classified within Level

3

of the valuation hierarchy. An increase in the interest income

may

result in a higher fair value of the contingent consideration liability. Alternatively, a decrease in the interest income

may

result in a lower estimated fair value of the contingent consideration liability.

Off-balance sheet financial instruments

 

Off-balance sheet financial instruments are based on interest rate changes and fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties’ credit standing. The off-balance-sheet financial instruments (i.e., commitments to extend credit) are insignificant and are

not

recorded on a recurring basis.

The following table provides a comparison of the carrying amounts and estimated fair values of Patriot’s financial assets and liabilities as of

March 

31,

 

2019

and

December 31, 2018:

(In thousands)		March 31, 2019				December 31, 2018
	Fair Value Hierarchy	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Financial Assets:
Cash and noninterest bearing balances due from banks	Level 1	$	6,661		6,661		7,381		7,381
Interest-bearing deposits due from banks	Level 1		49,971		49,971		59,056		59,056
U. S. Government agency mortgage-backed securities	Level 2		19,976		19,976		20,473		20,473
Corporate bonds	Level 2		12,828		12,828		12,974		12,974
Subordinated notes	Level 2		5,980		5,980		4,564		4,564
U.S. Treasury notes	Level 2		1,491		1,491		1,485		1,485
Other investments	Level 2		4,963		4,963		4,963		4,963
Federal Reserve Bank stock	Level 2		2,892		2,892		2,866		2,866
Federal Home Loan Bank stock	Level 2		4,513		4,513		4,928		4,928
Loans receivable, net	Level 3		780,713		771,523		772,767		762,581
Accrued interest receivable	Level 2		3,621		3,621		3,766		3,766
Interest swap receivable	Level 2		417		417		286		286
Financial assets, total		$	894,026		884,836		895,509		885,323
Financial Liabilities:
Demand deposits	Level 2	$	82,248		82,248		84,471		84,471
Savings deposits	Level 2		67,708		67,708		81,912		81,912
Money market deposits	Level 2		88,493		88,493		85,197		85,197
NOW accounts	Level 2		24,924		24,924		26,100		26,100
Time deposits	Level 2		306,654		306,260		282,001		280,538
Brokered deposits	Level 1		182,794		182,804		183,600		183,120
FHLB borrowings	Level 2		90,000		92,509		100,000		101,369
Senior notes	Level 2		11,796		11,433		11,778		11,293
Subordinated debt	Level 2		9,731		9,490		9,723		9,348
Junior subordinated debt owed to unconsolidated trust	Level 2		8,096		8,096		8,094		8,094
Note payable	Level 3		1,339		1,222		1,388		1,239
Accrued interest payable	Level 2		1,854		1,854		1,605		1,605
Contingent consideration liability	Level 3		86		86		707		707
Interest swap liability	Level 2		417		417		286		286
Financial liabilities, total		$	876,140		877,544		876,862		875,279

The carrying amount of cash and noninterest bearing balances due from banks, interest-bearing deposits due from banks, and demand deposits approximates fair value, due to the short-term nature and high turnover of these balances. These amounts are included in the table above for informational purposes.

In the normal course of its operations, Patriot assumes interest rate risk (i.e., the risk that general interest rate levels will fluctuate). As a result, the fair value of the Patriot’s financial assets and liabilities are affected when interest market rates change, which change

may

be either favorable or unfavorable. Management attempts to mitigate interest rate risk by matching the maturities of its financial assets and liabilities. However, borrowers with fixed rate obligations are less likely to prepay their obligations in a rising interest rate environment and more likely to prepay their obligations in a falling interest rate environment. Conversely, depositors receiving fixed rates are more likely to withdraw funds before maturity in a rising interest rate environment and less likely to do so in a falling interest rate environment. Management monitors market rates of interest and the maturities of its financial assets and financial liabilities, adjusting the terms of new loans and deposits in an attempt to minimize interest rate risk. Additionally, management mitigates its overall interest rate risk through its available funds investment strategy.

The following tables detail the financial assets measured at fair value on a recurring basis and the valuation techniques utilized relative to the fair value hierarchy, as of

March 

31,

 

2019

and

December 31, 2018:

(In thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
March 31, 2019:
U. S. Government agency mortgage-backed securities	$	-		19,976		-		19,976
Corporate bonds		-		12,828		-		12,828
Subordinated notes		-		5,980		-		5,980
U.S. Treasury notes		-		1,491		-		1,491
Available-for-sale securities	$	-		40,275		-		40,275
Impaired PCI Loans, net		-		-		439		439
Contingent consideration liability		-		-		86		86
Interest swap receivable		-		417		-		417
Interest swap liability		-		417		-		417
December 31, 2018:
U. S. Government agency mortgage-backed securities	$	-		20,473		-		20,473
Corporate bonds		-		12,974		-		12,974
Subordinated notes		-		4,564		-		4,564
U.S. Treasury notes		-		1,485		-		1,485
Available-for-sale securities	$	-		39,496		-		39,496
Impaired PCI Loans, net		-		-		615		615
Contingent consideration liability		-		-		707		707
Interest swap receivable		-		286		-		286
Interest swap liability		-		286		-		286

Patriot measures certain financial assets and financial liabilities at fair value on a non-recurring basis. When circumstances dictate (e.g., impairment of long-lived assets, other than temporary impairment of collateral value), the carrying values of such financial assets and financial liabilities are adjusted to fair value or fair value less costs to sell, as

may

be appropriate.

During the

three

months ended

March 31, 2019,

the Company had

no

transfers into or out of Levels

1,

2

or

3.

The table below presents the valuation methodology and unobservable inputs for level

3

assets measures at fair value on a non-recurring basis as of

March 

31,

 

2019

and

December 31, 2018:

(In thousands)	Fair Value		Valuation Methodology		Unobservable Inputs		Range of Inputs
March 31, 2019:
Impaired loans, net	$	28,426		Real Estate Appraisals		Discount for appraisal type		8%	-	21%
Other Real Estate Owned		2,945		Real Estate Appraisals		Discount for appraisal type			14%
December 31, 2018:
Impaired loans, net	$	19,673		Real Estate Appraisals		Discount for appraisal type		8%	-	21%
Other Real Estate Owned		2,945		Real Estate Appraisals		Discount for appraisal type			14%

Patriot discloses fair value information about financial instruments, whether or

not

recognized in the Consolidated Balance Sheet, for which it is practicable to estimate that value. Certain financial instruments are excluded from disclosure requirements and, accordingly, the aggregate fair value amounts presented do

not

necessarily represent the complete underlying value of financial instruments included in the Consolidated Financial Statements.

The estimated fair value amounts have been measured as of

March 

31,

 

2019

and

December 31, 2018,

and have

not

been reevaluated or updated for purposes of these consolidated financial statements subsequent to those respective dates. As such, the estimated fair values of the financial instruments measured

may

be different than if they had been subsequently valued.

The information presented should

not

be interpreted as an estimate of the total fair value of Patriot’s assets and liabilities, since only a portion of Patriot’s assets and liabilities are required to be measured at fair value for financial reporting purposes. Due to the wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between Patriot’s fair value disclosures and those of other bank holding companies

may

not

be meaningful.

XML

Note 12 - Derivatives

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Derivative Instruments and Hedging Activities Disclosure [Text Block]

Note

1

2

:

Derivatives

Patriot is a party to interest rate derivatives that are

not

designated as hedging instruments. Under a program, Patriot will execute interest rate swaps with commercial lending customers to facilitate their respective risk management strategies. These interest rate swaps with customers are simultaneously offset by interest rate swaps that Patriot executes with a

third

party, such that Patriot minimizes its net risk exposure resulting from such transactions. Because the interest rate swaps associated with this program do

not

meet the strict hedge accounting requirements, changes in the fair value of both the customer swaps and the offsetting swaps are recognized directly in earnings. The changes in the fair value of the swaps offset each other, except for the credit risk of the counterparties, which is determined by taking into consideration the risk rating, probability of default and loss given default for all counterparties. Patriot entered the

two

initial interest rate swaps under the program in

November 2018.

As of

March 31, 2019

and

December 31, 2018,

Patriot had

$450,000

and

$300,000,

respectively, in cash pledged for collateral on its interest rate swaps.

The following table presents summary information regarding these derivatives for the periods presented (dollars in thousands):

(In thousands)	Notional Amount		Maturity (Years)		Fixed Rate			Variable Rate	Fair Value
March 31, 2019:
Classified in Other Assets:
Customer interest rate swap	$	5,000		10.5		5.25	%	1 Mo. LIBOR + 1.96%	$	417
Classified in Other Liabilities:
3rd party interest rate swap	$	5,000		10.5		5.25	%	1 Mo. LIBOR + 1.96%	$	(417	)
December 31, 2018:
Classified in Other Assets:
Customer interest rate swap	$	5,000		10.5		5.25	%	1 Mo. LIBOR + 1.96%	$	286
Classified in Other Liabilities:
3rd party interest rate swap	$	5,000		10.5		5.25	%	1 Mo. LIBOR + 1.96%	$	(286	)

XML

Note 13 - Leases

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Lessee, Operating Leases [Text Block]

Note

1

3

: Leases

A lease is defined as a contract, or part of a contract, that conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. On

January 1, 2019,

the Company adopted ASU

No.

2016

-

02

“Leases” (Topic

842

) and all subsequent ASUs that modified Topic

842.

For the Company, Topic

842

primarily affected the accounting treatment for operating lease agreements in which the Company is the lessee.

Patriot has

seven

non-cancelable operating leases, including

four

Bank branch locations and

two

for administrative and operational space, and

one

equipment lease. The leases expire on various dates through

2032

and some include renewal options. Most of the leases contain rent escalation provisions, as well as renewal options for

one

or more periods. The last potential year the leases can be extended through

2037.

Substantially all of our leases are classified as operating leases, and therefore, were previously

not

recognized on the Company’s consolidated balance sheets. With the adoption of Topic

842,

operating lease agreements are required to be recognized on the consolidated balance sheets as a right-of-use (“ROU”) asset and a corresponding lease liability. The Company has

no

finance lease (previously referred to as a capital lease).

The cumulative-effect adjustment was an increase to the opening balance of accumulated deficit at the time of adoption on

January 1, 2019.

The Company recognized

$3.4

million of right-of-use (“ROU”) assets and

$3.4

million lease liabilities for operating leases on its Consolidated Balance Sheets. The standard did

not

have an impact on its Consolidated Income Statements.

Operating leases are recorded as a ROU lease assets and are included in other assets on the consolidated balance sheet. The Company’s corresponding lease obligations are included in accrued expenses and other liabilities on the consolidated balance sheet. ROU lease assets represent the Company’s right to use an underlying asset for the lease term and lease obligations represent the Company’s obligation to make lease payments arising from the lease. Operating ROU lease assets and obligations are recognized at the commencement date based on the present value of lease payments over the lease term. As most of the Company’s leases do

not

provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The Company’s lease terms

may

include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option.

Lease expense for lease payments is recognized on a straight-line basis over the lease term. Short-term leases are leases having a term of

twelve

months or less. The Company recognizes short-term leases on a straight-line basis and does

not

record a related lease asset or liability for such leases, as allowed as practical expedient of the standard. The following is a maturity analysis of the operating lease liabilities as of

March 31, 2019:

(in thousands)	Operating lease
Years ending December 31,	Obligation
2019	$	343
2020		464
2021		474
2022		435
2023		397
Thereafter		2,046
Total undiscounted lease payments		4,159
Less imputed interest		(798	)
Present value of operating lease liabilities	$	3,361
Operating lease right-of-use asset	$	3,305

	Three Months Ended
	March 31, 2019
Lease cost
Operating lease cost	$	122
Short-term lease cost	$	25
Other information
Operating cash flows from operating leases	$	114
Weighted -average remaining lease term - operating leases (in years)		11
Weighted -average discount rate - operating leases		3.63	%

XML

Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2019

Accounting Policies [Abstract]

New Accounting Pronouncements, Policy [Policy Text Block]

Accounting Standards Adopted During

201

9

Effective

January 1, 2019,

the following new Accounting Standards Update (ASU) was adopted by the Company:

ASU

2016

-

02

In

February 2016,

the FASB issued ASU

No.

2016

-

02,

 Leases. This ASU was issued to improve the financial reporting of leasing activities and provide a faithful representation of leasing transactions and improve understanding and comparability of a lessee's financial statements. The amendments in this ASU require lessees to recognize, on the balance sheet, assets and liabilities for the rights and obligations created by leases. Accounting by lessors will remain largely unchanged. In

July 2018,

the FASB issued a subsequent update which introduced a new transition method, under this new transition method, an entity initially applies the new leases standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The guidance was effective for the Company on

January 1, 2019,

with early adoption permitted. Management elected the transition practical expedient option. The cumulative-effect adjustment was an increase to the opening balance of accumulated deficit at the time of adoption on

January 1, 2019.

The Company recognized

$3.4

million of right-of-use (“ROU”) assets and

$3.4

million lease liabilities for operating leases on its Consolidated Balance Sheets. The standard did

not

have an impact on its Consolidated Income Statements.

Accounting Standards Issued But

Not

Yet Adopted

ASU

2016

-

13

 

In

June 2016,

the 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. Under the CECL model, entities will estimate credit losses over the entire contractual term of a financial instrument from the date of initial recognition of the instrument. The ASU also changes the existing impairment model for available-for-sale debt securities. In cases where there is neither the intent nor a more-likely-than-

not

requirement to sell the debt security, an entity will record credit losses as an allowance rather than a direct write-down of the amortized cost basis. Additionally, ASU

2016

-

13

notes that credit losses related to available-for-sale debt securities and purchased credit impaired loans should be recorded through an allowance for credit losses. ASU

2016

-

13

is effective for fiscal years beginning after

December 15, 2019,

including interim periods within those fiscal years, with early adoption permitted for fiscal years beginning after

December 15, 2018.

Management is currently evaluating the impact that the standard will have on its Consolidated Financial Statements.

ASU

2017

-

04

In 

January 2017,

the FASB issued ASU

2017

-

04,

Intangibles-Goodwill and Other (Topic

350

): Simplifying the Test for Goodwill Impairment:

The objective of this guidance is to simplify an entity’s required test for impairment of goodwill by eliminating Step

2

from the goodwill impairment test. In Step

2

an entity measured a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. In computing the implied fair value of goodwill, an entity had to determine the fair value at the impairment date of its assets and liabilities, including any unrecognized assets and liabilities, following a procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Under this Update, an entity should perform its annual or quarterly goodwill impairment test by comparing the fair value of the reporting unit with its carrying amount and record an impairment charge for the excess of the carrying amount over the reporting unit’s fair value. The loss recognized should

not

exceed the total amount of goodwill allocated to the reporting unit and the entity must consider the income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. This guidance is effective for a public business entity that is an SEC filer for its annual or any interim goodwill impairment tests in fiscal years beginning after

December 15, 2019.

The adoption of this standard is

not

expected to have a material impact on the Company’s Consolidated Financial Statements.

ASU

2017

-

08

In

March 2017,

the FASB issued ASU

2017

-

08,

Premium Amortization on Purchased Callable Debt Securities

, which amends the amortization period for certain purchased callable debt securities held at a premium, shortening such period to the earliest call date. The ASU is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after

December 15, 2018.

For all other entities, the ASU is effective for fiscal years beginning after

December 15, 2019,

and interim periods within fiscal years beginning after

December 15, 2020.

Earlier application is permitted for all entities, including adoption in an interim period. If an entity early adopts the ASU in an interim period, any adjustments must be reflected as of the beginning of the fiscal year that includes that interim period. Management is currently evaluating the impact the adoption of ASU

2017

-

08

will have on its Consolidated Financial Statements.

A

SU

2017

-

12

"Derivatives and Hedging (Topic

815

): Targeted Improvements to Accounting for Hedging Activities." ASU

2017

-

12

was issued to ease the burden associated with assessing hedge effectiveness and to promote better financial statement alignment of the recognition and presentation of the effects of the hedging instrument and the hedged item. This guidance requires entities to present the earnings effect of the hedging instrument in the same income statement line item with the earnings effect on the hedged item. In

October 2018,

FASB issued ASU

2018

-

16,

"Derivatives and Hedging (Topic

815

): Inclusion of the Secured Overnight Financial Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes." ASU

2018

-

16

was issued to expand the list of benchmark interest rates for hedge accounting. The effective date for the amendment is the same as the effective date for ASU

2017

-

12.

For public business entities, ASU

2017

-

12

is effective for fiscal years beginning after

December 15, 2018,

and interim periods within those fiscal years. ASU

2017

-

12

and ASU

2018

-

16

are

not

expected to have any impact on the Consolidated Financial Statements.

ASU

2018

-

13

In

August 2018,

the FASB issued ASU

No.

2018

-

13,

Fair Value Measurement (Topic

820

) - Changes to the Disclosure Requirements for Fair Value Measurement

, to modify the disclosure requirements on fair value measurements. This ASU removes requirements to disclose the amount of and reasons for transfers between Level

1

and Level

2

of the fair value hierarchy, the policy for timing of transfers between levels and the valuation processes for Level

3

fair value measurements. ASU

2018

-

13

clarifies that disclosure regarding measurement uncertainty is intended to communicate information about the uncertainty in measurement as of the reporting date. ASU

2018

-

13

adds certain disclosure requirements, including disclosure of changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level

3

fair value measurements held at the end of the reporting period and the range and weighted average of significant unobservable inputs used to develop Level

3

fair value measurements. The amendments in this update are effective for annual periods and interim periods within those annual periods beginning after

December 15, 2019.

The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level

3

fair value measurements and the narrative description of measurement uncertainty should be applied prospectively, while all other amendments should be applied retrospectively for all periods presented upon their effective date. Management is currently evaluating the impact of adopting the new guidance on the Consolidated Financial Statements, but it is

not

expected to have a material impact.

XML

Note 3 - Available-for-sale Securities (Tables)

3 Months Ended

Mar. 31, 2019

Notes Tables

Debt Securities, Available-for-sale [Table Text Block]

(In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Fair Value
March 31, 2019:
U. S. Government agency mortgage-backed securities	$	20,017		84		(125	)		19,976
Corporate bonds		14,000		-		(1,172	)		12,828
Subordinated notes		5,899		81		-			5,980
U.S. Treasury notes		1,488		3		-			1,491
	$	41,404		168		(1,297	)		40,275
December 31, 2018:
U. S. Government agency mortgage-backed securities	$	20,626		43		(196	)		20,473
Corporate bonds		14,000		-		(1,026	)		12,974
Subordinated notes		4,500		64		-			4,564
U.S. Treasury notes		1,484		1		-			1,485
	$	40,610		108		(1,222	)		39,496

Schedule of Unrealized Loss on Investments [Table Text Block]

(In thousands)	Less than 12 Months					12 Months or More					Total
	Fair Value		Unrealized (Loss)			Fair Value		Unrealized (Loss)			Fair Value		Unrealized (Loss)
March 31, 2019:
U. S. Government agency mortgage-backed securities	$	2,972		(23	)		3,778		(102	)		6,750		(125	)
Corporate bonds		-		-			12,828		(1,172	)		12,828		(1,172	)
	$	2,972		(23	)		16,606		(1,274	)		19,578		(1,297	)
December 31, 2018:
U. S. Government agency mortgage-backed securities	$	8,024		(38	)		5,422		(158	)		13,446		(196	)
Corporate bonds		-		-			12,974		(1,026	)		12,974		(1,026	)
	$	8,024		(38	)		18,396		(1,184	)		26,420		(1,222	)

Investments Classified by Contractual Maturity Date [Table Text Block]

(In thousands)	Amortized Cost								Fair Value
	Due Within 5 years		Due After 5 years through 10 years		Due After 10 years		Total		Due Within 5 years		Due After 5 years through 10 years		Due After 10 years		Total
March 31, 2019:
Corporate bonds	$	-		9,000		5,000		14,000		-		8,278		4,550		12,828
Subordinated notes		-		5,899		-		5,899		-		5,980		-		5,980
U.S. Treasury notes		1,488		-		-		1,488		1,491		-		-		1,491
Available-for-sale securities with single maturity dates		1,488		14,899		5,000		21,387		1,491		14,258		4,550		20,299
U. S. Government agency mortgage-backed securities		9,671		2,445		7,901		20,017		9,664		2,368		7,944		19,976
	$	11,159		17,344		12,901		41,404		11,155		16,626		12,494		40,275
December 31, 2018:
Corporate bonds	$	-		9,000		5,000		14,000		-		8,537		4,437		12,974
Subordinated notes		-		4,500		-		4,500		-		4,564		-		4,564
U.S. Treasury notes		1,484		-		-		1,484		1,485		-		-		1,485
Available-for-sale securities with single maturity dates		1,484		13,500		5,000		19,984		1,485		13,101		4,437		19,023
U. S. Government agency mortgage-backed securities		6,842		5,668		8,116		20,626		6,844		5,530		8,099		20,473
	$	8,326		19,168		13,116		40,610		8,329		18,631		12,536		39,496

XML

Note 4 - Loans Receivable and Allowance for Loan and Lease Losses (Tables)

3 Months Ended

Mar. 31, 2019

Notes Tables

Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block]

(In thousands)	March 31, 2019			December 31, 2018
Loan portfolio segment:
Commercial Real Estate	$	291,556			274,938
Residential Real Estate		159,985			157,300
Commercial and Industrial		177,866			191,852
Consumer and Other		95,755			94,569
Construction		45,356			46,040
Construction to Permanent - CRE		18,018			15,677
Loans receivable, gross		788,536			780,376
Allowance for loan and lease losses		(7,823	)		(7,609	)
Loans receivable, net	$	780,713			772,767

Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Accretable Yield Movement Schedule [Table Text Block]

(In thousands)	For the three Months Ended March 31, 2019
Accretable discount, beginning of period	$	(792	)
Accretion		25
Other changes, net		573
Accretable discount, end of period	$	(194	)

Financing Receivable, Allowance for Credit Loss [Table Text Block]

(In thousands)	Commercial Real Estate			Residential Real Estate		Commercial and Industrial			Consumer and Other			Construction		Construction to Permanent - CRE		Unallocated			Total
Three months ended March 31, 2019
Allowance for loan and lease losses:
December 31, 2018	$	1,866			1,059		3,558			641			350		108		27			7,609
Charge-offs		-			-		-			-			-		-		-			-
Recoveries		-			-		47			2			-		-		-			49
Provisions (credits)		(4	)		330		(115	)		(51	)		5		15		(15	)		165
March 31, 2019	$	1,862			1,389		3,490			592			355		123		12			7,823
Three months ended March 31, 2018
Allowance for loan and lease losses:
December 31, 2017	$	2,212			959		2,023			568			481		54		-			6,297
Charge-offs		-			-		-			-			-		-		-			-
Recoveries		3			-		-			-			-		-		-			3
Provisions (credits)		265			114		(264	)		(22	)		7		7		78			185
March 31, 2018	$	2,480			1,073		1,759			546			488		61		78			6,485

(In thousands)	Commercial Real Estate		Residential Real Estate		Commercial and Industrial		Consumer and Other		Construction		Construction to Permanent - CRE		Unallocated		Total
March 31, 2019
Allowance for loan and lease losses:
Individually evaluated for impairment	$	-		563		1,062		-		-		-		-		1,625
Collectively evaluated for impairment		1,862		826		2,428		592		355		123		12		6,198
Total allowance for loan losses	$	1,862		1,389		3,490		592		355		123		12		7,823
Loans receivable, gross:
Individually evaluated for impairment	$	12,026		3,766		4,598		861		8,800		-		-		30,051
PCI loans individually evaluated for impairment		-		-		439		-		-		-		-		439
Collectively evaluated for impairment		279,530		156,219		172,829		94,894		36,556		18,018		-		758,046
Total loans receivable, gross	$	291,556		159,985		177,866		95,755		45,356		18,018		-		788,536

(In thousands)	Commercial Real Estate		Residential Real Estate		Commercial and Industrial		Consumer and Other		Construction		Construction to Permanent - CRE		Unallocated		Total
December 31, 2018
Allowance for loan and lease losses:
Individually evaluated for impairment	$	-		216		1,299		30		-		-		-		1,545
Collectively evaluated for impairment		1,866		843		2,259		611		350		108		27		6,064
Total allowance for loan losses	$	1,866		1,059		3,558		641		350		108		27		7,609
Loans receivable, gross:
Individually evaluated for impairment	$	4,606		2,302		4,646		864		8,800		-		-		21,218
PCI loans individually evaluated for impairment		-		-		615		-		-		-		-		615
Collectively evaluated for impairment		270,332		154,998		186,591		93,705		37,240		15,677		-		758,543
Total loans receivable, gross	$	274,938		157,300		191,852		94,569		46,040		15,677		-		780,376

Financing Receivable, Past Due [Table Text Block]

(In thousands)	Performing (Accruing) Loans
As of March 31, 2019:	30 - 59 Days Past Due		60 - 89 Days Past Due		90 Days or Greater Past Due		Total Past Due		Current		Total Performing Loans		Non-accruing Loans		Loans Receivable Gross
Loan portfolio segment:
Commercial Real Estate:
Pass	$	208		-		-		208		272,278		272,486		-		272,486
Special mention		-		-		-		-		2,070		2,070		-		2,070
Substandard		583		431		-		1,014		5,033		6,047		10,953		17,000
		791		431		-		1,222		279,381		280,603		10,953		291,556
Residential Real Estate:
Pass		1,293		-		-		1,293		153,481		154,774		-		154,774
Special mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		1,738		1,738		3,473		5,211
		1,293		-		-		1,293		155,219		156,512		3,473		159,985
Commercial and Industrial:
Pass		454		195		600		1,249		160,419		161,668		-		161,668
Special mention		-		-		100		100		1,932		2,032		-		2,032
Substandard		-		338		-		338		9,196		9,534		4,632		14,166
		454		533		700		1,687		171,547		173,234		4,632		177,866
Consumer and Other:
Pass		1,463		168		8		1,639		93,944		95,583		-		95,583
Substandard		-		-		-		-		-		-		172		172
		1,463		168		8		1,639		93,944		95,583		172		95,755
Construction:
Pass		-		-		-		-		36,556		36,556		-		36,556
Substandard		-		-		-		-		-		-		8,800		8,800
		-		-		-		-		36,556		36,556		8,800		45,356
Construction to Permanent - CRE:
Pass		-		-		-		-		18,018		18,018		-		18,018
		-		-		-		-		18,018		18,018		-		18,018
Total	$	4,001		1,132		708		5,841		754,665		760,506		28,030		788,536
Loans receivable, gross:
Pass	$	3,418		363		608		4,389		734,696		739,085		-		739,085
Special mention		-		-		100		100		4,002		4,102		-		4,102
Substandard		583		769		-		1,352		15,967		17,319		28,030		45,349
Loans receivable, gross	$	4,001		1,132		708		5,841		754,665		760,506		28,030		788,536

(In thousands)	Performing (Accruing) Loans
As of December 31, 2018:	30 - 5 9 Days Past Due		60 - 89 Days Past Due		90 Days or Greater Past Due		Total Past Due		Current		Total Performing Loans		Non-accruing Loans		Loans Receivable Gross
Loan portfolio segment:
Commercial Real Estate:
Pass	$	423		-		-		423		262,435		262,858		-		262,858
Special mention		-		-		958		958		2,673		3,631		-		3,631
Substandard		170		-		-		170		4,754		4,924		3,525		8,449
		593		-		958		1,551		269,862		271,413		3,525		274,938
Residential Real Estate:
Pass		637		817		-		1,454		151,509		152,963		-		152,963
Special mention		-		-		-		-		850		850		-		850
Substandard		-		-		-		-		1,481		1,481		2,006		3,487
		637		817		-		1,454		153,840		155,294		2,006		157,300
Commercial and Industrial:
Pass		150		853		234		1,237		180,293		181,530		-		181,530
Special mention		-		-		101		101		2,378		2,479		-		2,479
Substandard		-		-		-		-		3,162		3,162		4,681		7,843
		150		853		335		1,338		185,833		187,171		4,681		191,852
Consumer and Other:
Pass		20		-		23		43		94,352		94,395		-		94,395
Substandard		-		-		-		-		-		-		174		174
		20		-		23		43		94,352		94,395		174		94,569
Construction:
Pass		-		1,000		-		1,000		36,240		37,240		-		37,240
Substandard		-		-		-		-		-		-		8,800		8,800
		-		1,000		-		1,000		36,240		37,240		8,800		46,040
Construction to Permanent - CRE:
Pass		-		-		-		-		15,677		15,677		-		15,677
		-		-		-		-		15,677		15,677		-		15,677
Total	$	1,400		2,670		1,316		5,386		755,804		761,190		19,186		780,376
Loans receivable, gross:
Pass	$	1,230		2,670		257		4,157		740,506		744,663		-		744,663
Special mention		-		-		1,059		1,059		5,901		6,960		-		6,960
Substandard		170		-		-		170		9,397		9,567		19,186		28,753
Loans receivable, gross	$	1,400		2,670		1,316		5,386		755,804		761,190		19,186		780,376

Financing Receivable, Nonaccrual [Table Text Block]

(In thousands)	Non-accruing Loans
	30 - 59 Days Past Due		60 - 89 Days Past Due		90 Days or Greater Past Due		Total Past Due		Current		Total Non-accruing Loans
As of March 31, 2019:
Loan portfolio segment:
Commercial Real Estate:
Substandard	$	-		-		1,011		1,011		9,942		10,953
Residential Real Estate:
Substandard		60		-		2,843		2,903		570		3,473
Commercial and Industrial:
Substandard		-		-		3,913		3,913		719		4,632
Consumer and Other:
Substandard		-		102		70		172		-		172
Construction:
Substandard		-		-		-		-		8,800		8,800
Total non-accruing loans	$	60		102		7,837		7,999		20,031		28,030
As of December 31, 2018:
Loan portfolio segment:
Commercial Real Estate:
Substandard	$	1,580		-		1,945		3,525		-		3,525
Residential Real Estate:
Substandard		-		-		2,006		2,006		-		2,006
Commercial and Industrial:
Substandard		-		15		3,941		3,956		725		4,681
Consumer and Other:
Substandard		-		86		11		97		77		174
Construction:
Substandard		-		-		8,800		8,800		-		8,800
Total non-accruing loans	$	1,580		101		16,703		18,384		802		19,186

Financing Receivable, Troubled Debt Restructuring [Table Text Block]

(In thousands)	March 31, 2019					December 31, 2018
Loan portfolio segment:	Number of Contracts		Recorded Investment			Number of Contracts		Recorded Investment
Commercial Real Estate		2	$	1,073			2	$	1,081
Residential Real Estate		1		292			1		296
Consumer and Other		2		690			2		689
Construction		1		8,800			-		-
Total TDR Loans		6		10,855			5		2,066
Less:
TDRs included in non-accrual loans		1		(8,800	)		-		-
Total accrual TDR Loans		5	$	2,055			5	$	2,066

Impaired Financing Receivables [Table Text Block]

(In thousands)	March 31, 2019						December 31, 2018
	Recorded Investment		Principal Outstanding		Related Allowance		Recorded Investment		Principal Outstanding		Related Allowance
With no related allowance recorded:
Commercial Real Estate	$	12,026		12,145		-		4,606		5,109		-
Residential Real Estate		1,760		1,768		-		670		703		-
Commercial and Industrial		1,589		1,589		-		488		1,281		-
Consumer and Other		861		861		-		827		867		-
Construction		8,800		8,800		-		8,800		8,839		-
		25,036		25,163		-		15,391		16,799		-
With a related allowance recorded:
Commercial Real Estate		-		-		-		-		-		-
Residential Real Estate		2,006		2,006		563		1,632		1,632		216
Commercial and Industrial		3,009		3,009		1,062		4,158		4,208		1,299
Consumer and Other		-		-		-		37		37		30
Construction		-		-		-		-		-		-
		5,015		5,015		1,625		5,827		5,877		1,545
Impaired Loans, Total:
Commercial Real Estate		12,026		12,145		-		4,606		5,109		-
Residential Real Estate		3,766		3,774		563		2,302		2,335		216
Commercial and Industrial		4,598		4,598		1,062		4,646		5,489		1,299
Consumer and Other		861		861		-		864		904		30
Construction		8,800		8,800		-		8,800		8,839		-
Impaired Loans, Total	$	30,051		30,178		1,625		21,218		22,676		1,545

(In thousands)	Three Months Ended March 31,
	2019				2018
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial Real Estate	$	6,440		13		2,205		25
Residential Real Estate		942		4		3,342		3
Commercial and Industrial		775		-		739		-
Consumer and Other		841		8		691		7
Construction		8,800		150		-		-
		17,798		175		6,977		35
With a related allowance recorded:
Commercial Real Estate		472		-		-		-
Residential Real Estate		2,089		-		-		-
Commercial and Industrial		3,863		-		393		-
Consumer and Other		21		-		2		-
Construction		-		-		-		-
		6,445		-		395		-
Impaired Loans, Total:
Commercial Real Estate		6,912		13		2,205		25
Residential Real Estate		3,031		4		3,342		3
Commercial and Industrial		4,638		-		1,132		-
Consumer and Other		862		8		693		7
Construction		8,800		150		-		-
Impaired Loans, Total	$	24,243		175		7,372		35

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Note 6 - Deposits (Tables)

3 Months Ended

Mar. 31, 2019

Notes Tables

Deposit Liabilities, Type [Table Text Block]

(In thousands)	March 31, 2019		December 31, 2018
Non-interest bearing	$	82,248	$	84,471
Interest bearing:
NOW		24,924		26,100
Savings		67,708		81,912
Money market		88,493		85,197
Certificates of deposit, less than $250,000		217,701		203,683
Certificates of deposit, $250,000 or greater		88,953		78,318
Brokered deposits		182,794		183,600
Interest bearing, Total		670,573		658,810
Total Deposits	$	752,821	$	743,281

Contractual Obligation, Fiscal Year Maturity [Table Text Block]

(In thousands)	CDs less than $250,000		CDs $250,000 or greater		Brokered Deposits		Total
1 year or less	$	139,614		58,395		145,508	$	343,517
More than 1 year through 2 years		68,372		28,199		21,320		117,891
More than 2 years through 3 years		7,972		1,519		15,467		24,958
More than 3 years through 4 years		1,316		840		499		2,655
More than 4 years through 5 years		427		-		-		427
	$	217,701		88,953		182,794	$	489,448

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Note 7 - Share-based Compensation and Employee Benefit Plan (Tables)

3 Months Ended

Mar. 31, 2019

Notes Tables

Schedule of Nonvested Restricted Stock Units Activity [Table Text Block]

Three months ended March 31, 2019:	Number of Shares Awarded			Weighted Average Grant Date Fair Value
Unvested at December 31, 2018		31,790		$	14.06
Vested		(8,936	)	$	15.07
Unvested at March 31, 2019		22,854		$	13.66
Three months ended March 31, 2018:
Unvested at December 31, 2017		25,870		$	12.15
Granted		14,199		$	17.93
Vested		(2,935	)	$	14.18
Forfeited		(100	)	$	15.50
Unvested at March 31, 2018		37,034		$	14.20

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Note 8 - Earnings Per Share (Tables)

3 Months Ended

Mar. 31, 2019

Notes Tables

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

(Net income in thousands)	Three Months Ended March 31,
	2019			2018
Basic earnings per share:
Net income attributable to Common shareholders	$	323		$	1,065
Divided by:
Weighted average shares outstanding		3,917,312			3,900,513
Basic earnings per common share		0.08			0.27
Diluted earnings per share:
Net income attributable to Common shareholders		323			1,065
Weighted average shares outstanding		3,917,312			3,900,513
Effect of potentially dilutive restricted common shares		-			16,601
Divided by:
Weighted average diluted shares outstanding		3,917,312	(1)		3,917,114
Diluted earnings per common share		0.08			0.27

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Note 9 - Financial Instruments With Off-balance Sheet Risk (Tables)

3 Months Ended

Mar. 31, 2019

Notes Tables

Schedule of Commitment to Extended Credit [Table Text Block]

(In thousands)	As of March 31, 2019
Commitments to extend credit:
Unused lines of credit	$	58,521
Undisbursed construction loans		31,207
Home equity lines of credit		19,953
Future loan commitments		15,727
Financial standby letters of credit		1,153
	$	126,561

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Note 10 - Regulatory and Operational Matters (Tables)

3 Months Ended

Mar. 31, 2019

Notes Tables

Schedule of Compliance with Regulatory Capital Requirements under Banking Regulations [Table Text Block]

(In thousands)	Patriot National Bancorp, Inc.								Patriot Bank, N.A.
	March 31, 2019				December 31, 2018				March 31, 2019				December 31, 2018
	Amount ($)		Ratio (%)		Amount ($)		Ratio (%)		Amount ($)		Ratio (%)		Amount ($)		Ratio (%)
Total Capital (to risk weighted assets):
Actual		91,489		10.332		90,722		10.452		101,239		11.908		99,341		11.500
To be Well Capitalized (1)		-		-		-		-		85,016		10.000		86,384		10.000
For capital adequacy with Capital Buffer (2)		-		-		-		-		89,267		10.500		85,304		9.875
For capital adequacy		70,836		8.000		69,441		8.000		68,013		8.000		69,107		8.000
Tier 1 Capital (to risk weighted assets):
Actual		73,654		8.318		73,101		8.422		93,404		10.987		91,720		10.618
To be Well Capitalized (1)		-		-		-		-		68,013		8.000		69,107		8.000
For capital adequacy with Capital Buffer (2)		-		-		-		-		72,264		8.500		68,027		7.875
For capital adequacy		53,127		6.000		52,081		6.000		51,010		6.000		51,830		6.000
Common Equity Tier 1 Capital (to risk weighted assets):
Actual		65,654		7.415		65,101		7.500		93,404		10.987		91,720		10.618
To be Well Capitalized (1)		-		-		-		-		55,260		6.500		56,149		6.500
For capital adequacy with Capital Buffer (2)		-		-		-		-		59,511		7.000		55,069		6.375
For capital adequacy		39,845		4.500		39,061		4.500		38,257		4.500		38,873		4.500
Tier 1 Leverage Capital (to average assets):
Actual		73,654		7.721		73,101		7.842		93,404		9.789		91,720		9.838
To be Well Capitalized (1)		-		-		-		-		47,707		5.000		46,617		5.000
For capital adequacy		38,160		4.000		37,288		4.000		38,166		4.000		37,294		4.000

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Note 11 - Fair Value and Interest Rate Risk (Tables)

3 Months Ended

Mar. 31, 2019

Notes Tables

Fair Value, by Balance Sheet Grouping [Table Text Block]

(In thousands)		March 31, 2019				December 31, 2018
	Fair Value Hierarchy	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Financial Assets:
Cash and noninterest bearing balances due from banks	Level 1	$	6,661		6,661		7,381		7,381
Interest-bearing deposits due from banks	Level 1		49,971		49,971		59,056		59,056
U. S. Government agency mortgage-backed securities	Level 2		19,976		19,976		20,473		20,473
Corporate bonds	Level 2		12,828		12,828		12,974		12,974
Subordinated notes	Level 2		5,980		5,980		4,564		4,564
U.S. Treasury notes	Level 2		1,491		1,491		1,485		1,485
Other investments	Level 2		4,963		4,963		4,963		4,963
Federal Reserve Bank stock	Level 2		2,892		2,892		2,866		2,866
Federal Home Loan Bank stock	Level 2		4,513		4,513		4,928		4,928
Loans receivable, net	Level 3		780,713		771,523		772,767		762,581
Accrued interest receivable	Level 2		3,621		3,621		3,766		3,766
Interest swap receivable	Level 2		417		417		286		286
Financial assets, total		$	894,026		884,836		895,509		885,323
Financial Liabilities:
Demand deposits	Level 2	$	82,248		82,248		84,471		84,471
Savings deposits	Level 2		67,708		67,708		81,912		81,912
Money market deposits	Level 2		88,493		88,493		85,197		85,197
NOW accounts	Level 2		24,924		24,924		26,100		26,100
Time deposits	Level 2		306,654		306,260		282,001		280,538
Brokered deposits	Level 1		182,794		182,804		183,600		183,120
FHLB borrowings	Level 2		90,000		92,509		100,000		101,369
Senior notes	Level 2		11,796		11,433		11,778		11,293
Subordinated debt	Level 2		9,731		9,490		9,723		9,348
Junior subordinated debt owed to unconsolidated trust	Level 2		8,096		8,096		8,094		8,094
Note payable	Level 3		1,339		1,222		1,388		1,239
Accrued interest payable	Level 2		1,854		1,854		1,605		1,605
Contingent consideration liability	Level 3		86		86		707		707
Interest swap liability	Level 2		417		417		286		286
Financial liabilities, total		$	876,140		877,544		876,862		875,279

Fair Value, Assets Measured on Recurring Basis [Table Text Block]

(In thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
March 31, 2019:
U. S. Government agency mortgage-backed securities	$	-		19,976		-		19,976
Corporate bonds		-		12,828		-		12,828
Subordinated notes		-		5,980		-		5,980
U.S. Treasury notes		-		1,491		-		1,491
Available-for-sale securities	$	-		40,275		-		40,275
Impaired PCI Loans, net		-		-		439		439
Contingent consideration liability		-		-		86		86
Interest swap receivable		-		417		-		417
Interest swap liability		-		417		-		417
December 31, 2018:
U. S. Government agency mortgage-backed securities	$	-		20,473		-		20,473
Corporate bonds		-		12,974		-		12,974
Subordinated notes		-		4,564		-		4,564
U.S. Treasury notes		-		1,485		-		1,485
Available-for-sale securities	$	-		39,496		-		39,496
Impaired PCI Loans, net		-		-		615		615
Contingent consideration liability		-		-		707		707
Interest swap receivable		-		286		-		286
Interest swap liability		-		286		-		286

Fair Value Measurement Inputs and Valuation Techniques [Table Text Block]

(In thousands)	Fair Value		Valuation Methodology		Unobservable Inputs		Range of Inputs
March 31, 2019:
Impaired loans, net	$	28,426		Real Estate Appraisals		Discount for appraisal type		8%	-	21%
Other Real Estate Owned		2,945		Real Estate Appraisals		Discount for appraisal type			14%
December 31, 2018:
Impaired loans, net	$	19,673		Real Estate Appraisals		Discount for appraisal type		8%	-	21%
Other Real Estate Owned		2,945		Real Estate Appraisals		Discount for appraisal type			14%

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Note 12 - Derivatives (Tables)

3 Months Ended

Mar. 31, 2019

Notes Tables

Schedule of Derivative Instruments [Table Text Block]

(In thousands)	Notional Amount		Maturity (Years)		Fixed Rate			Variable Rate	Fair Value
March 31, 2019:
Classified in Other Assets:
Customer interest rate swap	$	5,000		10.5		5.25	%	1 Mo. LIBOR + 1.96%	$	417
Classified in Other Liabilities:
3rd party interest rate swap	$	5,000		10.5		5.25	%	1 Mo. LIBOR + 1.96%	$	(417	)
December 31, 2018:
Classified in Other Assets:
Customer interest rate swap	$	5,000		10.5		5.25	%	1 Mo. LIBOR + 1.96%	$	286
Classified in Other Liabilities:
3rd party interest rate swap	$	5,000		10.5		5.25	%	1 Mo. LIBOR + 1.96%	$	(286	)

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Note 13 - Leases (Tables)

3 Months Ended

Mar. 31, 2019

Notes Tables

Lessee, Operating Lease, Liability, Maturity [Table Text Block]

(in thousands)	Operating lease
Years ending December 31,	Obligation
2019	$	343
2020		464
2021		474
2022		435
2023		397
Thereafter		2,046
Total undiscounted lease payments		4,159
Less imputed interest		(798	)
Present value of operating lease liabilities	$	3,361
Operating lease right-of-use asset	$	3,305

Lease, Cost [Table Text Block]

	Three Months Ended
	March 31, 2019
Lease cost
Operating lease cost	$	122
Short-term lease cost	$	25
Other information
Operating cash flows from operating leases	$	114
Weighted -average remaining lease term - operating leases (in years)		11
Weighted -average discount rate - operating leases		3.63	%

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Note 2 - Recent Accounting Pronouncements (Details Textual) - USD ($) $ in Thousands	Mar. 31, 2019	Jan. 01, 2019
Operating Lease, Right-of-Use Asset	$ 3,305
Operating Lease, Liability, Total	$ 3,361
Accounting Standards Update 2016-02 [Member]
Operating Lease, Right-of-Use Asset		$ 3,400
Operating Lease, Liability, Total		$ 3,400

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Note 3 - Available-for-sale Securities (Details Textual) $ in Thousands	3 Months Ended
	Mar. 31, 2019 USD ($)	Mar. 31, 2018 USD ($)	Dec. 31, 2018 USD ($)
Debt Securities, Available-for-sale, Unrealized Loss Position, Number of Positions	10		10
Number of Available-for-sale Securities	17		16
Unrealized Holding Losses Depreciation Percentage from Amortized Cost	6.20%		4.40%
Other than Temporary Impairment Losses, Investments, Available-for-sale Securities, Total	$ 0
Other-than-temporary Impairment Loss, Debt Securities, Available-for-sale, Total	0
Payments to Acquire Debt Securities, Available-for-sale		$ 0
Proceeds from Sale of Debt Securities, Available-for-sale	0	$ 0
Subordinated Notes [Member]
Payments to Acquire Debt Securities, Available-for-sale	1,400
Available-For-Sale Securities Pledged to Secure Municipal Deposits [Member]
Debt Securities, Available-for-sale, Restricted	6,900		$ 7,000
Available-For-Sale Securities Pledged to FRB of New York [Member]
Debt Securities, Available-for-sale, Restricted	5,400		5,500
Available-For-Sale Securities Pledged to St. Louis Fed [Member]
Debt Securities, Available-for-sale, Restricted	$ 1,500		$ 1,500

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Note 3 - Available-for-sale Securities - Investment Securities (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Available-for-sale securities, amortized cost	$ 41,404	$ 40,610
Available-for-sale securities, gross unrealized gains	168	108
Available-for-sale securities, gross unrealized losses	(1,297)	(1,222)
Available-for-sale securities	40,275	39,496
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Available-for-sale securities, amortized cost	20,017	20,626
Available-for-sale securities, gross unrealized gains	84	43
Available-for-sale securities, gross unrealized losses	(125)	(196)
Available-for-sale securities	19,976	20,473
Corporate Debt Securities [Member]
Available-for-sale securities, amortized cost	14,000	14,000
Available-for-sale securities, gross unrealized gains
Available-for-sale securities, gross unrealized losses	(1,172)	(1,026)
Available-for-sale securities	12,828	12,974
Subordinated Notes [Member]
Available-for-sale securities, amortized cost	5,899	4,500
Available-for-sale securities, gross unrealized gains	81	64
Available-for-sale securities, gross unrealized losses
Available-for-sale securities	5,980	4,564
US Treasury Securities [Member]
Available-for-sale securities, amortized cost	1,488	1,484
Available-for-sale securities, gross unrealized gains	3	1
Available-for-sale securities, gross unrealized losses
Available-for-sale securities	$ 1,491	$ 1,485

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Note 3 - Available-for-sale Securities - Investment Securities in a Continuous Loss Position (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Available-for-sale securities in continuous loss position, less than 12 months, fair value	$ 2,972	$ 8,024
Available-for-sale securities in continuous loss position, less than 12 months, unrealized loss	(23)	(38)
Available-for-sale securities in continuous loss position, 12 months or more, fair value	16,606	18,396
Available-for-sale securities in continuous loss position, 12 months or more, unrealized loss	(1,274)	(1,184)
Available-for-sale securities in continuous loss position, fair value	19,578	26,420
Available-for-sale securities in continuous loss position, unrealized loss	(1,297)	(1,222)
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Available-for-sale securities in continuous loss position, less than 12 months, fair value	2,972	8,024
Available-for-sale securities in continuous loss position, less than 12 months, unrealized loss	(23)	(38)
Available-for-sale securities in continuous loss position, 12 months or more, fair value	3,778	5,422
Available-for-sale securities in continuous loss position, 12 months or more, unrealized loss	(102)	(158)
Available-for-sale securities in continuous loss position, fair value	6,750	13,446
Available-for-sale securities in continuous loss position, unrealized loss	(125)	(196)
Corporate Debt Securities [Member]
Available-for-sale securities in continuous loss position, less than 12 months, fair value
Available-for-sale securities in continuous loss position, less than 12 months, unrealized loss
Available-for-sale securities in continuous loss position, 12 months or more, fair value	12,828	12,974
Available-for-sale securities in continuous loss position, 12 months or more, unrealized loss	(1,172)	(1,026)
Available-for-sale securities in continuous loss position, fair value	12,828	12,974
Available-for-sale securities in continuous loss position, unrealized loss	$ (1,172)	$ (1,026)

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Note 3 - Available-for-sale Securities - Investment Debt Securities by Contractual Maturity (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Amortized cost, due within 5 years	$ 11,159	$ 8,326
Amortized cost, due after 5 years through 10 years	17,344	19,168
Amortized cost, due after 10 years	12,901	13,116
Available-for-sale securities, amortized cost	41,404	40,610
Fair value, due within 5 years	11,155	8,329
Fair value, due after 5 years through 10 years	16,626	18,631
Fair value, due after 10 years	12,494	12,536
Fair value, total	40,275	39,496
Corporate Debt Securities [Member]
Amortized cost, due within 5 years
Amortized cost, due after 5 years through 10 years	9,000	9,000
Amortized cost, due after 10 years	5,000	5,000
Available-for-sale securities, amortized cost	14,000	14,000
Fair value, due within 5 years
Fair value, due after 5 years through 10 years	8,278	8,537
Fair value, due after 10 years	4,550	4,437
Fair value, total	12,828	12,974
Subordinated Notes [Member]
Amortized cost, due within 5 years
Amortized cost, due after 5 years through 10 years	5,899	4,500
Amortized cost, due after 10 years
Available-for-sale securities, amortized cost	5,899	4,500
Fair value, due within 5 years
Fair value, due after 5 years through 10 years	5,980	4,564
Fair value, due after 10 years
Fair value, total	5,980	4,564
US Treasury Securities [Member]
Amortized cost, due within 5 years	1,488	1,484
Amortized cost, due after 5 years through 10 years
Amortized cost, due after 10 years
Available-for-sale securities, amortized cost	1,488	1,484
Fair value, due within 5 years	1,491	1,485
Fair value, due after 5 years through 10 years
Fair value, due after 10 years
Fair value, total	1,491	1,485
Available-for-sale Securities with Single Maturity Dates [Member]
Amortized cost, due within 5 years	1,488	1,484
Amortized cost, due after 5 years through 10 years	14,899	13,500
Amortized cost, due after 10 years	5,000	5,000
Available-for-sale securities, amortized cost	21,387	19,984
Fair value, due within 5 years	1,491	1,485
Fair value, due after 5 years through 10 years	14,258	13,101
Fair value, due after 10 years	4,550	4,437
Fair value, total	20,299	19,023
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Amortized cost, due within 5 years	9,671	6,842
Amortized cost, due after 5 years through 10 years	2,445	5,668
Amortized cost, due after 10 years	7,901	8,116
Available-for-sale securities, amortized cost	20,017	20,626
Fair value, due within 5 years	9,664	6,844
Fair value, due after 5 years through 10 years	2,368	5,530
Fair value, due after 10 years	7,944	8,099
Fair value, total	$ 19,976	$ 20,473

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Note 4 - Loans Receivable and Allowance for Loan and Lease Losses (Details Textual)	3 Months Ended		12 Months Ended
	Mar. 31, 2019 USD ($)	Mar. 31, 2018 USD ($)	Dec. 31, 2018 USD ($)
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Carrying Amount, Net	$ 439,000
Deteriorated Loans Transferred in, Debt Securities, Accreditable Yield, Period Increase (Decrease), Total	25,000
Payments to Acquire Loans Receivable	$ 4,804,000
Maximum Period of Credit Extension of Construction Loans	1 year 180 days
Loans Receivable, Term to Reset to FHLB Rate	5 years
Period for Charged Off of Open-End Credits	180 days
Period for Charged Off of Close-End Credits	120 days
Loans and Leases Receivable, Impaired, Interest Lost on Nonaccrual Loans	$ 275,000	$ 81,000
Maximum Period for Charged Off of Consumer Installment Loans	180 days
Financing Receivable, Troubled Debt Restructuring	$ 10,855,000		$ 2,066,000
Financing Receivable, Modifications, Number of Contracts	6	0	5
Financing Receivable, Troubled Debt Restructuring, Subsequent Default, Number of Contracts		0
Financing Receivable, Troubled Debt Restructuring, Commitment to Lend	$ 0		$ 0
Impaired Financing Receivable, Recorded Investment, Total	30,000,000		21,200,000
Impaired Financing Receivable, Related Allowance	$ 1,600,000		$ 1,500,000
Number of Impaired Loans	29		25
Non-Accrual Loans [Member]
Impaired Financing Receivable, Interest Income, Cash Basis Method, Total	$ 150,000	$ 0
Financing Receivable, Troubled Debt Restructuring	$ 8,800,000
Financing Receivable, Modifications, Number of Contracts	1
Commercial Real Estate Portfolio Segment [Member]
Maximum Percentage of Credit Extension Based on Market Value of Collateral	75.00%
Financing Receivable, Troubled Debt Restructuring	$ 1,073,000		$ 1,081,000
Financing Receivable, Modifications, Number of Contracts	2		2
Multi-family Real Estate [Member]
Maximum Percentage of Credit Extension Based on Market Value of Collateral	80.00%
Construction Portfolio Segment [Member]
Percentage of Maximum Loan to Value	75.00%
Financing Receivable, Troubled Debt Restructuring	$ 8,800,000
Financing Receivable, Modifications, Number of Contracts	1
Financing Receivable, Troubled Debt Restructuring, Postmodification	$ 8,800,000
Residential Portfolio Segment [Member]
Payments to Acquire Loans Receivable	4,800,000	0
Financing Receivable, Troubled Debt Restructuring	$ 292,000		$ 296,000
Financing Receivable, Modifications, Number of Contracts	1		1
Consumer Portfolio Segment [Member]
Financing Receivable, Troubled Debt Restructuring	$ 690,000		$ 689,000
Financing Receivable, Modifications, Number of Contracts	2		2
Consumer Portfolio Segment [Member] | Education Loans [Member]
Payments to Acquire Loans Receivable	$ 0	$ 0
Construction to Permanent Portfolio Segment [Member] | Minimum [Member]
Loans Receivable, Term	20 years
Construction to Permanent Portfolio Segment [Member] | Maximum [Member]
Loans Receivable, Term	25 years
Commercial and Industrial Portfolio Segment [Member]
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Carrying Amount, Net	$ 439,000
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Allowance for Loan Losses	$ 0

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Note 4 - Loans Receivable and Allowance for Loan and Lease Losses - Loan Portfolio (Details) - USD ($) $ in Thousands	Mar. 31, 2019		Dec. 31, 2018	Mar. 31, 2018	Dec. 31, 2017
Allowance for loan and lease losses	$ (7,823)		$ (7,609)	$ (6,485)	$ (6,297)
Loans receivable, net	780,713		772,767
Business Activities Loans [Member]
Loans receivable, gross	788,536	[1]	780,376
Allowance for loan and lease losses	(7,823)		(7,609)
Loans receivable, net	780,713
Acquired Loans [Member]
Loans receivable, gross			780,376
Allowance for loan and lease losses			(7,609)
Loans receivable, net			772,767
Commercial Real Estate Portfolio Segment [Member]
Allowance for loan and lease losses	(1,862)		(1,866)	(2,480)	(2,212)
Commercial Real Estate Portfolio Segment [Member] | Business Activities Loans [Member]
Loans receivable, gross	291,556		274,938
Allowance for loan and lease losses	(1,862)		(1,866)
Commercial Real Estate Portfolio Segment [Member] | Acquired Loans [Member]
Loans receivable, gross			274,938
Residential Portfolio Segment [Member]
Allowance for loan and lease losses	(1,389)		(1,059)	(1,073)	(959)
Residential Portfolio Segment [Member] | Business Activities Loans [Member]
Loans receivable, gross	159,985		157,300
Allowance for loan and lease losses	(1,389)		(1,059)
Residential Portfolio Segment [Member] | Acquired Loans [Member]
Loans receivable, gross			157,300
Commercial Portfolio Segment [Member]
Allowance for loan and lease losses	(3,490)		(3,558)	(1,759)	(2,023)
Commercial Portfolio Segment [Member] | Business Activities Loans [Member]
Loans receivable, gross	177,866		191,852
Allowance for loan and lease losses	(3,490)		(3,558)
Commercial Portfolio Segment [Member] | Acquired Loans [Member]
Loans receivable, gross			191,852
Consumer Portfolio Segment [Member]
Allowance for loan and lease losses	(592)		(641)	(546)	(568)
Consumer Portfolio Segment [Member] | Business Activities Loans [Member]
Loans receivable, gross	95,755		94,569
Allowance for loan and lease losses	(592)		(641)
Consumer Portfolio Segment [Member] | Acquired Loans [Member]
Loans receivable, gross			94,569
Construction Portfolio Segment [Member]
Allowance for loan and lease losses	(355)		(350)	(488)	(481)
Construction Portfolio Segment [Member] | Business Activities Loans [Member]
Loans receivable, gross	45,356		46,040
Allowance for loan and lease losses	(355)		(350)
Construction Portfolio Segment [Member] | Acquired Loans [Member]
Loans receivable, gross			46,040
Construction to Permanent Portfolio Segment [Member]
Allowance for loan and lease losses	(123)		(108)	$ (61)	$ (54)
Construction to Permanent Portfolio Segment [Member] | Business Activities Loans [Member]
Loans receivable, gross	18,018		15,677
Allowance for loan and lease losses	$ (123)		(108)
Construction to Permanent Portfolio Segment [Member] | Acquired Loans [Member]
Loans receivable, gross			$ 15,677

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Note 4 - Loans Receivable and Allowance for Loan and Lease Losses - Summary of Changes in Accretable Discount for PCI (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2019 USD ($)
Accretable discount, beginning of period	$ (792)
Accretion	25
Other changes, net	573
Accretable discount, end of period	$ (194)

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Note 4 - Loans Receivable and Allowance for Loan and Lease Losses - Allowance for Loan Losses (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Mar. 31, 2019		Dec. 31, 2018
Balance	$ 7,609	$ 6,297
Charge-offs
Recoveries	49	3
Provisions (credits)	165	185
Balance	7,823	6,485
Total allowance for loan losses	7,609	6,297	$ 7,823		$ 7,609
Business Activities Loans [Member]
Balance	7,609
Balance	7,823
Allowance for loan losses: Individually evaluated for impairment			1,625		1,545
Allowance for loan losses: Collectively evaluated for impairment			6,198		6,064
Total allowance for loan losses	7,823		7,823		7,609
Loans receivable, gross: Individually evaluated for impairment			30,051		21,218
PCI loans individually evaluated for impairment			439		615
Loans receivable, gross: Collectively evaluated for impairment			758,046		758,543
Total loans receivable, gross			788,536	[1]	780,376
Commercial Real Estate Portfolio Segment [Member]
Balance	1,866	2,212
Charge-offs	0	0
Recoveries		3
Provisions (credits)	(4)	265
Balance	1,862	2,480
Total allowance for loan losses	1,866	2,212	1,862		1,866
Commercial Real Estate Portfolio Segment [Member] | Business Activities Loans [Member]
Balance	1,866
Balance	1,862
Allowance for loan losses: Individually evaluated for impairment			0		0
Allowance for loan losses: Collectively evaluated for impairment			1,862		1,866
Total allowance for loan losses	1,862		1,862		1,866
Loans receivable, gross: Individually evaluated for impairment			12,026		4,606
PCI loans individually evaluated for impairment
Loans receivable, gross: Collectively evaluated for impairment			279,530		270,332
Total loans receivable, gross			291,556		274,938
Residential Portfolio Segment [Member]
Balance	1,059	959
Charge-offs		0
Recoveries		0
Provisions (credits)	330	114
Balance	1,389	1,073
Total allowance for loan losses	1,059	959	1,389		1,059
Residential Portfolio Segment [Member] | Business Activities Loans [Member]
Balance	1,059
Balance	1,389
Allowance for loan losses: Individually evaluated for impairment			563		216
Allowance for loan losses: Collectively evaluated for impairment			826		843
Total allowance for loan losses	1,389		1,389		1,059
Loans receivable, gross: Individually evaluated for impairment			3,766		2,302
PCI loans individually evaluated for impairment
Loans receivable, gross: Collectively evaluated for impairment			156,219		154,998
Total loans receivable, gross			159,985		157,300
Commercial Portfolio Segment [Member]
Balance	3,558	2,023
Charge-offs	0
Recoveries	47
Provisions (credits)	(115)	(264)
Balance	3,490	1,759
Total allowance for loan losses	3,558	2,023	3,490		3,558
Commercial Portfolio Segment [Member] | Business Activities Loans [Member]
Balance	3,558
Balance	3,490
Allowance for loan losses: Individually evaluated for impairment			1,062		1,299
Allowance for loan losses: Collectively evaluated for impairment			2,428		2,259
Total allowance for loan losses	3,490		3,490		3,558
Loans receivable, gross: Individually evaluated for impairment			4,598		4,646
PCI loans individually evaluated for impairment			439
Loans receivable, gross: Collectively evaluated for impairment			172,829		186,591
Total loans receivable, gross			177,866		191,852
Consumer Portfolio Segment [Member]
Balance	641	568
Charge-offs
Recoveries	2
Provisions (credits)	(51)	(22)
Balance	592	546
Total allowance for loan losses	641	568	592		641
Consumer Portfolio Segment [Member] | Business Activities Loans [Member]
Balance	641
Balance	592
Allowance for loan losses: Individually evaluated for impairment					30
Allowance for loan losses: Collectively evaluated for impairment			592		611
Total allowance for loan losses	592		592		641
Loans receivable, gross: Individually evaluated for impairment			861		864
PCI loans individually evaluated for impairment
Loans receivable, gross: Collectively evaluated for impairment			94,894		93,705
Total loans receivable, gross			95,755		94,569
Construction Portfolio Segment [Member]
Balance	350	481
Charge-offs	0	0
Recoveries	0	0
Provisions (credits)	5	7
Balance	355	488
Total allowance for loan losses	350	481	355		350
Construction Portfolio Segment [Member] | Business Activities Loans [Member]
Balance	350
Balance	355
Allowance for loan losses: Individually evaluated for impairment			0		0
Allowance for loan losses: Collectively evaluated for impairment			355		350
Total allowance for loan losses	355		355		350
Loans receivable, gross: Individually evaluated for impairment			8,800		8,800
PCI loans individually evaluated for impairment
Loans receivable, gross: Collectively evaluated for impairment			36,556		37,240
Total loans receivable, gross			45,356		46,040
Construction to Permanent Portfolio Segment [Member]
Balance	108	54
Charge-offs	0	0
Recoveries	0	0
Provisions (credits)	15	7
Balance	123	61
Total allowance for loan losses	108	54	123		108
Construction to Permanent Portfolio Segment [Member] | Business Activities Loans [Member]
Balance	108
Balance	123
Allowance for loan losses: Individually evaluated for impairment			0		0
Allowance for loan losses: Collectively evaluated for impairment			123		108
Total allowance for loan losses	123		123		108
Loans receivable, gross: Individually evaluated for impairment			0		0
PCI loans individually evaluated for impairment
Loans receivable, gross: Collectively evaluated for impairment			18,018		15,677
Total loans receivable, gross			18,018		15,677
Unallocated Financing Receivables [Member]
Balance	27
Charge-offs	0	0
Recoveries	0	0
Provisions (credits)	(15)	78
Balance	12	78
Total allowance for loan losses	27		12		27
Unallocated Financing Receivables [Member] | Business Activities Loans [Member]
Balance	27
Balance	12
Allowance for loan losses: Individually evaluated for impairment			0		0
Allowance for loan losses: Collectively evaluated for impairment			12		27
Total allowance for loan losses	$ 12		12		27
Loans receivable, gross: Individually evaluated for impairment			0		0
PCI loans individually evaluated for impairment
Loans receivable, gross: Collectively evaluated for impairment					0
Total loans receivable, gross					0
Commercial and Industrial Portfolio Segment [Member] | Business Activities Loans [Member]
PCI loans individually evaluated for impairment					$ 615

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Note 4 - Loans Receivable and Allowance for Loan and Lease Losses - Delinquency Status of Performing and Non-performing Loans (Details) - Business Activities Loans [Member] - USD ($) $ in Thousands	Mar. 31, 2019		Dec. 31, 2018
Loans receivable, gross	$ 788,536	[1]	$ 780,376
Non-accruing loans	28,030		19,186
Commercial Real Estate Portfolio Segment [Member]
Loans receivable, gross	291,556		274,938
Non-accruing loans	10,953		3,525
Residential Portfolio Segment [Member]
Loans receivable, gross	159,985		157,300
Non-accruing loans	3,473		2,006
Commercial Portfolio Segment [Member]
Loans receivable, gross	177,866		191,852
Non-accruing loans	4,632		4,681
Consumer Portfolio Segment [Member]
Loans receivable, gross	95,755		94,569
Non-accruing loans	172		174
Construction Portfolio Segment [Member]
Loans receivable, gross	45,356		46,040
Non-accruing loans	8,800		8,800
Construction to Permanent Portfolio Segment [Member]
Loans receivable, gross	18,018		15,677
Non-accruing loans
Pass [Member]
Loans receivable, gross	739,085		744,663
Non-accruing loans
Pass [Member] | Commercial Real Estate Portfolio Segment [Member]
Loans receivable, gross	272,486		262,858
Non-accruing loans
Pass [Member] | Residential Portfolio Segment [Member]
Loans receivable, gross	154,774		152,963
Non-accruing loans
Pass [Member] | Commercial Portfolio Segment [Member]
Loans receivable, gross	161,668		181,530
Non-accruing loans
Pass [Member] | Consumer Portfolio Segment [Member]
Loans receivable, gross	95,583		94,395
Non-accruing loans
Pass [Member] | Construction Portfolio Segment [Member]
Loans receivable, gross	36,556		37,240
Non-accruing loans
Pass [Member] | Construction to Permanent Portfolio Segment [Member]
Loans receivable, gross	18,018		15,677
Non-accruing loans
Special Mention [Member]
Loans receivable, gross	4,102		6,960
Non-accruing loans
Special Mention [Member] | Commercial Real Estate Portfolio Segment [Member]
Loans receivable, gross	2,070		3,631
Non-accruing loans
Special Mention [Member] | Residential Portfolio Segment [Member]
Loans receivable, gross			850
Non-accruing loans
Special Mention [Member] | Commercial and Industrial Portfolio Segment [Member]
Loans receivable, gross	2,032		2,479
Non-accruing loans
Substandard [Member]
Loans receivable, gross	45,349		28,753
Non-accruing loans	28,030		19,186
Substandard [Member] | Commercial Real Estate Portfolio Segment [Member]
Loans receivable, gross	17,000		8,449
Non-accruing loans	10,953		3,525
Substandard [Member] | Residential Portfolio Segment [Member]
Loans receivable, gross	5,211		3,487
Non-accruing loans	3,473		2,006
Substandard [Member] | Commercial Portfolio Segment [Member]
Loans receivable, gross	14,166		7,843
Non-accruing loans	4,632		4,681
Substandard [Member] | Commercial and Industrial Portfolio Segment [Member]
Non-accruing loans			4,681
Substandard [Member] | Consumer Portfolio Segment [Member]
Loans receivable, gross	172		174
Non-accruing loans	172		174
Substandard [Member] | Construction Portfolio Segment [Member]
Loans receivable, gross	8,800		8,800
Non-accruing loans	8,800		8,800
Performing Financial Instruments [Member]
Performing (accruing) loans, past due	5,841		5,386
Performing (accruing) loans, current	754,665		755,804
Loans receivable, gross	760,506		761,190
Performing Financial Instruments [Member] | Commercial Real Estate Portfolio Segment [Member]
Performing (accruing) loans, past due	1,222		1,551
Performing (accruing) loans, current	279,381		269,862
Loans receivable, gross	280,603		271,413
Performing Financial Instruments [Member] | Residential Portfolio Segment [Member]
Performing (accruing) loans, past due	1,293		1,454
Performing (accruing) loans, current	155,219		153,840
Loans receivable, gross	156,512		155,294
Performing Financial Instruments [Member] | Commercial Portfolio Segment [Member]
Performing (accruing) loans, past due	1,687		1,338
Performing (accruing) loans, current	171,547		185,833
Loans receivable, gross	173,234		187,171
Performing Financial Instruments [Member] | Consumer Portfolio Segment [Member]
Performing (accruing) loans, past due	1,639		43
Performing (accruing) loans, current	93,944		94,352
Loans receivable, gross	95,583		94,395
Performing Financial Instruments [Member] | Construction Portfolio Segment [Member]
Performing (accruing) loans, past due			1,000
Performing (accruing) loans, current	36,556		36,240
Loans receivable, gross	36,556		37,240
Performing Financial Instruments [Member] | Construction to Permanent Portfolio Segment [Member]
Performing (accruing) loans, past due
Performing (accruing) loans, current	18,018		15,677
Loans receivable, gross	18,018		15,677
Performing Financial Instruments [Member] | Pass [Member]
Performing (accruing) loans, past due	4,389		4,157
Performing (accruing) loans, current	734,696		740,506
Loans receivable, gross	739,085		744,663
Performing Financial Instruments [Member] | Pass [Member] | Commercial Real Estate Portfolio Segment [Member]
Performing (accruing) loans, past due	208		423
Performing (accruing) loans, current	272,278		262,435
Loans receivable, gross	272,486		262,858
Performing Financial Instruments [Member] | Pass [Member] | Residential Portfolio Segment [Member]
Performing (accruing) loans, past due	1,293		1,454
Performing (accruing) loans, current	153,481		151,509
Loans receivable, gross	154,774		152,963
Performing Financial Instruments [Member] | Pass [Member] | Commercial Portfolio Segment [Member]
Performing (accruing) loans, past due	1,249		1,237
Performing (accruing) loans, current	160,419		180,293
Loans receivable, gross	161,668		181,530
Performing Financial Instruments [Member] | Pass [Member] | Consumer Portfolio Segment [Member]
Performing (accruing) loans, past due	1,639		43
Performing (accruing) loans, current	93,944		94,352
Loans receivable, gross	95,583		94,395
Performing Financial Instruments [Member] | Pass [Member] | Construction Portfolio Segment [Member]
Performing (accruing) loans, past due			1,000
Performing (accruing) loans, current	36,556		36,240
Loans receivable, gross	36,556		37,240
Performing Financial Instruments [Member] | Pass [Member] | Construction to Permanent Portfolio Segment [Member]
Performing (accruing) loans, past due
Performing (accruing) loans, current	18,018		15,677
Loans receivable, gross	18,018		15,677
Performing Financial Instruments [Member] | Special Mention [Member]
Performing (accruing) loans, past due	100		1,059
Performing (accruing) loans, current	4,002		5,901
Loans receivable, gross	4,102		6,960
Performing Financial Instruments [Member] | Special Mention [Member] | Commercial Real Estate Portfolio Segment [Member]
Performing (accruing) loans, past due			958
Performing (accruing) loans, current	2,070		2,673
Loans receivable, gross	2,070		3,631
Performing Financial Instruments [Member] | Special Mention [Member] | Residential Portfolio Segment [Member]
Performing (accruing) loans, past due
Performing (accruing) loans, current			850
Loans receivable, gross			850
Performing Financial Instruments [Member] | Special Mention [Member] | Commercial and Industrial Portfolio Segment [Member]
Performing (accruing) loans, past due	100		101
Performing (accruing) loans, current	1,932		2,378
Loans receivable, gross	2,032		2,479
Performing Financial Instruments [Member] | Substandard [Member]
Performing (accruing) loans, past due	1,352		170
Performing (accruing) loans, current	15,967		9,397
Loans receivable, gross	17,319		9,567
Performing Financial Instruments [Member] | Substandard [Member] | Commercial Real Estate Portfolio Segment [Member]
Performing (accruing) loans, past due	1,014		170
Performing (accruing) loans, current	5,033		4,754
Loans receivable, gross	6,047		4,924
Performing Financial Instruments [Member] | Substandard [Member] | Residential Portfolio Segment [Member]
Performing (accruing) loans, past due
Performing (accruing) loans, current	1,738		1,481
Loans receivable, gross	1,738		1,481
Performing Financial Instruments [Member] | Substandard [Member] | Commercial Portfolio Segment [Member]
Performing (accruing) loans, past due	338
Performing (accruing) loans, current	9,196		3,162
Loans receivable, gross	9,534		3,162
Performing Financial Instruments [Member] | Substandard [Member] | Consumer Portfolio Segment [Member]
Performing (accruing) loans, past due
Performing (accruing) loans, current
Loans receivable, gross
Performing Financial Instruments [Member] | Substandard [Member] | Construction Portfolio Segment [Member]
Performing (accruing) loans, past due
Performing (accruing) loans, current
Loans receivable, gross
Financial Asset, 30 to 59 Days Past Due [Member] | Performing Financial Instruments [Member]
Performing (accruing) loans, past due	4,001		1,400
Financial Asset, 30 to 59 Days Past Due [Member] | Performing Financial Instruments [Member] | Commercial Real Estate Portfolio Segment [Member]
Performing (accruing) loans, past due	791		593
Financial Asset, 30 to 59 Days Past Due [Member] | Performing Financial Instruments [Member] | Residential Portfolio Segment [Member]
Performing (accruing) loans, past due	1,293		637
Financial Asset, 30 to 59 Days Past Due [Member] | Performing Financial Instruments [Member] | Commercial Portfolio Segment [Member]
Performing (accruing) loans, past due	454		150
Financial Asset, 30 to 59 Days Past Due [Member] | Performing Financial Instruments [Member] | Consumer Portfolio Segment [Member]
Performing (accruing) loans, past due	1,463		20
Financial Asset, 30 to 59 Days Past Due [Member] | Performing Financial Instruments [Member] | Construction Portfolio Segment [Member]
Performing (accruing) loans, past due
Financial Asset, 30 to 59 Days Past Due [Member] | Performing Financial Instruments [Member] | Construction to Permanent Portfolio Segment [Member]
Performing (accruing) loans, past due
Financial Asset, 30 to 59 Days Past Due [Member] | Performing Financial Instruments [Member] | Pass [Member]
Performing (accruing) loans, past due	3,418		1,230
Financial Asset, 30 to 59 Days Past Due [Member] | Performing Financial Instruments [Member] | Pass [Member] | Commercial Real Estate Portfolio Segment [Member]
Performing (accruing) loans, past due	208		423
Financial Asset, 30 to 59 Days Past Due [Member] | Performing Financial Instruments [Member] | Pass [Member] | Residential Portfolio Segment [Member]
Performing (accruing) loans, past due	1,293		637
Financial Asset, 30 to 59 Days Past Due [Member] | Performing Financial Instruments [Member] | Pass [Member] | Commercial Portfolio Segment [Member]
Performing (accruing) loans, past due	454		150
Financial Asset, 30 to 59 Days Past Due [Member] | Performing Financial Instruments [Member] | Pass [Member] | Consumer Portfolio Segment [Member]
Performing (accruing) loans, past due	1,463		20
Financial Asset, 30 to 59 Days Past Due [Member] | Performing Financial Instruments [Member] | Pass [Member] | Construction Portfolio Segment [Member]
Performing (accruing) loans, past due
Financial Asset, 30 to 59 Days Past Due [Member] | Performing Financial Instruments [Member] | Pass [Member] | Construction to Permanent Portfolio Segment [Member]
Performing (accruing) loans, past due
Financial Asset, 30 to 59 Days Past Due [Member] | Performing Financial Instruments [Member] | Special Mention [Member]
Performing (accruing) loans, past due
Financial Asset, 30 to 59 Days Past Due [Member] | Performing Financial Instruments [Member] | Special Mention [Member] | Commercial Real Estate Portfolio Segment [Member]
Performing (accruing) loans, past due
Financial Asset, 30 to 59 Days Past Due [Member] | Performing Financial Instruments [Member] | Special Mention [Member] | Residential Portfolio Segment [Member]
Performing (accruing) loans, past due
Financial Asset, 30 to 59 Days Past Due [Member] | Performing Financial Instruments [Member] | Special Mention [Member] | Commercial and Industrial Portfolio Segment [Member]
Performing (accruing) loans, past due
Financial Asset, 30 to 59 Days Past Due [Member] | Performing Financial Instruments [Member] | Substandard [Member]
Performing (accruing) loans, past due	583		170
Financial Asset, 30 to 59 Days Past Due [Member] | Performing Financial Instruments [Member] | Substandard [Member] | Commercial Real Estate Portfolio Segment [Member]
Performing (accruing) loans, past due	583		170
Financial Asset, 30 to 59 Days Past Due [Member] | Performing Financial Instruments [Member] | Substandard [Member] | Residential Portfolio Segment [Member]
Performing (accruing) loans, past due
Financial Asset, 30 to 59 Days Past Due [Member] | Performing Financial Instruments [Member] | Substandard [Member] | Commercial Portfolio Segment [Member]
Performing (accruing) loans, past due
Financial Asset, 30 to 59 Days Past Due [Member] | Performing Financial Instruments [Member] | Substandard [Member] | Consumer Portfolio Segment [Member]
Performing (accruing) loans, past due
Financial Asset, 30 to 59 Days Past Due [Member] | Performing Financial Instruments [Member] | Substandard [Member] | Construction Portfolio Segment [Member]
Performing (accruing) loans, past due
Financial Asset, 60 to 89 Days Past Due [Member] | Performing Financial Instruments [Member]
Performing (accruing) loans, past due	1,132		2,670
Financial Asset, 60 to 89 Days Past Due [Member] | Performing Financial Instruments [Member] | Commercial Real Estate Portfolio Segment [Member]
Performing (accruing) loans, past due	431
Financial Asset, 60 to 89 Days Past Due [Member] | Performing Financial Instruments [Member] | Residential Portfolio Segment [Member]
Performing (accruing) loans, past due			817
Financial Asset, 60 to 89 Days Past Due [Member] | Performing Financial Instruments [Member] | Commercial Portfolio Segment [Member]
Performing (accruing) loans, past due	533		853
Financial Asset, 60 to 89 Days Past Due [Member] | Performing Financial Instruments [Member] | Consumer Portfolio Segment [Member]
Performing (accruing) loans, past due	168
Financial Asset, 60 to 89 Days Past Due [Member] | Performing Financial Instruments [Member] | Construction Portfolio Segment [Member]
Performing (accruing) loans, past due			1,000
Financial Asset, 60 to 89 Days Past Due [Member] | Performing Financial Instruments [Member] | Construction to Permanent Portfolio Segment [Member]
Performing (accruing) loans, past due
Financial Asset, 60 to 89 Days Past Due [Member] | Performing Financial Instruments [Member] | Pass [Member]
Performing (accruing) loans, past due	363		2,670
Financial Asset, 60 to 89 Days Past Due [Member] | Performing Financial Instruments [Member] | Pass [Member] | Commercial Real Estate Portfolio Segment [Member]
Performing (accruing) loans, past due
Financial Asset, 60 to 89 Days Past Due [Member] | Performing Financial Instruments [Member] | Pass [Member] | Residential Portfolio Segment [Member]
Performing (accruing) loans, past due			817
Financial Asset, 60 to 89 Days Past Due [Member] | Performing Financial Instruments [Member] | Pass [Member] | Commercial Portfolio Segment [Member]
Performing (accruing) loans, past due	195		853
Financial Asset, 60 to 89 Days Past Due [Member] | Performing Financial Instruments [Member] | Pass [Member] | Consumer Portfolio Segment [Member]
Performing (accruing) loans, past due	168
Financial Asset, 60 to 89 Days Past Due [Member] | Performing Financial Instruments [Member] | Pass [Member] | Construction Portfolio Segment [Member]
Performing (accruing) loans, past due			1,000
Financial Asset, 60 to 89 Days Past Due [Member] | Performing Financial Instruments [Member] | Pass [Member] | Construction to Permanent Portfolio Segment [Member]
Performing (accruing) loans, past due
Financial Asset, 60 to 89 Days Past Due [Member] | Performing Financial Instruments [Member] | Special Mention [Member]
Performing (accruing) loans, past due
Financial Asset, 60 to 89 Days Past Due [Member] | Performing Financial Instruments [Member] | Special Mention [Member] | Commercial Real Estate Portfolio Segment [Member]
Performing (accruing) loans, past due
Financial Asset, 60 to 89 Days Past Due [Member] | Performing Financial Instruments [Member] | Special Mention [Member] | Residential Portfolio Segment [Member]
Performing (accruing) loans, past due
Financial Asset, 60 to 89 Days Past Due [Member] | Performing Financial Instruments [Member] | Special Mention [Member] | Commercial and Industrial Portfolio Segment [Member]
Performing (accruing) loans, past due
Financial Asset, 60 to 89 Days Past Due [Member] | Performing Financial Instruments [Member] | Substandard [Member]
Performing (accruing) loans, past due	769
Financial Asset, 60 to 89 Days Past Due [Member] | Performing Financial Instruments [Member] | Substandard [Member] | Commercial Real Estate Portfolio Segment [Member]
Performing (accruing) loans, past due	431
Financial Asset, 60 to 89 Days Past Due [Member] | Performing Financial Instruments [Member] | Substandard [Member] | Residential Portfolio Segment [Member]
Performing (accruing) loans, past due
Financial Asset, 60 to 89 Days Past Due [Member] | Performing Financial Instruments [Member] | Substandard [Member] | Commercial Portfolio Segment [Member]
Performing (accruing) loans, past due	338
Financial Asset, 60 to 89 Days Past Due [Member] | Performing Financial Instruments [Member] | Substandard [Member] | Consumer Portfolio Segment [Member]
Performing (accruing) loans, past due
Financial Asset, 60 to 89 Days Past Due [Member] | Performing Financial Instruments [Member] | Substandard [Member] | Construction Portfolio Segment [Member]
Performing (accruing) loans, past due
Financial Asset, Equal to or Greater than 90 Days Past Due [Member] | Performing Financial Instruments [Member]
Performing (accruing) loans, past due	708		1,316
Financial Asset, Equal to or Greater than 90 Days Past Due [Member] | Performing Financial Instruments [Member] | Commercial Real Estate Portfolio Segment [Member]
Performing (accruing) loans, past due			958
Financial Asset, Equal to or Greater than 90 Days Past Due [Member] | Performing Financial Instruments [Member] | Residential Portfolio Segment [Member]
Performing (accruing) loans, past due
Financial Asset, Equal to or Greater than 90 Days Past Due [Member] | Performing Financial Instruments [Member] | Commercial Portfolio Segment [Member]
Performing (accruing) loans, past due	700		335
Financial Asset, Equal to or Greater than 90 Days Past Due [Member] | Performing Financial Instruments [Member] | Consumer Portfolio Segment [Member]
Performing (accruing) loans, past due	8		23
Financial Asset, Equal to or Greater than 90 Days Past Due [Member] | Performing Financial Instruments [Member] | Construction Portfolio Segment [Member]
Performing (accruing) loans, past due
Financial Asset, Equal to or Greater than 90 Days Past Due [Member] | Performing Financial Instruments [Member] | Construction to Permanent Portfolio Segment [Member]
Performing (accruing) loans, past due
Financial Asset, Equal to or Greater than 90 Days Past Due [Member] | Performing Financial Instruments [Member] | Pass [Member]
Performing (accruing) loans, past due	608		257
Financial Asset, Equal to or Greater than 90 Days Past Due [Member] | Performing Financial Instruments [Member] | Pass [Member] | Commercial Real Estate Portfolio Segment [Member]
Performing (accruing) loans, past due
Financial Asset, Equal to or Greater than 90 Days Past Due [Member] | Performing Financial Instruments [Member] | Pass [Member] | Residential Portfolio Segment [Member]
Performing (accruing) loans, past due
Financial Asset, Equal to or Greater than 90 Days Past Due [Member] | Performing Financial Instruments [Member] | Pass [Member] | Commercial Portfolio Segment [Member]
Performing (accruing) loans, past due	600		234
Financial Asset, Equal to or Greater than 90 Days Past Due [Member] | Performing Financial Instruments [Member] | Pass [Member] | Consumer Portfolio Segment [Member]
Performing (accruing) loans, past due	8		23
Financial Asset, Equal to or Greater than 90 Days Past Due [Member] | Performing Financial Instruments [Member] | Pass [Member] | Construction Portfolio Segment [Member]
Performing (accruing) loans, past due
Financial Asset, Equal to or Greater than 90 Days Past Due [Member] | Performing Financial Instruments [Member] | Pass [Member] | Construction to Permanent Portfolio Segment [Member]
Performing (accruing) loans, past due
Financial Asset, Equal to or Greater than 90 Days Past Due [Member] | Performing Financial Instruments [Member] | Special Mention [Member]
Performing (accruing) loans, past due	100		1,059
Financial Asset, Equal to or Greater than 90 Days Past Due [Member] | Performing Financial Instruments [Member] | Special Mention [Member] | Commercial Real Estate Portfolio Segment [Member]
Performing (accruing) loans, past due			958
Financial Asset, Equal to or Greater than 90 Days Past Due [Member] | Performing Financial Instruments [Member] | Special Mention [Member] | Residential Portfolio Segment [Member]
Performing (accruing) loans, past due
Financial Asset, Equal to or Greater than 90 Days Past Due [Member] | Performing Financial Instruments [Member] | Special Mention [Member] | Commercial and Industrial Portfolio Segment [Member]
Performing (accruing) loans, past due	100		101
Financial Asset, Equal to or Greater than 90 Days Past Due [Member] | Performing Financial Instruments [Member] | Substandard [Member]
Performing (accruing) loans, past due
Financial Asset, Equal to or Greater than 90 Days Past Due [Member] | Performing Financial Instruments [Member] | Substandard [Member] | Commercial Real Estate Portfolio Segment [Member]
Performing (accruing) loans, past due
Financial Asset, Equal to or Greater than 90 Days Past Due [Member] | Performing Financial Instruments [Member] | Substandard [Member] | Residential Portfolio Segment [Member]
Performing (accruing) loans, past due
Financial Asset, Equal to or Greater than 90 Days Past Due [Member] | Performing Financial Instruments [Member] | Substandard [Member] | Commercial Portfolio Segment [Member]
Performing (accruing) loans, past due
Financial Asset, Equal to or Greater than 90 Days Past Due [Member] | Performing Financial Instruments [Member] | Substandard [Member] | Consumer Portfolio Segment [Member]
Performing (accruing) loans, past due
Financial Asset, Equal to or Greater than 90 Days Past Due [Member] | Performing Financial Instruments [Member] | Substandard [Member] | Construction Portfolio Segment [Member]
Performing (accruing) loans, past due

[1]

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Note 4 - Loans Receivable and Allowance for Loan and Lease Losses - Non-accrual Loans (Details) - Business Activities Loans [Member] - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Non-accruing loans	$ 28,030	$ 19,186
Commercial Real Estate Portfolio Segment [Member]
Non-accruing loans	10,953	3,525
Residential Portfolio Segment [Member]
Non-accruing loans	3,473	2,006
Commercial Portfolio Segment [Member]
Non-accruing loans	4,632	4,681
Consumer Portfolio Segment [Member]
Non-accruing loans	172	174
Construction Portfolio Segment [Member]
Non-accruing loans	8,800	8,800
Substandard [Member]
Non-accruing loans	28,030	19,186
Substandard [Member] | Commercial Real Estate Portfolio Segment [Member]
Non-accruing loans	10,953	3,525
Substandard [Member] | Residential Portfolio Segment [Member]
Non-accruing loans	3,473	2,006
Substandard [Member] | Commercial Portfolio Segment [Member]
Non-accruing loans	4,632	4,681
Substandard [Member] | Consumer Portfolio Segment [Member]
Non-accruing loans	172	174
Substandard [Member] | Construction Portfolio Segment [Member]
Non-accruing loans	8,800	8,800
Substandard [Member] | Commercial and Industrial Portfolio Segment [Member]
Non-accruing loans		4,681
Substandard [Member] | Non-Accrual Loans [Member]
Performing (accruing) loans, past due	7,999	18,384
Performing (accruing) loans, current	20,031	802
Substandard [Member] | Non-Accrual Loans [Member] | Commercial Real Estate Portfolio Segment [Member]
Performing (accruing) loans, past due	1,011	3,525
Performing (accruing) loans, current	9,942
Substandard [Member] | Non-Accrual Loans [Member] | Residential Portfolio Segment [Member]
Performing (accruing) loans, past due	2,903	2,006
Performing (accruing) loans, current	570
Substandard [Member] | Non-Accrual Loans [Member] | Commercial Portfolio Segment [Member]
Performing (accruing) loans, past due	3,913
Performing (accruing) loans, current	719
Substandard [Member] | Non-Accrual Loans [Member] | Consumer Portfolio Segment [Member]
Performing (accruing) loans, past due	172	97
Performing (accruing) loans, current		77
Substandard [Member] | Non-Accrual Loans [Member] | Construction Portfolio Segment [Member]
Performing (accruing) loans, past due		8,800
Performing (accruing) loans, current	8,800
Substandard [Member] | Non-Accrual Loans [Member] | Commercial and Industrial Portfolio Segment [Member]
Performing (accruing) loans, past due		3,956
Performing (accruing) loans, current		725
Financial Asset, 30 to 59 Days Past Due [Member] | Substandard [Member] | Non-Accrual Loans [Member]
Performing (accruing) loans, past due	60	1,580
Financial Asset, 30 to 59 Days Past Due [Member] | Substandard [Member] | Non-Accrual Loans [Member] | Commercial Real Estate Portfolio Segment [Member]
Performing (accruing) loans, past due		1,580
Financial Asset, 30 to 59 Days Past Due [Member] | Substandard [Member] | Non-Accrual Loans [Member] | Residential Portfolio Segment [Member]
Performing (accruing) loans, past due	60
Financial Asset, 30 to 59 Days Past Due [Member] | Substandard [Member] | Non-Accrual Loans [Member] | Commercial Portfolio Segment [Member]
Performing (accruing) loans, past due	0
Financial Asset, 30 to 59 Days Past Due [Member] | Substandard [Member] | Non-Accrual Loans [Member] | Consumer Portfolio Segment [Member]
Performing (accruing) loans, past due	0
Financial Asset, 30 to 59 Days Past Due [Member] | Substandard [Member] | Non-Accrual Loans [Member] | Construction Portfolio Segment [Member]
Performing (accruing) loans, past due
Financial Asset, 30 to 59 Days Past Due [Member] | Substandard [Member] | Non-Accrual Loans [Member] | Commercial and Industrial Portfolio Segment [Member]
Performing (accruing) loans, past due
Financial Asset, 60 to 89 Days Past Due [Member] | Substandard [Member] | Non-Accrual Loans [Member]
Performing (accruing) loans, past due	102	101
Financial Asset, 60 to 89 Days Past Due [Member] | Substandard [Member] | Non-Accrual Loans [Member] | Commercial Real Estate Portfolio Segment [Member]
Performing (accruing) loans, past due	0
Financial Asset, 60 to 89 Days Past Due [Member] | Substandard [Member] | Non-Accrual Loans [Member] | Residential Portfolio Segment [Member]
Performing (accruing) loans, past due	0
Financial Asset, 60 to 89 Days Past Due [Member] | Substandard [Member] | Non-Accrual Loans [Member] | Commercial Portfolio Segment [Member]
Performing (accruing) loans, past due
Financial Asset, 60 to 89 Days Past Due [Member] | Substandard [Member] | Non-Accrual Loans [Member] | Consumer Portfolio Segment [Member]
Performing (accruing) loans, past due	102	86
Financial Asset, 60 to 89 Days Past Due [Member] | Substandard [Member] | Non-Accrual Loans [Member] | Construction Portfolio Segment [Member]
Performing (accruing) loans, past due
Financial Asset, 60 to 89 Days Past Due [Member] | Substandard [Member] | Non-Accrual Loans [Member] | Commercial and Industrial Portfolio Segment [Member]
Performing (accruing) loans, past due		15
Financial Asset, Equal to or Greater than 90 Days Past Due [Member] | Substandard [Member] | Non-Accrual Loans [Member]
Performing (accruing) loans, past due	7,837	16,703
Financial Asset, Equal to or Greater than 90 Days Past Due [Member] | Substandard [Member] | Non-Accrual Loans [Member] | Commercial Real Estate Portfolio Segment [Member]
Performing (accruing) loans, past due	1,011	1,945
Financial Asset, Equal to or Greater than 90 Days Past Due [Member] | Substandard [Member] | Non-Accrual Loans [Member] | Residential Portfolio Segment [Member]
Performing (accruing) loans, past due	2,843	2,006
Financial Asset, Equal to or Greater than 90 Days Past Due [Member] | Substandard [Member] | Non-Accrual Loans [Member] | Commercial Portfolio Segment [Member]
Performing (accruing) loans, past due	3,913
Financial Asset, Equal to or Greater than 90 Days Past Due [Member] | Substandard [Member] | Non-Accrual Loans [Member] | Consumer Portfolio Segment [Member]
Performing (accruing) loans, past due	70	11
Financial Asset, Equal to or Greater than 90 Days Past Due [Member] | Substandard [Member] | Non-Accrual Loans [Member] | Construction Portfolio Segment [Member]
Performing (accruing) loans, past due		8,800
Financial Asset, Equal to or Greater than 90 Days Past Due [Member] | Substandard [Member] | Non-Accrual Loans [Member] | Commercial and Industrial Portfolio Segment [Member]
Performing (accruing) loans, past due		$ 3,941

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Note 4 - Loans Receivable and Allowance for Loan and Lease Losses - Recorded Investment in TDRs (Details)	3 Months Ended		12 Months Ended
	Mar. 31, 2019 USD ($)	Mar. 31, 2018	Dec. 31, 2018 USD ($)
Number of contracts	6	0	5
Recorded investment	$ 10,855,000		$ 2,066,000
Recorded investment	$ (10,855,000)		$ (2,066,000)
Non-Accrual Loans [Member]
Number of contracts	1
Recorded investment	$ 8,800,000
Recorded investment	$ (8,800,000)
Accrual Loans [Member]
Number of contracts	5		5
Recorded investment	$ 2,055,000		$ 2,066,000
Recorded investment	$ (2,055,000)		$ (2,066,000)
Commercial Real Estate Portfolio Segment [Member]
Number of contracts	2		2
Recorded investment	$ 1,073,000		$ 1,081,000
Recorded investment	$ (1,073,000)		$ (1,081,000)
Residential Portfolio Segment [Member]
Number of contracts	1		1
Recorded investment	$ 292,000		$ 296,000
Recorded investment	$ (292,000)		$ (296,000)
Consumer Portfolio Segment [Member]
Number of contracts	2		2
Recorded investment	$ 690,000		$ 689,000
Recorded investment	$ (690,000)		$ (689,000)
Construction Portfolio Segment [Member]
Number of contracts	1
Recorded investment	$ 8,800,000
Recorded investment	$ (8,800,000)

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Note 4 - Loans Receivable and Allowance for Loan and Lease Losses - Impaired Loans (Details) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Impaired loans, related allowance	$ 1,600,000		$ 1,500,000
Impaired loans, recorded investment	30,000,000		21,200,000
With no allowance recorded, average recorded investment	17,798,000	$ 6,977,000
With no allowance recorded, interest income recognized	175,000	35,000
With allowance recorded, average recorded investment	6,445,000	395,000
With allowance recorded, interest income recognized
Impaired Loans, Average recorded investment	24,243,000	7,372,000
Impaired Loans, interest income recognized	175,000	35,000
Business Activities Loans [Member]
Impaired loans with no related allowance recorded, recorded investment	25,036,000		15,391,000
Impaired loans with no related allowance recorded, unpaid principal balance	25,163,000		16,799,000
Impaired loans with a related allowance recorded, recorded investment	5,015,000		5,827,000
Impaired loans with a related allowance recorded, unpaid principal balance	5,015,000		5,877,000
Impaired loans, related allowance	1,625,000		1,545,000
Impaired loans, recorded investment	30,051,000		21,218,000
Impaired loans, unpaid principal balance	30,178,000		22,676,000
Commercial Real Estate Portfolio Segment [Member]
With no allowance recorded, average recorded investment	6,440,000	2,205,000
With no allowance recorded, interest income recognized	13,000	25,000
With allowance recorded, average recorded investment	472,000
With allowance recorded, interest income recognized
Impaired Loans, Average recorded investment	6,912,000	2,205,000
Impaired Loans, interest income recognized	13,000	25,000
Commercial Real Estate Portfolio Segment [Member] | Business Activities Loans [Member]
Impaired loans with no related allowance recorded, recorded investment	12,026,000		4,606,000
Impaired loans with no related allowance recorded, unpaid principal balance	12,145,000		5,109,000
Impaired loans with a related allowance recorded, recorded investment
Impaired loans with a related allowance recorded, unpaid principal balance
Impaired loans, related allowance
Impaired loans, recorded investment	12,026,000		4,606,000
Impaired loans, unpaid principal balance	12,145,000		5,109,000
Residential Portfolio Segment [Member]
With no allowance recorded, average recorded investment	942,000	3,342,000
With no allowance recorded, interest income recognized	4,000	3,000
With allowance recorded, average recorded investment	2,089,000
With allowance recorded, interest income recognized
Impaired Loans, Average recorded investment	3,031,000	3,342,000
Impaired Loans, interest income recognized	4,000	3,000
Residential Portfolio Segment [Member] | Business Activities Loans [Member]
Impaired loans with no related allowance recorded, recorded investment	1,760,000		670,000
Impaired loans with no related allowance recorded, unpaid principal balance	1,768,000		703,000
Impaired loans with a related allowance recorded, recorded investment	2,006,000		1,632,000
Impaired loans with a related allowance recorded, unpaid principal balance	2,006,000		1,632,000
Impaired loans, related allowance	563,000		216,000
Impaired loans, recorded investment	3,766,000		2,302,000
Impaired loans, unpaid principal balance	3,774,000		2,335,000
Commercial Portfolio Segment [Member]
With no allowance recorded, average recorded investment	775,000	739,000
With no allowance recorded, interest income recognized
With allowance recorded, average recorded investment	3,863,000	393,000
With allowance recorded, interest income recognized
Impaired Loans, Average recorded investment	4,638,000	1,132,000
Impaired Loans, interest income recognized
Commercial Portfolio Segment [Member] | Business Activities Loans [Member]
Impaired loans with no related allowance recorded, recorded investment	1,589,000		488,000
Impaired loans with no related allowance recorded, unpaid principal balance	1,589,000		1,281,000
Impaired loans with a related allowance recorded, recorded investment	3,009,000		4,158,000
Impaired loans with a related allowance recorded, unpaid principal balance	3,009,000		4,208,000
Impaired loans, related allowance	1,062,000		1,299,000
Impaired loans, recorded investment	4,598,000		4,646,000
Impaired loans, unpaid principal balance	4,598,000		5,489,000
Consumer Portfolio Segment [Member]
With no allowance recorded, average recorded investment	841,000	691,000
With no allowance recorded, interest income recognized	8,000	7,000
With allowance recorded, average recorded investment	21,000	2,000
With allowance recorded, interest income recognized
Impaired Loans, Average recorded investment	862,000	693,000
Impaired Loans, interest income recognized	8,000	7,000
Consumer Portfolio Segment [Member] | Business Activities Loans [Member]
Impaired loans with no related allowance recorded, recorded investment	861,000		827,000
Impaired loans with no related allowance recorded, unpaid principal balance	861,000		867,000
Impaired loans with a related allowance recorded, recorded investment			37,000
Impaired loans with a related allowance recorded, unpaid principal balance			37,000
Impaired loans, related allowance			30,000
Impaired loans, recorded investment	861,000		864,000
Impaired loans, unpaid principal balance	861,000		904,000
Construction Portfolio Segment [Member]
With no allowance recorded, average recorded investment	8,800,000
With no allowance recorded, interest income recognized	150,000
With allowance recorded, average recorded investment
With allowance recorded, interest income recognized
Impaired Loans, Average recorded investment	8,800,000
Impaired Loans, interest income recognized	150,000
Construction Portfolio Segment [Member] | Business Activities Loans [Member]
Impaired loans with no related allowance recorded, recorded investment	8,800,000		8,800,000
Impaired loans with no related allowance recorded, unpaid principal balance	8,800,000		8,839,000
Impaired loans with a related allowance recorded, recorded investment
Impaired loans with a related allowance recorded, unpaid principal balance
Impaired loans, related allowance
Impaired loans, recorded investment	8,800,000		8,800,000
Impaired loans, unpaid principal balance	$ 8,800,000		$ 8,839,000

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Note 5 - Goodwill and Other Intangible Assets (Details Textual) - USD ($)	3 Months Ended
	Mar. 31, 2019	Dec. 31, 2018	May 10, 2018
Goodwill, Ending Balance	$ 1,107,000	$ 1,728,000
Prime Bank [Member]
Goodwill, Ending Balance	1,100,000	$ 1,700,000	$ 2,100,000
Goodwill, Purchase Accounting Adjustments	$ (621,000)

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Note 6 - Deposits - Summary of Deposits (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Non-interest bearing, Balance	$ 82,248	$ 84,471
NOW, Balance	24,924	26,100
Savings, Balance	67,708	81,912
Money market, Balance	88,493	85,197
Certificates of deposit, less than $250,000, Balance	217,701	203,683
Certificates of deposit, $250,000 or greater, Balance	88,953	78,318
Brokered deposits, Balance	182,794	183,600
Interest bearing, Total, Balance	670,573	658,810
Deposits, Balance	$ 752,821	$ 743,281

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Note 6 - Deposits - Contractual Maturities of Certificates of Deposit (Details) $ in Thousands	Mar. 31, 2019 USD ($)
1 year or less	$ 343,517
More than 1 year through 2 years	117,891
More than 2 years through 3 years	24,958
More than 3 years through 4 years	2,655
More than 4 years through 5 years	427
Contractual Maturities of Certificates of Deposit, Total	489,448
Certificates of Deposits Less Than $250,000 [Member]
1 year or less	139,614
More than 1 year through 2 years	68,372
More than 2 years through 3 years	7,972
More than 3 years through 4 years	1,316
More than 4 years through 5 years	427
Contractual Maturities of Certificates of Deposit, Total	217,701
Certificates of Deposit $250,000 or Greater [Member]
1 year or less	58,395
More than 1 year through 2 years	28,199
More than 2 years through 3 years	1,519
More than 3 years through 4 years	840
More than 4 years through 5 years
Contractual Maturities of Certificates of Deposit, Total	88,953
Brokered Deposits [Member]
1 year or less	145,508
More than 1 year through 2 years	21,320
More than 2 years through 3 years	15,467
More than 3 years through 4 years	499
More than 4 years through 5 years
Contractual Maturities of Certificates of Deposit, Total	$ 182,794

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Note 7 - Share-based Compensation and Employee Benefit Plan (Details Textual) - USD ($)		3 Months Ended
	Jan. 04, 2019	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Labor and Related Expense		$ 3,184,000	$ 2,769,000
Common Stock, Dividends, Per Share, Cash Paid		$ 0.01	$ 0.01
Payments of Ordinary Dividends, Common Stock		$ 39,000	$ 38,000
Defined Contribution Plan, Employer Matching Contribution, Percent of Employees' Gross Pay		50.00%
Defined Contribution Plan, Maximum Annual Contributions Per Employee, Percent		6.00%
Defined Contribution Plan, Cost		$ 54,000	$ 51,000
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeited in Period			100
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period		8,936	2,935
2012 Stock Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized		3,000,000
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant		2,870,113
Share-based Payment Arrangement, Expense		$ 48,000	$ 53,000
2012 Stock Plan [Member] | Employee [Member]
Share-based Payment Arrangement, Expense		28,000	35,000
2012 Stock Plan [Member] | Patriot's External Directors [Member]
Share-based Payment Arrangement, Expense		20,000	18,000
2012 Stock Plan [Member] | Patriot's External Directors [Member] | Other Nonoperating Income (Expense) [Member]
Labor and Related Expense		$ 119,000	$ 82,000
2012 Stock Plan [Member] | Phantom Share Units (PSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding, Number, Ending Balance		0		0
2012 Stock Plan [Member] | Restricted Stock [Member]
Share-based Payment Arrangement, Nonvested Award, Excluding Option, Cost Not yet Recognized, Amount		$ 324,000
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition		2 years 109 days
2012 Stock Plan [Member] | Restricted Stock [Member] | Non-executive Employees [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeited in Period		0	100
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period	6,000
2012 Stock Plan [Member] | Restricted Stock [Member] | Share-based Payment Arrangement, Tranche Two [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period		4 years
2012 Stock Plan [Member] | Restricted Stock [Member] | Share-based Payment Arrangement, Tranche Three [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period		5 years
2012 Stock Plan [Member] | Restricted Stock [Member] | Share-based Payment Arrangement, Tranche One [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period		3 years

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Note 7 - Share-based Compensation - Restricted Shares (Details) - Restricted Stock [Member] - $ / shares	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Unvested at beginning of year (in shares)	31,790	25,870
Unvested at beginning of year, weighted average grant date fair value (in dollars per share)	$ 14.06	$ 12.15
Vested (in shares)	(8,936)	(2,935)
Vested, weighted average grant date fair value (in dollars per share)	$ 15.07	$ 14.18
Granted (in shares)		14,199
Granted, weighted average grant date fair value (in dollars per share)		$ 17.93
Forfeited (in shares)		(100)
Forfeited, weighted average grant date fair value (in dollars per share)		$ 15.50
Unvested at end of year (in shares)	22,854	37,034
Unvested at end of year, weighted average grant date fair value (in dollars per share)	$ 13.66	$ 14.20

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Note 8 - Earnings Per Share (Details Textual)	3 Months Ended
	Mar. 31, 2019 shares
Restricted Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	448

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Note 8 - Earnings Per Share - Computation of Earnings Per Share Basic and Diluted (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2019		Mar. 31, 2018
Net income attributable to Common shareholders	$ 323		$ 1,065
Weighted average shares outstanding (in shares)	3,917,312		3,900,513
Basic earnings per share (in dollars per share)	$ 0.08		$ 0.27
Net income attributable to Common shareholders	$ 323		$ 1,065
Effect of potentially dilutive restricted common shares (in shares)			16,601
Weighted average diluted shares outstanding (in shares)	3,917,312	[1]	3,917,114
Diluted earnings per share (in dollars per share)	$ 0.08		$ 0.27

[1] The weighted average diluted shares outstanding did not include 448 anti-dilutive restricted common shares as of March 31, 2019.

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Note 9 - Financial Instruments With Off-balance Sheet Risk (Details Textual)	Mar. 31, 2019 USD ($)
Banks Reserve Based on Analysis in Unfunded Commitments	$ 8,000

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Note 9 - Financial Instruments With Off-balance Sheet Risk - Financial Instruments With Credit Risk (Details) $ in Thousands	Mar. 31, 2019 USD ($)
Commitments to extend credit	$ 126,561
Unused Line of Credit [Member]
Commitments to extend credit	58,521
Undisbursed Construction Loans [Member]
Commitments to extend credit	31,207
Home Equity Lines of Credit [Member]
Commitments to extend credit	19,953
Future Loan Commitments [Member]
Commitments to extend credit	15,727
Financial Standy Letter of Credit [Member]
Commitments to extend credit	$ 1,153

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Note 10 - Regulatory and Operational Matters (Details Textual)	Mar. 31, 2019	Jan. 01, 2019
Capital Required to be Well Capitalized to Risk Weighted Assets	10.00%
Tier One Risk Based Capital Required to be Well Capitalized to Risk Weighted Assets	8.00%
Common Equity, Tier 1, Capital Required for Capital Adequacy to Risk Weighted Assets	6.50%	7.00%
Tier One Leverage Capital Required to be Well Capitalized to Average Assets	5.00%
Capital Conservation Buffer	2.50%
Capital Conservation Buffer Phase In Amount	1.875%
Capital Required for Capital Adequacy to Risk Weighted Assets		10.50%
Tier One Risk Based Capital Required for Capital Adequacy to Risk Weighted Assets		8.50%

XML

Note 10 - Regulatory and Operational Matters - Regulatory Capital Amounts and Ratios (Details) - USD ($) $ in Thousands		Mar. 31, 2019	Jan. 01, 2019	Dec. 31, 2018
Total Capital (to Risk Weighted Assets) To Be Well Capitalized Under Prompt Corrective Action Provisions Ratio		10.00%
Total Capital (to Risk Weighted Assets) For Capital Adequacy Purposes Ratio			10.50%
Tier 1 Capital (to Risk Weighted Assets) To Be Well Capitalized Under Prompt Corrective Action Provisions Ratio		8.00%
Tier 1 Capital (to Risk Weighted Assets) For Capital Adequacy Purposes Ratio			8.50%
Common Equity Tier 1 Capital (to Risk Weighted Assets) For Capital Adequacy Purposes Ratio		6.50%	7.00%
Tier 1 Capital (to Average Assets) To Be Well Capitalized Under Prompt Corrective Action Provisions Ratio		5.00%
Parent Company [Member]
Total Capital (to Risk Weighted Assets) Actual Amount		$ 91,489		$ 90,722
Total Capital (to Risk Weighted Assets) Actual Ratio		10.332%		10.452%
Total Capital (to Risk Weighted Assets) To Be Well Capitalized Under Prompt Corrective Action Provisions Amount	[1]
Total Capital (to Risk Weighted Assets) To Be Well Capitalized Under Prompt Corrective Action Provisions Ratio	[1]
Total Capital (to Risk Weighted Assets) For Capital Adequacy Purposes With Capital Buffer Amount	[2]
Total Capital (to Risk Weighted Assets) For Capital Adequacy Purposes With Capital Buffer Ratio	[2]
Total Capital (to Risk Weighted Assets) For Capital Adequacy Purposes Amount		$ 70,836		$ 69,441
Total Capital (to Risk Weighted Assets) For Capital Adequacy Purposes Ratio		8.00%		8.00%
Tier 1 Capital (to Risk Weighted Assets) Actual Amount		$ 73,654		$ 73,101
Tier 1 Capital (to Risk Weighted Assets) Actual Ratio		8.318%		8.422%
Tier 1 Capital (to Risk Weighted Assets) To Be Well Capitalized Under Prompt Corrective Action Provisions Amount	[1]
Tier 1 Capital (to Risk Weighted Assets) To Be Well Capitalized Under Prompt Corrective Action Provisions Ratio	[1]
Tier 1 Capital (to Risk Weighted Assets) For Capital Adequacy Purposes With Capital Buffer Amount	[2]
Tier 1 Capital (to Risk Weighted Assets) For Capital Adequacy Purposes With Capital Buffer Ratio	[2]
Tier 1 Capital (to Risk Weighted Assets) For Capital Adequacy Purposes Amount		$ 53,127		$ 52,081
Tier 1 Capital (to Risk Weighted Assets) For Capital Adequacy Purposes Ratio		6.00%		6.00%
Common Equity Tier 1 Capital (to Risk Weighted Assets) Actual Amount		$ 65,654		$ 65,101
Common Equity Tier 1 Capital (to Risk Weighted Assets) Actual Ratio		7.415%		7.50%
Common Equity Tier 1 Capital (to Risk Weighted Assets) To Be Well Capitalized Under Prompt Corrective Action Provisions Amount	[1]
Common Equity Tier 1 Capital (to Risk Weighted Assets) To Be Well Capitalized Under Prompt Corrective Action Provisions Ratio	[1]
Common Equity Tier 1 Capital (to Risk Weighted Assets) For Capital Adequacy Purposes With Capital Buffer Amount	[2]
Common Equity Tier 1 Capital (to Risk Weighted Assets) For Capital Adequacy Purposes With Capital Buffer Ratio	[2]
Common Equity Tier 1 Capital (to Risk Weighted Assets) For Capital Adequacy Purposes Amount		$ 39,845		$ 39,061
Common Equity Tier 1 Capital (to Risk Weighted Assets) For Capital Adequacy Purposes Ratio		4.50%		4.50%
Tier 1 Capital (to Average Assets) Actual Amount		$ 73,654		$ 73,101
Tier 1 Capital (to Average Assets) Actual Ratio		7.721%		7.842%
Tier 1 Capital (to Average Assets) To Be Well Capitalized Under Prompt Corrective Action Provisions Amount	[1]
Tier 1 Capital (to Average Assets) To Be Well Capitalized Under Prompt Corrective Action Provisions Ratio	[1]
Tier 1 Capital (to Average Assets) For Capital Adequacy Purposes Amount		$ 38,160		$ 37,288
Tier 1 Capital (to Average Assets) For Capital Adequacy Purposes Ratio		4.00%		4.00%
Subsidiaries [Member]
Total Capital (to Risk Weighted Assets) Actual Amount		$ 101,239		$ 99,341
Total Capital (to Risk Weighted Assets) Actual Ratio		11.908%		11.50%
Total Capital (to Risk Weighted Assets) To Be Well Capitalized Under Prompt Corrective Action Provisions Amount	[1]	$ 85,016		$ 86,384
Total Capital (to Risk Weighted Assets) To Be Well Capitalized Under Prompt Corrective Action Provisions Ratio	[1]	10.00%		10.00%
Total Capital (to Risk Weighted Assets) For Capital Adequacy Purposes With Capital Buffer Amount	[2]	$ 89,267		$ 85,304
Total Capital (to Risk Weighted Assets) For Capital Adequacy Purposes With Capital Buffer Ratio	[2]	10.50%		9.875%
Total Capital (to Risk Weighted Assets) For Capital Adequacy Purposes Amount		$ 68,013		$ 69,107
Total Capital (to Risk Weighted Assets) For Capital Adequacy Purposes Ratio		8.00%		8.00%
Tier 1 Capital (to Risk Weighted Assets) Actual Amount		$ 93,404		$ 91,720
Tier 1 Capital (to Risk Weighted Assets) Actual Ratio		10.987%		10.618%
Tier 1 Capital (to Risk Weighted Assets) To Be Well Capitalized Under Prompt Corrective Action Provisions Amount	[1]	$ 68,013		$ 69,107
Tier 1 Capital (to Risk Weighted Assets) To Be Well Capitalized Under Prompt Corrective Action Provisions Ratio	[1]	8.00%		8.00%
Tier 1 Capital (to Risk Weighted Assets) For Capital Adequacy Purposes With Capital Buffer Amount	[2]	$ 72,264		$ 68,027
Tier 1 Capital (to Risk Weighted Assets) For Capital Adequacy Purposes With Capital Buffer Ratio	[2]	8.50%		7.875%
Tier 1 Capital (to Risk Weighted Assets) For Capital Adequacy Purposes Amount		$ 51,010		$ 51,830
Tier 1 Capital (to Risk Weighted Assets) For Capital Adequacy Purposes Ratio		6.00%		6.00%
Common Equity Tier 1 Capital (to Risk Weighted Assets) Actual Amount		$ 93,404		$ 91,720
Common Equity Tier 1 Capital (to Risk Weighted Assets) Actual Ratio		10.987%		10.618%
Common Equity Tier 1 Capital (to Risk Weighted Assets) To Be Well Capitalized Under Prompt Corrective Action Provisions Amount	[1]	$ 55,260		$ 56,149
Common Equity Tier 1 Capital (to Risk Weighted Assets) To Be Well Capitalized Under Prompt Corrective Action Provisions Ratio	[1]	6.50%		6.50%
Common Equity Tier 1 Capital (to Risk Weighted Assets) For Capital Adequacy Purposes With Capital Buffer Amount	[2]	$ 59,511		$ 55,069
Common Equity Tier 1 Capital (to Risk Weighted Assets) For Capital Adequacy Purposes With Capital Buffer Ratio	[2]	7.00%		6.375%
Common Equity Tier 1 Capital (to Risk Weighted Assets) For Capital Adequacy Purposes Amount		$ 38,257		$ 38,873
Common Equity Tier 1 Capital (to Risk Weighted Assets) For Capital Adequacy Purposes Ratio		4.50%		4.50%
Tier 1 Capital (to Average Assets) Actual Amount		$ 93,404		$ 91,720
Tier 1 Capital (to Average Assets) Actual Ratio		9.789%		9.838%
Tier 1 Capital (to Average Assets) To Be Well Capitalized Under Prompt Corrective Action Provisions Amount	[1]	$ 47,707		$ 46,617
Tier 1 Capital (to Average Assets) To Be Well Capitalized Under Prompt Corrective Action Provisions Ratio	[1]	5.00%		5.00%
Tier 1 Capital (to Average Assets) For Capital Adequacy Purposes Amount		$ 38,166		$ 37,294
Tier 1 Capital (to Average Assets) For Capital Adequacy Purposes Ratio		4.00%		4.00%

[1] Designation as "Well Capitalized" does not apply to bank holding companies - the Company. Such categorization of capital adequacy only applies to insured depository institutions - the Bank..

[2] The Capital Conservation Buffer implemented by the FDIC began to be phased in beginning January 1, 2016. It was not applicable to periods prior to that date and does not apply to bank holding companies - the Company.

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Note 11 - Fair Value and Interest Rate Risk (Details Textual) - USD ($)	Mar. 31, 2019	Dec. 31, 2018
Other Investments, Total	$ 4,963,000	$ 4,963,000
Solomon Hess SBA Loan Fund [Member]
Other Investments, Total	4,450,000
Bank Time Deposits [Member]
Other Investments, Total	$ 513,000
Federal Home Loan Bank Certificates and Obligations (FHLB) [Member]
Stock Value Par or Stated Value per Share	$ 100

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Note 11 - Fair Value and Interest Rate Risk - Financial Assets and Liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Fair value, total	$ 40,275	$ 39,496
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Fair value, total	19,976	20,473
Corporate Debt Securities [Member]
Fair value, total	12,828	12,974
Subordinated Notes [Member]
Fair value, total	5,980	4,564
Reported Value Measurement [Member]
Financial assets, total	894,026	895,509
Financial liabilities, total	876,140	876,862
Estimate of Fair Value Measurement [Member]
Financial assets, total	884,836	885,323
Financial liabilities, total	877,544	875,279
Fair Value, Inputs, Level 1 [Member] | Reported Value Measurement [Member] | Brokered Deposits [Member]
Deposits	182,794	183,600
Fair Value, Inputs, Level 1 [Member] | Reported Value Measurement [Member] | Cash and Due from Banks [Member]
Cash and cash equivalents	6,661	7,381
Fair Value, Inputs, Level 1 [Member] | Reported Value Measurement [Member] | Interest-bearing Deposits [Member]
Cash and cash equivalents	49,971	59,056
Fair Value, Inputs, Level 1 [Member] | Estimate of Fair Value Measurement [Member] | Brokered Deposits [Member]
Deposits	182,804	183,120
Fair Value, Inputs, Level 1 [Member] | Estimate of Fair Value Measurement [Member] | Cash and Due from Banks [Member]
Cash and cash equivalents	6,661	7,381
Fair Value, Inputs, Level 1 [Member] | Estimate of Fair Value Measurement [Member] | Interest-bearing Deposits [Member]
Cash and cash equivalents	49,971	59,056
Fair Value, Inputs, Level 2 [Member] | Reported Value Measurement [Member]
Fair value, total	1,491	1,485
Other investments	4,963	4,963
Federal Reserve Bank stock	2,892	2,866
Federal Home Loan Bank stock	4,513	4,928
Accrued interest receivable	3,621	3,766
Interest swap receivable	417	286
FHLB borrowings	90,000	100,000
Senior notes	11,796	11,778
Subordinated debt	9,731	9,723
Junior subordinated debt owed to unconsolidated trust	8,096	8,094
Accrued interest payable	1,854	1,605
Interest swap liability	417	286
Fair Value, Inputs, Level 2 [Member] | Reported Value Measurement [Member] | Demand Deposits [Member]
Deposits	82,248	84,471
Fair Value, Inputs, Level 2 [Member] | Reported Value Measurement [Member] | Savings Deposits [Member]
Deposits	67,708	81,912
Fair Value, Inputs, Level 2 [Member] | Reported Value Measurement [Member] | Money Market Deposits [Member]
Deposits	88,493	85,197
Fair Value, Inputs, Level 2 [Member] | Reported Value Measurement [Member] | Negotiable Order of Withdrawal (NOW) Accounts [Member]
Deposits	24,924	26,100
Fair Value, Inputs, Level 2 [Member] | Reported Value Measurement [Member] | Time Deposits [Member]
Deposits	306,654	282,001
Fair Value, Inputs, Level 2 [Member] | Reported Value Measurement [Member] | Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Fair value, total	19,976	20,473
Fair Value, Inputs, Level 2 [Member] | Reported Value Measurement [Member] | Corporate Debt Securities [Member]
Fair value, total	12,828	12,974
Fair Value, Inputs, Level 2 [Member] | Reported Value Measurement [Member] | Subordinated Notes [Member]
Fair value, total	5,980	4,564
Fair Value, Inputs, Level 2 [Member] | Estimate of Fair Value Measurement [Member]
Fair value, total	1,491	1,485
Other investments	4,963	4,963
Federal Reserve Bank stock	2,892	2,866
Federal Home Loan Bank stock	4,513	4,928
Accrued interest receivable	3,621	3,766
Interest swap receivable	417	286
FHLB borrowings	92,509	101,369
Senior notes	11,433	11,293
Subordinated debt	9,490	9,348
Junior subordinated debt owed to unconsolidated trust	8,096	8,094
Accrued interest payable	1,854	1,605
Interest swap liability	417	286
Fair Value, Inputs, Level 2 [Member] | Estimate of Fair Value Measurement [Member] | Demand Deposits [Member]
Deposits	82,248	84,471
Fair Value, Inputs, Level 2 [Member] | Estimate of Fair Value Measurement [Member] | Savings Deposits [Member]
Deposits	67,708	81,912
Fair Value, Inputs, Level 2 [Member] | Estimate of Fair Value Measurement [Member] | Money Market Deposits [Member]
Deposits	88,493	85,197
Fair Value, Inputs, Level 2 [Member] | Estimate of Fair Value Measurement [Member] | Negotiable Order of Withdrawal (NOW) Accounts [Member]
Deposits	24,924	26,100
Fair Value, Inputs, Level 2 [Member] | Estimate of Fair Value Measurement [Member] | Time Deposits [Member]
Deposits	306,260	280,538
Fair Value, Inputs, Level 2 [Member] | Estimate of Fair Value Measurement [Member] | Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Fair value, total	19,976	20,473
Fair Value, Inputs, Level 2 [Member] | Estimate of Fair Value Measurement [Member] | Corporate Debt Securities [Member]
Fair value, total	12,828	12,974
Fair Value, Inputs, Level 2 [Member] | Estimate of Fair Value Measurement [Member] | Subordinated Notes [Member]
Fair value, total	5,980	4,564
Fair Value, Inputs, Level 3 [Member] | Reported Value Measurement [Member]
Loans receivable, net	780,713	772,767
Note payable	1,339	1,388
Contingent consideration liability	86	707
Fair Value, Inputs, Level 3 [Member] | Estimate of Fair Value Measurement [Member]
Loans receivable, net	771,523	762,581
Note payable	1,222	1,239
Contingent consideration liability	$ 86	$ 707

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Note 11 - Fair Value and Interest Rate Risk - Financial Assets Measured at Fair Value on a Recurring Basis (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Available-for-sale securities	$ 40,275	$ 39,496
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Available-for-sale securities	19,976	20,473
Corporate Debt Securities [Member]
Available-for-sale securities	12,828	12,974
Subordinated Notes [Member]
Available-for-sale securities	5,980	4,564
US Treasury Securities [Member]
Available-for-sale securities	1,491	1,485
Fair Value, Recurring [Member]
Available-for-sale securities	40,275	39,496
Impaired PCI Loans, net	439	615
Contingent consideration liability	86	707
Interest swap receivable	417	286
Interest swap liability	417	286
Fair Value, Recurring [Member] | Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Available-for-sale securities	19,976	20,473
Fair Value, Recurring [Member] | Corporate Debt Securities [Member]
Available-for-sale securities	12,828	12,974
Fair Value, Recurring [Member] | Subordinated Notes [Member]
Available-for-sale securities	5,980	4,564
Fair Value, Recurring [Member] | US Treasury Securities [Member]
Available-for-sale securities	1,491	1,485
Fair Value, Inputs, Level 1 [Member] | Fair Value, Recurring [Member]
Available-for-sale securities
Impaired PCI Loans, net
Contingent consideration liability
Interest swap receivable
Interest swap liability
Fair Value, Inputs, Level 1 [Member] | Fair Value, Recurring [Member] | Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Available-for-sale securities
Fair Value, Inputs, Level 1 [Member] | Fair Value, Recurring [Member] | Corporate Debt Securities [Member]
Available-for-sale securities
Fair Value, Inputs, Level 1 [Member] | Fair Value, Recurring [Member] | Subordinated Notes [Member]
Available-for-sale securities
Fair Value, Inputs, Level 1 [Member] | Fair Value, Recurring [Member] | US Treasury Securities [Member]
Available-for-sale securities
Fair Value, Inputs, Level 2 [Member] | Fair Value, Recurring [Member]
Available-for-sale securities	40,275	39,496
Impaired PCI Loans, net
Contingent consideration liability
Interest swap receivable	417	286
Interest swap liability	417	286
Fair Value, Inputs, Level 2 [Member] | Fair Value, Recurring [Member] | Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Available-for-sale securities	19,976	20,473
Fair Value, Inputs, Level 2 [Member] | Fair Value, Recurring [Member] | Corporate Debt Securities [Member]
Available-for-sale securities	12,828	12,974
Fair Value, Inputs, Level 2 [Member] | Fair Value, Recurring [Member] | Subordinated Notes [Member]
Available-for-sale securities	5,980	4,564
Fair Value, Inputs, Level 2 [Member] | Fair Value, Recurring [Member] | US Treasury Securities [Member]
Available-for-sale securities	1,491	1,485
Fair Value, Inputs, Level 3 [Member] | Fair Value, Recurring [Member]
Available-for-sale securities
Impaired PCI Loans, net	439	615
Contingent consideration liability	86	707
Interest swap receivable
Interest swap liability
Fair Value, Inputs, Level 3 [Member] | Fair Value, Recurring [Member] | Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Available-for-sale securities
Fair Value, Inputs, Level 3 [Member] | Fair Value, Recurring [Member] | Corporate Debt Securities [Member]
Available-for-sale securities
Fair Value, Inputs, Level 3 [Member] | Fair Value, Recurring [Member] | Subordinated Notes [Member]
Available-for-sale securities
Fair Value, Inputs, Level 3 [Member] | Fair Value, Recurring [Member] | US Treasury Securities [Member]
Available-for-sale securities

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Note 11 - Fair Value and Interest Rate Risk - Quantitative Information About Level 3 Fair Value Measurements (Details) - Fair Value, Inputs, Level 3 [Member] - Fair Value of Collateral Approach [Member] $ in Thousands	Mar. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)
Impaired loans, net	$ 28,426	$ 19,673
Other Real Estate Owned	$ 2,945	$ 2,945
Other Real Estate Owned	0.14	0.14
Minimum [Member]
Impaired loans, net	0.08	0.08
Maximum [Member]
Impaired loans, net	0.21	0.21

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Note 12 - Derivatives (Details Textual) - Interest Rate Swap [Member] - Not Designated as Hedging Instrument [Member]	Mar. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)	Nov. 30, 2018
Derivative, Number of Instruments Held, Total			2
Derivative, Collateral, Right to Reclaim Cash	$ 450,000	$ 300,000

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Note 12 - Derivatives - Schedule of Derivative Instruments (Details) - Interest Rate Swap [Member] - Not Designated as Hedging Instrument [Member] - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2019	Dec. 31, 2018
Derivative Asset, Notional Amount	$ 5,000	$ 5,000
Derivative, Maturity (Year)	10 years 182 days	10 years 182 days
Derivative, Fixed Rate	5.25%	5.25%
Interest swap receivable		$ 286
Derivative Liability, Notional Amount	$ 5,000	5,000
Derivative Liability, Fair Value		$ (286)
Other Assets [Member]
Interest swap receivable	417
Other Liabilities [Member]
Derivative Liability, Fair Value	$ (417)
London Interbank Offered Rate (LIBOR) [Member]
Derivative, Variable Rate	1.96%	1.96%

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Note 13 - Leases (Details Textual) $ in Thousands	Mar. 31, 2019 USD ($)	Jan. 01, 2019 USD ($)
Number of Operating Leases, Lessee	7
Number of Operating Leases in Bank Branch Locations, Lessee	4
Number of Operating Leases in Administrative and Operational Spaces, Lessee	2
Number of Operating Leases in Equipment Leases, Lessee	1
Operating Lease, Right-of-Use Asset	$ 3,305
Operating Lease, Liability, Total	$ 3,361
Accounting Standards Update 2016-02 [Member]
Operating Lease, Right-of-Use Asset		$ 3,400
Operating Lease, Liability, Total		$ 3,400

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Note 13 - Leases - Maturity of Operating Lease Liabilities (Details) $ in Thousands	Mar. 31, 2019 USD ($)
2019	$ 343
2020	464
2021	474
2022	435
2023	397
Thereafter	2,046
Total undiscounted lease payments	4,159
Less imputed interest	(798)
Present value of operating lease liabilities	3,361
Operating lease right-of-use asset	$ 3,305

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Note 13 - Leases - Lease Cost and Information (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2019 USD ($)
Operating lease cost	$ 122
Short-term lease cost	25
Operating cash flows from operating leases	$ 114
Weighted -average remaining lease term - operating leases (in years) (Year)	11 years
Weighted -average discount rate - operating leases	3.63%