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 September 30, 2020

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 November 10, 2020, there were 3,937,041 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 Operations (Unaudited)	4
Consolidated Statements of Comprehensive (Loss) Income (Unaudited)	5
Consolidated Statements of Shareholder's Equity (Unaudited)	6
Consolidated Statements of Cash Flows (Unaudited)	8
Notes to Consolidated Financial Statements (Unaudited)	10
Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations	43
Item 3: Quantitative and Qualitative Disclosures about Market Risk	59
Item 4: Disclosure Controls and Procedures	61
PART II - OTHER INFORMATION	62
Item 1:      Legal Proceedings	62
Item 5:      Other Information	62
Item 6:      Exhibits	63
SIGNATURES	64

2

PART I- FINANCIAL INFORMATION

Item 1: Consolidated Financial Statements

PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited)

(In thousands, except share data)	September 30, 2020			December 31, 2019
Assets
Cash and due from banks:
Noninterest bearing deposits and cash	$	3,231		$	2,693
Interest bearing deposits		46,405			36,711
Total cash and cash equivalents		49,636			39,404
Investment securities:
Available-for-sale securities, at fair value		47,823			48,317
Other investments, at cost		4,450			4,450
Total investment securities		52,273			52,767
Federal Reserve Bank stock, at cost		2,783			2,897
Federal Home Loan Bank stock, at cost		4,503			4,477
Loans receivable (net of allowance for loan losses: 2020: $11,171 and 2019: $10,115)		740,127			802,049
Loans held for sale		6,824			15,282
Accrued interest and dividends receivable		6,834			3,603
Premises and equipment, net		33,632			34,568
Other real estate owned		1,954			2,400
Deferred tax asset, net		12,066			11,133
Goodwill		1,107			1,107
Core deposit intangible, net		567			623
Other assets		10,623			9,526
Total assets	$	922,929		$	979,836
Liabilities
Deposits:
Noninterest bearing deposits	$	161,871		$	88,135
Interest bearing deposits		565,560			681,400
Total deposits		727,431			769,535
Federal Home Loan Bank and correspondent bank borrowings		90,000			100,000
Senior notes, net		11,909			11,853
Subordinated debt, net		9,774			9,752
Junior subordinated debt owed to unconsolidated trust, net		8,108			8,102
Note payable		1,044			1,193
Advances from borrowers for taxes and insurance		2,492			3,681
Accrued expenses and other liabilities		7,634			8,726
Total liabilities		858,392			912,842
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; As of September 30, 2020: 4,010,782 shares issued; 3,937,041 shares outstanding; As of December 31, 2019: 4,004,410 shares issued; 3,930,669 shares outstanding		106,293			106,170
Accumulated deficit		(41,210	)		(38,773	)
Accumulated other comprehensive loss		(546	)		(403	)
Total shareholders' equity		64,537			66,994
Total liabilities and shareholders' equity	$	922,929		$	979,836

See Accompanying Notes to Consolidated Financial Statements.

3

PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

	Three Months Ended September 30,					Nine Months Ended September 30,
(In thousands, except per share amounts)	2020			2019		2020			2019
Interest and Dividend Income
Interest and fees on loans	$	8,578		$	10,245	$	27,722		$	30,345
Interest on investment securities		340			430		1,134			1,207
Dividends on investment securities		85			112		313			344
Other interest income		28			225		187			795
Total interest and dividend income		9,031			11,012		29,356			32,691
Interest Expense
Interest on deposits		2,028			3,655		8,020			10,452
Interest on Federal Home Loan Bank borrowings		628			602		1,963			1,467
Interest on senior debt		229			229		686			686
Interest on subordinated debt		235			277		756			845
Interest on note payable and other		5			6		15			20
Total interest expense		3,125			4,769		11,440			13,470
Net interest income		5,906			6,243		17,916			19,221
Provision for Loan Losses		85			100		1,799			3,202
Net interest income after provision for loan losses		5,821			6,143		16,117			16,019
Non-interest Income
Loan application, inspection and processing fees		54			32		147			74
Deposit fees and service charges		73			123		253			366
Gains on sales of loans		380			188		464			864
Rental income		131			137		393			459
Other income		66			91		257			312
Total non-interest income		704			571		1,514			2,075
Non-interest Expense
Salaries and benefits		3,460			3,480		10,966			10,272
Occupancy and equipment expense		810			937		2,680			2,598
Data processing expense		433			357		1,194			1,088
Professional and other outside services		627			721		2,137			2,233
Project expenses, net		6			212		154			277
Advertising and promotional expense		107			63		377			255
Loan administration and processing expense		75			44		135			101
Regulatory assessments		355			152		1,159			862
Insurance expense, net		67			65		215			160
Communications, stationary and supplies		118			118		371			383
Other operating expense		560			530		1,491			1,626
Total non-interest expense		6,618			6,679		20,879			19,855
(Loss) income before income taxes		(93	)		35		(3,248	)		(1,761	)
(Benefit) provision for income taxes		(6	)		8		(811	)		(456	)
Net (loss) income	$	(87	)	$	27	$	(2,437	)	$	(1,305	)
Basic (loss) earnings per share	$	(0.02	)	$	0.01	$	(0.62	)	$	(0.33	)
Diluted (loss) earnings per share	$	(0.02	)	$	0.01	$	(0.62	)	$	(0.33	)

See Accompanying Notes to Consolidated Financial Statements.

4

PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (Unaudited)

(In thousands)	Three Months Ended September 30,						Nine Months Ended Septmber 30,
	2020			2019			2020			2019
Net (loss) income	$	(87	)	$	27		$	(2,437	)	$	(1,305	)
Other comprehensive income (loss)
Unrealized holding gain (loss) on securities		553			(215	)		(193	)		132
Income tax effect		(143	)		57			50			(23	)
Total other comprehensive income (loss)		410			(158	)		(143	)		109
Comprehensive income (loss)	$	323		$	(131	)	$	(2,580	)	$	(1,196	)

See Accompanying Notes to Consolidated Financial Statements.

5

PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (Unaudited)

			Three Months Ended September 30, 2020
(In thousands, except shares)	Number of Shares		Common Stock		Accumulated Deficit			Accumulated Other Comprehensive (Loss) Income			Total
Balance at June 30, 2020		3,935,841	$	106,251	$	(41,123	)	$	(956	)	$	64,172
Comprehensive income:
Net loss		-		-		(87	)		-			(87	)
Unrealized holding gain on available-for-sale securities, net of tax		-		-		-			410			410
Total comprehensive income		-		-		(87	)		410			323
Share-based compensation expense		-		42		-			-			42
Vesting of restricted stock		1,200		-		-			-			-
Balance at September 30, 2020		3,937,041	$	106,293	$	(41,210	)	$	(546	)	$	64,537

			Nine Months Ended September 30, 2020
(In thousands, except shares)	Number of Shares		Common Stock		Accumulated Deficit			Accumulated Other Comprehensive (Loss) Income			Total
Balance at December 31, 2019		3,930,669	$	106,170	$	(38,773	)	$	(403	)	$	66,994
Comprehensive loss:
Net loss		-		-		(2,437	)		-			(2,437	)
Unrealized holding loss on available-for-sale securities, net of tax		-		-		-			(143	)		(143	)
Total comprehensive loss		-		-		(2,437	)		(143	)		(2,580	)
Share-based compensation expense		-		123		-			-			123
Vesting of restricted stock		6,372		-		-			-			-
Balance at September 30, 2020		3,937,041	$	106,293	$	(41,210	)	$	(546	)	$	64,537

See Accompanying Notes to Consolidated Financial Statements.

6

PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (Unaudited) (Continued)

			Three Month Ended September 30, 2019
(In thousands, except shares)	Number of Shares		Common Stock		Accumulated Deficit			Accumulated Other Comprehensive (Loss) Income			Total
Balance at June 30, 2019		3,922,610	$	106,059	$	(37,210	)	$	(559	)	$	68,290
Comprehensive (loss) income:
Net income		-		-		27			-			27
Unrealized holding loss on available-for-sale securities, net of tax		-		-		-			(158	)		(158	)
Total comprehensive loss		-		-		27			(158	)		(131	)
Common stock dividends		-		-		(39	)		-			(39	)
Share-based compensation expense		-		59		-			-			59
Vesting of restricted stock		2,392		-		-			-			-
Balance at September 30, 2019		3,925,002	$	106,118	$	(37,222	)	$	(717	)	$	68,179

			Nine Month Ended September 30, 2019
(In thousands, except shares)	Number of Shares		Common Stock		Accumulated Deficit			Accumulated Other Comprehensive (Loss) Income			Total
Balance at December 31, 2018		3,910,674	$	105,956	$	(35,790	)	$	(826	)	$	69,340
Comprehensive (loss) income:
Net loss		-		-		(1,305	)		-			(1,305	)
Unrealized holding gain on available-for-sale securities, net of tax		-		-		-			109			109
Total comprehensive loss		-		-		(1,305	)		109			(1,196	)
Common stock dividends		-		-		(116	)		-			(116	)
Share-based compensation expense		-		162		-			-			162
Cumulative effect of adopting ASU 2016-02		-		-		(11	)		-			(11	)
Vesting of restricted stock		14,328		-		-			-			-
Balance at September 30, 2019		3,925,002	$	106,118	$	(37,222	)	$	(717	)	$	68,179

See Accompanying Notes to Consolidated Financial Statements.

7

PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(In thousands)	Nine Months Ended September 30,
	2020			2019
Cash Flows from Operating Activities:
Net loss	$	(2,437	)	$	(1,305	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Amortization (accretion) of investment premiums (discounts), net		168			(20	)
Amortization and accretion of purchase loan premiums and discounts		589			702
Amortization of debt issuance costs		84			84
Amortization of core deposit intangible		56			56
Amortization of servicing assets of sold SBA loans		15			10
Provision for loan losses		1,799			3,202
Depreciation and amortization		1,144			1,201
Share-based compensation		123			162
Increase in deferred income taxes		(883	)		(667	)
Originations of SBA loans held for sale		(1,694	)		(15,208	)
Proceeds from sale of SBA loans held for sale		6,096			11,969
Gains on sale of SBA loans held for sale, net		(464	)		(864	)
Net loss on sale of other real estate owned		21			94
Changes in assets and liabilities:
(Increase) decrease in accrued interest and dividends receivable		(3,231	)		228
Increase in other assets		(674	)		(1,779	)
(Decrease) increase in accrued expenses and other liabilities		(1,465	)		700
Net cash used in operating activities		(753	)		(1,435	)
Cash Flows from Investing Activities:
Principal repayments on available-for-sale securities		6,674			2,588
Purchases of available-for-sale securities		(6,541	)		(12,997	)
Redemption (purchases) of Federal Reserve Bank stock		114			(23	)
(Purchases) redemptions of Federal Home Loan Bank stock		(26	)		451
Decrease in originated loans receivable, net		95,464			4,552
Purchases of loans receivable		(31,525	)		(28,213	)
Purchases of premises and equipment		(158	)		(525	)
Proceeds from sale of other real estate owned		425			897
Refund of escrow deposit related to acquisition activity		-			500
Net cash provided by (used in) investing activities		64,427			(32,770	)
Cash Flows from Financing Activities:
(Decrease) increase in deposits, net		(92,102	)		18,775
Purchases of deposits		49,998			-
Repayments of FHLB borrowings		(10,000	)		-
Principal repayments of note payable		(149	)		(146	)
Decrease in advances from borrowers for taxes and insurance		(1,189	)		(744	)
Dividends paid on common stock		-			(116	)
Net cash (used in) provided by financing activities		(53,442	)		17,769
Net increase (decrease) in cash and cash equivalents		10,232			(16,436	)
Cash and cash equivalents at beginning of period		39,404			66,437
Cash and cash equivalents at end of period	$	49,636		$	50,001

8

PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Continued)

(In thousands)	Nine Months Ended September 30,
	2020			2019
Supplemental Disclosures of Cash Flow Information:
Cash paid for interest	$	12,237		$	12,996
Cash (refund) paid for income taxes, net	$	(193	)	$	22
Non-cash transactions:
Purchase of premises and equipment	$	50		$	124
Increase in accrued expense and other liabilities	$	(50	)	$	(124	)
Increase in interest rate swaps assets	$	609		$	-
Increase in interest rate swaps liabilities	$	(609	)	$	-
Transfers of loans receivable to other real estate owned	$	-		$	446
Transfers of SBA loans held for sale to loans receivable	$	9,542		$	-
Transfers of loans receivable to loans held for sale	$	5,022		$	-
Operating lease right-of-use assets	$	57		$	3,267
Operating lease liabilities	$	(57	)	$	(3,364	)
Accrued liability for OREO sale	$	-		$	86
Capitalized servicing assets	$	115		$	169
Business Combination Non-Cash Disclosures:
Contingent liability assumed in business combination	$	-		$	621

See Accompanying Notes to Consolidated Financial Statements.

9

PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIES

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 subsidiaries Patriot Bank, N.A. (the “Bank”) , Patriot National Statutory Trust I and PinPat Acquisition Corporation (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, 2019.

The consolidated balance sheet at December 31, 2019 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.

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, the impairment of goodwill, the valuation of derivatives, and the valuation of servicing assets as certain of the Company’s more significant accounting policies and estimates, in that they are critical to the presentation of the Company’s consolidated 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 the Company’s consolidated financial statements.

Reclassifications:

Certain amounts appearing in the financial statements and notes thereto for prior periods have been reclassified to conform with the current presentation. The reclassifications had no effect on net income or stockholders’ equity as previously reported.

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 and nine months ended September 30, 2020 are not necessarily indicative of the results of operations that may be expected for the remainder of 2020.

COVID-19 Impact

In March 2020, the World Health Organization declared novel coronavirus disease 2019 ("COVID-19") as a global pandemic. The COVID-19 pandemic has negatively impacted the global and U.S. economies. Many businesses in the U.S., including those in the markets we serve, were required to close, causing a significant increase in unemployment and loss of revenue.

The consolidated financial statements reflect estimates and assumptions that affect the reported amounts of assets and liabilities, including the amount of the allowance for loan losses. The assumptions and estimates used in the financial statements were impacted by the COVID-19 pandemic. The COVID-19 pandemic did have an adverse impact on our earnings and resulted in an increase to the allowance for loan losses when compared to the same period in 2019.

We are unable to estimate the full impact of COVID-19 on our business and operations at this time. The extent of such impact will depend on future developments, which are highly uncertain, including when COVID-19 can be controlled and abated and when and how the economy may be reopened. The pandemic could cause us to experience higher credit losses in our loan portfolio, impairment of our goodwill, reduced demand for our products and services, or other negative impacts on our financial position, results of operations, and prospects.

On March 27, 2020, the President of the United States signed into law the Coronavirus Aid, Relief and Economic Security (“CARES”) Act in response to the coronavirus pandemic. This legislation aims at providing relief for individuals and businesses that have been negatively impacted by the coronavirus pandemic.

10

PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIES

Notes to consolidated financial statements (Unaudited)

The CARES Act includes a provision for the Company to opt out of applying the “troubled-debt restructuring” (“TDR”) accounting guidance in ASC 310-40 for certain loan modifications. Loan modifications made between March 1, 2020 and the earlier of i) December 30, 2020 or ii) 60 days after the President declares a termination of the COVID-19 national emergency are eligible for this relief if the related loans were not more than 30 days past due as of December 31, 2019. The Company has assessed which loans qualify for this treatment. The CARES Act also permits the Bank to continue to accrue interest on loans that have received deferral treatment as a result of the pandemic. In addition, on April 7, 2020, a group of banking regulatory agencies issued a revised interagency statement that offers practical expedients for evaluating whether COVID-19 loan modifications are TDRs.

On August 3, 2020, the Federal Financial Institutions Council issued a joint statement, encouraging financial institutions to consider prudent accommodation options to mitigate losses for the borrower and financial institution beyond the initial accommodation period. The joint statement specifically encourages financial institutions to provide consumers with available options for repaying missed payments at the end of their accommodation to avoid delinquencies, as well as options for changes to terms to support sustainable and affordable payments for the long term. These considerations should also include prudent risk management practices at the financial institution based on the credit risk of the borrower. Patriot is actively working with its customers to address any further accommodation needs while carefully evaluating the associated credit risk of the borrowers.

Note 2. Accounting Policies

Please refer to the summary of Significant Accounting Policies included in the Company’s 2019 Annual Report on Form 10-K for a list of all policies in effect as of December 31, 2019. The below summary is intended to provide updates or new policies required as a result of a new accounting standard or a change to the Company’s operations or assets that require a new or amended policy.

Recently Adopted and Issued Accounting Standards

Accounting Standards Adopted During 2020

Effective January 1, 2020, the following new Accounting Standards Updates (ASU) were adopted by the Company:

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 related to 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. The adoption of ASU 2018-13 did not have any impact on our consolidated financial statements.

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PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIES

Notes to consolidated financial statements (Unaudited)

ASU 2018-15

In August 2018, the FASB issued ASU No. 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40) - Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. ASU 2018-15 clarifies certain aspects of ASU 2015-05, “Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement,” which was issued in April 2015. Specifically, ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). For public business entities, the ASU was effective for interim and annual reporting periods beginning after December 15, 2019, with early adoption permitted.

The amendments in this update align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal use software license). The accounting for the service element of a hosting arrangement that is a service contract is not affected by the amendments in this update.

The amendments in this ASU also require the entity (customer) to expense the capitalized implementation costs of a hosting arrangement that is a service contract over the term of the hosting arrangement. The term of the hosting arrangement includes the non-cancellable period of the arrangement plus periods covered by (1) an option to extend the arrangement if the customer is reasonably certain to exercise that option, (2) an option to terminate the arrangement if the customer is reasonably certain not to exercise the termination option, and (3) an option to extend (or not to terminate) the arrangement in which exercise of the option is in the control of the vendor. The entity also is required to apply the existing impairment guidance in Subtopic 350-40 to the capitalized implementation costs as if the costs were long-lived assets.

The amendments in this ASU also require the entity to present the expense related to the capitalized implementation costs in the same line item in the statement of income as the fees associated with the hosting element (service) of the arrangement and classify payments for capitalized implementation costs in the statement of cash flows in the same manner as payments made for fees associated with the hosting element. The entity is also required to present the capitalized implementation costs in the consolidated balance sheets in the same line item that a repayment for the fees of the associated hosting arrangement would be presented.

The adoption of ASU 2018-15 did not have a significant impact on our consolidated financial 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. In November 2019, the FASB issued ASU 2019-10, which amends the effective date of ASC 326 for smaller reporting companies, as defined by the SEC, and other non-SEC reporting entities, and delays the effective date to fiscal years beginning after December 31, 2022, including interim periods within those fiscal periods. As the Company is a small reporting company, the delay will be applicable to the Company. Management is currently evaluating the impact that the standard will have on its consolidated financial statements.

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PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIES

Notes to consolidated financial statements (Unaudited)

ASU 2019-12

ASU 2019-12, “Income Taxes (Topic 740) - Simplifying the Accounting for Income Taxes.” The guidance issued in this update simplifies the accounting for income taxes by eliminating certain exceptions to the guidance in ASC 740 related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period and the recognition for deferred tax liabilities for outside basis differences. ASU 2019-12 also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. The ASU will be effective for the Company on January 1, 2021, with early adoption permitted, and is not expected to have a significant impact on our consolidated financial statements.

ASU Update 2020-02

In January 2020, the FASB issued ASU No. 2020-02, “Financial Instruments - Credit Losses (Topic 326) and Leases (Topic 842): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 119 and Update to SEC Section on Effective Date Related to Accounting Standards Update No. 2016-02, Leases (Topic 842).” This ASU adds and amends SEC paragraphs in the Accounting Standards Codification to reflect the issuance of SEC Staff Accounting Bulletin No. 119, related to the new credit losses standard, and comments by the SEC staff related to the revised effective date of the new leases standard. This ASU is effective upon issuance. See the discussion regarding the adoption of ASU 2016-13 above.

ASU Update 2020-03 

In March 2020, the FASB issued ASU No. 2020-3, “Codification Improvements to Financial Instruments.” This ASU clarifies various financial instruments topics, including the CECL standard issued in 2016. Amendments related to ASU 2016-13 for entities that have not yet adopted that guidance are effective upon adoption of the amendments in ASU 2016-13. Early adoption is not permitted before an entity’s adoption of ASU 2016-13. Other amendments are effective upon issuance of this ASU. See the discussion regarding the adoption of ASU 2016-13 above.

Note 3. Available-for-Sale Securities

The amortized cost, gross unrealized gains, gross unrealized losses and fair values of available-for-sale securities at September 30, 2020 and December 31, 2019 are as follows:

(In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Fair Value
September 30, 2020:
U. S. Government agency mortgage-backed securities	$	15,578	$	139	$	(12	)	$	15,705
Corporate bonds		18,015		123		(888	)		17,250
Subordinated notes		9,033		120		(140	)		9,013
SBA loan pools		5,369		-		(68	)		5,301
Municipal bonds		564		-		(10	)		554
	$	48,559	$	382	$	(1,118	)	$	47,823
December 31, 2019:
U. S. Government agency mortgage-backed securities	$	16,663	$	90	$	(68	)	$	16,685
Corporate bonds		18,018		133		(838	)		17,313
Subordinated notes		9,022		182		-			9,204
U.S. Treasury notes		5,157		-		(42	)		5,115
	$	48,860	$	405	$	(948	)	$	48,317

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PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIES

Notes to consolidated financial statements (Unaudited)

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 September 30, 2020 and December 31, 2019:

(In thousands)	Less than 12 Months					12 Months or More					Total
	Fair Value		Unrealized (Loss)			Fair Value		Unrealized (Loss)			Fair Value		Unrealized (Loss)
September 30, 2020:
U. S. Government agency mortgage-backed securities	$	3,510	$	(11	)	$	1,537	$	(1	)	$	5,047	$	(12	)
Corporate bonds		-		-			13,113		(888	)		13,113		(888	)
Subordinated notes		5,393		(140	)		-		-			5,393		(140	)
SBA loan pools		961		(12	)		4,340		(56	)		5,301		(68	)
Municipal bonds		398		(10	)		-		-			398		(10	)
	$	10,262	$	(173	)	$	18,990	$	(945	)	$	29,252	$	(1,118	)
December 31, 2019:
U. S. Government agency mortgage-backed securities	$	2,609	$	(20	)	$	3,919	$	(48	)	$	6,528	$	(68	)
Corporate bonds		-		-			13,162		(838	)		13,162		(838	)
SBA loan pools		5,115		(42	)		-		-			5,115		(42	)
	$	7,724	$	(62	)	$	17,081	$	(886	)	$	24,805	$	(948	)

At September 30, 2020 and December 31, 2019, 19 of 34 and 15 of 27 available-for-sale securities had unrealized losses with an aggregate decline of 3.7% and 3.7% 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 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, subordinated notes, corporate debt, and municipal bonds. 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. SBA government guaranteed loan pools securities were purchased at a premium and the impairment was attributable primarily to increased prepayment speeds. The timely payment of principal and interest on these securities is guaranteed by the U.S. Government agency. The contractual terms of the subordinated notes do not permit the issuer to settle the securities at a price less than the amortized cost bases of the investments. 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 September 30, 2020.

As of September 30, 2020 and December 31, 2019, available-for-sale securities of $3.7 million and $4.8 million were pledged primarily to secure municipal deposits, respectively. The securities were pledged to the Federal Reserve Bank (“FRB”).

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PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIES

Notes to consolidated financial statements (Unaudited)

The following summarizes, by class and contractual maturity, the amortized cost and estimated fair value of available-for-sale debt securities held as of September 30, 2020 and December 31, 2019. 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
September 30, 2020:
Corporate bonds	$	4,015	$	14,000	$	-	$	18,015	$	4,139	$	13,111	$	-	$	17,250
Subordinated notes		-		9,033		-		9,033		-		9,013		-		9,013
SBA loan pools		-		5,369		-		5,369		-		5,301		-		5,301
Municipal bonds		-		564		-		564		-		554		-		554
Available-for-sale securities with stated maturity dates		4,015		28,966		-		32,981		4,139		27,979		-		32,118
U. S. Government agency mortgage-backed securities		3,423		1,622		10,533		15,578		3,437		1,649		10,619		15,705
	$	7,438	$	30,588	$	10,533	$	48,559	$	7,576	$	29,628	$	10,619	$	47,823
December 31, 2019:
Corporate bonds	$	4,018	$	14,000	$	-	$	18,018	$	4,151	$	13,162	$	-	$	17,313
Subordinated notes		-		9,022		-		9,022		-		9,204		-		9,204
SBA loan pools		-		5,157		-		5,157		-		5,115		-		5,115
Available-for-sale securities with stated maturity dates		4,018		28,179		-		32,197		4,151		27,481		-		31,632
U. S. Government agency mortgage-backed securities		3,805		2,047		10,811		16,663		3,810		2,016		10,859		16,685
	$	7,823	$	30,226	$	10,811	$	48,860	$	7,961	$	29,497	$	10,859	$	48,317

During the nine months ended September 30, 2020, the Bank purchased $4.9 million U.S. Government agency mortgage-backed securities, $988,000 SBA government guaranteed loan pools securities and $565,000 municipal bonds. During the nine months ended September 30, 2019, the Bank purchased $3.5 million subordinated notes, $4.0 million corporate bonds and $5.5 million SBA government guaranteed loan pools securities. There was no sale of available-for-sale securities in the nine months ended September 30, 2020 and 2019.

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PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIES

Notes to consolidated financial statements (Unaudited)

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

As of September 30, 2020 and December 31, 2019, loans receivable, net, consisted of the following:

	September 30,			December 31,
(In thousands)	2020			2019
Loan portfolio segment:
Commercial Real Estate	$	292,067		$	314,414
Residential Real Estate		162,976			175,489
Commercial and Industrial		147,248			173,875
Consumer and Other		73,127			85,934
Construction		61,534			48,388
Construction to Permanent - CRE		14,346			14,064
Loans receivable, gross		751,298			812,164
Allowance for loan and lease losses		(11,171	)		(10,115	)
Loans receivable, net	$	740,127		$	802,049

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 zero as of September 30, 2020 and $176,000 as of December 31, 2019, respectively. 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 SUBSIDIARIES

Notes to consolidated financial statements (Unaudited)

A summary of changes in the accretable discount for PCI loans for the three and nine months ended September 30, 2020 and 2019 follows:

(In thousands)	Three Months Ended September 30,					Nine Months Ended September 30,
	2020		2019			2020			2019
Accretable discount, beginning of period	$	-	$	(201	)	$	(47	)	$	(792	)
Accretion		-		9			2			43
Other changes, net		-		141			45			698
Accretable discount, end of period	$	-	$	(51	)	$	-		$	(51	)

The accretion of the accretable discount for PCI loans for the three and nine months ended September 30, 2020 were $0 and $2,000, respectively. The accretion of the accretable discount for PCI loans for the three and nine months ended September 30, 2019 was $9,000 and $43,000, respectively. The other changes represent primarily loans that were either fully paid-off or totally charged off.

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 and nine months ended September 30, 2020, Patriot purchased $2.5 million and $16.6 million of residential real estate loans, respectively. During the three and nine months ended September 30, 2019, Patriot purchased $4.6 million and $20.9 million 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’s syndicated and leveraged loan portfolio, which totaled $60.6 million and $71.5 million at September 30, 2020 and December 31, 2019, respectively, 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 commercial and industrial loan 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 transaction in accordance with its internal policies.

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PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIES

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, auto loans 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.

Patriot purchased $0 and $14.9 million of education loans during the three and nine months ended September 30, 2020, respectively. During the three and nine months ended September 30, 2019, Patriot purchased $0 and $7.3 million of education loans, respectively.

Construction Loans

Construction loans are of a short-term nature, generally of eighteen months or less, that are secured by land and improvements 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”)

Loans in this category represent a 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.

SBA Loans

Patriot originates SBA 7(a) loans, on which the SBA has historically provided guarantees of 75% 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. SBA loans held for investment are included in the commercial real estate loans and commercial and industrial loan classifications, which totaled $21.5 million and $9.6 million as of September 30, 2020 and December 31, 2019, respectively. During the nine-month period ended September 30, 2020, $9.5 million SBA loans previously classified as held for sale were transferred to held for investment.

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PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIES

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 and nine months ended September 30, 2020 and 2019:

(In thousands)	Commercial Real Estate			Residential Real Estate			Commercial and Industrial			Consumer and Other			Construction			Construction to Permanent - CRE		Unallocated			Total
Three months ended September 30, 2020
Allowance for loan and lease losses:
June 30, 2020	$	4,274		$	1,910		$	3,526		$	534		$	666		$	149	$	89		$	11,148
Charge-offs		(35	)		-			(34	)		(6	)		-			-		-			(75	)
Recoveries		-			1			11			1			-			-		-			13
Provisions (credits)		158			(374	)		(33	)		11			152			40		131			85
September 30, 2020	$	4,397		$	1,537		$	3,470		$	540		$	818		$	189	$	220		$	11,171
Three months ended September 30, 2019
Allowance for loan and lease losses:
June 30, 2019	$	1,978		$	936		$	4,208		$	664		$	467		$	105	$	100		$	8,458
Charge-offs		-			(105	)		(74	)		(103	)		-			-		-			(282	)
Recoveries		-			9			117			3			-			-		-			129
Provisions (credits)		111			125			104			(196	)		(19	)		10		(35	)		100
September 30, 2019	$	2,089		$	965		$	4,355		$	368		$	448		$	115	$	65		$	8,405

(In thousands)	Commercial Real Estate			Residential Real Estate			Commercial and Industrial			Consumer and Other			Construction		Construction to Permanent - CRE		Unallocated		Total
Nine months ended September 30, 2020
Allowance for loan and lease losses:
December 31, 2019	$	3,789		$	1,038		$	4,340		$	341		$	477	$	130	$	-	$	10,115
Charge-offs		(400	)		(13	)		(352	)		(45	)		-		-		-		(810	)
Recoveries		-			1			62			4			-		-		-		67
Provisions (credits)		1,008			511			(580	)		240			341		59		220		1,799
September 30, 2020	$	4,397		$	1,537		$	3,470		$	540		$	818	$	189	$	220	$	11,171
Nine months ended September 30, 2019
Allowance for loan and lease losses:
December 31, 2018	$	1,866		$	1,059		$	3,558		$	641		$	350	$	108	$	27	$	7,609
Charge-offs		-			(117	)		(2,366	)		(106	)		-		-		-		(2,589	)
Recoveries		2			9			164			8			-		-		-		183
Provisions (credits)		221			14			2,999			(175	)		98		7		38		3,202
September 30, 2019	$	2,089		$	965		$	4,355		$	368		$	448	$	115	$	65	$	8,405

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PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIES

Notes to consolidated financial statements (Unaudited)

The following tables summarize, by loan portfolio segment, the amount of loans receivable evaluated individually and collectively for impairment as of September 30, 2020 and December 31, 2019:

(In thousands)	Commercial Real Estate		Residential Real Estate		Commercial and Industrial		Consumer and Other		Construction		Construction to Permanent - CRE		Unallocated		Total
September 30, 2020
Allowance for loan and lease losses:
Individually evaluated for impairment	$	1,552	$	5	$	-	$	11	$	-	$	-	$	-	$	1,568
Collectively evaluated for impairment		2,845		1,532		3,470		529		818		189		220		9,603
Total allowance for loan and lease losses	$	4,397	$	1,537	$	3,470	$	540	$	818	$	189	$	220	$	11,171
Loans receivable, gross:
Individually evaluated for impairment	$	15,521	$	3,674	$	1,706	$	1,264	$	-	$	-	$	-	$	22,165
Collectively evaluated for impairment		276,546		159,302		145,542		71,863		61,534		14,346		-		729,133
Total loans receivable, gross	$	292,067	$	162,976	$	147,248	$	73,127	$	61,534	$	14,346	$	-	$	751,298

(In thousands)	Commercial Real Estate		Residential Real Estate		Commercial and Industrial		Consumer and Other		Construction		Construction to Permanent - CRE		Unallocated		Total
December 31, 2019
Allowance for loan and lease losses:
Individually evaluated for impairment	$	1,496	$	-	$	-	$	-	$	-	$	-	$	-	$	1,496
Collectively evaluated for impairment		2,293		1,038		4,340		341		477		130		-		8,619
Total allowance for loan losses	$	3,789	$	1,038	$	4,340	$	341	$	477	$	130	$	-	$	10,115
Loans receivable, gross:
Individually evaluated for impairment	$	13,034	$	3,621	$	2,057	$	916	$	-	$	-	$	-	$	19,628
PCI loans individually evaluated for impairment		-		-		176		-		-		-		-		176
Collectively evaluated for impairment		301,380		171,868		171,642		85,018		48,388		14,064		-		792,360
Total loans receivable, gross	$	314,414	$	175,489	$	173,875	$	85,934	$	48,388	$	14,064	$	-	$	812,164

Patriot monitors the credit quality of its loans receivable on an ongoing basis. Credit quality is monitored by reviewing certain indicators, including cash flow from business operations, 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.

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PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIES

Notes to consolidated financial statements (Unaudited)

Additionally, Patriot retains an 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 of loans to reduce the loan to its recoverable value that are solely collateral dependent, generally occur immediately upon confirmation of the partial loss amount. Loans that are cash flow dependent are modeled to reflect the expected cash flows through expected loan maturity, including any proceeds from refinancing or principal curtailment. A specific reserve is established for the amount by which the net investment in the loan exceeds the present value of discounted cash flows. Charge-offs on cash flow dependent loans also generally occur immediately upon confirmation of the partial loss amount.

If either type of loan is classified as “Loss”, meaning full loss on the loan is expected, the full balance of the loan receivable is charged off, regardless of the potential recovery from a sale of the underlying collateral. 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. 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.

Due to the economic disruption and uncertainty caused by the pandemic, the allowance for loan losses may increase in future periods as borrowers are affected by the expected severe contraction of economic activity and the dramatic increase in unemployment. This may result in increases in loan delinquencies, down-grades of loan credit ratings and charge-offs in future periods. The allowance for loan losses may increase to reflect the decline in the performance of the loan portfolio and the higher level of incurred losses.

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PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIES

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 September 30, 2020.

(In thousands)	Performing (Accruing) Loans
As of September 30, 2020:	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	$	903	$	-	$	-	$	903	$	264,594	$	265,497	$	-	$	265,497
Substandard		1,430		-		-		1,430		10,693		12,123		14,447		26,570
		2,333		-		-		2,333		275,287		277,620		14,447		292,067
Residential Real Estate:
Pass		2,283		-		679		2,962		156,472		159,434		-		159,434
Substandard		-		-		-		-		250		250		3,292		3,542
		2,283		-		679		2,962		156,722		159,684		3,292		162,976
Commercial and Industrial:
Pass		-		200		-		200		112,236		112,436		-		112,436
Special mention		-		-		-		-		7,437		7,437		-		7,437
Substandard		702		-		-		702		24,967		25,669		1,706		27,375
		702		200		-		902		144,640		145,542		1,706		147,248
Consumer and Other:
Pass		30		1		-		31		71,980		72,011		-		72,011
Substandard		97		-		-		97		24		121		995		1,116
		127		1		-		128		72,004		72,132		995		73,127
Construction:
Pass		-		-		-		-		61,534		61,534		-		61,534
		-		-		-		-		61,534		61,534		-		61,534
Construction to Permanent - CRE:
Pass		-		-		-		-		14,346		14,346		-		14,346
		-		-		-		-		14,346		14,346		-		14,346
Total	$	5,445	$	201	$	679	$	6,325	$	724,533	$	730,858	$	20,440	$	751,298
Loans receivable, gross:
Pass	$	3,216	$	201	$	679	$	4,096	$	681,162	$	685,258	$	-	$	685,258
Special mention		-		-		-		-		7,437		7,437		-		7,437
Substandard		2,229		-		-		2,229		35,934		38,163		20,440		58,603
Loans receivable, gross	$	5,445	$	201	$	679	$	6,325	$	724,533	$	730,858	$	20,440	$	751,298

22

PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIES

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, 2019.

(In thousands)	Performing (Accruing) Loans
As of December 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	$	-	$	-	$	-	$	-	$	295,982	$	295,982	$	-	$	295,982
Special mention		-		-		-		-		385		385		-		385
Substandard		-		-		-		-		6,086		6,086		11,961		18,047
		-		-		-		-		302,453		302,453		11,961		314,414
Residential Real Estate:
Pass		658		-		-		658		169,903		170,561		-		170,561
Substandard		-		-		-		-		1,700		1,700		3,228		4,928
		658		-		-		658		171,603		172,261		3,228		175,489
Commercial and Industrial:
Pass		327		350		-		677		162,711		163,388		-		163,388
Special mention		279		-		-		279		172		451		-		451
Substandard		-		-		-		-		7,942		7,942		2,094		10,036
		606		350		-		956		170,825		171,781		2,094		173,875
Consumer and Other:
Pass		2,805		3		19		2,827		82,341		85,168		-		85,168
Substandard		-		-		-		-		-		-		766		766
		2,805		3		19		2,827		82,341		85,168		766		85,934
Construction:
Pass		-		-		-		-		48,388		48,388		-		48,388
		-		-		-		-		48,388		48,388		-		48,388
Construction to Permanent - CRE:
Pass		-		-		-		-		14,064		14,064		-		14,064
		-		-		-		-		14,064		14,064		-		14,064
Total	$	4,069	$	353	$	19	$	4,441	$	789,674	$	794,115	$	18,049	$	812,164
Loans receivable, gross:
Pass	$	3,790	$	353	$	19	$	4,162	$	773,389	$	777,551	$	-	$	777,551
Special mention		279		-		-		279		557		836		-		836
Substandard		-		-		-		-		15,728		15,728		18,049		33,777
Loans receivable, gross	$	4,069	$	353	$	19	$	4,441	$	789,674	$	794,115	$	18,049	$	812,164

23

PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIES

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 September 30, 2020 and December 31, 2019:

(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 September 30, 2020:
Loan portfolio segment:
Commercial Real Estate:
Substandard	$	-	$	-	$	5,636	$	5,636	$	8,811	$	14,447
Residential Real Estate:
Substandard		-		-		1,585		1,585		1,707		3,292
Commercial and Industrial:
Substandard		-		-		1,706		1,706		-		1,706
Consumer and Other:
Substandard		-		-		104		104		891		995
Total non-accruing loans	$	-	$	-	$	9,031	$	9,031	$	11,409	$	20,440
As of December 31, 2019:
Loan portfolio segment:
Commercial Real Estate:
Substandard	$	-	$	-	$	1,636	$	1,636	$	10,325	$	11,961
Residential Real Estate:
Substandard		-		-		1,872		1,872		1,356		3,228
Commercial and Industrial:
Substandard		-		-		1,724		1,724		370		2,094
Consumer and Other:
Substandard		-		-		149		149		617		766
Total non-accruing loans	$	-	$	-	$	5,381	$	5,381	$	12,668	$	18,049

If non-accrual loans had been performing in accordance with the original contractual terms, additional interest income (net of cash collected) of approximately $216,000 and $691,000 would have been recognized during the three and nine months ended September 30, 2020, respectively. During the three and nine months ended September 30, 2019, additional interest income (net of cash collected) of approximately $134,000 and $271,000 would have been recognized in income, respectively.

Interest income collected and recognized on non-accruing loans for the three and nine months ended September 30, 2020 was $21,000 and $106,000, respectively. During the three and nine months ended September 30, 2019, interest income collected and recognized on non-accruing loans was $129,000 and $474,000, respectively.

The accrual of interest on loans is discontinued at the time the loan is 90 days past due for payment unless the loan is well-secured and in process of collection. 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, after at least nine months of timely payment history. Management considers all non-accrual loans and Trouble Debt Restructurings (“TDR”) for impaired loans. In most cases, loan payments that are past due less than 90 days, well-secured, and in the process of collection are not considered impaired. The Bank considers consumer installment loans to be pools of smaller homogeneous loan balances, which are collectively evaluated for impairment.

24

PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIES

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 also 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 following table summarizes the recorded investment in TDRs as of September 30, 2020 and December 31, 2019:

(In thousands)	September 30, 2020					December 31, 2019
Loan portfolio segment:	Number of Loans		Recorded Investment			Number of Loans		Recorded Investment
Commercial Real Estate		2	$	9,884			2	$	9,873
Residential Real Estate		3		437			2		393
Consumer and Other		4		787			2		687
Total TDR Loans		9		11,108			6		10,953
Less:
TDRs included in non-accrual loans		3		(9,384	)		2		(9,337	)
Total accrual TDR Loans		6	$	1,724			4	$	1,616

During the three months ended September 30, 2020 and 2019, no loans were modified as TDR. The following table summarizes the loans were modified as TDR during the nine months ended September 30, 2020 and 2019:

					Outstanding Recorded Investment
(In thousands)	Number of Loans				Pre-Modification				Post-Modification
Nine Months Ended September 30,	2020		2019		2020		2019		2020		2019
Loan portfolio segment:
Commercial Real Estate		1		2	$	57	$	8,912	$	56	$	8,911
Consumer and Other		2		-		121		-		121		-
Total TDR Loans		3		2	$	178	$	8,912	$	177	$	8,911

25

PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIES

Notes to consolidated financial statements (Unaudited)

The following table provides information on how loans were modified as TDRs during the three and nine months ended September 30, 2020 and 2019:

	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2020		2019		2020		2019
Rate reduction	$	-	$	-	$	56	$	111
Extension of interest only period		-		-		121		-
Maturity and rate reduction		-		-		-		8,800
Total	$	-	$	-	$	177	$	8,911

The loans modified in a TDR often involve reducing the interest rate for the remaining term of the loan, extending the maturity date at an interest rate lower than the current market rate for new debt with similar risk, extending the interest-only payment period, or substituting or adding a co-borrower or guarantor. There were no defaults of TDRs during the three and nine months ended September 30, 2020. At September 30, 2020 and December 31, 2019, there were no commitments to advance additional funds under TDRs.

The balances reflected here as TDR’s are also included in the non-accruing loan balance included in the prior table - Loan Portfolio Aging Analysis.

Pursuant to the CARES Act, loan modifications made between March 1, 2020 and the earlier of i) December 30, 2020 or ii) 60 days after the President declares a termination of the COVID-19 national emergency are not classified as TDRs if the related loans were not more than 30 days past due as of December 31, 2019. In addition, on April 7, 2020, a group of banking regulatory agencies issued a revised interagency statement that offers practical expedients for evaluating whether COVID-19 loan modifications are TDRs. The Bank had modified $244.4 million of loans to borrowers to defer the payment of interest and/or principal for up to 180 days, and approximately $157.7 million of loans remained on deferment as of September 30, 2020.According to regulatory guidance and CARES Act, these modified loans were not TDRs as of September 30, 2020.

Impaired Loans

Impaired loans may consist of non-accrual loans and/or performing and non-performing TDRs. As of September 30, 2020 and December 31, 2019, based on the on-going monitoring and analysis of the loan portfolio, impaired loans of $22.2 million and $19.6 million, respectively, were identified, for which $1.6 million and $1.5 million specific reserves were established, respectively. Loans not requiring specific reserves had fair values exceeding the total recorded investment, 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 September 30, 2020 and December 31, 2019, exposure to the impaired loans was related to 30 and 27 borrowers, respectively. For collateral dependent loans, appraisal reports of the underlying collateral, have been obtained from independent licensed appraisal firms. For non-performing loans, the independently determined appraised values were first reduced by a 12% discount to reflect the Bank’s experience selling Other Real Estate Owned (OREO) properties, and were further reduced by 8% in selling costs, in order to estimate the potential loss, if any, that may eventually be realized. Performing loans are monitored to determine when, if at all, additional loan loss reserves may be required for a loss of underlying collateral value. For cash flow dependent loans, the Bank determined the reserve based on the present value of expected future cash flows discounted at the loan's effective interest rate.

PCI loans acquired from Prime Bank acquisition were originally recorded at fair value by the Bank on the date of acquisition. As of September 30, 2020 and December 31, 2019, PCI loans remaining balance was $0 and $179,000, respectively. Those loans were considered individually evaluated for impairment, with no allowance recorded.

26

PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIES

Notes to consolidated financial statements (Unaudited)

The following table reflects information about the impaired loans, excluding PCI loans, by class as of September 30, 2020 and December 31, 2019:

(In thousands)	September 30, 2020						December 31, 2019
	Recorded Investment		Principal Outstanding		Related Allowance		Recorded Investment		Principal Outstanding		Related Allowance
With no related allowance recorded:
Commercial Real Estate	$	6,710	$	7,116	$	-	$	4,234	$	4,309	$	-
Residential Real Estate		3,565		3,634		-		3,621		3,623		-
Commercial and Industrial		1,706		1,840		-		2,057		2,060		-
Consumer and Other		1,115		1,265		-		916		1,000		-
		13,096		13,855		-		10,828		10,992		-
With a related allowance recorded:
Commercial Real Estate	$	8,811	$	8,811	$	1,552		8,800		8,800		1,496
Residential Real Estate		109		109		5		-		-		-
Consumer and Other		149		149		11		-		-		-
		9,069		9,069		1,568		8,800		8,800		1,496
Impaired Loans, Total:
Commercial Real Estate		15,521		15,927		1,552		13,034		13,109		1,496
Residential Real Estate		3,674		3,743		5		3,621		3,623		-
Commercial and Industrial		1,706		1,840		-		2,057		2,060		-
Consumer and Other		1,264		1,414		11		916		1,000		-
Impaired Loans, Total	$	22,165	$	22,924	$	1,568	$	19,628	$	19,792	$	1,496

The following tables summarize additional information regarding impaired loans, excluding PCI loans, by class for the three and nine months ended September 30, 2020 and 2019.

	Three Months Ended September 30,								Nine Months Ended September 30,
(In thousands)	2020				2019				2020				2019
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial Real Estate	$	6,975	$	13	$	13,579	$	164	$	5,702	$	39	$	9,654	$	324
Residential Real Estate		3,641		12		3,696		37		3,603		45		2,202		28
Commercial and Industrial		1,716		2		2,656		39		1,936		4		1,684		99
Consumer and Other		1,321		10		978		12		1,101		26		897		108
Construction		-		-		-		-		-		-		5,280		150
		13,653		37		20,909		252		12,342		114		19,717		709
With a related allowance recorded:
Commercial Real Estate		8,975		-		-		-		8,876		35		275		-
Residential Real Estate		55		1		-		-		33		4		1,237		-
Commercial and Industrial		-		-		-		-		-		-		2,228		-
Consumer and Other		74		1		-		-		50		4		23		-
		9,104		2		-		-		8,959		43		3,763		-
Impaired Loans, Total:
Commercial Real Estate		15,950		13		13,579		164		14,578		74		9,929		324
Residential Real Estate		3,696		13		3,696		37		3,636		49		3,439		28
Commercial and Industrial		1,716		2		2,656		39		1,936		4		3,912		99
Consumer and Other		1,395		11		978		12		1,151		30		920		108
Construction		-		-		-		-		-		-		5,280		150
Impaired Loans, Total	$	22,757	$	39	$	20,909	$	252	$	21,301	$	157	$	23,480	$	709

27

PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIES

Notes to consolidated financial statements (Unaudited)

Note 5. Loans Held for Sale

As of September 30, 2020, loans held for sale consist of one commercial and industrial loan held for sale of $5.0 million and $1.8 million SBA loans held for sale. The one commercial loan represents a single loan with an agreed upon sale price which was in process of being sold at period end and the sale was completed on October 22, 2020.

SBA loans held for sale represent the guaranteed portion of SBA loans originated and are reflected at the lower of aggregate cost or market value. As of September 30, 2020, SBA loans held for sale, consisted of $851,000 commercial and industrial loans and $950,000 commercial real estate loans. There were $15.3 million of SBA loans held for sale at December 31, 2019, consisting of $10.2 million commercial and industrial loans and $5.1 million commercial real estate loans. During the nine months ended September 30, 2020, $9.5 million SBA loans previously classified as held for sale were transferred to held for investment.

The Company generally sells the guaranteed portion of its SBA loans to a third party and retains the servicing, holding the unguaranteed portion in its portfolio. When sales of SBA loans do occur, the premium received on the sale and the present value of future cash flows of the servicing assets, less the discount of the retained portion of the loan are recognized in income.

Servicing assets represent the estimated fair value of retained servicing rights, net of servicing costs, at the time loans are sold. Servicing assets are amortized in proportion to, and over the period of, estimated net servicing revenues. Impairment will be evaluated based on stratifying the underlying financial assets by date of origination and term. Fair value is determined using prices for similar assets with similar characteristics, when available, or based upon discounted cash flows using market-based assumptions. Any impairment, if temporary, would be reported as a valuation allowance.

Serviced loans sold to others are not included in the accompanying consolidated balance sheets. The total amount of such loans serviced, but owned by third party, amounted to approximately $18.6 million and $13.6 million at September 30, 2020 and December 31, 2019, respectively. The servicing asset has a carrying value of $301,000 and fair value of $362,000 at September 30, 2020. Income and fees collected for loan servicing are credited to noninterest income when earned, net of amortization on the related servicing assets. The servicing asset is included in other assets on the consolidated balance sheets.

The following table presents an analysis of the activity in the SBA servicing assets for the three and nine months ended September 30, 2020 and 2019:

(In thousands)	Three Months Ended September 30,						Nine Months Ended September 30,
	2020			2019			2020			2019
Beginning balance	$	221			156		$	201			37
Servicing rights capitalized		86			44			115			169
Servicing rights amortized		(6	)		(4	)		(15	)		(10	)
Ending balance		301			196			301			196

Note 6. 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 intangible and adjustment of cash and contingent consideration. The goodwill was further adjusted to $1.1 million as a result of reducing the estimated amount to be paid pursuant to certain problem loans pending resolution by $621,000 as of May 10, 2019. There were no income statement effects resulting from the recorded measurement period adjustments for the three and nine months ended September 30, 2020. The goodwill is all deductible for income taxes over 15 years.

28

PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIES

Notes to consolidated financial statements (Unaudited)

Information on goodwill for the three and nine months ended September 30, 2020 and 2019 is as follows:

(In thousands)	Three Month Ended September 30,				Nine Month Ended September 30,
	2020		2019		2020		2019
Balance, beginning of period	$	1,107	$	1,107	$	1,107	$	1,728
Mesurement period adjustments		-		-		-		(621	)
Balance, end of period	$	1,107	$	1,107	$	1,107	$	1,107

Goodwill is evaluated for impairment annually, in the fourth quarter of the year, or whenever we identify certain triggering events or circumstances that would more likely than not reduce the fair value of a reporting unit below its carrying amount. Events or circumstances that might indicate an interim evaluation is warranted include, among other things, unexpected adverse business conditions, macro and reporting unit specific economic factors, supply costs, unanticipated competitive activities, and acts by governments and courts.

The Company identified the COVID-19 pandemic and related reported losses as a triggering event in the first quarter of 2020. Due to this triggering event, the Company performed a qualitative assessment of the goodwill, and concluded it was more likely than not that the fair value of the reporting unit exceeded its carrying value, and goodwill was not impaired. The Company did not perform an interim goodwill test in the third quarter of 2020 as no events occurred which would trigger an impairment assessment. The Company will perform a quantitative assessment as of October 31, 2020, the Company’s annual goodwill impairment measurement date.

Note 7. Deposits

The following table presents the balance of deposits held, by category as of September 30, 2020 and December 31, 2019.

(In thousands)	September 30, 2020		December 31, 2019
Non-interest bearing	$	161,871	$	88,135
Interest bearing:
NOW		29,518		26,864
Savings		91,169		64,020
Money market		142,909		99,115
Certificates of deposit, less than $250,000		160,610		193,942
Certificates of deposit, $250,000 or greater		50,359		67,550
Brokered deposits		90,995		229,909
Interest bearing, Total		565,560		681,400
Total Deposits	$	727,431	$	769,535

On July 22, 2020, the Company completed the purchase of prepaid debit card deposits of $50.0 million from a prominent national provider and processor of prepaid debit cards for corporate, consumer and government clients. The prepaid debit card deposits totaled approximately $60.0 million as of September 30, 2020, which is included in the non-interest bearing deposits.

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PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIES

Notes to consolidated financial statements (Unaudited)

As of September 30, 2020, 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	$	139,850	$	41,249	$	85,398	$	266,497
More than 1 year through 2 years		17,847		8,163		4,848		30,858
More than 2 years through 3 years		1,256		694		499		2,449
More than 3 years through 4 years		913		-		250		1,163
More than 4 years through 5 years		744		253		-		997
	$	160,610	$	50,359	$	90,995	$	301,964

Note 8. Derivatives

Patriot is a party to four interest rate swaps 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 two initial interest rate swaps under the program in November 2018, and another two additional swaps were entered into in May 2019. As of September 30, 2020 and December 31, 2019, Patriot had cash pledged for collateral on its interest rate swaps of $1.4 million and $1.1 million, respectively. This collateral is included in other assets on the consolidated balance sheets.

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
September 30, 2020:
Classified in Other Assets:
Customer interest rate swap	$	4,911		8.6		5.25	%	1 Mo. LIBOR + 1.96%	$	1,087
Customer interest rate swap		1,439		8.8		4.38	%	1 Mo. LIBOR + 2.00%		216
Classified in Other Liabilities:
3rd party interest rate swap	$	4,911		8.6		5.25	%	1 Mo. LIBOR + 1.96%	$	(1,087	)
3rd party interest rate swap		1,439		8.8		4.38	%	1 Mo. LIBOR + 2.00%		(216	)
December 31, 2019:
Classified in Other Assets:
Customer interest rate swap	$	4,944		9.3		5.25	%	1 Mo. LIBOR + 1.96%	$	617
Customer interest rate swap		1,444		9.5		4.38	%	1 Mo. LIBOR + 2.00%		77
Classified in Other Liabilities:
3rd party interest rate swap	$	4,944		9.3		5.25	%	1 Mo. LIBOR + 1.96%	$	(617	)
3rd party interest rate swap		1,444		9.5		4.38	%	1 Mo. LIBOR + 2.00%		(77	)

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PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIES

Notes to consolidated financial statements (Unaudited)

Note 9.     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 has been to grant RSAs. As of September 30, 2020 and December 31, 2019, 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 September 30, 2020, 2,850,139 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 and changes for the three and nine months ended September 30, 2020 and 2019:

Three months ended September 30, 2020:	Number of Shares Awarded			Weighted Average Grant Date Fair Value
Unvested at June 30, 2020		26,597		$	8.89
Vested		(1,200	)	$	17.41
Unvested at September 30, 2020		25,397		$	8.49
Nine months ended September 30, 2020:
Unvested at December 31, 2019		21,470		$	12.91
Granted		12,484		$	6.12
Vested		(6,372	)	$	16.20
Forfeited		(2,185	)	$	15.92
Unvested at September 30, 2020		25,397		$	8.49

Three months ended September 30, 2019:	Number of Shares Awarded			Weighted Average Grant Date Fair Value
Unvested at June 30, 2019		29,529		$	13.94
Vested		(2,392	)	$	17.11
Unvested at September 30, 2019		27,137		$	13.66
Nine months ended September 30, 2019:
Unvested at December 31, 2018		31,790		$	14.06
Granted		9,675		$	15.52
Vested		(14,328	)	$	15.79
Unvested at September 30, 2019		27,137		$	13.66

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.

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PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIES

Notes to consolidated financial statements (Unaudited)

For the three and nine months ended September 30, 2020, the Company recognized total share-based compensation expense of $42,000 and $123,000, respectively. The share-based compensation attributable to employees of Patriot amounted to $21,000 and $64,000, respectively. Included in share-based compensation expense were $21,000 and $59,000 attributable to Patriot’s external directors, who received total compensation of $87,000 and $342,000 for each of those periods, respectively, which amounts are included in other operating expenses in the consolidated statements of operations.

For the three and nine months ended September 30, 2019, the Company recognized total share-based compensation expense of $59,000 and $162,000, respectively. The share-based compensation attributable to employees of Patriot amounted to $31,000 and $87,000, respectively. Included in share-based compensation expense were $28,000 and $75,000 attributable to Patriot’s external directors, who received total compensation of $153,000 and $423,000 for each of those periods, respectively, which amounts are included in other operating expenses in the consolidated statements of operations.

Unrecognized compensation expense attributable to the unvested restricted shares outstanding as of September 30, 2020 amounted to $226,000, which amount is expected to be recognized over the weighted average remaining life of the awards of 1.99 years.

Dividends

The Company has not paid any dividends during 2020 and has temporarily suspended dividend payments pending resolution of the economic uncertainties associated with the Coronavirus pandemic.

For the three and nine months ended September 30, 2019, the Company paid cash dividends of $.01 per share of common stock, or an aggregate of $39,000 and $116,000, 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 and nine months ended September 30, 2020, compensation expense under the 401K aggregated $48,000 and $199,000, respectively. During the three and nine months ended September 30, 2019 compensation expense under the 401K aggregated $53,000 and $195,000, respectively.

Note 10. Earnings (loss) per share

The Company is required to present basic earnings (loss) per share and diluted earnings (loss) per share in its Consolidated Statements of Operations. Basic earnings (loss) per share amounts are computed by dividing net (loss) income by the weighted average number of common shares outstanding. Diluted earnings (loss) 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 (loss) per share.

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PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIES

Notes to consolidated financial statements (Unaudited)

The following table summarizes the computation of basic and diluted earnings (loss) per share for the three and nine months ended September 30, 2020 and 2019:

(Net income (loss) in thousands)	Three Months Ended September 30,						Nine Months Ended September 30,
	2020			2019			2020			2019
Basis (loss) earnings per share:
Net (loss) income attributable to Common shareholders	$	(87	)	$	27		$	(2,437	)	$	(1,305	)
Divided by:
Weighted average shares outstanding		3,935,898			3,922,783			3,934,138			3,920,678
Basic (loss) earnings per common share	$	(0.02	)	$	0.01		$	(0.62	)	$	(0.33	)
Diluted (loss) earnings per share:
Net (loss) income attributable to Common shareholders	$	(87	)	$	27		$	(2,437	)	$	(1,305	)
Weighted average shares outstanding		3,935,898			3,922,783			3,934,138			3,920,678
Effect of potentially dilutive restricted common shares		-	(1)		-	(2)		-	(3)		-	(4)
Divided by:
Weighted average diluted shares outstanding		3,935,898			3,922,783			3,934,138			3,920,678
Diluted (loss) earnings per common share	$	(0.02	)	$	0.01		$	(0.62	)	$	(0.33	)

(1) The weighted average diluted shares outstanding does not include 13,093 anti-dilutive restricted common shares for the three months ended September 30, 2020.

(2) The weighted average diluted shares outstanding does not include 417 anti-dilutive restricted common shares for the three months ended September 30, 2019.

(3) The weighted average diluted shares outstanding does not include 1,630 anti-dilutive restricted common shares for the nine months ended September 30, 2020.

(4) The weighted average diluted shares outstanding does not include 151 anti-dilutive restricted common shares for the nine months ended September 30, 2019.

33

PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIES

Notes to consolidated financial statements (Unaudited)

Note 11. 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 become 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 September 30, 2020 and December 31, 2019 are as follows:

	September 30,		December 31,
(In thousands)	2020		2019
Commitments to extend credit:
Unused lines of credit	$	73,751	$	71,101
Undisbursed construction loans		31,947		25,367
Home equity lines of credit		19,825		20,032
Future loan commitments		24,165		27,822
Financial standby letters of credit		669		743
	$	150,357	$	145,065

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 reserve for credit loss of $8,000 and $8,000 as of September 30, 2020 and December 31, 2019, respectively, 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.

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PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIES

Notes to consolidated financial statements (Unaudited)

Note 12. Regulatory and Operational Matters

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

The Agreement states that the Board of the 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 agreed to provide a revised written 3-year strategic and capital plan for the Bank. The Bank provided the documents and policies requested in the Agreement. To date, the Bank has addressed each of the items identified in the Agreement and is currently working collaboratively with the OCC to bring all matters to full resolution. Further details pertaining to the Agreement were 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.

In September 2019, the community bank leverage ratio (CBLR) framework was jointly issued by the FDIC, OCC and FRB. The final rule gives qualifying community banks the option to use a simplified measure of capital adequacy instead of risk based capital, beginning with their September 30, 2020 Call Report. Under the final rule a community bank may qualify for the CBLR framework if it has a Tier 1 leverage ratio of greater than 9%, less than $10 billion in total consolidated assets, and limited amounts of off-balance sheet exposures and trading assets and liabilities. The Bank did not adopt the CBLR framework at September 30, 2020 but retains the option to adopt the framework in a future period.

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 9.0%. 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 SUBSIDIARIES

Notes to consolidated financial statements (Unaudited)

The Company’s and the Bank’s regulatory capital amounts and ratios at September 30, 2020 and December 31, 2019 are summarized as follows:

(In thousands)	Patriot National Bancorp, Inc.								Patriot Bank, N.A.
	September 30, 2020				December 31, 2019				September 30, 2020				December 31, 2019
	Amount ($)		Ratio (%)		Amount ($)		Ratio (%)		Amount ($)		Ratio (%)		Amount ($)		Ratio (%)
Total Capital (to risk weighted assets):
Actual	$	87,925		10.924	$	90,083		10.510	$	98,800		12.332	$	100,953		11.826
To be Well Capitalized(1)		-		-		-		-		80,115		10.000		85,362		10.000
For capital adequacy with Capital Buffer(2)		-		-		-		-		84,121		10.500		89,630		10.500
For capital adequacy		64,389		8.000		68,573		8.000		64,092		8.000		68,290		8.000
Tier 1 Capital (to risk weighted assets):
Actual		67,850		8.430		69,957		8.161		88,772		11.081		90,827		10.640
To be Well Capitalized(1)		-		-		-		-		64,092		8.000		68,290		8.000
For capital adequacy with Capital Buffer(2)		-		-		-		-		68,098		8.500		72,558		8.500
For capital adequacy		48,292		6.000		51,430		6.000		48,069		6.000		51,217		6.000
Common Equity Tier 1 Capital (to risk weighted assets):
Actual		59,850		7.436		61,957		7.228		88,772		11.081		90,827		10.640
To be Well Capitalized(1)		-		-		-		-		52,075		6.500		55,485		6.500
For capital adequacy with Capital Buffer(2)		-		-		-		-		56,080		7.000		59,753		7.000
For capital adequacy		36,219		4.500		38,572		4.500		36,052		4.500		38,413		4.500
Tier 1 Leverage Capital (to average assets):
Actual		67,850		7.150		69,957		7.148		88,772		9.352		90,827		9.279
To be Well Capitalized(1)		-		-		-		-		47,459		5.000		48,944		5.000
For capital adequacy		37,960		4.000		39,148		4.000		37,967		4.000		39,155		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.

36

PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIES

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 conversation buffer of 2.5% has been included in the minimum capital adequacy ratios in the 2020 and 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. As of September 30, 2020, Patriot satisfies all regulatory capital adequacy requirements on a fully phased-in basis.

Note 13. 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).

37

PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIES

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 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 September 30, 2020 and December 31, 2019 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. We 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.

Loans Held for Sale

The fair value of loans held for sale is estimated by using a market approach that includes prices for loans sold awaiting settlement and other observable inputs. The Company has determined that the inputs used to value the loans held for sale fall within Level 2 of the fair value hierarchy.

SBA Servicing Asset

Servicing assets do not trade in an active, open market with readily observable prices. The Company estimates the fair value of servicing assets using discounted cash flow models incorporating numerous assumptions from the perspective of a market participant including market discount rates and prepayment speeds. Due to the significant unobservable input related to the servicing rights, the SBA servicing asset is classified within Level 3 of the valuation hierarchy.

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PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIES

Notes to consolidated financial statements (Unaudited)

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 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 and Note Payable

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.

The Company considers its own credit worthiness in determining the fair value of its Senior Notes, Subordinated Notes, Notes Payable and Junior Subordinated Debt.

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.

39

PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIES

Notes to consolidated financial statements (Unaudited)

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 September 30, 2020 and December 31, 2019:

(In thousands)		September 30, 2020				December 31, 2019
	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	$	3,231	$	3,231	$	2,693	$	2,693
Interest-bearing deposits due from banks	Level 1		46,405		46,405		36,711		36,711
Available-for-sale securities	Level 2		47,823		47,823		48,317		48,317
Other investments	Level 2		4,450		4,450		4,450		4,450
Federal Reserve Bank stock	Level 2		2,783		2,783		2,897		2,897
Federal Home Loan Bank stock	Level 2		4,503		4,503		4,477		4,477
Loans receivable, net	Level 3		740,127		729,924		802,049		793,559
Loans held for sale	Level 2		6,824		7,002		15,282		16,733
SBA servicing assets	Level 3		301		362		201		280
Accrued interest receivable	Level 2		6,834		6,834		3,603		3,603
Interest rate swap receivable	Level 2		1,303		1,303		694		694
Financial assets, total		$	864,584	$	854,620	$	921,374	$	914,414
Financial Liabilities:
Demand deposits	Level 2	$	161,871	$	161,871	$	88,135	$	88,135
Savings deposits	Level 2		91,169		91,169		64,020		64,020
Money market deposits	Level 2		142,909		142,909		99,115		99,115
NOW accounts	Level 2		29,518		29,518		26,864		26,864
Time deposits	Level 2		210,969		211,724		261,492		261,914
Brokered deposits	Level 1		90,995		91,521		229,909		230,073
FHLB borrowings	Level 2		90,000		97,786		100,000		103,962
Senior notes	Level 2		11,909		12,033		11,853		11,722
Subordinated debt	Level 2		9,774		10,145		9,752		9,747
Junior subordinated debt owed to unconsolidated trust	Level 2		8,108		8,108		8,102		8,102
Note payable	Level 3		1,044		1,059		1,193		1,129
Accrued interest payable	Level 2		1,091		1,091		1,971		1,971
Contingent consideration liability	Level 3		86		86		86		86
Interest rate swap liability	Level 2		1,303		1,303		694		694
Financial liabilities, total		$	850,746	$	860,323	$	903,186	$	907,534

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.

40

PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIES

Notes to consolidated financial statements (Unaudited)

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 September 30, 2020 and December 31, 2019:

(In thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
September 30, 2020:
U. S. Government agency mortgage-backed securities	$	-	$	15,705	$	-	$	15,705
Corporate bonds		-		17,250		-		17,250
Subordinated notes		-		9,013		-		9,013
SBA loan pools		-		5,301		-		5,301
Municipal bonds		-		554		-		554
Available-for-sale securities	$	-	$	47,823	$	-	$	47,823
Contingent consideration liability	$	-	$	-	$	86	$	86
Interest rate swap receivable	$	-	$	1,303	$	-	$	1,303
Interest rate swap liability	$	-	$	1,303	$	-	$	1,303
December 31, 2019:
U. S. Government agency mortgage-backed securities	$	-	$	16,685	$	-	$	16,685
Corporate bonds		-		17,313		-		17,313
Subordinated notes		-		9,204		-		9,204
SBA loan pools		-		5,115		-		5,115
Available-for-sale securities	$	-	$	48,317	$	-	$	48,317
Impaired PCI Loans, net	$	-	$	-	$	176	$	176
Contingent consideration liability	$	-	$	-	$	86	$	86
Interest rate swap receivable	$	-	$	694	$	-	$	694
Interest rate swap liability	$	-	$	694	$	-	$	694

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 and nine months ended September 30, 2020 and 2019, the Company had no transfers into or out of Levels 1, 2 or 3.

41

PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIES

Notes to consolidated financial statements (Unaudited)

The table below presents the valuation methodology and unobservable inputs for level 3 assets measured at fair value on a non-recurring basis as of September 30, 2020 and December 31, 2019:

(In thousands)	Fair Value		Valuation Methodology	Unobservable Inputs	Range of Inputs
September 30, 2020:
Impaired loans, net	$	20,597	Real Estate Appraisals	Discount for appraisal type	8%	-	20%
Other Real Estate Owned		1,954	Real Estate Appraisals	Discount for appraisal type		12%
SBA servicing assets		362	Discounted Cash Flows	Market discount rates	14.73%	-	14.90%
December 31, 2019:
Impaired loans, net	$	18,132	Real Estate Appraisals	Discount for appraisal type	8%	-	20%
Other Real Estate Owned		2,400	Real Estate Appraisals	Discount for appraisal type		12%
SBA servicing assets		280	Discounted Cash Flows	Market discount rates	14.73%	-	14.90%

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

The estimated fair value amounts have been measured as of September 30, 2020 and December 31, 2019, 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.

Note 14. Subsequent Events

As noted in Note 4, the Bank had approximately $244.4 million of loans to borrowers that had been modified to defer the payment of interest and/or principal for up to 180 days pursuant to the CARES Act. The majority of the modifications granted to customers expired as of November 13, 2020, the balance of loans modified in conjunction with the CARES Act had declined to $59.1 million.

42

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 re-pricing 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) demand for loans and deposits in our market area;

(9) 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;

(10) 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;

(11) the application of generally accepted accounting principles in the United States of America (“U.S. GAAP”), consistently applied ;

(12) the fact that one period of reported results may not be indicative of future periods;

(13) 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 other such factors, including risk factors, as may be described in the Company’s other filings with the Securities and Exchange Commission (the “SEC”);

(14) political, social, legal and economic instability, civil unrest, war, catastrophic events, acts of terrorism;

(15) widespread outbreaks of infectious diseases, including the ongoing novel coronavirus ( COVID-19) outbreak;

(16) changes in the level and direction of loan delinquencies and write-offs and changes in estimates of the adequacy of the allowance for loan losses;

(17) our ability to access cost-effective funding;

(18) our ability to implement and change our business strategies;

(19) changes in the quality or composition of our loan or investment portfolios;

(20) technological changes that may be more difficult or expensive than expected;

(21) our ability to manage market risk, credit risk and operational risk in the current economic environment;

(22) our ability to enter new markets successfully and capitalize on growth opportunities;

(23) changes in consumer spending, borrowing and savings habits;

(24) our ability to retain key employees; and

(25) our compensation expense associated with equity allocated or awarded to our employees

The following discussion should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 filed with the SEC on April 29, 2020 (the “2019 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.

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Coronavirus Aid, Relief, and Economic Security Act

In response to the COVID-19 pandemic, President Trump signed into law the Coronavirus Aid, Relief and Economic Security (CARES) Act on March 27, 2020. Among other things, the CARES Act included the following provisions impacting financial institutions:

Legal Lending Limit Waiver. The CARES Act permits the OCC to waive legal lending limits to any particular borrower (i) with respect to loans to non-bank financial companies or (ii) upon a finding by the OCC that such exemption is in the public interest, with respect to any other borrower, in each case until the earlier of the termination date of the national emergency or December 31, 2020.

Community Bank Leverage Ratio. The CARES Act directs federal banking agencies to adopt interim final rules to lower the threshold under the CBLR from 9% to 8% and to provide a reasonable grace period for a community bank that falls below the threshold to regain compliance, in each case until the earlier of the termination date of the national emergency or December 31, 2020. In April 2020, the federal bank regulatory agencies issued two interim final rules implementing this directive. One interim final rule provides that, as of the second quarter 2020, banking organizations with leverage ratios of 8% or greater (and that meet the other existing qualifying criteria) may elect to use the CBLR framework. It also establishes a two-quarter grace period for qualifying community banking organizations whose leverage ratios fall below the 8% CBLR requirement, so long as the banking organization maintains a leverage ratio of 7% or greater. The second interim final rule provides a transition from the temporary 8% CBLR requirement to a 9% CBLR requirement. It establishes a minimum CBLR of 8% for the second through fourth quarters of 2020, 8.5% for 2021, and 9% thereafter, and maintains a two-quarter grace period for qualifying community banking organizations whose leverage ratios fall no more than 100 basis points below the applicable CBLR requirement.

Temporary Troubled Debt Restructurings (“TDRs”) Relief. The CARES Act allows banks to elect to suspend requirements under U.S. GAAP for loan modifications related to the COVID-19 pandemic (for loans that were not more than 30 days past due as of December 31, 2019) that would otherwise be categorized as a TDR, including impairment for accounting purposes, until the earlier of 60 days after the termination date of the national emergency or December 31, 2020. Federal banking agencies are required to defer to the determination of the banks making such suspension. In addition, on April 7, 2020, a group of banking regulatory agencies issued a revised interagency statement that offers practical expedients for evaluating whether COVID-19 loan modifications are TDRs.

Small Business Administration Paycheck Protection Program. The CARES Act created the SBA’s Paycheck Protection Program. Under the Paycheck Protection Program, $669 billion was authorized for small business loans to pay payroll and group health costs, salaries and commissions, mortgage and rent payments, utilities, and interest on other debt. The loans are provided through participating financial institutions that process loan applications and service the loans. The Bank did not participate in the SBA’s Paycheck Protection Program in the nine-month period as of September 30, 2020.

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The ongoing COVID-19 pandemic and measures intended to prevent its spread could have a material adverse effect on our business, results of operations and financial condition, and such effects will depend on future developments, which are highly uncertain and are difficult to predict.

Global health concerns relating to the COVID-19 outbreak and related government actions taken to reduce the spread of the virus have been weighing on the macroeconomic environment, and the outbreak has significantly increased economic uncertainty and reduced economic activity. The outbreak has resulted in authorities implementing numerous measures to try to contain the virus, such as travel bans and restrictions, quarantines, shelter in place or total lock-down orders and business limitations and shutdowns. Such measures have significantly contributed to rising unemployment and negatively impacted consumer and business spending. The United States government has taken steps to attempt to mitigate some of the more severe anticipated economic effects of the virus, including the passage of the CARES Act, but there can be no assurance that such steps will be effective or achieve their desired results in a timely fashion.

The outbreak has adversely impacted and is likely to further adversely impact our operations and the operations of our borrowers, customers and business partners. In particular, we may experience financial losses due to a number of operational factors impacting us or our borrowers, customers or business partners, including but not limited to:

● credit losses resulting from financial stress being experienced by our borrowers as a result of the outbreak and related governmental actions, particularly in the hospitality, energy, retail and restaurant industries, but across other industries as well;

● declines in collateral values;

● third party disruptions, including outages at network providers and other suppliers;

● increased cyber and payment fraud risk, as cybercriminals attempt to profit from the disruption, given increased online and remote activity; and

● operational failures due to changes in our normal business practices necessitated by the outbreak and related governmental actions.

These factors may remain prevalent for a significant period of time and may continue to adversely affect our business, results of operations and financial condition even after the COVID-19 outbreak has subsided.

The extent to which the coronavirus outbreak impacts our business, results of operations and financial condition will depend on future developments, which are highly uncertain and are difficult to predict, including, but not limited to, the duration and spread of the outbreak, its severity, the actions to contain the virus or treat its impact, and how quickly and to what extent normal economic and operating conditions can resume.

CRITICAL ACCOUNTING POLICIES

The preparation of consolidated financial statements in accordance with U.S. 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 the accounting for the allowance for loan and lease losses, the analysis and valuation of its investment securities, the valuation of deferred tax assets, the impairment of goodwill, the valuation of derivatives, and the valuation of servicing assets as certain of 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 2019 Form 10-K for additional information.

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Summary

The Company reported net loss for the third quarter of 2020 of $87,000 ($0.02 basic and diluted loss per share) compared to a net income of $27,000 ($0.01 basic and diluted earnings per share) for the third quarter of 2019. The loss before income taxes was $93,000 for third quarter of 2020, as compared to $35,000 income before income taxes for the third quarter of 2019.

For the nine months ended September 30, 2020, the Company reported net loss of $2.4 million ($0.62 basic and diluted loss per share), compared to a net loss of $1.3 million ($0.33 basic and diluted loss per share) for the nine months ended September 30, 2019.

The 2020 results reflected the impact of a higher loan loss provision associated with credit losses relating to the COVID-19 pandemic along with lower net interest income and non-interest income. The lower net interest income was due to a tightening of net interest margins associated with the lower market interest rates.

The Company expects to return to profitability once the impact of the COVID-19 pandemic is fully absorbed in its assessment of credit losses and when its investments in the expansion of its SBA business and deposit raising initiatives (including prepaid debit card deposits) begin to result in stronger net interest and non-interest income. The Company continues to work collaboratively with the OCC and intends to fully resolve all matters associated with the OCC Formal Agreement to the full satisfaction of the OCC.

Financial Condition

As of September 30, 2020, total assets decreased to $922.9 million, as compared to $979.8 million at December 31, 2019. Net Loan portfolio decreased $61.9 million or 7.7% from $802.0 million at December 31, 2019 to $740.1 million at September 30, 2020. Deposits decreased $42.1 million or 5.5% from $769.5 million at December 31, 2019 to $727.4 million at September 30, 2020 as the result of a decline in wholesale brokered deposits.

Equity decreased $2.5 million or 3.7%, from $67.0 million at December 31, 2019 to $64.5 million at September 30, 2020, primarily due to $2.4 million of net loss and $143,000 of unrealized loss on investment portfolio, net of taxes, which was partially offset by $123,000 of equity compensation in 2020.

Cash and Cash Equivalents

Cash and cash equivalents increased $10.2 million, from $39.4 million at December 31, 2019 to $49.6 million at September 30, 2020. The increase in 2020 was primarily attributable to increasing retail deposits and net decrease in loan portfolio through paydown of the loans - both of which are currently invested in short term cash positions. The Company’s liquidity position is strong with liquid assets rising to 11.0% of total assets at September 30, 2020.

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)	September 30,		December 31,		Increase / (Decrease)
	2020		2019		($)			(%)
U. S. Government agency mortgage-backed securities	$	15,705	$	16,685	$	(980	)	-5.87	%
Corporate bonds		17,250		17,313		(63	)	-0.36	%
Subordinated notes		9,013		9,204		(191	)	-2.08	%
SBA loan pools		5,301		5,115		186		3.64	%
Municipal bonds		554		-		554		100.00	%
Total Available-for-Sale Securities, at fair value		47,823		48,317		(494	)	-1.02	%
Other Investments, at cost		4,450		4,450		-		0.00	%
	$	52,273	$	52,767	$	(494	)	-0.94	%

46

Total investments decreased by $494,000 or 0.9%, from $52.8 million at December 31, 2019 to $52.2 million at September 30, 2020. This decrease was primarily attributable to repayments of $6.7 million principal and $193,000 change in unrealized loss on available-for-sale securities, which was offsets by purchases of $4.9 million U.S. Government agency mortgage-backed securities, $988,000 SBA loan pools and $565,000 municipal bonds. There were no sales of available-for-sale securities in the three and nine months ended September 30, 2020.

Loans held for investment

The following table provides the composition of the Company’s loan held for investment portfolio as of September 30, 2020 and December 31, 2019:

(In thousands)	September 30, 2020						December 31, 2019
	Amount			%			Amount			%
Loan portfolio segment:
Commercial Real Estate	$	292,067			38.88	%	$	314,414			38.71	%
Residential Real Estate		162,976			21.69	%		175,489			21.61	%
Commercial and Industrial		147,248			19.60	%		173,875			21.41	%
Consumer and Other		73,127			9.73	%		85,934			10.58	%
Construction		61,534			8.19	%		48,388			5.96	%
Construction to permanent - CRE		14,346			1.91	%		14,064			1.73	%
Loans receivable, gross		751,298			100.00	%		812,164			100.00	%
Allowance for loan losses		(11,171	)					(10,115	)
Loans receivable, net	$	740,127					$	802,049

The Company’s gross loan portfolio decreased $60.9 million, from $812.2 million at December 31, 2019 to $751.3 million at September 30, 2020. The decrease in loans was primarily attributable to $95.5 million net paydown of the loans and a reclass of $5.0 million commercial and industrial loan from loans held for investments to loans held for sale, which was offset by $31.5 million in purchases of loans receivable and $9.5 million transfer of SBA loans held for sale to loans held for investment in the nine months ended September 30, 2020.

SBA loans held for investment were included in the commercial real estate loans and commercial and industrial loan classifications above. As of September 30, 2020 and December 31, 2019, SBA loans included in the commercial real estate loans were $5.7 million and $4.0 million, respectively. SBA loans included in the commercial and industrial loan were $15.8 million and $5.6 million as of September 30, 2020 and December 31, 2019, respectively. SBA loans of $9.5 million previously classified as held for sale were transferred to held for investment during the nine months ended September 30, 2020.

At September 30, 2020, the net loan to deposit ratio was 102% and the net loan to total assets ratio was 80%. At December 31, 2019, these ratios were 104% and 82%, respectively.

Allowance for Loan and Lease Losses

The allowance for loan and lease losses increased $1.1 million or 10.9% from $10.1 million at December 31, 2019 to $11.2 million at September 30, 2020. The increase was primarily attributable to a provision for loan losses of $1.8 million for the nine months ended September 30, 2020, which was primarily due to $810,000 charge-offs and an additional reserve related to the COVID-19 pandemic in the nine months ended September 30, 2020.

Based upon the overall assessment and evaluation of the loan portfolio at September 30, 2020, management believes $11.2 million in the allowance for loan and lease losses, which represented 1.5% of gross loans outstanding, is adequate under prevailing economic conditions to absorb existing losses in the loan portfolio.

47

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

	Three Month Ended September 30,						Nine months ended September 30,
(In thousands)	2020			2019			2020			2019
Balance at beginning of the period	$	11,148		$	8,458		$	10,115		$	7,609
Charge-offs:
Commercial Real Estate		(35	)		-			(400	)		-
Residential Real Estate		-			(105	)		(13	)		(117	)
Commercial and Industrial		(34	)		(74	)		(352	)		(2,366	)
Consumer and Other		(6	)		(103	)		(45	)		(106	)
Total charge-offs		(75	)		(282	)		(810	)		(2,589	)
Recoveries:
Commercial Real Estate		-			-			-			2
Residential Real Estate		1			9			1			9
Commercial and Industrial		11			117			62			164
Consumer and Other		1			3			4			8
Total recoveries		13			129			67			183
Net charge-offs		(62	)		(153	)		(743	)		(2,406	)
Provision charged to earnings		85			100			1,799			3,202
Balance at end of the period	$	11,171		$	8,405		$	11,171		$	8,405
Ratios:
Net charge-offs to average loans		(0.008	)%		(0.019	)%		(0.092	)%		(0.301	)%
Allowance for loan losses to total loans		1.49	%		1.05	%		1.49	%		1.05	%

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)	September 30, 2020					December 31, 2019
	Allowance for loan losses		% of loans			Allowance for loan losses		% of loans
Commercial Real Estate	$	4,397		38.88	%	$	3,789		38.71	%
Residential Real Estate		1,537		21.69	%		1,038		21.61	%
Commercial and Industrial		3,470		19.60	%		4,340		21.41	%
Consumer and Other		540		9.73	%		341		10.58	%
Construction		818		8.19	%		477		5.96	%
Construction to permanent - CRE		189		1.91	%		130		1.73	%
Unallocated		220		N/A			-		N/A
Total	$	11,171		100.00	%	$	10,115		100.00	%

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Non-performing Assets

The following table presents non-performing assets as of September 30, 2020 and December 31, 2019:

(In thousands)	September 30,			December 31,
	2020			2019
Non-accruing loans:
Commercial Real Estate	$	14,447		$	11,961
Residential Real Estate		3,292			3,228
Commercial and Industrial		1,706			2,094
Consumer and Other		995			766
Total non-accruing loans		20,440			18,049
Loans past due over 90 days and still accruing		679			19
Other real estate owned		1,954			2,400
Total nonperforming assets	$	23,073		$	20,468
Nonperforming assets to total assets		2.50	%		2.09	%
Nonperforming loans to total loans, net		2.85	%		2.25	%

The $20.4 million of non-accrual loans at September 30, 2020 was comprised of 23 borrowers, for which a specific reserve of $1.6 million was established. Three TDR loans of total $9.4 million were included in the non-accrual loans. For collateral dependent loans, the Bank has obtained appraisal reports from independent licensed appraisal firms and discounted those values based on the Bank’s experience selling OREO properties and for estimated selling costs to determine estimated impairment. For cash flow dependent loans, the Bank determined the reserve based on the present value of expected future cash flows discounted at the loan's effective interest rate. The Bank evaluated the impaired loans individually and determined that a specific reserve of $1.6 million was established as of September 30, 2020.

As of December 31, 2019, the $18.0 million of non-accrual loans was comprised of 27 borrowers, for which a specific reserve of $1.5 million was established. Two TDR loans of total $9.3 million were included in the non-accrual loans as of December 31, 2019.

Loans held for sale

In September 2020, one commercial and industry loan of $5.0 million was reclassed from loans held for investment to loans held for sale. The loan was sold in October 2020 which resulted in proceeds of $5.0 million.

SBA loans held for sale totaled $1.8 million and $15.3 million as of September 30, 2020 and December 31, 2019, respectively. SBA loans held for sale represent the guaranteed portion of SBA loans and are reflected at the lower of aggregate cost or market value. SBA loans held for sale at September 30, 2020, consisted of $851,000 commercial and industrial loans and $950.000 commercial real estate, respectively. SBA loans held for sale at December 31, 2019, consisted of $10.2 million commercial and industrial loans and $5.1 million commercial real estate, respectively. The decrease in SBA loans held for sale was primary due to $9.5 million transfer of SBA loans held for sale to held for investment, and $5.6 million sale of SBA loans in the nine months ended September 30, 2020.

Goodwill

The Company completed its acquisition of Prime Bank in May 2018, and recorded $1.7 million of goodwill at December 31, 2018. The goodwill was adjusted to $1.1 million as a result of reducing by $621,000 the estimated amount to be paid pursuant to certain problem loans pending resolution as of May 10, 2019. No further adjustment was made as of September 30, 2020.

The Company identified the COVID-19 pandemic and related reported losses as a triggering event in the first quarter of 2020. Due to this triggering event, the Company performed a qualitative assessment of the goodwill, and concluded it was more likely than not that the fair value of the reporting unit exceeded its carrying value, and goodwill was not impaired. The Company did not perform an interim goodwill test in the third quarter of 2020 as no events occurred which would trigger an impairment assessment. The Company will perform a quantitative assessment as of October 31, 2020, the Company’s annual goodwill impairment measurement date.

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Deferred Taxes

Deferred tax assets increased $1.0 million, from $11.1 million at December 31, 2019 to $12.1 million at September 30, 2020. The increase in deferred tax assets resulted primarily from the impact of net loss and currently non-deductible reserves and accruals in the nine months ended September 30, 2020.

Our effective (tax) benefit rate for the three and nine months ended September 30, 2020 was 6.5% and 25.0%, respectively, compared to the effective (tax) benefit rate of (22.9%) and 25.9% for the three and nine months ended September 30, 2019, respectively. The Company’s effective rates for both periods were affected primarily by states taxes and non-deductible expenses.

Patriot anticipates utilizing the net operating loss carry forwards to reduce income taxes otherwise payable on current and future years taxable income.

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.

On March 27, 2020, the CARES Act was signed into law. The CARES Act includes provisions relating to refundable payroll tax credits, deferment of the employer portion of certain payroll taxes, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. While the Company continues to evaluate the impact of the CARES Act, it does not currently believe it will have a material impact on the Company’s income taxes or related disclosures.

Deposits

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

(In thousands)	September 30,		December 31,		Increase/(Decrease)
	2020		2019		$			%
Non-interest bearing	$	161,871	$	88,135	$	73,736			83.66	%
Interest bearing:
NOW		29,518		26,864		2,654			9.88	%
Savings		91,169		64,020		27,149			42.41	%
Money market		142,909		99,115		43,794			44.19	%
Certificates of deposit, less than $250,000		160,610		193,942		(33,332	)		(17.19	)%
Certificates of deposit, $250,000 or greater		50,359		67,550		(17,191	)		(25.45	)%
Brokered deposits		90,995		229,909		(138,914	)		(60.42	)%
Total Interest bearing		565,560		681,400		(115,840	)		(17.00	)%
Total Deposits	$	727,431	$	769,535	$	(42,104	)		(5.47	)%

Deposits decreased $42.1 million or 5.5%, from $769.5 million at December 31, 2019 to $727.4 million at September 30, 2020, resulting primarily from a reduction of $138.9 million in higher cost brokered deposits as those balances were allowed to roll off in connection with the planned decline in outstanding loan balances, which was partially offset by an increase in money market deposits impacted by the roll-out of the Company’s national on-line money market account which added $25.2 million to the money market balance, and $60.0 million increase in non-interest bearing deposits related to the prepaid debit card business through September 30, 2020.

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Borrowings

Total borrowings were $120.8 million and $130.9 million as of September 30, 2020 and December 31, 2019, respectively. Borrowings consist primarily of FHLB advances, senior notes, subordinated notes, junior subordinated debentures and a note payable. The senior notes, subordinated notes and junior subordinated debentures 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.

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 September 30, 2020, the Bank had $88.3 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 September 30, 2020 and December 31, 2019, outstanding advances from the FHLB-B aggregated $90.0 million and $100.0 million, respectively.

At September 30, 2020, advances of $80.0 million outstanding bore fixed rates of interest ranging from 2.40% to 3.61% with maturities ranging from 2.8 years to 4.0 years. The FHLB-B advances with fixed interest rates have a weighted average interest rate of 3.13%. Included in the fixed rate advances are two advances totaling $50.0 million, callable by the FHLB-B quarterly through October 2023.

The remaining $10.0 million floating to fixed rate advance resets to a fixed rate in October of 2020. During its initial term (two years), this advance carries a floating rate 100 basis points below LIBOR. After the initial term, the rate resets to a fixed rate of 4.23% per annum, and the borrowing can be called by the FHLB-B on a quarterly basis.

At September 30, 2020, collateral for FHLB-B borrowings consisted of a mixture of real estate loans and securities with book value of $284.2 million.

In addition, Patriot has a $2.0 million revolving line of credit with the FHLB-B. For the three and nine months ended September 30, 2020 and 2019, no funds had been borrowed under the line of credit.

Interest expenses incurred for the three and nine months ended September 30, 2020 were $628,000 and $2.0 million, respectively. Interest expenses incurred for the three and nine months ended September 30, 2019 were $602,000 and $1.5 million, 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 September 30, 2020 and $5 million at December 31, 2019. The purpose of the agreements is to provide a credit facility intended to satisfy overnight federal account balance requirements and to provide for daily settlement of FRB, Automated Clearing House (ACH), and other clearinghouse transactions.

There was no outstanding balance under the agreements at September 30, 2020 and December 31, 2019. No interest expense incurred for the three and nine months ended September 30, 2020. Interest expense incurred for the three and nine months ended September 30, 2019 was $0 and $2,000, respectively.

Other Borrowing

In August 2020, Patriot was approved to pledge commercial and industrial loans and leases, commercial real estate, construction loans and one-to-four family first lien loans under the Federal Reserve Bank of New York’s (“FRBNY”) Borrower-in-Custody program. As of September 30, 2020, Patriot had pledged eligible loans with a book value of $27.4 million as collateral to support borrowing capacity at the FRBNY. There was no outstanding balance under the agreements at September 30, 2020.

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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 September 30, 2020 and December 31, 2019, $91,000 and $147,000 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 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.

For the three and nine months ended September 30, 2020, the Company recognized interest expense of $229,000 and $686,000, respectively. For the three and nine months ended September 30, 2019, the Company recognized interest expense of $229,000 and $686,000, 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, September 30, 2023, payable semi-annually in arrears. From and including September 30, 2023, until but excluding September 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 September 30, 2023 and on any scheduled interest payment date thereafter, redeem the Subordinated Notes. Interest payable on the Subordinated Notes began 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 September 30, 2020 and December 31, 2019, $226,000 and $248,000 of unamortized debt issuance costs were deducted from the face amount of the Subordinated Notes included in the consolidated balance sheet, respectively.

For the three and nine months ended September 30, 2020, the Company recognized interest expense of $163,000 and $490,000, respectively. For the three and nine months ended September 30, 2019, the Company recognized interest expense of $163,000 and $492,000, 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.

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The junior subordinated debentures bear interest at three-month LIBOR plus 3.15% (3.38% at September 30, 2020) 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 September 30, 2020 and December 31, 2019, the unamortized placement fee deducted from the face amount of the junior subordinated debt owed to the unconsolidated trust amounted to $140,000 and $146,000, respectively, and accrued interest on the junior subordinated debentures was $4,000 and $6,000, respectively.

For the three and nine months ended September 30, 2020, the Company recognized interest expense of $72,000 and $266,000 respectively. For the three and nine months ended September 30, 2019, the Company recognized interest expense of $114,000 and $353,000 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.

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 September 30, 2020 and December 31, 2019, the note had a balance outstanding of $1.0 million and $1.2 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 and nine months ended September 30, 2020, the Company recognized interest expense of $5,000 and $15,000 respectively. For the three and nine months ended September 30, 2019, the Company recognized interest expense of $6,000 and $18,000 respectively.

Equity

Equity decreased $2.5 million, from $67.0 million at December 31, 2019 to $64.5 million at September 30, 2020, primarily due to $2.4 million of net loss and $143,000 of net investment portfolio unrealized loss, which was offset by $123,000 of equity compensation for the nine months ended September 30, 2020.

Off-Balance Sheet Commitments

The Company’s off-balance sheet commitments, which primarily consist of commitments to lend, increased $5.2 million from $145.1 million at December 31, 2019 to $150.4 million at September 30, 2020.

Derivatives

As of September 30, 2020, Patriot had entered into four interest rate swaps (“swaps”). Two swaps are with a loan customer to provide a facility to mitigate the fluctuations in the variable rate on the respective loan. The other two swaps are with an outside third party. The customer interest rate swaps are matched in offsetting terms to the third party interest rate swaps. The swaps are reported at fair value in other assets or other liabilities on the consolidated balance sheets. Patriot’s swaps are derivatives, but are not designated as hedging instruments, thus any net gain or loss resulting from changes in the fair value is recognized in other noninterest income. The Company recognized no gain on the swaps for the three and nine months ended September 30, 2020 and 2019, respectively.

Further discussion of the fair value of derivatives is set forth in Note 8 to the consolidated financial statements.

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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 and nine months ended September 30, 2020 and 2019:

(In thousands)	Three months ended September 30,
	2020							2019
	Daily Average Balance ($)			Interest ($)		Yield (%)		Daily Average Balance ($)			Interest ($)		Yield (%)
ASSETS
Interest Earning Assets:
Loans	$	775,172		$	8,578		4.39	$	815,573		$	10,245		4.98
Investments		60,421			425		2.81		59,311			542		3.66
Cash equivalents and other		60,795			28		0.18		41,925			225		2.13
Total interest earning assets		896,388			9,031		4.00		916,809			11,012		4.77
Cash and due from banks		2,578							3,525
Allowance for loan losses		(11,359	)						(8,495	)
OREO		2,303							2,913
Other assets		63,583							58,481
Total Assets	$	953,493						$	973,233
Liabilities
Interest bearing liabilities:
Deposits	$	618,946		$	2,028		1.30	$	686,594		$	3,655		2.11
Borrowings		90,000			628		2.77		94,565			602		2.53
Senior notes		11,898			229		7.70		11,823			229		7.75
Subordinated debt		17,877			235		5.22		17,839			277		6.16
Note Payable and other		1,060			5		1.89		1,257			6		1.91
Total interest bearing liabilities		739,781			3,125		1.68		812,078			4,769		2.33
Demand deposits		139,944							83,546
Other liabilities		9,045							8,765
Total Liabilities		888,770							904,389
Shareholders' equity		64,723							68,844
Total Liabilities and Shareholders' Equity	$	953,493						$	973,233
Net interest income				$	5,906						$	6,243
Interest margin							2.61							2.70
Interest spread							2.32							2.44

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(In thousands)	Nine months ended September 30,
	2020							2019
	Daily Average Balance ($)			Interest ($)		Yield (%)		Daily Average Balance ($)			Interest ($)		Yield (%)
ASSETS
Interest Earning Assets:
Loans	$	809,569		$	27,722		4.56	$	800,541		$	30,345		5.07
Investments		59,017			1,447		3.27		55,492			1,551		3.73
Cash equivalents and other		50,796			187		0.49		47,211			795		2.25
Total interest earning assets		919,382			29,356		4.25		903,244			32,691		4.84
Cash and due from banks		2,287							5,827
Allowance for loan losses		(10,813	)						(7,975	)
OREO		2,367							2,602
Other assets		61,722							59,253
Total Assets	$	974,945						$	962,951
Liabilities
Interest bearing liabilities:
Deposits	$	672,780		$	8,020		1.59	$	679,335		$	10,452		2.06
Borrowings		93,298			1,963		2.80		92,381			1,467		2.12
Senior notes		11,879			686		7.70		11,804			686		7.75
Subordinated debt		17,867			756		5.64		17,830			845		6.34
Note Payable and other		1,110			15		1.80		1,416			20		1.89
Total interest bearing liabilities		796,934			11,440		1.91		802,766			13,470		2.24
Demand deposits		103,313							81,662
Other liabilities		8,954							8,725
Total Liabilities		909,201							893,153
Shareholders' equity		65,744							69,798
Total Liabilities and Shareholders' Equity	$	974,945						$	962,951
Net interest income				$	17,916						$	19,221
Interest margin							2.60							2.85
Interest spread							2.34							2.60

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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 and nine months ended September 30, 2020 and 2019:

	Three Months Ended September 30,									Nine Months Ended September 30,
	2020 compared to 2019									2020 compared to 2019
(In thousands)	Increase/(Decrease)									Increase/(Decrease)
	Volume			Rate			Total			Volume			Rate			Total
Interest Earning Assets:
Loans	$	(471	)	$	(1,196	)	$	(1,667	)	$	303		$	(2,926	)	$	(2,623	)
Investments		9			(126	)		(117	)		94			(198	)		(104	)
Cash equivalents and other		101			(298	)		(197	)		62			(670	)		(608	)
Total interest earning assets		(361	)		(1,620	)		(1,981	)		459			(3,794	)		(3,335	)
Interest bearing liabilities:
Deposit		(589	)		(1,038	)		(1,627	)		(318	)		(2,114	)		(2,432	)
Borrowings		(29	)		55			26			17			479			496
Senior notes		-			-			-			-			-			-
Subordinated debt		-			(42	)		(42	)		-			(89	)		(89	)
Note payable and other		(1	)		-			(1	)		(5	)		-			(5	)
Total interest bearing liabilities		(619	)		(1,025	)		(1,644	)		(306	)		(1,724	)		(2,030	)
Net interest income	$	258		$	(595	)	$	(337	)	$	765		$	(2,070	)	$	(1,305	)

For the quarter ended September 30, 2020, interest income and dividend income decreased $2.0 million or 18.0% as compared to the quarter ended September 30, 2019. Total interest expense decreased $1.6 million or 34.5% as compared to the quarter ended September 30, 2019. For the nine months ended September 30, 2020, interest income decreased $3.3 million or 10.2% as compared to the nine months ended September 30, 2019. Total interest expense decreased $2.0 million or 15.1% as compared to the nine months ended September 30, 2019.

Net interest income was $5.9 million for the quarter ended September 30, 2020, which decreased 5.4% from $6.2 million for the quarter ended September 30, 2019. For the nine months ended September 30, 2020, net interest income was $17.9 million, decreased 6.8% from $19.2 million for the nine months ended September 30, 2019.

Net interest margin for the three and nine months ended September 30, 2020 were 2.61% and 2.60%, respectively. Net interest margin for the three and nine months ended September 30, 2019, were 2.70% and 2.85%, respectively.

The decline in net interest income and net interest margin reflects the impact of lower interest rates connected with the 1.50% decline in market interest rates in late first quarter of 2020 connected to the COVID 19 pandemic. Asset yields were impacted by those changes in the second quarter while retail and brokered deposit rates have declined at a slower pace. Compared to the prior year, net interest income was also negatively impacted by lower average loan volume and an increase in the rate paid on FHLB borrowings associated with the conversion of certain borrowings from a low variable teaser rate to higher fixed rate.

Provision for Loan Losses

The provision for loan losses for three and nine months ended September 30, 2020 was $85,000 and $1.8 million, respectively, as compared to $100,000 and $3.2 million for the three and nine months ended September 30, 2019, respectively. The provision for loan losses in 2020 was primarily due to loan charge-offs and an additional reserve attributable to COVID-19 pandemic. The provision for loan losses in 2019 was primarily attributable to a $2.3 million single commercial loan charge off.

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Non-interest income

Non-interest income for the three and nine months ended September 30, 2020 was $704,000 and $1.5 million, respectively, as compared to $571,000 and $2.1 million for the three and nine months ended September 30, 2019, respectively. The reduction for the nine-month period was primarily attributable to decrease in gain on sale of SBA loans in the nine months ended September 30, 2020 associated with delays in executing the sale of those loans. Sale activity did resume in the third quarter of 2020 and is expected to continue in the fourth quarter of 2020.

Non-interest expense

Non-interest expense for the three and nine months ended September 30, 2020 was $6.6 million and $20.9 million, respectively, as compared to $6.7 million and $19.9 million for the three and nine months ended September 30, 2019, respectively. The increase in non-interest expense for the nine months ended September 30, 2020 was primarily driven by increase of $700,000 in salaries and benefits reflecting the build-up of staffing in the SBA business during the second half of 2019.

Provision (benefit) for income taxes

The Company reported benefit for income taxes of $6,000 and $811,000 for three and nine months ended September 30, 2020, respectively, as compared to a provision for income taxes of $8,000 and a benefit for income taxes of $456,000 for the three and nine months ended September 30, 2019, respectively. The changes mainly reflected the impact of the net loss and non-deductible reserves and accruals in 2020.

Liquidity

The Company’s balance sheet liquidity to total assets ratio was 11.0% at September 30, 2020, compared to 10.0% at December 31, 2019. Liquidity including readily available off-balance sheet funding sources was 24.3% at September 30, 2020, compared to 17.3% at December 31, 2019. The Company’s available total liquidity (readily available plus brokered deposit availability) to total assets ratio was 38.8% at September 30, 2020, compared to 18.2% at December 31, 2019.

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 September 30, 2020 and December 31, 2019:

	Patriot National Bancorp, Inc.								Patriot Bank, N.A.
(In thousands)	September 30, 2020				December 31, 2019				September 30, 2020				December 31, 2019
	Amount ($)		Ratio (%)		Amount ($)		Ratio (%)		Amount ($)		Ratio (%)		Amount ($)		Ratio (%)
Total Capital (to risk weighted assets)	$	87,925		10.924	$	90,083		10.510	$	98,800		12.332	$	100,953		11.826
Tier 1 Capital (to risk weighted assets)		67,850		8.430		69,957		8.161		88,772		11.081		90,827		10.640
Common Equity Tier 1 Capital (to risk weighted assets)		59,850		7.436		61,957		7.228		88,772		11.081		90,827		10.640
Tier 1 Leverage Capital (to average assets)		67,850		7.150		69,957		7.148		88,772		9.352		90,827		9.279

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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 9.0%, 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 capital conversation buffer increased to 2.5% for 2019 and 2020, which has been included in the minimum capital adequacy ratios in the table above.

The capital buffer requirement effectively raises the Bank’s 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. As of September 30, 2020, Patriot satisfies all capital adequacy requirements on a fully phased-in basis.

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

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.

58

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.

59

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 September 30, 2020						As of December 31, 2019
Projected Interest Rate Scenario	Estimated Value		Change from Base ($)		Change from Base (%)		Estimated Value		Change from Base ($)			Change from Base (%)
+200	$	105,962		1,616		1.5	$	115,401	$	(4,473	)		(3.7	)
+100		105,713		1,367		1.3		119,249		(625	)		(0.5	)
BASE		104,346		-		-		119,874		-			-
-100		109,812		5,466		5.2		119,167		(707	)		(0.6	)
-200		128,927		24,581		23.6		117,418		(2,456	)		(2.0	)

(In thousands)	Net Interest Income - Performance Summary
	September 30, 2020						December 31, 2019
Projected Interest Rate Scenario	Estimated Value		Change from Base ($)		Change from Base (%)		Estimated Value		Change from Base ($)			Change from Base (%)
+200	$	28,659	$	1,738		6.5	$	30,354	$	2,160			7.7
+100		27,784		863		3.2		29,385		1,191			4.2
BASE		26,921		-		-		28,194		-			-
-100		27,604		683		2.5		27,173		(1,021	)		(3.6	)
-200		27,669		748		2.8		26,280		(1,914	)		(6.8	)

60

Item 4: Disclosure Controls and Procedures

Evaluation of 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. Management has concluded that Patriot’s disclosure controls and procedures were effective for the period ended September 30, 2020.

Changes in Internal Control Over Financial Reporting

There were no changes in the Company’s internal controls over financial reporting have occurred during the Company’s fiscal quarter ended September 30, 2020 that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting despite the fact that virtually all of our employees are working remotely due to the COVID-19 pandemic. We are continually monitoring and assessing the COVID-19 situation on our internal controls over financial reporting to minimize any related impact on their effectiveness.

61

PART II - OTHER INFORMATION 

Item 1:      Legal Proceedings

From time to time we are a party to various litigation matters incidental to the conduct of our business and otherwise. We are not presently party to any legal proceedings the resolution of which we believe would have a material adverse effect on our business, future prospects, financial condition, liquidity, results of operation, cash flows or capital levels.

Item 5: Other Information

None

62

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)
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)	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)
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.

63

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: November 13, 2020

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

64

EX-31.1

EXHIBIT 31 (1)

Certification

By Chief Executive Officer

Pursuant to Rule 13a-14

I, Robert G. Russell, 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/ Robert G. Russell

Robert G. Russell

Chief Executive Officer

(Principal Executive Officer)

November 13, 2020

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)

November 13, 2020

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 September 30, 2020 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, Robert G. Russell 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/ Robert G. Russell

Robert G. Russell 

Chief Executive Officer

/s/ Joseph D. Perillo

Joseph D. Perillo

Chief Financial Officer

November 13, 2020

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	9 Months Ended
	Sep. 30, 2020	Nov. 10, 2020
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 Interactive Data Current	Yes
Entity Common Stock, Shares Outstanding (in shares)		3,937,041
Entity Shell Company	false
Document Type	10-Q
Document Period End Date	Sep. 30, 2020
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q3
Amendment Flag	false
Title of 12(b) Security	Common Stock

XML

Consolidated Balance Sheets (Current Period Unaudited) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Cash and due from banks:
Noninterest bearing deposits and cash	$ 3,231	$ 2,693
Interest bearing deposits	46,405	36,711
Total cash and cash equivalents	49,636	39,404
Investment securities:
Available-for-sale securities, at fair value	47,823	48,317
Other investments, at cost	4,450	4,450
Total investment securities	52,273	52,767
Federal Reserve Bank stock, at cost	2,783	2,897
Federal Home Loan Bank stock, at cost	4,503	4,477
Loans receivable (net of allowance for loan losses: 2020: $11,171 and 2019: $10,115)	740,127	802,049
Loans held for sale	6,824	15,282
Accrued interest and dividends receivable	6,834	3,603
Premises and equipment, net	33,632	34,568
Other real estate owned	1,954	2,400
Deferred tax asset, net	12,066	11,133
Goodwill	1,107	1,107
Core deposit intangible, net	567	623
Other assets	10,623	9,526
Total assets	922,929	979,836
Deposits:
Noninterest bearing deposits	161,871	88,135
Interest bearing deposits	565,560	681,400
Total deposits	727,431	769,535
Federal Home Loan Bank and correspondent bank borrowings	90,000	100,000
Senior notes, net	11,909	11,853
Subordinated debt, net	9,774	9,752
Junior subordinated debt owed to unconsolidated trust, net	8,108	8,102
Note payable	1,044	1,193
Advances from borrowers for taxes and insurance	2,492	3,681
Accrued expenses and other liabilities	7,634	8,726
Total liabilities	858,392	912,842
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; As of September 30, 2020: 4,010,782 shares issued; 3,937,041 shares outstanding; As of December 31, 2019: 4,004,410 shares issued; 3,930,669 shares outstanding	106,293	106,170
Accumulated deficit	(41,210)	(38,773)
Accumulated other comprehensive loss	(546)	(403)
Total shareholders' equity	64,537	66,994
Total liabilities and shareholders' equity	$ 922,929	$ 979,836

XML

Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Net of allowance for loan and lease losses	$ 11,171	$ 10,115
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)	4,010,782	4,004,410
Common stock, shares outstanding (in shares)	3,937,041	3,930,669

XML

Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Interest and Dividend Income
Interest and fees on loans	$ 8,578	$ 10,245	$ 27,722	$ 30,345
Interest on investment securities	340	430	1,134	1,207
Dividends on investment securities	85	112	313	344
Other interest income	28	225	187	795
Total interest and dividend income	9,031	11,012	29,356	32,691
Interest Expense
Interest on deposits	2,028	3,655	8,020	10,452
Interest on Federal Home Loan Bank borrowings	628	602	1,963	1,467
Interest on senior debt	229	229	686	686
Interest on subordinated debt	235	277	756	845
Interest on note payable and other	5	6	15	20
Total interest expense	3,125	4,769	11,440	13,470
Net interest income	5,906	6,243	17,916	19,221
Provision for Loan Losses	85	100	1,799	3,202
Net interest income after provision for loan losses	5,821	6,143	16,117	16,019
Non-interest Income
Loan application, inspection and processing fees	54	32	147	74
Deposit fees and service charges	73	123	253	366
Gains on sales of loans	380	188	464	864
Rental income	131	137	393	459
Other income	66	91	257	312
Total non-interest income	704	571	1,514	2,075
Non-interest Expense
Salaries and benefits	3,460	3,480	10,966	10,272
Occupancy and equipment expense	810	937	2,680	2,598
Data processing expense	433	357	1,194	1,088
Professional and other outside services	627	721	2,137	2,233
Project expenses, net	6	212	154	277
Advertising and promotional expense	107	63	377	255
Loan administration and processing expense	75	44	135	101
Regulatory assessments	355	152	1,159	862
Insurance expense, net	67	65	215	160
Communications, stationary and supplies	118	118	371	383
Other operating expense	560	530	1,491	1,626
Total non-interest expense	6,618	6,679	20,879	19,855
(Loss) income before income taxes	(93)	35	(3,248)	(1,761)
(Benefit) provision for income taxes	(6)	8	(811)	(456)
Net (loss) income	$ (87)	$ 27	$ (2,437)	$ (1,305)
Basic (loss) earnings per share (in dollars per share)	$ (0.02)	$ 0.01	$ (0.62)	$ (0.33)
Diluted (loss) earnings per share (in dollars per share)	$ (0.02)	$ 0.01	$ (0.62)	$ (0.33)

XML

Consolidated Statements of Comprehensive (Loss) Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Net (loss) income	$ (87)	$ 27	$ (2,437)	$ (1,305)
Other comprehensive income (loss)
Unrealized holding gain (loss) on securities	553	(215)	(193)	132
Income tax effect	(143)	57	50	(23)
Total other comprehensive income (loss)	410	(158)	(143)	109
Comprehensive income (loss)	$ 323	$ (131)	$ (2,580)	$ (1,196)

XML

Consolidated Statements of Shareholders' Equity (Unaudited) - USD ($) $ in Thousands	Cumulative Effect, Period of Adoption, Adjustment [Member] Common Stock Outstanding [Member]	Cumulative Effect, Period of Adoption, Adjustment [Member] Retained Earnings [Member]	Cumulative Effect, Period of Adoption, Adjustment [Member] AOCI Attributable to Parent [Member]	Cumulative Effect, Period of Adoption, Adjustment [Member]	Common Stock Outstanding [Member]	Retained Earnings [Member]	AOCI Attributable to Parent [Member]	Total
Balance (in shares) at Dec. 31, 2018					3,910,674
Balance at Dec. 31, 2018		$ (11)		$ (11)	$ 105,956	$ (35,790)	$ (826)	$ 69,340
Net (loss) income						(1,305)		(1,305)
Unrealized holding gain (loss) on available-for-sale securities, net of tax							109	109
Total comprehensive income						(1,305)	109	(1,196)
Share-based compensation expense					$ 162			162
Vesting of restricted stock (in shares)					14,328
Common stock dividends						(116)		(116)
Balance (in shares) at Sep. 30, 2019					3,925,002
Balance at Sep. 30, 2019					$ 106,118	(37,222)	(717)	68,179
Balance (in shares) at Jun. 30, 2019					3,922,610
Balance at Jun. 30, 2019					$ 106,059	(37,210)	(559)	68,290
Net (loss) income						27		27
Unrealized holding gain (loss) on available-for-sale securities, net of tax							(158)	(158)
Total comprehensive income						27	(158)	(131)
Share-based compensation expense					$ 59			59
Vesting of restricted stock (in shares)					2,392
Common stock dividends						(39)		(39)
Balance (in shares) at Sep. 30, 2019					3,925,002
Balance at Sep. 30, 2019					$ 106,118	(37,222)	(717)	68,179
Balance (in shares) at Dec. 31, 2019					3,930,669
Balance at Dec. 31, 2019					$ 106,170	(38,773)	(403)	66,994
Net (loss) income						(2,437)		(2,437)
Unrealized holding gain (loss) on available-for-sale securities, net of tax							(143)	(143)
Total comprehensive income						(2,437)	(143)	(2,580)
Share-based compensation expense					$ 123			123
Vesting of restricted stock (in shares)					6,372
Balance (in shares) at Sep. 30, 2020					3,937,041
Balance at Sep. 30, 2020					$ 106,293	(41,210)	(546)	64,537
Balance (in shares) at Jun. 30, 2020					3,935,841
Balance at Jun. 30, 2020					$ 106,251	(41,123)	(956)	64,172
Net (loss) income						(87)		(87)
Unrealized holding gain (loss) on available-for-sale securities, net of tax							410	410
Total comprehensive income						(87)	410	323
Share-based compensation expense					$ 42			42
Vesting of restricted stock (in shares)					1,200
Balance (in shares) at Sep. 30, 2020					3,937,041
Balance at Sep. 30, 2020					$ 106,293	$ (41,210)	$ (546)	$ 64,537

XML

Consolidated Statements of Cash Flows (Unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
Cash Flows from Operating Activities:
Net loss	$ (2,437,000)	$ (1,305,000)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Amortization (accretion) of investment premiums (discounts), net	168,000	(20,000)
Amortization and accretion of purchase loan premiums and discounts	589,000	702,000
Amortization of debt issuance costs	84,000	84,000
Amortization of core deposit intangible	56,000	56,000
Amortization of servicing assets of sold SBA loans	15,000	10,000
Provision for loan losses	1,799,000	3,202,000
Depreciation and amortization	1,144,000	1,201,000
Share-based compensation	123,000	162,000
Increase in deferred income taxes	(883,000)	(667,000)
Originations of SBA loans held for sale	(1,694,000)	(15,208,000)
Proceeds from sale of SBA loans held for sale	6,096,000	11,969,000
Gains on sale of SBA loans held for sale, net	(464,000)	(864,000)
Net loss on sale of other real estate owned	21,000	94,000
Changes in assets and liabilities:
(Increase) decrease in accrued interest and dividends receivable	(3,231,000)	228,000
Increase in other assets	(674,000)	(1,779,000)
(Decrease) increase in accrued expenses and other liabilities	(1,465,000)	700,000
Net cash used in operating activities	(753,000)	(1,435,000)
Cash Flows from Investing Activities:
Principal repayments on available-for-sale securities	6,674,000	2,588,000
Purchases of available-for-sale securities	(6,541,000)	(12,997,000)
Redemption (purchases) of Federal Reserve Bank stock	114,000	(23,000)
(Purchases) redemptions of Federal Home Loan Bank stock	(26,000)	451,000
Decrease in originated loans receivable, net	95,464,000	4,552,000
Purchases of loans receivable	(31,525,000)	(28,213,000)
Purchases of premises and equipment	(158,000)	(525,000)
Proceeds from sale of other real estate owned	425,000	897,000
Refund of escrow deposit related to acquisition activity		500,000
Net cash provided by (used in) investing activities	64,427,000	(32,770,000)
Cash Flows from Financing Activities:
(Decrease) increase in deposits, net	(92,102,000)	18,775,000
Purchases of deposits	49,998,000
Repayments of FHLB borrowings	(10,000,000)
Principal repayments of note payable	(149,000)	(146,000)
Decrease in advances from borrowers for taxes and insurance	(1,189,000)	(744,000)
Dividends paid on common stock		(116,000)
Net cash (used in) provided by financing activities	(53,442,000)	17,769,000
Net increase (decrease) in cash and cash equivalents	10,232,000	(16,436,000)
Cash and cash equivalents at beginning of period	39,404,000	66,437,000
Cash and cash equivalents at end of period	49,636,000	50,001,000
Supplemental Disclosures of Cash Flow Information:
Cash paid for interest	12,237,000	12,996,000
Cash (refund) paid for income taxes, net	(193,000)	22,000
Non-cash transactions:
Purchase of premises and equipment	50,000	124,000
Increase in accrued expense and other liabilities	(50,000)	(124,000)
Transfers of loans receivable to other real estate owned		446,000
Transfers of loans receivable to loans held for sale	5,022,000
Operating lease right-of-use assets	57,000	3,267,000
Operating lease liabilities	(57,000)	(3,364,000)
Accrued liability for OREO sale		86,000
Capitalized servicing assets	115,000	169,000
Contingent liability assumed in business combination		621,000
SBA CARES Act Paycheck Protection Program [Member]
Non-cash transactions:
Transfers of SBA loans held for sale to loans receivable	9,542,000
Interest Rate Swap [Member]
Non-cash transactions:
Increase in interest rate swaps assets	609,000
Increase in interest rate swaps liabilities	$ (609,000)

XML

Note 1 - Basis of Financial Statement Presentation

9 Months Ended

Sep. 30, 2020

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 subsidiaries Patriot Bank, N.A. (the “Bank”) , Patriot National Statutory Trust I and PinPat Acquisition Corporation (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, 2019.

The consolidated balance sheet at

December 31, 2019

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.

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, the impairment of goodwill, the valuation of derivatives, and the valuation of servicing assets as certain of the Company's more significant accounting policies and estimates, in that they are critical to the presentation of the Company's consolidated 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 the Company's consolidated financial statements.

Reclassifications:

Certain amounts appearing in the financial statements and notes thereto for prior periods have been reclassified to conform with the current presentation. The reclassifications had

no

effect on net income or stockholders' equity as previously reported.

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

and

nine

months ended

September 30, 2020

are

not

necessarily indicative of the results of operations that

may

be expected for the remainder of

2020.

COVID-

19

Impact

In

March 2020,

the World Health Organization declared novel coronavirus disease

2019

("COVID-

19"

) as a global pandemic. The COVID-

19

pandemic has negatively impacted the global and U.S. economies. Many businesses in the U.S., including those in the markets we serve, were required to close, causing a significant increase in unemployment and loss of revenue.

The consolidated financial statements reflect estimates and assumptions that affect the reported amounts of assets and liabilities, including the amount of the allowance for loan losses. The assumptions and estimates used in the financial statements were impacted by the COVID-

19

pandemic. The COVID-

19

pandemic did have an adverse impact on our earnings and resulted in an increase to the allowance for loan losses when compared to the same period in

2019.

We are unable to estimate the full impact of COVID-

19

on our business and operations at this time. The extent of such impact will depend on future developments, which are highly uncertain, including when COVID-

19

can be controlled and abated and when and how the economy

may

be reopened. The pandemic could cause us to experience higher credit losses in our loan portfolio, impairment of our goodwill, reduced demand for our products and services, or other negative impacts on our financial position, results of operations, and prospects.

On

March 27, 2020,

the President of the United States signed into law the Coronavirus Aid, Relief and Economic Security (“CARES”) Act in response to the coronavirus pandemic. This legislation aims at providing relief for individuals and businesses that have been negatively impacted by the coronavirus pandemic.

The CARES Act includes a provision for the Company to opt out of applying the “troubled-debt restructuring” (“TDR”) accounting guidance in ASC

310

-

40

for certain loan modifications. Loan modifications made between

March 1, 2020

and the earlier of i)

December 30, 2020

or ii)

60

days after the President declares a termination of the COVID-

19

national emergency are eligible for this relief if the related loans were

not

more than

30

days past due as of

December 31, 2019.

The Company has assessed which loans qualify for this treatment. The CARES Act also permits the Bank to continue to accrue interest on loans that have received deferral treatment as a result of the pandemic. In addition, on

April 7, 2020,

a group of banking regulatory agencies issued a revised interagency statement that offers practical expedients for evaluating whether COVID-

19

loan modifications are TDRs.

On

August 3, 2020,

the Federal Financial Institutions Council issued a joint statement, encouraging financial institutions to consider prudent accommodation options to mitigate losses for the borrower and financial institution beyond the initial accommodation period. The joint statement specifically encourages financial institutions to provide consumers with available options for repaying missed payments at the end of their accommodation to avoid delinquencies, as well as options for changes to terms to support sustainable and affordable payments for the long term. These considerations should also include prudent risk management practices at the financial institution based on the credit risk of the borrower. Patriot is actively working with its customers to address any further accommodation needs while carefully evaluating the associated credit risk of the borrowers.

XML

Note 2 - Accounting Policies

9 Months Ended

Sep. 30, 2020

Notes to Financial Statements

Accounting Standards Update and Change in Accounting Principle [Text Block]

Note  2. Accounting Policies

Please refer to the summary of Significant Accounting Policies included in the Company's

2019

Annual Report on Form

10

-K for a list of all policies in effect as of

December 31, 2019.

The below summary is intended to provide updates or new policies required as a result of a new accounting standard or a change to the Company's operations or assets that require a new or amended policy.

Recently Adopted and Issued Accounting Standards

Accounting Standards Adopted During

2020

Effective

January 1, 2020,

the following new Accounting Standards Updates (ASU) were adopted by the Company:

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 related to 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. The adoption of ASU

2018

-

13

did

not

have any impact on our consolidated financial statements.

ASU

2018

-

15

In

August 2018,

the FASB issued ASU

No.

2018

-

15,

Intangibles - Goodwill and Other - Internal-Use Software (Subtopic

350

-

40

) - Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract

. ASU

2018

-

15

clarifies certain aspects of ASU

2015

-

05,

“Customer's Accounting for Fees Paid in a Cloud Computing Arrangement,” which was issued in

April 2015.

Specifically, ASU

2018

-

15

aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). For public business entities, the ASU was effective for interim and annual reporting periods beginning after

December 15, 2019,

with early adoption permitted.

The amendments in this update align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal use software license). The accounting for the service element of a hosting arrangement that is a service contract is

not

affected by the amendments in this update.

The amendments in this ASU also require the entity (customer) to expense the capitalized implementation costs of a hosting arrangement that is a service contract over the term of the hosting arrangement. The term of the hosting arrangement includes the non-cancellable period of the arrangement plus periods covered by (

1

) an option to extend the arrangement if the customer is reasonably certain to exercise that option, (

2

) an option to terminate the arrangement if the customer is reasonably certain

not

to exercise the termination option, and (

3

) an option to extend (or

not

to terminate) the arrangement in which exercise of the option is in the control of the vendor. The entity also is required to apply the existing impairment guidance in Subtopic

350

-

40

to the capitalized implementation costs as if the costs were long-lived assets.

The amendments in this ASU also require the entity to present the expense related to the capitalized implementation costs in the same line item in the statement of income as the fees associated with the hosting element (service) of the arrangement and classify payments for capitalized implementation costs in the statement of cash flows in the same manner as payments made for fees associated with the hosting element. The entity is also required to present the capitalized implementation costs in the consolidated balance sheets in the same line item that a repayment for the fees of the associated hosting arrangement would be presented.

The adoption of ASU

2018

-

15

did

not

have a significant impact on our consolidated financial 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.

In

November 2019,

the FASB issued ASU

2019

-

10,

which amends the effective date of ASC

326

for smaller reporting companies, as defined by the SEC, and other non-SEC reporting entities, and delays the effective date to fiscal years beginning after

December 31, 2022,

including interim periods within those fiscal periods. As the Company is a small reporting company, the delay will be applicable to the Company. Management is currently evaluating the impact that the standard will have on its consolidated financial statements.

ASU

2019

-

12

ASU

2019

-

12,

“Income Taxes (Topic

740

) - Simplifying the Accounting for Income Taxes.”

The guidance issued in this update simplifies the accounting for income taxes by eliminating certain exceptions to the guidance in ASC

740

related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period and the recognition for deferred tax liabilities for outside basis differences. ASU

2019

-

12

also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. The ASU will be effective for the Company on

January 1, 2021,

with early adoption permitted, and is

not

expected to have a significant impact on our consolidated financial statements.

ASU Update

2020

-

02

In

January 2020,

the FASB issued ASU

No.

2020

-

02,

“Financial Instruments - Credit Losses (Topic

326

) and Leases (Topic

842

): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin

No.

119

and Update to SEC Section on Effective Date Related to Accounting Standards Update

No.

2016

-

02,

Leases (Topic

842

).

” This ASU adds and amends SEC paragraphs in the Accounting Standards Codification to reflect the issuance of SEC Staff Accounting Bulletin

No.

119,

related to the new credit losses standard, and comments by the SEC staff related to the revised effective date of the new leases standard. This ASU is effective upon issuance. See the discussion regarding the adoption of ASU

2016

-

13

above.

ASU Update

2020

-

03

 

In

March 2020,

the FASB issued ASU

No.

2020

-

3,

“Codification Improvements to Financial Instruments.”

This ASU clarifies various financial instruments topics, including the CECL standard issued in

2016.

Amendments related to ASU

2016

-

13

for entities that have

not

yet adopted that guidance are effective upon adoption of the amendments in ASU

2016

-

13.

Early adoption is

not

permitted before an entity's adoption of ASU

2016

-

13.

Other amendments are effective upon issuance of this ASU. See the discussion regarding the adoption of ASU

2016

-

13

above.

XML

Note 3 - Available-for-sale Securities

9 Months Ended

Sep. 30, 2020

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

September 30, 2020

and

December 31, 2019

are as follows:

(In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Fair Value
September 30, 2020:
U. S. Government agency mortgage-backed securities	$	15,578	$	139	$	(12	)	$	15,705
Corporate bonds		18,015		123		(888	)		17,250
Subordinated notes		9,033		120		(140	)		9,013
SBA loan pools		5,369		-		(68	)		5,301
Municipal bonds		564		-		(10	)		554
	$	48,559	$	382	$	(1,118	)	$	47,823
December 31, 2019:
U. S. Government agency mortgage-backed securities	$	16,663	$	90	$	(68	)	$	16,685
Corporate bonds		18,018		133		(838	)		17,313
Subordinated notes		9,022		182		-			9,204
U.S. Treasury notes		5,157		-		(42	)		5,115
	$	48,860	$	405	$	(948	)	$	48,317

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

September 30, 2020

and

December 31, 2019:

(In thousands)	Less than 12 Months					12 Months or More					Total
	Fair Value		Unrealized (Loss)			Fair Value		Unrealized (Loss)			Fair Value		Unrealized (Loss)
September 30, 2020:
U. S. Government agency mortgage-backed securities	$	3,510	$	(11	)	$	1,537	$	(1	)	$	5,047	$	(12	)
Corporate bonds		-		-			13,113		(888	)		13,113		(888	)
Subordinated notes		5,393		(140	)		-		-			5,393		(140	)
SBA loan pools		961		(12	)		4,340		(56	)		5,301		(68	)
Municipal bonds		398		(10	)		-		-			398		(10	)
	$	10,262	$	(173	)	$	18,990	$	(945	)	$	29,252	$	(1,118	)
December 31, 2019:
U. S. Government agency mortgage-backed securities	$	2,609	$	(20	)	$	3,919	$	(48	)	$	6,528	$	(68	)
Corporate bonds		-		-			13,162		(838	)		13,162		(838	)
SBA loan pools		5,115		(42	)		-		-			5,115		(42	)
	$	7,724	$	(62	)	$	17,081	$	(886	)	$	24,805	$	(948	)

At

September 30, 2020

and

December 31, 2019,

19

of

34

and

15

of

27

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

3.7%

and

3.7%

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 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, subordinated notes, corporate debt, and municipal bonds. 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. SBA government guaranteed loan pools securities were purchased at a premium and the impairment was attributable primarily to increased prepayment speeds. The timely payment of principal and interest on these securities is guaranteed by the U.S. Government agency. The contractual terms of the subordinated notes do

not

permit the issuer to settle the securities at a price less than the amortized cost bases of the investments. 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

September 30, 2020.

As of

September 30, 2020

and

December 31, 2019,

available-for-sale securities of

$3.7

million and

$4.8

million were pledged primarily to secure municipal deposits, respectively. The securities were pledged to the Federal Reserve Bank (“FRB”).

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

September 30, 2020

and

December 31, 2019.

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
September 30, 2020:
Corporate bonds	$	4,015	$	14,000	$	-	$	18,015	$	4,139	$	13,111	$	-	$	17,250
Subordinated notes		-		9,033		-		9,033		-		9,013		-		9,013
SBA loan pools		-		5,369		-		5,369		-		5,301		-		5,301
Municipal bonds		-		564		-		564		-		554		-		554
Available-for-sale securities with stated maturity dates		4,015		28,966		-		32,981		4,139		27,979		-		32,118
U. S. Government agency mortgage-backed securities		3,423		1,622		10,533		15,578		3,437		1,649		10,619		15,705
	$	7,438	$	30,588	$	10,533	$	48,559	$	7,576	$	29,628	$	10,619	$	47,823
December 31, 2019:
Corporate bonds	$	4,018	$	14,000	$	-	$	18,018	$	4,151	$	13,162	$	-	$	17,313
Subordinated notes		-		9,022		-		9,022		-		9,204		-		9,204
SBA loan pools		-		5,157		-		5,157		-		5,115		-		5,115
Available-for-sale securities with stated maturity dates		4,018		28,179		-		32,197		4,151		27,481		-		31,632
U. S. Government agency mortgage-backed securities		3,805		2,047		10,811		16,663		3,810		2,016		10,859		16,685
	$	7,823	$	30,226	$	10,811	$	48,860	$	7,961	$	29,497	$	10,859	$	48,317

During the

nine

months ended

September 30, 2020,

the Bank purchased

$4.9

million U.S. Government agency mortgage-backed securities,

$988,000

SBA government guaranteed loan pools securities and

$565,000

municipal bonds. During the

nine

months ended

September 30, 2019,

the Bank purchased

$3.5

million subordinated notes,

$4.0

million corporate bonds and

$5.5

million SBA government guaranteed loan pools securities. There was

no

sale of available-for-sale securities in the

nine

months ended

September 30, 2020

and

2019.

XML

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

9 Months Ended

Sep. 30, 2020

Notes to Financial Statements

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

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

As of

September 30, 2020

and

December 31, 2019,

loans receivable, net, consisted of the following:

	September 30,			December 31,
(In thousands)	2020			2019
Loan portfolio segment:
Commercial Real Estate	$	292,067		$	314,414
Residential Real Estate		162,976			175,489
Commercial and Industrial		147,248			173,875
Consumer and Other		73,127			85,934
Construction		61,534			48,388
Construction to Permanent - CRE		14,346			14,064
Loans receivable, gross		751,298			812,164
Allowance for loan and lease losses		(11,171	)		(10,115	)
Loans receivable, net	$	740,127		$	802,049

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

zero

as of

September 30, 2020

and

$176,000

as of

December 31, 2019,

respectively. 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

and

nine

months ended

September 30, 2020

and

2019

follows:

(In thousands)	Three Months Ended September 30,					Nine Months Ended September 30,
	2020		2019			2020			2019
Accretable discount, beginning of period	$	-	$	(201	)	$	(47	)	$	(792	)
Accretion		-		9			2			43
Other changes, net		-		141			45			698
Accretable discount, end of period	$	-	$	(51	)	$	-		$	(51	)

The accretion of the accretable discount for PCI loans for the

three

and

nine

months ended

September 30, 2020

were

$0

and

$2,000,

respectively. The accretion of the accretable discount for PCI loans for the

three

and

nine

months ended

September 30, 2019

was

$9,000

and

$43,000,

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

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

and

nine

months ended

September 30, 2020,

Patriot purchased

$2.5

million and

$16.6

million of residential real estate loans, respectively. During the

three

and

nine

months ended

September 30, 2019,

Patriot purchased

$4.6

million and

$20.9

million 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's syndicated and leveraged loan portfolio, which totaled

$60.6

million and

$71.5

million at

September 30, 2020

and

December 31, 2019,

respectively, 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 commercial and industrial loan 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 transaction in accordance with its internal policies.

Consumer and Other Loans

Patriot offers individual consumers various forms of credit including installment loans, credit cards, overdraft protection, auto loans 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.

Patriot purchased

$0

and

$14.9

million of education loans during the

three

and

nine

months ended

September 30, 2020,

respectively. During the

three

and

nine

months ended

September 30, 2019,

Patriot purchased

$0

and

$7.3

million of education loans, respectively.

Construction Loans

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

eighteen

months or less, that are secured by land and improvements 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”)

Loans in this category represent a

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.

SBA

Loans

Patriot originates SBA

7

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

75%

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. SBA loans held for investment are included in the commercial real estate loans and commercial and industrial loan classifications, which totaled

$21.5

million and

$9.6

million as of

September 30, 2020

and

December 31, 2019,

respectively. During the

nine

-month period ended

September 30, 2020,

$9.5

million SBA loans previously classified as held for sale were transferred to held for investment.

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

and

nine

months ended

September 30, 2020

and

2019:

(In thousands)	Commercial Real Estate			Residential Real Estate			Commercial and Industrial			Consumer and Other			Construction			Construction to Permanent - CRE		Unallocated			Total
Three months ended September 30, 2020
Allowance for loan and lease losses:
June 30, 2020	$	4,274		$	1,910		$	3,526		$	534		$	666		$	149	$	89		$	11,148
Charge-offs		(35	)		-			(34	)		(6	)		-			-		-			(75	)
Recoveries		-			1			11			1			-			-		-			13
Provisions (credits)		158			(374	)		(33	)		11			152			40		131			85
September 30, 2020	$	4,397		$	1,537		$	3,470		$	540		$	818		$	189	$	220		$	11,171
Three months ended September 30, 2019
Allowance for loan and lease losses:
June 30, 2019	$	1,978		$	936		$	4,208		$	664		$	467		$	105	$	100		$	8,458
Charge-offs		-			(105	)		(74	)		(103	)		-			-		-			(282	)
Recoveries		-			9			117			3			-			-		-			129
Provisions (credits)		111			125			104			(196	)		(19	)		10		(35	)		100
September 30, 2019	$	2,089		$	965		$	4,355		$	368		$	448		$	115	$	65		$	8,405

(In thousands)	Commercial Real Estate			Residential Real Estate			Commercial and Industrial			Consumer and Other			Construction		Construction to Permanent - CRE		Unallocated		Total
Nine months ended September 30, 2020
Allowance for loan and lease losses:
December 31, 2019	$	3,789		$	1,038		$	4,340		$	341		$	477	$	130	$	-	$	10,115
Charge-offs		(400	)		(13	)		(352	)		(45	)		-		-		-		(810	)
Recoveries		-			1			62			4			-		-		-		67
Provisions (credits)		1,008			511			(580	)		240			341		59		220		1,799
September 30, 2020	$	4,397		$	1,537		$	3,470		$	540		$	818	$	189	$	220	$	11,171
Nine months ended September 30, 2019
Allowance for loan and lease losses:
December 31, 2018	$	1,866		$	1,059		$	3,558		$	641		$	350	$	108	$	27	$	7,609
Charge-offs		-			(117	)		(2,366	)		(106	)		-		-		-		(2,589	)
Recoveries		2			9			164			8			-		-		-		183
Provisions (credits)		221			14			2,999			(175	)		98		7		38		3,202
September 30, 2019	$	2,089		$	965		$	4,355		$	368		$	448	$	115	$	65	$	8,405

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

September 30, 2020

and

December 31, 2019:

(In thousands)	Commercial Real Estate		Residential Real Estate		Commercial and Industrial		Consumer and Other		Construction		Construction to Permanent - CRE		Unallocated		Total
September 30, 2020
Allowance for loan and lease losses:
Individually evaluated for impairment	$	1,552	$	5	$	-	$	11	$	-	$	-	$	-	$	1,568
Collectively evaluated for impairment		2,845		1,532		3,470		529		818		189		220		9,603
Total allowance for loan and lease losses	$	4,397	$	1,537	$	3,470	$	540	$	818	$	189	$	220	$	11,171
Loans receivable, gross:
Individually evaluated for impairment	$	15,521	$	3,674	$	1,706	$	1,264	$	-	$	-	$	-	$	22,165
Collectively evaluated for impairment		276,546		159,302		145,542		71,863		61,534		14,346		-		729,133
Total loans receivable, gross	$	292,067	$	162,976	$	147,248	$	73,127	$	61,534	$	14,346	$	-	$	751,298

(In thousands)	Commercial Real Estate		Residential Real Estate		Commercial and Industrial		Consumer and Other		Construction		Construction to Permanent - CRE		Unallocated		Total
December 31, 2019
Allowance for loan and lease losses:
Individually evaluated for impairment	$	1,496	$	-	$	-	$	-	$	-	$	-	$	-	$	1,496
Collectively evaluated for impairment		2,293		1,038		4,340		341		477		130		-		8,619
Total allowance for loan losses	$	3,789	$	1,038	$	4,340	$	341	$	477	$	130	$	-	$	10,115
Loans receivable, gross:
Individually evaluated for impairment	$	13,034	$	3,621	$	2,057	$	916	$	-	$	-	$	-	$	19,628
PCI loans individually evaluated for impairment		-		-		176		-		-		-		-		176
Collectively evaluated for impairment		301,380		171,868		171,642		85,018		48,388		14,064		-		792,360
Total loans receivable, gross	$	314,414	$	175,489	$	173,875	$	85,934	$	48,388	$	14,064	$	-	$	812,164

Patriot monitors the credit quality of its loans receivable on an ongoing basis. Credit quality is monitored by reviewing certain indicators, including cash flow from business operations, 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 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 of loans to reduce the loan to its recoverable value that are solely collateral dependent, generally occur immediately upon confirmation of the partial loss amount. Loans that are cash flow dependent are modeled to reflect the expected cash flows through expected loan maturity, including any proceeds from refinancing or principal curtailment. A specific reserve is established for the amount by which the net investment in the loan exceeds the present value of discounted cash flows. Charge-offs on cash flow dependent loans also generally occur immediately upon confirmation of the partial loss amount.

If either type of loan is classified as “Loss”, meaning full loss on the loan is expected, the full balance of the loan receivable is charged off, regardless of the potential recovery from a sale of the underlying collateral. 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. 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.

Due to the economic disruption and uncertainty caused by the pandemic, the allowance for loan losses

may

increase in future periods as borrowers are affected by the expected severe contraction of economic activity and the dramatic increase in unemployment. This

may

result in increases in loan delinquencies, down-grades of loan credit ratings and charge-offs in future periods. The allowance for loan losses

may

increase to reflect the decline in the performance of the loan portfolio and the higher level of incurred losses.

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

September 30, 2020.

(In thousands)	Performing (Accruing) Loans
As of September 30, 2020:	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	$	903	$	-	$	-	$	903	$	264,594	$	265,497	$	-	$	265,497
Substandard		1,430		-		-		1,430		10,693		12,123		14,447		26,570
		2,333		-		-		2,333		275,287		277,620		14,447		292,067
Residential Real Estate:
Pass		2,283		-		679		2,962		156,472		159,434		-		159,434
Substandard		-		-		-		-		250		250		3,292		3,542
		2,283		-		679		2,962		156,722		159,684		3,292		162,976
Commercial and Industrial:
Pass		-		200		-		200		112,236		112,436		-		112,436
Special mention		-		-		-		-		7,437		7,437		-		7,437
Substandard		702		-		-		702		24,967		25,669		1,706		27,375
		702		200		-		902		144,640		145,542		1,706		147,248
Consumer and Other:
Pass		30		1		-		31		71,980		72,011		-		72,011
Substandard		97		-		-		97		24		121		995		1,116
		127		1		-		128		72,004		72,132		995		73,127
Construction:
Pass		-		-		-		-		61,534		61,534		-		61,534
		-		-		-		-		61,534		61,534		-		61,534
Construction to Permanent - CRE:
Pass		-		-		-		-		14,346		14,346		-		14,346
		-		-		-		-		14,346		14,346		-		14,346
Total	$	5,445	$	201	$	679	$	6,325	$	724,533	$	730,858	$	20,440	$	751,298
Loans receivable, gross:
Pass	$	3,216	$	201	$	679	$	4,096	$	681,162	$	685,258	$	-	$	685,258
Special mention		-		-		-		-		7,437		7,437		-		7,437
Substandard		2,229		-		-		2,229		35,934		38,163		20,440		58,603
Loans receivable, gross	$	5,445	$	201	$	679	$	6,325	$	724,533	$	730,858	$	20,440	$	751,298

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, 2019.

(In thousands)	Performing (Accruing) Loans
As of December 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	$	-	$	-	$	-	$	-	$	295,982	$	295,982	$	-	$	295,982
Special mention		-		-		-		-		385		385		-		385
Substandard		-		-		-		-		6,086		6,086		11,961		18,047
		-		-		-		-		302,453		302,453		11,961		314,414
Residential Real Estate:
Pass		658		-		-		658		169,903		170,561		-		170,561
Substandard		-		-		-		-		1,700		1,700		3,228		4,928
		658		-		-		658		171,603		172,261		3,228		175,489
Commercial and Industrial:
Pass		327		350		-		677		162,711		163,388		-		163,388
Special mention		279		-		-		279		172		451		-		451
Substandard		-		-		-		-		7,942		7,942		2,094		10,036
		606		350		-		956		170,825		171,781		2,094		173,875
Consumer and Other:
Pass		2,805		3		19		2,827		82,341		85,168		-		85,168
Substandard		-		-		-		-		-		-		766		766
		2,805		3		19		2,827		82,341		85,168		766		85,934
Construction:
Pass		-		-		-		-		48,388		48,388		-		48,388
		-		-		-		-		48,388		48,388		-		48,388
Construction to Permanent - CRE:
Pass		-		-		-		-		14,064		14,064		-		14,064
		-		-		-		-		14,064		14,064		-		14,064
Total	$	4,069	$	353	$	19	$	4,441	$	789,674	$	794,115	$	18,049	$	812,164
Loans receivable, gross:
Pass	$	3,790	$	353	$	19	$	4,162	$	773,389	$	777,551	$	-	$	777,551
Special mention		279		-		-		279		557		836		-		836
Substandard		-		-		-		-		15,728		15,728		18,049		33,777
Loans receivable, gross	$	4,069	$	353	$	19	$	4,441	$	789,674	$	794,115	$	18,049	$	812,164

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

September 30, 2020

and

December 31, 2019:

(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 September 30, 2020:
Loan portfolio segment:
Commercial Real Estate:
Substandard	$	-	$	-	$	5,636	$	5,636	$	8,811	$	14,447
Residential Real Estate:
Substandard		-		-		1,585		1,585		1,707		3,292
Commercial and Industrial:
Substandard		-		-		1,706		1,706		-		1,706
Consumer and Other:
Substandard		-		-		104		104		891		995
Total non-accruing loans	$	-	$	-	$	9,031	$	9,031	$	11,409	$	20,440
As of December 31, 2019:
Loan portfolio segment:
Commercial Real Estate:
Substandard	$	-	$	-	$	1,636	$	1,636	$	10,325	$	11,961
Residential Real Estate:
Substandard		-		-		1,872		1,872		1,356		3,228
Commercial and Industrial:
Substandard		-		-		1,724		1,724		370		2,094
Consumer and Other:
Substandard		-		-		149		149		617		766
Total non-accruing loans	$	-	$	-	$	5,381	$	5,381	$	12,668	$	18,049

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

$216,000

and

$691,000

would have been recognized during the

three

and

nine

months ended

September 30, 2020,

respectively. During the

three

and

nine

months ended

September 30, 2019,

additional interest income (net of cash collected) of approximately

$134,000

and

$271,000

would have been recognized in income, respectively.

Interest income collected and recognized on non-accruing loans for the

three

and

nine

months ended

September 30, 2020

was

$21,000

and

$106,000,

respectively. During the

three

and

nine

months ended

September 30, 2019,

interest income collected and recognized on non-accruing loans was

$129,000

and

$474,000,

respectively.

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

90

days past due for payment unless the loan is well-secured and in process of collection. 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, after at least

nine

months of timely payment history. Management considers all non-accrual loans and Trouble Debt Restructurings (“TDR”) for impaired loans. In most cases, loan payments that are past due less than

90

days, well-secured, and in the process of collection are

not

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

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

also 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 following table summarizes the recorded investment in TDRs as of

September 30, 2020

and

December 31, 2019:

(In thousands)	September 30, 2020					December 31, 2019
Loan portfolio segment:	Number of Loans		Recorded Investment			Number of Loans		Recorded Investment
Commercial Real Estate		2	$	9,884			2	$	9,873
Residential Real Estate		3		437			2		393
Consumer and Other		4		787			2		687
Total TDR Loans		9		11,108			6		10,953
Less:
TDRs included in non-accrual loans		3		(9,384	)		2		(9,337	)
Total accrual TDR Loans		6	$	1,724			4	$	1,616

During the

three

months ended

September 30, 2020

and

2019,

no

loans were modified as TDR. The following table summarizes the loans were modified as TDR during the

nine

months ended

September 30, 2020

and

2019:

					Outstanding Recorded Investment
(In thousands)	Number of Loans				Pre-Modification				Post-Modification
Nine Months Ended September 30,	2020		2019		2020		2019		2020		2019
Loan portfolio segment:
Commercial Real Estate		1		2	$	57	$	8,912	$	56	$	8,911
Consumer and Other		2		-		121		-		121		-
Total TDR Loans		3		2	$	178	$	8,912	$	177	$	8,911

The following table provides information on how loans were modified as TDRs during the

three

and

nine

months ended

September 30, 2020

and

2019:

	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2020		2019		2020		2019
Rate reduction	$	-	$	-	$	56	$	111
Extension of interest only period		-		-		121		-
Maturity and rate reduction		-		-		-		8,800
Total	$	-	$	-	$	177	$	8,911

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

no

defaults of TDRs during the

three

and

nine

months ended

September 30, 2020.

At

September 30, 2020

and

December 31, 2019,

there were

no

commitments to advance additional funds under TDRs.

The balances reflected here as TDR's are also included in the non-accruing loan balance included in the prior table - Loan Portfolio Aging Analysis.

Pursuant to the CARES Act, loan modifications made between

March 1, 2020

and the earlier of i)

December 30, 2020

or ii)

60

days after the President declares a termination of the COVID-

19

national emergency are

not

classified as TDRs if the related loans were

not

more than

30

days past due as of

December 31, 2019.

In addition, on

April 7, 2020,

a group of banking regulatory agencies issued a revised interagency statement that offers practical expedients for evaluating whether COVID-

19

loan modifications are TDRs. The Bank had modified

$244.4

million of loans to borrowers to defer the payment of interest and/or principal for up to

180

days, and approximately

$157.7

million of loans remained on deferment as of

September 30,

2020.According

to regulatory guidance and CARES Act, these modified loans were

not

TDRs as of

September 30, 2020.

Impaired Loans

Impaired loans

may

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

September 30, 2020

and

December 31, 2019,

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

$22.2

 million and

$19.6

million, respectively, were identified, for which

$1.6

million and

$1.5

million specific reserves were established, respectively. Loans

not

requiring specific reserves had fair values exceeding the total recorded investment, 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

September 30, 2020

and

December 31, 2019,

exposure to the impaired loans was related to

30

and

27

borrowers, respectively. For collateral dependent loans, appraisal reports of the underlying collateral, have been obtained from independent licensed appraisal firms. For non-performing loans, the independently determined appraised values were

first

reduced by a

12%

discount to reflect the Bank's experience selling Other Real Estate Owned (OREO) properties, and were further reduced by

8%

in selling costs, in order to estimate the potential loss, if any, that

may

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

may

be required for a loss of underlying collateral value. For cash flow dependent loans, the Bank determined the reserve based on the present value of expected future cash flows discounted at the loan's effective interest rate.

PCI loans acquired from Prime Bank acquisition were originally recorded at fair value by the Bank on the date of acquisition. As of

September 30, 2020

and

December 31, 2019,

PCI loans remaining balance was

$0

and

$179,000,

respectively. 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

September 30, 2020

and

December 31, 2019:

(In thousands)	September 30, 2020						December 31, 2019
	Recorded Investment		Principal Outstanding		Related Allowance		Recorded Investment		Principal Outstanding		Related Allowance
With no related allowance recorded:
Commercial Real Estate	$	6,710	$	7,116	$	-	$	4,234	$	4,309	$	-
Residential Real Estate		3,565		3,634		-		3,621		3,623		-
Commercial and Industrial		1,706		1,840		-		2,057		2,060		-
Consumer and Other		1,115		1,265		-		916		1,000		-
		13,096		13,855		-		10,828		10,992		-
With a related allowance recorded:
Commercial Real Estate	$	8,811	$	8,811	$	1,552		8,800		8,800		1,496
Residential Real Estate		109		109		5		-		-		-
Consumer and Other		149		149		11		-		-		-
		9,069		9,069		1,568		8,800		8,800		1,496
Impaired Loans, Total:
Commercial Real Estate		15,521		15,927		1,552		13,034		13,109		1,496
Residential Real Estate		3,674		3,743		5		3,621		3,623		-
Commercial and Industrial		1,706		1,840		-		2,057		2,060		-
Consumer and Other		1,264		1,414		11		916		1,000		-
Impaired Loans, Total	$	22,165	$	22,924	$	1,568	$	19,628	$	19,792	$	1,496

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

three

and

nine

months ended

September 30, 2020

and

2019.

	Three Months Ended September 30,								Nine Months Ended September 30,
(In thousands)	2020				2019				2020				2019
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial Real Estate	$	6,975	$	13	$	13,579	$	164	$	5,702	$	39	$	9,654	$	324
Residential Real Estate		3,641		12		3,696		37		3,603		45		2,202		28
Commercial and Industrial		1,716		2		2,656		39		1,936		4		1,684		99
Consumer and Other		1,321		10		978		12		1,101		26		897		108
Construction		-		-		-		-		-		-		5,280		150
		13,653		37		20,909		252		12,342		114		19,717		709
With a related allowance recorded:
Commercial Real Estate		8,975		-		-		-		8,876		35		275		-
Residential Real Estate		55		1		-		-		33		4		1,237		-
Commercial and Industrial		-		-		-		-		-		-		2,228		-
Consumer and Other		74		1		-		-		50		4		23		-
		9,104		2		-		-		8,959		43		3,763		-
Impaired Loans, Total:
Commercial Real Estate		15,950		13		13,579		164		14,578		74		9,929		324
Residential Real Estate		3,696		13		3,696		37		3,636		49		3,439		28
Commercial and Industrial		1,716		2		2,656		39		1,936		4		3,912		99
Consumer and Other		1,395		11		978		12		1,151		30		920		108
Construction		-		-		-		-		-		-		5,280		150
Impaired Loans, Total	$	22,757	$	39	$	20,909	$	252	$	21,301	$	157	$	23,480	$	709

XML

Note 5 - Loans Held for Sale

9 Months Ended

Sep. 30, 2020

Notes to Financial Statements

Loans Held for Sale [Text Block]

Note  5. Loans Held for Sale

As of

September 30, 2020,

loans held for sale consist of

one

commercial and industrial loan held for sale of

$5.0

million and

$1.8

million SBA loans held for sale. The

one

commercial loan represents a single loan with an agreed upon sale price which was in process of being sold at period end and the sale was completed on

October 22, 2020.

SBA loans held for sale represent the guaranteed portion of SBA loans originated and are reflected at the lower of aggregate cost or market value. As of

September 30, 2020,

SBA loans held for sale, consisted of

$851,000

commercial and industrial loans and

$950,000

commercial real estate loans. There were

$15.3

million of SBA loans held for sale at

December 31, 2019,

consisting of

$10.2

million commercial and industrial loans and

$5.1

million commercial real estate loans. During the

nine

months ended

September 30, 2020,

$9.5

million SBA loans previously classified as held for sale were transferred to held for investment.

The Company generally sells the guaranteed portion of its SBA loans to a

third

party and retains the servicing, holding the unguaranteed portion in its portfolio. When sales of SBA loans do occur, the premium received on the sale and the present value of future cash flows of the servicing assets, less the discount of the retained portion of the loan are recognized in income.

Servicing assets represent the estimated fair value of retained servicing rights, net of servicing costs, at the time loans are sold. Servicing assets are amortized in proportion to, and over the period of, estimated net servicing revenues. Impairment will be evaluated based on stratifying the underlying financial assets by date of origination and term. Fair value is determined using prices for similar assets with similar characteristics, when available, or based upon discounted cash flows using market-based assumptions. Any impairment, if temporary, would be reported as a valuation allowance.

Serviced loans sold to others are

not

included in the accompanying consolidated balance sheets. The total amount of such loans serviced, but owned by

third

party, amounted to approximately

$18.6

million and

$13.6

million at

September 30, 2020

and

December 31, 2019,

respectively. The servicing asset has a carrying value of

$301,000

and fair value of

$362,000

at

September 30, 2020.

Income and fees collected for loan servicing are credited to noninterest income when earned, net of amortization on the related servicing assets. The servicing asset is included in other assets on the consolidated balance sheets.

The following table presents an analysis of the activity in the SBA servicing assets for the

three

and

nine

months ended

September 30, 2020

and

2019:

(In thousands)	Three Months Ended September 30,						Nine Months Ended September 30,
	2020			2019			2020			2019
Beginning balance	$	221			156		$	201			37
Servicing rights capitalized		86			44			115			169
Servicing rights amortized		(6	)		(4	)		(15	)		(10	)
Ending balance		301			196			301			196

XML

Note 6 - Goodwill and Other Intangible Assets

9 Months Ended

Sep. 30, 2020

Notes to Financial Statements

Goodwill and Intangible Assets Disclosure [Text Block]

Note  6. 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 intangible and adjustment of cash and contingent consideration. The goodwill was further adjusted to

$1.1

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

$621,000

as of

May 10, 2019.

There were

no

income statement effects resulting from the recorded measurement period adjustments for the

three

and

nine

months ended

September 30, 2020.

The goodwill is all deductible for income taxes over

15

years.

Information on goodwill for the

three

and

nine

months ended

September 30, 2020

and

2019

is as follows:

(In thousands)	Three Month Ended September 30,				Nine Month Ended September 30,
	2020		2019		2020		2019
Balance, beginning of period	$	1,107	$	1,107	$	1,107	$	1,728
Mesurement period adjustments		-		-		-		(621	)
Balance, end of period	$	1,107	$	1,107	$	1,107	$	1,107

Goodwill is evaluated for impairment annually, in the

fourth

quarter of the year, or whenever we identify certain triggering events or circumstances that would more likely than

not

reduce the fair value of a reporting unit below its carrying amount. Events or circumstances that might indicate an interim evaluation is warranted include, among other things, unexpected adverse business conditions, macro and reporting unit specific economic factors, supply costs, unanticipated competitive activities, and acts by governments and courts.

The Company identified the COVID-

19

pandemic and related reported losses as a triggering event in the

first

quarter of

2020.

Due to this triggering event, the Company performed a qualitative assessment of the goodwill, and concluded it was more likely than

not

that the fair value of the reporting unit exceeded its carrying value, and goodwill was

not

impaired. The Company did

not

perform an interim goodwill test in the

third

quarter of

2020

as

no

events occurred which would trigger an impairment assessment. The Company will perform a quantitative assessment as of

October 31, 2020,

the Company's annual goodwill impairment measurement date.

XML

Note 7 - Deposits

9 Months Ended

Sep. 30, 2020

Notes to Financial Statements

Deposit Liabilities Disclosures [Text Block]

Note 7. Deposits

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

September 30, 2020

and

December 31, 2019.

(In thousands)	September 30, 2020		December 31, 2019
Non-interest bearing	$	161,871	$	88,135
Interest bearing:
NOW		29,518		26,864
Savings		91,169		64,020
Money market		142,909		99,115
Certificates of deposit, less than $250,000		160,610		193,942
Certificates of deposit, $250,000 or greater		50,359		67,550
Brokered deposits		90,995		229,909
Interest bearing, Total		565,560		681,400
Total Deposits	$	727,431	$	769,535

On

July 22, 2020,

the Company completed the purchase of prepaid debit card deposits of

$50.0

million from a prominent national provider and processor of prepaid debit cards for corporate, consumer and government clients. The prepaid debit card deposits totaled approximately

$60.0

million as of

September 30, 2020,

which is included in the non-interest bearing deposits.

As of

September 30, 2020,

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	$	139,850	$	41,249	$	85,398	$	266,497
More than 1 year through 2 years		17,847		8,163		4,848		30,858
More than 2 years through 3 years		1,256		694		499		2,449
More than 3 years through 4 years		913		-		250		1,163
More than 4 years through 5 years		744		253		-		997
	$	160,610	$	50,359	$	90,995	$	301,964

XML

Note 8 - Derivatives

9 Months Ended

Sep. 30, 2020

Notes to Financial Statements

Derivative Instruments and Hedging Activities Disclosure [Text Block]

Note  8. Derivatives

Patriot is a party to

four

interest rate swaps 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

two

initial interest rate swaps under the program in

November 2018,

and another

two

additional swaps were entered into in

May 2019.

As of

September 30, 2020

and

December 31, 2019,

Patriot had cash pledged for collateral on its interest rate swaps of

$1.4

million and

$1.1

million, respectively. This collateral is included in other assets on the consolidated balance sheets.

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
September 30, 2020:
Classified in Other Assets:
Customer interest rate swap	$	4,911		8.6		5.25	%	1 Mo. LIBOR + 1.96%	$	1,087
Customer interest rate swap		1,439		8.8		4.38	%	1 Mo. LIBOR + 2.00%		216
Classified in Other Liabilities:
3rd party interest rate swap	$	4,911		8.6		5.25	%	1 Mo. LIBOR + 1.96%	$	(1,087	)
3rd party interest rate swap		1,439		8.8		4.38	%	1 Mo. LIBOR + 2.00%		(216	)
December 31, 2019:
Classified in Other Assets:
Customer interest rate swap	$	4,944		9.3		5.25	%	1 Mo. LIBOR + 1.96%	$	617
Customer interest rate swap		1,444		9.5		4.38	%	1 Mo. LIBOR + 2.00%		77
Classified in Other Liabilities:
3rd party interest rate swap	$	4,944		9.3		5.25	%	1 Mo. LIBOR + 1.96%	$	(617	)
3rd party interest rate swap		1,444		9.5		4.38	%	1 Mo. LIBOR + 2.00%		(77	)

XML

Note 9 - Share-based Compensation and Employee Benefit Plan

9 Months Ended

Sep. 30, 2020

Notes to Financial Statements

Share-based Payment Arrangement [Text Block]

Note

9.

     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 has been to grant RSAs. As of

September 30, 2020

and

December 31, 2019,

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

September 30, 2020,

2,850,139

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 and changes for the

three

and

nine

months ended

September 30, 2020

and

2019:

Three months ended September 30, 2020:	Number of Shares Awarded			Weighted Average Grant Date Fair Value
Unvested at June 30, 2020		26,597		$	8.89
Vested		(1,200	)	$	17.41
Unvested at September 30, 2020		25,397		$	8.49
Nine months ended September 30, 2020:
Unvested at December 31, 2019		21,470		$	12.91
Granted		12,484		$	6.12
Vested		(6,372	)	$	16.20
Forfeited		(2,185	)	$	15.92
Unvested at September 30, 2020		25,397		$	8.49

Three months ended September 30, 2019:	Number of Shares Awarded			Weighted Average Grant Date Fair Value
Unvested at June 30, 2019		29,529		$	13.94
Vested		(2,392	)	$	17.11
Unvested at September 30, 2019		27,137		$	13.66
Nine months ended September 30, 2019:
Unvested at December 31, 2018		31,790		$	14.06
Granted		9,675		$	15.52
Vested		(14,328	)	$	15.79
Unvested at September 30, 2019		27,137		$	13.66

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

and

nine

months ended

September 30, 2020,

the Company recognized total share-based compensation expense of

$42,000

and

$123,000,

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

$21,000

and

$64,000,

respectively. Included in share-based compensation expense were

$21,000

and

$59,000

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

$87,000

and

$342,000

for each of those periods, respectively, which amounts are included in other operating expenses in the consolidated statements of operations.

For the

three

and

nine

months ended

September 30, 2019,

the Company recognized total share-based compensation expense of

$59,000

and

$162,000,

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

$31,000

and

$87,000,

respectively. Included in share-based compensation expense were

$28,000

and

$75,000

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

$153,000

and

$423,000

for each of those periods, respectively, which amounts are included in other operating expenses in the consolidated statements of operations.

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

September 30, 2020

amounted to

$226,000,

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

1.99

years.

Dividends

The Company has

not

paid any dividends during

2020

and has temporarily suspended dividend payments pending resolution of the economic uncertainties associated with the Coronavirus pandemic.

For the

three

and

nine

months ended

September 30, 2019,

the Company paid cash dividends of

$.01

per share of common stock, or an aggregate of

$39,000

and

$116,000,

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

and

nine

months ended

September 30, 2020,

compensation expense under the

401K

aggregated

$48,000

and

$199,000,

respectively. During the

three

and

nine

months ended

September 30, 2019

compensation expense under the

401K

aggregated

$53,000

and

$195,000,

respectively.

XML

Note 10 - Earnings (Loss) Per Share

9 Months Ended

Sep. 30, 2020

Notes to Financial Statements

Earnings Per Share [Text Block]

Note  10. Earnings (loss) per share

The Company is required to present basic earnings (loss) per share and diluted earnings (loss) per share in its Consolidated Statements of Operations. Basic earnings (loss) per share amounts are computed by dividing net (loss) income by the weighted average number of common shares outstanding. Diluted earnings (loss) 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 (loss) per share.

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

three

and

nine

months ended

September 30, 2020

and

2019:

(Net income (loss) in thousands)	Three Months Ended September 30,						Nine Months Ended September 30,
	2020			2019			2020			2019
Basis (loss) earnings per share:
Net (loss) income attributable to Common shareholders	$	(87	)	$	27		$	(2,437	)	$	(1,305	)
Divided by:
Weighted average shares outstanding		3,935,898			3,922,783			3,934,138			3,920,678
Basic (loss) earnings per common share	$	(0.02	)	$	0.01		$	(0.62	)	$	(0.33	)
Diluted (loss) earnings per share:
Net (loss) income attributable to Common shareholders	$	(87	)	$	27		$	(2,437	)	$	(1,305	)
Weighted average shares outstanding		3,935,898			3,922,783			3,934,138			3,920,678
Effect of potentially dilutive restricted common shares		-	(1)		-	(2)		-	(3)		-	(4)
Divided by:
Weighted average diluted shares outstanding		3,935,898			3,922,783			3,934,138			3,920,678
Diluted (loss) earnings per common share	$	(0.02	)	$	0.01		$	(0.62	)	$	(0.33	)

( 1 ) The weighted average diluted shares outstanding does not include 13,093 anti-dilutive restricted common shares for the three months ended September 30, 2020.

( 2 ) The weighted average diluted shares outstanding does not include 417 anti-dilutive restricted common shares for the three months ended September 30, 2019.

( 3 ) The weighted average diluted shares outstanding does not include 1,630 anti-dilutive restricted common shares for the nine months ended September 30, 2020.

( 4 ) The weighted average diluted shares outstanding does not include 151 anti-dilutive restricted common shares for the nine months ended September 30, 2019.

XML

Note 11 - Financial Instruments with Off-balance Sheet Risk

9 Months Ended

Sep. 30, 2020

Notes to Financial Statements

Concentration Risk Disclosure [Text Block]

Note  11. 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 become 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

September 30, 2020

and

December 31, 2019

are as follows:

	September 30,		December 31,
(In thousands)	2020		2019
Commitments to extend credit:
Unused lines of credit	$	73,751	$	71,101
Undisbursed construction loans		31,947		25,367
Home equity lines of credit		19,825		20,032
Future loan commitments		24,165		27,822
Financial standby letters of credit		669		743
	$	150,357	$	145,065

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 reserve for credit loss of

$8,000

and

$8,000

as of

September 30, 2020

and

December 31, 2019,

respectively, 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 12 - Regulatory and Operational Matters

9 Months Ended

Sep. 30, 2020

Notes to Financial Statements

Regulatory Capital Requirements under Banking Regulations [Text Block]

Note 12. Regulatory and Operational Matters

In

November 2018,

the Bank entered into a formal written agreement (the “Agreement”) with the OCC.  Pursuant to the terms of the Agreement, the Bank has appointed a Compliance Committee of

three

independent outside directors and

one

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

The Agreement states that the Board of the 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 agreed to provide a revised written

3

-year strategic and capital plan for the Bank. The Bank provided the documents and policies requested in the Agreement. To date, the Bank has addressed each of the items identified in the Agreement and is currently working collaboratively with the OCC to bring all matters to full resolution. Further details pertaining to the Agreement were 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.

In

September 2019,

the community bank leverage ratio (CBLR) framework was jointly issued by the FDIC, OCC and FRB. The final rule gives qualifying community banks the option to use a simplified measure of capital adequacy instead of risk based capital, beginning with their

September 30, 2020

Call Report. Under the final rule a community bank

may

qualify for the CBLR framework if it has a Tier

1

leverage ratio of greater than

9%,

less than

$10

billion in total consolidated assets, and limited amounts of off-balance sheet exposures and trading assets and liabilities. The Bank did

not

adopt the CBLR framework at

September 30, 2020

but retains the option to adopt the framework in a future period.

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

9.0%.

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

September 30, 2020

and

December 31, 2019

are summarized as follows:

(In thousands)	Patriot National Bancorp, Inc.								Patriot Bank, N.A.
	September 30, 2020				December 31, 2019				September 30, 2020				December 31, 2019
	Amount ($)		Ratio (%)		Amount ($)		Ratio (%)		Amount ($)		Ratio (%)		Amount ($)		Ratio (%)
Total Capital (to risk weighted assets):
Actual	$	87,925		10.924	$	90,083		10.510	$	98,800		12.332	$	100,953		11.826
To be Well Capitalized (1)		-		-		-		-		80,115		10.000		85,362		10.000
For capital adequacy with Capital Buffer (2)		-		-		-		-		84,121		10.500		89,630		10.500
For capital adequacy		64,389		8.000		68,573		8.000		64,092		8.000		68,290		8.000
Tier 1 Capital (to risk weighted assets):
Actual		67,850		8.430		69,957		8.161		88,772		11.081		90,827		10.640
To be Well Capitalized (1)		-		-		-		-		64,092		8.000		68,290		8.000
For capital adequacy with Capital Buffer (2)		-		-		-		-		68,098		8.500		72,558		8.500
For capital adequacy		48,292		6.000		51,430		6.000		48,069		6.000		51,217		6.000
Common Equity Tier 1 Capital (to risk weighted assets):
Actual		59,850		7.436		61,957		7.228		88,772		11.081		90,827		10.640
To be Well Capitalized (1)		-		-		-		-		52,075		6.500		55,485		6.500
For capital adequacy with Capital Buffer (2)		-		-		-		-		56,080		7.000		59,753		7.000
For capital adequacy		36,219		4.500		38,572		4.500		36,052		4.500		38,413		4.500
Tier 1 Leverage Capital (to average assets):
Actual		67,850		7.150		69,957		7.148		88,772		9.352		90,827		9.279
To be Well Capitalized (1)		-		-		-		-		47,459		5.000		48,944		5.000
For capital adequacy		37,960		4.000		39,148		4.000		37,967		4.000		39,155		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 conversation buffer of

2.5%

has been included in the minimum capital adequacy ratios in the

2020

and

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.

As of

September 30, 2020,

Patriot satisfies all regulatory capital adequacy requirements on a fully phased-in basis.

XML

Note 13 - Fair Value and Interest Rate Risk

9 Months Ended

Sep. 30, 2020

Notes to Financial Statements

Fair Value Disclosures [Text Block]

Note  13. 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 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

September 30, 2020

and

December 31, 2019

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. We 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.

Loans

Held for Sale

The fair value of loans held for sale is estimated by using a market approach that includes prices for loans sold awaiting settlement and other observable inputs. The Company has determined that the inputs used to value the loans held for sale fall within Level

2

of the fair value hierarchy.

SBA Servicing Asset

Servicing assets do

not

trade in an active, open market with readily observable prices. The Company estimates the fair value of servicing assets using discounted cash flow models incorporating numerous assumptions from the perspective of a market participant including market discount rates and prepayment speeds. Due to the significant unobservable input related to the servicing rights, the SBA servicing asset is classified within Level

3

of the valuation hierarchy.

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 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

and Note Payable

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.

The Company considers its own credit worthiness in determining the fair value of its Senior Notes, Subordinated Notes, Notes Payable and Junior Subordinated Debt.

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

September 30, 2020

and

December 31, 2019:

(In thousands)		September 30, 2020				December 31, 2019
	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	$	3,231	$	3,231	$	2,693	$	2,693
Interest-bearing deposits due from banks	Level 1		46,405		46,405		36,711		36,711
Available-for-sale securities	Level 2		47,823		47,823		48,317		48,317
Other investments	Level 2		4,450		4,450		4,450		4,450
Federal Reserve Bank stock	Level 2		2,783		2,783		2,897		2,897
Federal Home Loan Bank stock	Level 2		4,503		4,503		4,477		4,477
Loans receivable, net	Level 3		740,127		729,924		802,049		793,559
Loans held for sale	Level 2		6,824		7,002		15,282		16,733
SBA servicing assets	Level 3		301		362		201		280
Accrued interest receivable	Level 2		6,834		6,834		3,603		3,603
Interest rate swap receivable	Level 2		1,303		1,303		694		694
Financial assets, total		$	864,584	$	854,620	$	921,374	$	914,414
Financial Liabilities:
Demand deposits	Level 2	$	161,871	$	161,871	$	88,135	$	88,135
Savings deposits	Level 2		91,169		91,169		64,020		64,020
Money market deposits	Level 2		142,909		142,909		99,115		99,115
NOW accounts	Level 2		29,518		29,518		26,864		26,864
Time deposits	Level 2		210,969		211,724		261,492		261,914
Brokered deposits	Level 1		90,995		91,521		229,909		230,073
FHLB borrowings	Level 2		90,000		97,786		100,000		103,962
Senior notes	Level 2		11,909		12,033		11,853		11,722
Subordinated debt	Level 2		9,774		10,145		9,752		9,747
Junior subordinated debt owed to unconsolidated trust	Level 2		8,108		8,108		8,102		8,102
Note payable	Level 3		1,044		1,059		1,193		1,129
Accrued interest payable	Level 2		1,091		1,091		1,971		1,971
Contingent consideration liability	Level 3		86		86		86		86
Interest rate swap liability	Level 2		1,303		1,303		694		694
Financial liabilities, total		$	850,746	$	860,323	$	903,186	$	907,534

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

September 30, 2020

and

December 31, 2019:

(In thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
September 30, 2020:
U. S. Government agency mortgage-backed securities	$	-	$	15,705	$	-	$	15,705
Corporate bonds		-		17,250		-		17,250
Subordinated notes		-		9,013		-		9,013
SBA loan pools		-		5,301		-		5,301
Municipal bonds		-		554		-		554
Available-for-sale securities	$	-	$	47,823	$	-	$	47,823
Contingent consideration liability	$	-	$	-	$	86	$	86
Interest rate swap receivable	$	-	$	1,303	$	-	$	1,303
Interest rate swap liability	$	-	$	1,303	$	-	$	1,303
December 31, 2019:
U. S. Government agency mortgage-backed securities	$	-	$	16,685	$	-	$	16,685
Corporate bonds		-		17,313		-		17,313
Subordinated notes		-		9,204		-		9,204
SBA loan pools		-		5,115		-		5,115
Available-for-sale securities	$	-	$	48,317	$	-	$	48,317
Impaired PCI Loans, net	$	-	$	-	$	176	$	176
Contingent consideration liability	$	-	$	-	$	86	$	86
Interest rate swap receivable	$	-	$	694	$	-	$	694
Interest rate swap liability	$	-	$	694	$	-	$	694

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

and

nine

months ended

September 30, 2020

and

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 measured at fair value on a non-recurring basis as of

September 30, 2020

and

December 31, 2019:

(In thousands)	Fair Value		Valuation Methodology	Unobservable Inputs	Range of Inputs
September 30, 2020:
Impaired loans, net	$	20,597	Real Estate Appraisals	Discount for appraisal type	8%	-	20%
Other Real Estate Owned		1,954	Real Estate Appraisals	Discount for appraisal type		12%
SBA servicing assets		362	Discounted Cash Flows	Market discount rates	14.73%	-	14.90%
December 31, 2019:
Impaired loans, net	$	18,132	Real Estate Appraisals	Discount for appraisal type	8%	-	20%
Other Real Estate Owned		2,400	Real Estate Appraisals	Discount for appraisal type		12%
SBA servicing assets		280	Discounted Cash Flows	Market discount rates	14.73%	-	14.90%

Patriot discloses fair value information about financial instruments, whether or

not

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

not

necessarily represent the complete underlying value of financial instruments included in the consolidated financial statements.

The estimated fair value amounts have been measured as of

September 30, 2020

and

December 31, 2019,

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 14 - Subsequent Events

9 Months Ended

Sep. 30, 2020

Notes to Financial Statements

Subsequent Events [Text Block]

Note 14. Subsequent Events

As noted in Note

4,

the Bank had approximately

$244.4

million of loans to borrowers that had been modified to defer the payment of interest and/or principal for up to

180

days pursuant to the CARES Act. The majority of the modifications granted to customers expired as of

November 13, 2020,

the balance of loans modified in conjunction with the CARES Act had declined to

$59.1

million.

XML

Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2020

Accounting Policies [Abstract]

New Accounting Pronouncements, Policy [Policy Text Block]

Recently Adopted and Issued Accounting Standards

Accounting Standards Adopted During

2020

Effective

January 1, 2020,

the following new Accounting Standards Updates (ASU) were adopted by the Company:

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 related to 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. The adoption of ASU

2018

-

13

did

not

have any impact on our consolidated financial statements.

ASU

2018

-

15

In

August 2018,

the FASB issued ASU

No.

2018

-

15,

Intangibles - Goodwill and Other - Internal-Use Software (Subtopic

350

-

40

) - Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract

. ASU

2018

-

15

clarifies certain aspects of ASU

2015

-

05,

“Customer's Accounting for Fees Paid in a Cloud Computing Arrangement,” which was issued in

April 2015.

Specifically, ASU

2018

-

15

aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). For public business entities, the ASU was effective for interim and annual reporting periods beginning after

December 15, 2019,

with early adoption permitted.

The amendments in this update align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal use software license). The accounting for the service element of a hosting arrangement that is a service contract is

not

affected by the amendments in this update.

The amendments in this ASU also require the entity (customer) to expense the capitalized implementation costs of a hosting arrangement that is a service contract over the term of the hosting arrangement. The term of the hosting arrangement includes the non-cancellable period of the arrangement plus periods covered by (

1

) an option to extend the arrangement if the customer is reasonably certain to exercise that option, (

2

) an option to terminate the arrangement if the customer is reasonably certain

not

to exercise the termination option, and (

3

) an option to extend (or

not

to terminate) the arrangement in which exercise of the option is in the control of the vendor. The entity also is required to apply the existing impairment guidance in Subtopic

350

-

40

to the capitalized implementation costs as if the costs were long-lived assets.

The amendments in this ASU also require the entity to present the expense related to the capitalized implementation costs in the same line item in the statement of income as the fees associated with the hosting element (service) of the arrangement and classify payments for capitalized implementation costs in the statement of cash flows in the same manner as payments made for fees associated with the hosting element. The entity is also required to present the capitalized implementation costs in the consolidated balance sheets in the same line item that a repayment for the fees of the associated hosting arrangement would be presented.

The adoption of ASU

2018

-

15

did

not

have a significant impact on our consolidated financial 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.

In

November 2019,

the FASB issued ASU

2019

-

10,

which amends the effective date of ASC

326

for smaller reporting companies, as defined by the SEC, and other non-SEC reporting entities, and delays the effective date to fiscal years beginning after

December 31, 2022,

including interim periods within those fiscal periods. As the Company is a small reporting company, the delay will be applicable to the Company. Management is currently evaluating the impact that the standard will have on its consolidated financial statements.

ASU

2019

-

12

ASU

2019

-

12,

“Income Taxes (Topic

740

) - Simplifying the Accounting for Income Taxes.”

The guidance issued in this update simplifies the accounting for income taxes by eliminating certain exceptions to the guidance in ASC

740

related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period and the recognition for deferred tax liabilities for outside basis differences. ASU

2019

-

12

also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. The ASU will be effective for the Company on

January 1, 2021,

with early adoption permitted, and is

not

expected to have a significant impact on our consolidated financial statements.

ASU Update

2020

-

02

In

January 2020,

the FASB issued ASU

No.

2020

-

02,

“Financial Instruments - Credit Losses (Topic

326

) and Leases (Topic

842

): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin

No.

119

and Update to SEC Section on Effective Date Related to Accounting Standards Update

No.

2016

-

02,

Leases (Topic

842

).

” This ASU adds and amends SEC paragraphs in the Accounting Standards Codification to reflect the issuance of SEC Staff Accounting Bulletin

No.

119,

related to the new credit losses standard, and comments by the SEC staff related to the revised effective date of the new leases standard. This ASU is effective upon issuance. See the discussion regarding the adoption of ASU

2016

-

13

above.

ASU Update

2020

-

03

 

In

March 2020,

the FASB issued ASU

No.

2020

-

3,

“Codification Improvements to Financial Instruments.”

This ASU clarifies various financial instruments topics, including the CECL standard issued in

2016.

Amendments related to ASU

2016

-

13

for entities that have

not

yet adopted that guidance are effective upon adoption of the amendments in ASU

2016

-

13.

Early adoption is

not

permitted before an entity's adoption of ASU

2016

-

13.

Other amendments are effective upon issuance of this ASU. See the discussion regarding the adoption of ASU

2016

-

13

above.

XML

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

9 Months Ended

Sep. 30, 2020

Notes Tables

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

(In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Fair Value
September 30, 2020:
U. S. Government agency mortgage-backed securities	$	15,578	$	139	$	(12	)	$	15,705
Corporate bonds		18,015		123		(888	)		17,250
Subordinated notes		9,033		120		(140	)		9,013
SBA loan pools		5,369		-		(68	)		5,301
Municipal bonds		564		-		(10	)		554
	$	48,559	$	382	$	(1,118	)	$	47,823
December 31, 2019:
U. S. Government agency mortgage-backed securities	$	16,663	$	90	$	(68	)	$	16,685
Corporate bonds		18,018		133		(838	)		17,313
Subordinated notes		9,022		182		-			9,204
U.S. Treasury notes		5,157		-		(42	)		5,115
	$	48,860	$	405	$	(948	)	$	48,317

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)
September 30, 2020:
U. S. Government agency mortgage-backed securities	$	3,510	$	(11	)	$	1,537	$	(1	)	$	5,047	$	(12	)
Corporate bonds		-		-			13,113		(888	)		13,113		(888	)
Subordinated notes		5,393		(140	)		-		-			5,393		(140	)
SBA loan pools		961		(12	)		4,340		(56	)		5,301		(68	)
Municipal bonds		398		(10	)		-		-			398		(10	)
	$	10,262	$	(173	)	$	18,990	$	(945	)	$	29,252	$	(1,118	)
December 31, 2019:
U. S. Government agency mortgage-backed securities	$	2,609	$	(20	)	$	3,919	$	(48	)	$	6,528	$	(68	)
Corporate bonds		-		-			13,162		(838	)		13,162		(838	)
SBA loan pools		5,115		(42	)		-		-			5,115		(42	)
	$	7,724	$	(62	)	$	17,081	$	(886	)	$	24,805	$	(948	)

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
September 30, 2020:
Corporate bonds	$	4,015	$	14,000	$	-	$	18,015	$	4,139	$	13,111	$	-	$	17,250
Subordinated notes		-		9,033		-		9,033		-		9,013		-		9,013
SBA loan pools		-		5,369		-		5,369		-		5,301		-		5,301
Municipal bonds		-		564		-		564		-		554		-		554
Available-for-sale securities with stated maturity dates		4,015		28,966		-		32,981		4,139		27,979		-		32,118
U. S. Government agency mortgage-backed securities		3,423		1,622		10,533		15,578		3,437		1,649		10,619		15,705
	$	7,438	$	30,588	$	10,533	$	48,559	$	7,576	$	29,628	$	10,619	$	47,823
December 31, 2019:
Corporate bonds	$	4,018	$	14,000	$	-	$	18,018	$	4,151	$	13,162	$	-	$	17,313
Subordinated notes		-		9,022		-		9,022		-		9,204		-		9,204
SBA loan pools		-		5,157		-		5,157		-		5,115		-		5,115
Available-for-sale securities with stated maturity dates		4,018		28,179		-		32,197		4,151		27,481		-		31,632
U. S. Government agency mortgage-backed securities		3,805		2,047		10,811		16,663		3,810		2,016		10,859		16,685
	$	7,823	$	30,226	$	10,811	$	48,860	$	7,961	$	29,497	$	10,859	$	48,317

XML

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

9 Months Ended

Sep. 30, 2020

Notes Tables

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

	September 30,			December 31,
(In thousands)	2020			2019
Loan portfolio segment:
Commercial Real Estate	$	292,067		$	314,414
Residential Real Estate		162,976			175,489
Commercial and Industrial		147,248			173,875
Consumer and Other		73,127			85,934
Construction		61,534			48,388
Construction to Permanent - CRE		14,346			14,064
Loans receivable, gross		751,298			812,164
Allowance for loan and lease losses		(11,171	)		(10,115	)
Loans receivable, net	$	740,127		$	802,049

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

(In thousands)	Three Months Ended September 30,					Nine Months Ended September 30,
	2020		2019			2020			2019
Accretable discount, beginning of period	$	-	$	(201	)	$	(47	)	$	(792	)
Accretion		-		9			2			43
Other changes, net		-		141			45			698
Accretable discount, end of period	$	-	$	(51	)	$	-		$	(51	)

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 September 30, 2020
Allowance for loan and lease losses:
June 30, 2020	$	4,274		$	1,910		$	3,526		$	534		$	666		$	149	$	89		$	11,148
Charge-offs		(35	)		-			(34	)		(6	)		-			-		-			(75	)
Recoveries		-			1			11			1			-			-		-			13
Provisions (credits)		158			(374	)		(33	)		11			152			40		131			85
September 30, 2020	$	4,397		$	1,537		$	3,470		$	540		$	818		$	189	$	220		$	11,171
Three months ended September 30, 2019
Allowance for loan and lease losses:
June 30, 2019	$	1,978		$	936		$	4,208		$	664		$	467		$	105	$	100		$	8,458
Charge-offs		-			(105	)		(74	)		(103	)		-			-		-			(282	)
Recoveries		-			9			117			3			-			-		-			129
Provisions (credits)		111			125			104			(196	)		(19	)		10		(35	)		100
September 30, 2019	$	2,089		$	965		$	4,355		$	368		$	448		$	115	$	65		$	8,405

(In thousands)	Commercial Real Estate			Residential Real Estate			Commercial and Industrial			Consumer and Other			Construction		Construction to Permanent - CRE		Unallocated		Total
Nine months ended September 30, 2020
Allowance for loan and lease losses:
December 31, 2019	$	3,789		$	1,038		$	4,340		$	341		$	477	$	130	$	-	$	10,115
Charge-offs		(400	)		(13	)		(352	)		(45	)		-		-		-		(810	)
Recoveries		-			1			62			4			-		-		-		67
Provisions (credits)		1,008			511			(580	)		240			341		59		220		1,799
September 30, 2020	$	4,397		$	1,537		$	3,470		$	540		$	818	$	189	$	220	$	11,171
Nine months ended September 30, 2019
Allowance for loan and lease losses:
December 31, 2018	$	1,866		$	1,059		$	3,558		$	641		$	350	$	108	$	27	$	7,609
Charge-offs		-			(117	)		(2,366	)		(106	)		-		-		-		(2,589	)
Recoveries		2			9			164			8			-		-		-		183
Provisions (credits)		221			14			2,999			(175	)		98		7		38		3,202
September 30, 2019	$	2,089		$	965		$	4,355		$	368		$	448	$	115	$	65	$	8,405

(In thousands)	Commercial Real Estate		Residential Real Estate		Commercial and Industrial		Consumer and Other		Construction		Construction to Permanent - CRE		Unallocated		Total
September 30, 2020
Allowance for loan and lease losses:
Individually evaluated for impairment	$	1,552	$	5	$	-	$	11	$	-	$	-	$	-	$	1,568
Collectively evaluated for impairment		2,845		1,532		3,470		529		818		189		220		9,603
Total allowance for loan and lease losses	$	4,397	$	1,537	$	3,470	$	540	$	818	$	189	$	220	$	11,171
Loans receivable, gross:
Individually evaluated for impairment	$	15,521	$	3,674	$	1,706	$	1,264	$	-	$	-	$	-	$	22,165
Collectively evaluated for impairment		276,546		159,302		145,542		71,863		61,534		14,346		-		729,133
Total loans receivable, gross	$	292,067	$	162,976	$	147,248	$	73,127	$	61,534	$	14,346	$	-	$	751,298

(In thousands)	Commercial Real Estate		Residential Real Estate		Commercial and Industrial		Consumer and Other		Construction		Construction to Permanent - CRE		Unallocated		Total
December 31, 2019
Allowance for loan and lease losses:
Individually evaluated for impairment	$	1,496	$	-	$	-	$	-	$	-	$	-	$	-	$	1,496
Collectively evaluated for impairment		2,293		1,038		4,340		341		477		130		-		8,619
Total allowance for loan losses	$	3,789	$	1,038	$	4,340	$	341	$	477	$	130	$	-	$	10,115
Loans receivable, gross:
Individually evaluated for impairment	$	13,034	$	3,621	$	2,057	$	916	$	-	$	-	$	-	$	19,628
PCI loans individually evaluated for impairment		-		-		176		-		-		-		-		176
Collectively evaluated for impairment		301,380		171,868		171,642		85,018		48,388		14,064		-		792,360
Total loans receivable, gross	$	314,414	$	175,489	$	173,875	$	85,934	$	48,388	$	14,064	$	-	$	812,164

Financing Receivable, Past Due [Table Text Block]

(In thousands)	Performing (Accruing) Loans
As of September 30, 2020:	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	$	903	$	-	$	-	$	903	$	264,594	$	265,497	$	-	$	265,497
Substandard		1,430		-		-		1,430		10,693		12,123		14,447		26,570
		2,333		-		-		2,333		275,287		277,620		14,447		292,067
Residential Real Estate:
Pass		2,283		-		679		2,962		156,472		159,434		-		159,434
Substandard		-		-		-		-		250		250		3,292		3,542
		2,283		-		679		2,962		156,722		159,684		3,292		162,976
Commercial and Industrial:
Pass		-		200		-		200		112,236		112,436		-		112,436
Special mention		-		-		-		-		7,437		7,437		-		7,437
Substandard		702		-		-		702		24,967		25,669		1,706		27,375
		702		200		-		902		144,640		145,542		1,706		147,248
Consumer and Other:
Pass		30		1		-		31		71,980		72,011		-		72,011
Substandard		97		-		-		97		24		121		995		1,116
		127		1		-		128		72,004		72,132		995		73,127
Construction:
Pass		-		-		-		-		61,534		61,534		-		61,534
		-		-		-		-		61,534		61,534		-		61,534
Construction to Permanent - CRE:
Pass		-		-		-		-		14,346		14,346		-		14,346
		-		-		-		-		14,346		14,346		-		14,346
Total	$	5,445	$	201	$	679	$	6,325	$	724,533	$	730,858	$	20,440	$	751,298
Loans receivable, gross:
Pass	$	3,216	$	201	$	679	$	4,096	$	681,162	$	685,258	$	-	$	685,258
Special mention		-		-		-		-		7,437		7,437		-		7,437
Substandard		2,229		-		-		2,229		35,934		38,163		20,440		58,603
Loans receivable, gross	$	5,445	$	201	$	679	$	6,325	$	724,533	$	730,858	$	20,440	$	751,298

(In thousands)	Performing (Accruing) Loans
As of December 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	$	-	$	-	$	-	$	-	$	295,982	$	295,982	$	-	$	295,982
Special mention		-		-		-		-		385		385		-		385
Substandard		-		-		-		-		6,086		6,086		11,961		18,047
		-		-		-		-		302,453		302,453		11,961		314,414
Residential Real Estate:
Pass		658		-		-		658		169,903		170,561		-		170,561
Substandard		-		-		-		-		1,700		1,700		3,228		4,928
		658		-		-		658		171,603		172,261		3,228		175,489
Commercial and Industrial:
Pass		327		350		-		677		162,711		163,388		-		163,388
Special mention		279		-		-		279		172		451		-		451
Substandard		-		-		-		-		7,942		7,942		2,094		10,036
		606		350		-		956		170,825		171,781		2,094		173,875
Consumer and Other:
Pass		2,805		3		19		2,827		82,341		85,168		-		85,168
Substandard		-		-		-		-		-		-		766		766
		2,805		3		19		2,827		82,341		85,168		766		85,934
Construction:
Pass		-		-		-		-		48,388		48,388		-		48,388
		-		-		-		-		48,388		48,388		-		48,388
Construction to Permanent - CRE:
Pass		-		-		-		-		14,064		14,064		-		14,064
		-		-		-		-		14,064		14,064		-		14,064
Total	$	4,069	$	353	$	19	$	4,441	$	789,674	$	794,115	$	18,049	$	812,164
Loans receivable, gross:
Pass	$	3,790	$	353	$	19	$	4,162	$	773,389	$	777,551	$	-	$	777,551
Special mention		279		-		-		279		557		836		-		836
Substandard		-		-		-		-		15,728		15,728		18,049		33,777
Loans receivable, gross	$	4,069	$	353	$	19	$	4,441	$	789,674	$	794,115	$	18,049	$	812,164

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 September 30, 2020:
Loan portfolio segment:
Commercial Real Estate:
Substandard	$	-	$	-	$	5,636	$	5,636	$	8,811	$	14,447
Residential Real Estate:
Substandard		-		-		1,585		1,585		1,707		3,292
Commercial and Industrial:
Substandard		-		-		1,706		1,706		-		1,706
Consumer and Other:
Substandard		-		-		104		104		891		995
Total non-accruing loans	$	-	$	-	$	9,031	$	9,031	$	11,409	$	20,440
As of December 31, 2019:
Loan portfolio segment:
Commercial Real Estate:
Substandard	$	-	$	-	$	1,636	$	1,636	$	10,325	$	11,961
Residential Real Estate:
Substandard		-		-		1,872		1,872		1,356		3,228
Commercial and Industrial:
Substandard		-		-		1,724		1,724		370		2,094
Consumer and Other:
Substandard		-		-		149		149		617		766
Total non-accruing loans	$	-	$	-	$	5,381	$	5,381	$	12,668	$	18,049

Financing Receivable, Troubled Debt Restructuring [Table Text Block]

(In thousands)	September 30, 2020					December 31, 2019
Loan portfolio segment:	Number of Loans		Recorded Investment			Number of Loans		Recorded Investment
Commercial Real Estate		2	$	9,884			2	$	9,873
Residential Real Estate		3		437			2		393
Consumer and Other		4		787			2		687
Total TDR Loans		9		11,108			6		10,953
Less:
TDRs included in non-accrual loans		3		(9,384	)		2		(9,337	)
Total accrual TDR Loans		6	$	1,724			4	$	1,616

					Outstanding Recorded Investment
(In thousands)	Number of Loans				Pre-Modification				Post-Modification
Nine Months Ended September 30,	2020		2019		2020		2019		2020		2019
Loan portfolio segment:
Commercial Real Estate		1		2	$	57	$	8,912	$	56	$	8,911
Consumer and Other		2		-		121		-		121		-
Total TDR Loans		3		2	$	178	$	8,912	$	177	$	8,911

	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2020		2019		2020		2019
Rate reduction	$	-	$	-	$	56	$	111
Extension of interest only period		-		-		121		-
Maturity and rate reduction		-		-		-		8,800
Total	$	-	$	-	$	177	$	8,911

Impaired Financing Receivables [Table Text Block]

(In thousands)	September 30, 2020						December 31, 2019
	Recorded Investment		Principal Outstanding		Related Allowance		Recorded Investment		Principal Outstanding		Related Allowance
With no related allowance recorded:
Commercial Real Estate	$	6,710	$	7,116	$	-	$	4,234	$	4,309	$	-
Residential Real Estate		3,565		3,634		-		3,621		3,623		-
Commercial and Industrial		1,706		1,840		-		2,057		2,060		-
Consumer and Other		1,115		1,265		-		916		1,000		-
		13,096		13,855		-		10,828		10,992		-
With a related allowance recorded:
Commercial Real Estate	$	8,811	$	8,811	$	1,552		8,800		8,800		1,496
Residential Real Estate		109		109		5		-		-		-
Consumer and Other		149		149		11		-		-		-
		9,069		9,069		1,568		8,800		8,800		1,496
Impaired Loans, Total:
Commercial Real Estate		15,521		15,927		1,552		13,034		13,109		1,496
Residential Real Estate		3,674		3,743		5		3,621		3,623		-
Commercial and Industrial		1,706		1,840		-		2,057		2,060		-
Consumer and Other		1,264		1,414		11		916		1,000		-
Impaired Loans, Total	$	22,165	$	22,924	$	1,568	$	19,628	$	19,792	$	1,496

	Three Months Ended September 30,								Nine Months Ended September 30,
(In thousands)	2020				2019				2020				2019
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial Real Estate	$	6,975	$	13	$	13,579	$	164	$	5,702	$	39	$	9,654	$	324
Residential Real Estate		3,641		12		3,696		37		3,603		45		2,202		28
Commercial and Industrial		1,716		2		2,656		39		1,936		4		1,684		99
Consumer and Other		1,321		10		978		12		1,101		26		897		108
Construction		-		-		-		-		-		-		5,280		150
		13,653		37		20,909		252		12,342		114		19,717		709
With a related allowance recorded:
Commercial Real Estate		8,975		-		-		-		8,876		35		275		-
Residential Real Estate		55		1		-		-		33		4		1,237		-
Commercial and Industrial		-		-		-		-		-		-		2,228		-
Consumer and Other		74		1		-		-		50		4		23		-
		9,104		2		-		-		8,959		43		3,763		-
Impaired Loans, Total:
Commercial Real Estate		15,950		13		13,579		164		14,578		74		9,929		324
Residential Real Estate		3,696		13		3,696		37		3,636		49		3,439		28
Commercial and Industrial		1,716		2		2,656		39		1,936		4		3,912		99
Consumer and Other		1,395		11		978		12		1,151		30		920		108
Construction		-		-		-		-		-		-		5,280		150
Impaired Loans, Total	$	22,757	$	39	$	20,909	$	252	$	21,301	$	157	$	23,480	$	709

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Note 5 - Loans Held for Sale (Tables)

9 Months Ended

Sep. 30, 2020

Notes Tables

Servicing Asset at Amortized Cost [Table Text Block]

(In thousands)	Three Months Ended September 30,						Nine Months Ended September 30,
	2020			2019			2020			2019
Beginning balance	$	221			156		$	201			37
Servicing rights capitalized		86			44			115			169
Servicing rights amortized		(6	)		(4	)		(15	)		(10	)
Ending balance		301			196			301			196

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Note 6 - Goodwill and Other Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2020

Notes Tables

Schedule of Goodwill [Table Text Block]

(In thousands)	Three Month Ended September 30,				Nine Month Ended September 30,
	2020		2019		2020		2019
Balance, beginning of period	$	1,107	$	1,107	$	1,107	$	1,728
Mesurement period adjustments		-		-		-		(621	)
Balance, end of period	$	1,107	$	1,107	$	1,107	$	1,107

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Note 7 - Deposits (Tables)

9 Months Ended

Sep. 30, 2020

Notes Tables

Deposit Liabilities, Type [Table Text Block]

(In thousands)	September 30, 2020		December 31, 2019
Non-interest bearing	$	161,871	$	88,135
Interest bearing:
NOW		29,518		26,864
Savings		91,169		64,020
Money market		142,909		99,115
Certificates of deposit, less than $250,000		160,610		193,942
Certificates of deposit, $250,000 or greater		50,359		67,550
Brokered deposits		90,995		229,909
Interest bearing, Total		565,560		681,400
Total Deposits	$	727,431	$	769,535

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	$	139,850	$	41,249	$	85,398	$	266,497
More than 1 year through 2 years		17,847		8,163		4,848		30,858
More than 2 years through 3 years		1,256		694		499		2,449
More than 3 years through 4 years		913		-		250		1,163
More than 4 years through 5 years		744		253		-		997
	$	160,610	$	50,359	$	90,995	$	301,964

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Note 8 - Derivatives (Tables)

9 Months Ended

Sep. 30, 2020

Notes Tables

Schedule of Derivative Instruments [Table Text Block]

(In thousands)	Notional Amount		Maturity (Years)		Fixed Rate			Variable Rate	Fair Value
September 30, 2020:
Classified in Other Assets:
Customer interest rate swap	$	4,911		8.6		5.25	%	1 Mo. LIBOR + 1.96%	$	1,087
Customer interest rate swap		1,439		8.8		4.38	%	1 Mo. LIBOR + 2.00%		216
Classified in Other Liabilities:
3rd party interest rate swap	$	4,911		8.6		5.25	%	1 Mo. LIBOR + 1.96%	$	(1,087	)
3rd party interest rate swap		1,439		8.8		4.38	%	1 Mo. LIBOR + 2.00%		(216	)
December 31, 2019:
Classified in Other Assets:
Customer interest rate swap	$	4,944		9.3		5.25	%	1 Mo. LIBOR + 1.96%	$	617
Customer interest rate swap		1,444		9.5		4.38	%	1 Mo. LIBOR + 2.00%		77
Classified in Other Liabilities:
3rd party interest rate swap	$	4,944		9.3		5.25	%	1 Mo. LIBOR + 1.96%	$	(617	)
3rd party interest rate swap		1,444		9.5		4.38	%	1 Mo. LIBOR + 2.00%		(77	)

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Note 9 - Share-based Compensation and Employee Benefit Plan (Tables)

9 Months Ended

Sep. 30, 2020

Notes Tables

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

Three months ended September 30, 2020:	Number of Shares Awarded			Weighted Average Grant Date Fair Value
Unvested at June 30, 2020		26,597		$	8.89
Vested		(1,200	)	$	17.41
Unvested at September 30, 2020		25,397		$	8.49
Nine months ended September 30, 2020:
Unvested at December 31, 2019		21,470		$	12.91
Granted		12,484		$	6.12
Vested		(6,372	)	$	16.20
Forfeited		(2,185	)	$	15.92
Unvested at September 30, 2020		25,397		$	8.49

Three months ended September 30, 2019:	Number of Shares Awarded			Weighted Average Grant Date Fair Value
Unvested at June 30, 2019		29,529		$	13.94
Vested		(2,392	)	$	17.11
Unvested at September 30, 2019		27,137		$	13.66
Nine months ended September 30, 2019:
Unvested at December 31, 2018		31,790		$	14.06
Granted		9,675		$	15.52
Vested		(14,328	)	$	15.79
Unvested at September 30, 2019		27,137		$	13.66

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Note 10 - Earnings (Loss) Per Share (Tables)

9 Months Ended

Sep. 30, 2020

Notes Tables

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

(Net income (loss) in thousands)	Three Months Ended September 30,						Nine Months Ended September 30,
	2020			2019			2020			2019
Basis (loss) earnings per share:
Net (loss) income attributable to Common shareholders	$	(87	)	$	27		$	(2,437	)	$	(1,305	)
Divided by:
Weighted average shares outstanding		3,935,898			3,922,783			3,934,138			3,920,678
Basic (loss) earnings per common share	$	(0.02	)	$	0.01		$	(0.62	)	$	(0.33	)
Diluted (loss) earnings per share:
Net (loss) income attributable to Common shareholders	$	(87	)	$	27		$	(2,437	)	$	(1,305	)
Weighted average shares outstanding		3,935,898			3,922,783			3,934,138			3,920,678
Effect of potentially dilutive restricted common shares		-	(1)		-	(2)		-	(3)		-	(4)
Divided by:
Weighted average diluted shares outstanding		3,935,898			3,922,783			3,934,138			3,920,678
Diluted (loss) earnings per common share	$	(0.02	)	$	0.01		$	(0.62	)	$	(0.33	)

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Note 11 - Financial Instruments with Off-balance Sheet Risk (Tables)

9 Months Ended

Sep. 30, 2020

Notes Tables

Schedule of Commitment to Extended Credit [Table Text Block]

	September 30,		December 31,
(In thousands)	2020		2019
Commitments to extend credit:
Unused lines of credit	$	73,751	$	71,101
Undisbursed construction loans		31,947		25,367
Home equity lines of credit		19,825		20,032
Future loan commitments		24,165		27,822
Financial standby letters of credit		669		743
	$	150,357	$	145,065

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Note 12 - Regulatory and Operational Matters (Tables)

9 Months Ended

Sep. 30, 2020

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.
	September 30, 2020				December 31, 2019				September 30, 2020				December 31, 2019
	Amount ($)		Ratio (%)		Amount ($)		Ratio (%)		Amount ($)		Ratio (%)		Amount ($)		Ratio (%)
Total Capital (to risk weighted assets):
Actual	$	87,925		10.924	$	90,083		10.510	$	98,800		12.332	$	100,953		11.826
To be Well Capitalized (1)		-		-		-		-		80,115		10.000		85,362		10.000
For capital adequacy with Capital Buffer (2)		-		-		-		-		84,121		10.500		89,630		10.500
For capital adequacy		64,389		8.000		68,573		8.000		64,092		8.000		68,290		8.000
Tier 1 Capital (to risk weighted assets):
Actual		67,850		8.430		69,957		8.161		88,772		11.081		90,827		10.640
To be Well Capitalized (1)		-		-		-		-		64,092		8.000		68,290		8.000
For capital adequacy with Capital Buffer (2)		-		-		-		-		68,098		8.500		72,558		8.500
For capital adequacy		48,292		6.000		51,430		6.000		48,069		6.000		51,217		6.000
Common Equity Tier 1 Capital (to risk weighted assets):
Actual		59,850		7.436		61,957		7.228		88,772		11.081		90,827		10.640
To be Well Capitalized (1)		-		-		-		-		52,075		6.500		55,485		6.500
For capital adequacy with Capital Buffer (2)		-		-		-		-		56,080		7.000		59,753		7.000
For capital adequacy		36,219		4.500		38,572		4.500		36,052		4.500		38,413		4.500
Tier 1 Leverage Capital (to average assets):
Actual		67,850		7.150		69,957		7.148		88,772		9.352		90,827		9.279
To be Well Capitalized (1)		-		-		-		-		47,459		5.000		48,944		5.000
For capital adequacy		37,960		4.000		39,148		4.000		37,967		4.000		39,155		4.000

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Note 13 - Fair Value and Interest Rate Risk (Tables)

9 Months Ended

Sep. 30, 2020

Notes Tables

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

(In thousands)		September 30, 2020				December 31, 2019
	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	$	3,231	$	3,231	$	2,693	$	2,693
Interest-bearing deposits due from banks	Level 1		46,405		46,405		36,711		36,711
Available-for-sale securities	Level 2		47,823		47,823		48,317		48,317
Other investments	Level 2		4,450		4,450		4,450		4,450
Federal Reserve Bank stock	Level 2		2,783		2,783		2,897		2,897
Federal Home Loan Bank stock	Level 2		4,503		4,503		4,477		4,477
Loans receivable, net	Level 3		740,127		729,924		802,049		793,559
Loans held for sale	Level 2		6,824		7,002		15,282		16,733
SBA servicing assets	Level 3		301		362		201		280
Accrued interest receivable	Level 2		6,834		6,834		3,603		3,603
Interest rate swap receivable	Level 2		1,303		1,303		694		694
Financial assets, total		$	864,584	$	854,620	$	921,374	$	914,414
Financial Liabilities:
Demand deposits	Level 2	$	161,871	$	161,871	$	88,135	$	88,135
Savings deposits	Level 2		91,169		91,169		64,020		64,020
Money market deposits	Level 2		142,909		142,909		99,115		99,115
NOW accounts	Level 2		29,518		29,518		26,864		26,864
Time deposits	Level 2		210,969		211,724		261,492		261,914
Brokered deposits	Level 1		90,995		91,521		229,909		230,073
FHLB borrowings	Level 2		90,000		97,786		100,000		103,962
Senior notes	Level 2		11,909		12,033		11,853		11,722
Subordinated debt	Level 2		9,774		10,145		9,752		9,747
Junior subordinated debt owed to unconsolidated trust	Level 2		8,108		8,108		8,102		8,102
Note payable	Level 3		1,044		1,059		1,193		1,129
Accrued interest payable	Level 2		1,091		1,091		1,971		1,971
Contingent consideration liability	Level 3		86		86		86		86
Interest rate swap liability	Level 2		1,303		1,303		694		694
Financial liabilities, total		$	850,746	$	860,323	$	903,186	$	907,534

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
September 30, 2020:
U. S. Government agency mortgage-backed securities	$	-	$	15,705	$	-	$	15,705
Corporate bonds		-		17,250		-		17,250
Subordinated notes		-		9,013		-		9,013
SBA loan pools		-		5,301		-		5,301
Municipal bonds		-		554		-		554
Available-for-sale securities	$	-	$	47,823	$	-	$	47,823
Contingent consideration liability	$	-	$	-	$	86	$	86
Interest rate swap receivable	$	-	$	1,303	$	-	$	1,303
Interest rate swap liability	$	-	$	1,303	$	-	$	1,303
December 31, 2019:
U. S. Government agency mortgage-backed securities	$	-	$	16,685	$	-	$	16,685
Corporate bonds		-		17,313		-		17,313
Subordinated notes		-		9,204		-		9,204
SBA loan pools		-		5,115		-		5,115
Available-for-sale securities	$	-	$	48,317	$	-	$	48,317
Impaired PCI Loans, net	$	-	$	-	$	176	$	176
Contingent consideration liability	$	-	$	-	$	86	$	86
Interest rate swap receivable	$	-	$	694	$	-	$	694
Interest rate swap liability	$	-	$	694	$	-	$	694

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

(In thousands)	Fair Value		Valuation Methodology	Unobservable Inputs	Range of Inputs
September 30, 2020:
Impaired loans, net	$	20,597	Real Estate Appraisals	Discount for appraisal type	8%	-	20%
Other Real Estate Owned		1,954	Real Estate Appraisals	Discount for appraisal type		12%
SBA servicing assets		362	Discounted Cash Flows	Market discount rates	14.73%	-	14.90%
December 31, 2019:
Impaired loans, net	$	18,132	Real Estate Appraisals	Discount for appraisal type	8%	-	20%
Other Real Estate Owned		2,400	Real Estate Appraisals	Discount for appraisal type		12%
SBA servicing assets		280	Discounted Cash Flows	Market discount rates	14.73%	-	14.90%

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Note 3 - Available-for-sale Securities (Details Textual)	9 Months Ended
	Sep. 30, 2020 USD ($)	Sep. 30, 2019 USD ($)	Dec. 31, 2019 USD ($)
Debt Securities, Available-for-sale, Unrealized Loss Position, Number of Positions	19		15
Number of Available-for-sale Securities	34		27
Unrealized Holding Losses Depreciation Percentage from Amortized Cost	3.70%		3.70%
Other than Temporary Impairment Losses, Investments, Available-for-sale Securities, Total	$ 0
Other-than-temporary Impairment Loss, Debt Securities, Available-for-sale, Total	0
Proceeds from Sale of Debt Securities, Available-for-sale	0	$ 0
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Payments to Acquire Debt Securities, Available-for-sale	4,900,000
SBA Loan Pools [Member]
Payments to Acquire Debt Securities, Available-for-sale	988,000	5,500,000
US States and Political Subdivisions Debt Securities [Member]
Payments to Acquire Debt Securities, Available-for-sale	$ 565,000
Subordinated Notes [Member]
Payments to Acquire Debt Securities, Available-for-sale		3,500,000
Corporate Debt Securities [Member]
Payments to Acquire Debt Securities, Available-for-sale		4,000,000
Available-For-Sale Securities Pledged to Secure Municipal Deposits [Member]
Debt Securities, Available-for-sale, Restricted		$ 3,700,000	$ 4,800,000

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Note 3 - Available-for-sale Securities - Investment Securities (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Available-for-sale securities, amortized cost	$ 48,559	$ 48,860
Available-for-sale securities, gross unrealized gains	382	405
Available-for-sale securities, gross unrealized losses	(1,118)	(948)
Available-for-sale securities	47,823	48,317
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Available-for-sale securities, amortized cost	15,578	16,663
Available-for-sale securities, gross unrealized gains	139	90
Available-for-sale securities, gross unrealized losses	(12)	(68)
Available-for-sale securities	15,705	16,685
Corporate Debt Securities [Member]
Available-for-sale securities, amortized cost	18,015	18,018
Available-for-sale securities, gross unrealized gains	123	133
Available-for-sale securities, gross unrealized losses	(888)	(838)
Available-for-sale securities	17,250	17,313
Subordinated Notes [Member]
Available-for-sale securities, amortized cost	9,033	9,022
Available-for-sale securities, gross unrealized gains	120	182
Available-for-sale securities, gross unrealized losses	(140)
Available-for-sale securities	9,013	9,204
SBA Loan Pools [Member]
Available-for-sale securities, amortized cost	5,369	5,157
Available-for-sale securities, gross unrealized gains
Available-for-sale securities, gross unrealized losses	(68)
Available-for-sale securities	5,301	5,115
US States and Political Subdivisions Debt Securities [Member]
Available-for-sale securities, amortized cost	564
Available-for-sale securities, gross unrealized gains
Available-for-sale securities, gross unrealized losses	(10)
Available-for-sale securities	$ 554
US Treasury Securities [Member]
Available-for-sale securities, amortized cost		5,157
Available-for-sale securities, gross unrealized gains
Available-for-sale securities, gross unrealized losses		(42)
Available-for-sale securities		$ 5,115

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Note 3 - Available-for-sale Securities - Investment Securities in a Continuous Loss Position (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Available-for-sale securities in continuous loss position, less than 12 months, fair value	$ 10,262	$ 7,724
Available-for-sale securities in continuous loss position, less than 12 months, unrealized loss	(173)	(62)
Available-for-sale securities in continuous loss position, 12 months or more, fair value	18,990	17,081
Available-for-sale securities in continuous loss position, 12 months or more, unrealized loss	(945)	(886)
Available-for-sale securities in continuous loss position, fair value	29,252	24,805
Available-for-sale securities in continuous loss position, unrealized loss	(1,118)	(948)
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Available-for-sale securities in continuous loss position, less than 12 months, fair value	3,510	2,609
Available-for-sale securities in continuous loss position, less than 12 months, unrealized loss	(11)	(20)
Available-for-sale securities in continuous loss position, 12 months or more, fair value	1,537	3,919
Available-for-sale securities in continuous loss position, 12 months or more, unrealized loss	(1)	(48)
Available-for-sale securities in continuous loss position, fair value	5,047	6,528
Available-for-sale securities in continuous loss position, unrealized loss	(12)	(68)
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	13,113	13,162
Available-for-sale securities in continuous loss position, 12 months or more, unrealized loss	(888)	(838)
Available-for-sale securities in continuous loss position, fair value	13,113	13,162
Available-for-sale securities in continuous loss position, unrealized loss	(888)	(838)
Subordinated Notes [Member]
Available-for-sale securities in continuous loss position, less than 12 months, fair value	5,393
Available-for-sale securities in continuous loss position, less than 12 months, unrealized loss	(140)
Available-for-sale securities in continuous loss position, 12 months or more, fair value
Available-for-sale securities in continuous loss position, 12 months or more, unrealized loss
Available-for-sale securities in continuous loss position, fair value	5,393
Available-for-sale securities in continuous loss position, unrealized loss	(140)
SBA Loan Pools [Member]
Available-for-sale securities in continuous loss position, less than 12 months, fair value	961	5,115
Available-for-sale securities in continuous loss position, less than 12 months, unrealized loss	(12)	(42)
Available-for-sale securities in continuous loss position, 12 months or more, fair value	4,340
Available-for-sale securities in continuous loss position, 12 months or more, unrealized loss	(56)
Available-for-sale securities in continuous loss position, fair value	5,301	5,115
Available-for-sale securities in continuous loss position, unrealized loss	(68)	$ (42)
US States and Political Subdivisions Debt Securities [Member]
Available-for-sale securities in continuous loss position, less than 12 months, fair value	398
Available-for-sale securities in continuous loss position, less than 12 months, unrealized loss	(10)
Available-for-sale securities in continuous loss position, 12 months or more, fair value
Available-for-sale securities in continuous loss position, 12 months or more, unrealized loss
Available-for-sale securities in continuous loss position, fair value	398
Available-for-sale securities in continuous loss position, unrealized loss	$ (10)

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Note 3 - Available-for-sale Securities - Investment Debt Securities by Contractual Maturity (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Amortized cost, due within 5 years	$ 7,438	$ 7,823
Amortized cost, due after 5 years through 10 years	30,588	30,226
Amortized cost, due after 10 years	10,533	10,811
Available-for-sale securities, amortized cost	48,559	48,860
Fair value, due within 5 years	7,576	7,961
Fair value, due after 5 years through 10 years	29,628	29,497
Fair value, due after 10 years	10,619	10,859
Fair value, total	47,823	48,317
Available-for-sale securities	47,823	48,317
Corporate Debt Securities [Member]
Amortized cost, due within 5 years	4,015	4,018
Amortized cost, due after 5 years through 10 years	14,000	14,000
Amortized cost, due after 10 years
Available-for-sale securities, amortized cost	18,015	18,018
Fair value, due within 5 years	4,139	4,151
Fair value, due after 5 years through 10 years	13,111	13,162
Fair value, due after 10 years
Fair value, total	17,250	17,313
Available-for-sale securities	17,250	17,313
Subordinated Notes [Member]
Amortized cost, due within 5 years
Amortized cost, due after 5 years through 10 years	9,033	9,022
Amortized cost, due after 10 years
Available-for-sale securities, amortized cost	9,033	9,022
Fair value, due within 5 years
Fair value, due after 5 years through 10 years	9,013	9,204
Fair value, due after 10 years
Fair value, total	9,013	9,204
Available-for-sale securities	9,013	9,204
SBA Loan Pools [Member]
Amortized cost, due within 5 years
Amortized cost, due after 5 years through 10 years	5,369	5,157
Amortized cost, due after 10 years
Available-for-sale securities, amortized cost	5,369	5,157
Fair value, due within 5 years
Fair value, due after 5 years through 10 years	5,301	5,115
Fair value, due after 10 years
Fair value, total	5,301	5,115
Available-for-sale securities	5,301	5,115
US States and Political Subdivisions Debt Securities [Member]
Amortized cost, due within 5 years
Amortized cost, due after 5 years through 10 years	564
Amortized cost, due after 10 years
Available-for-sale securities, amortized cost	564
Fair value, due within 5 years
Fair value, due after 5 years through 10 years	554
Fair value, due after 10 years
Fair value, total	554
Available-for-sale securities	554
Available-for-sale Securities with Single Maturity Dates [Member]
Amortized cost, due within 5 years	4,015	4,018
Amortized cost, due after 5 years through 10 years	28,966	28,179
Amortized cost, due after 10 years
Available-for-sale securities, amortized cost	32,981	32,197
Fair value, due within 5 years	4,139	4,151
Fair value, due after 5 years through 10 years	27,979	27,481
Fair value, due after 10 years
Fair value, total	32,118	31,632
Available-for-sale securities	32,118	31,632
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Amortized cost, due within 5 years	3,423	3,805
Amortized cost, due after 5 years through 10 years	1,622	2,047
Amortized cost, due after 10 years	10,533	10,811
Available-for-sale securities, amortized cost	15,578	16,663
Fair value, due within 5 years	3,437	3,810
Fair value, due after 5 years through 10 years	1,649	2,016
Fair value, due after 10 years	10,619	10,859
Fair value, total	15,705	16,685
Available-for-sale securities	$ 15,705	$ 16,685

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Note 4 - Loans Receivable and Allowance for Loan and Lease Losses (Details Textual)	3 Months Ended		6 Months Ended	9 Months Ended
	Sep. 30, 2020 USD ($)	Sep. 30, 2019 USD ($)	Jun. 30, 2020	Sep. 30, 2020 USD ($)	Sep. 30, 2019 USD ($)	Dec. 31, 2019 USD ($)
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Carrying Amount, Net	$ 0			$ 0		$ 176,000
Deteriorated Loans Transferred in, Debt Securities, Accreditable Yield, Period Increase (Decrease), Total	0	$ 9,000		2,000	$ 43,000
Payments to Acquire Loans Receivable				$ 31,525,000	28,213,000
Maximum Period of Credit Extension of Construction Loans (Month)				1 year 180 days
Loans Receivable, Term to Reset to FHLB Rate (Year)				5 years
Period for Charged Off of Open-End Credits (Day)				180 days
Period for Charged Off of Close-End Credits (Day)				120 days
Loans and Leases Receivable, Impaired, Interest Lost on Nonaccrual Loans	$ 216,000	$ 134,000		$ 691,000	$ 271,000
Maximum Period for Charged Off of Consumer Installment Loans (Day)			180 days
Financing Receivable, Modifications, Number of Contracts	0	0		3	2
Financing Receivable, Troubled Debt Restructuring, Commitment to Lend	$ 0			$ 0		0
Financing Receivable, Principal and Interest Deferred Payments	244,400,000			244,400,000
Financing Receivable, Loans Remained on Deferment	157,700,000			157,700,000
Impaired Financing Receivable, Recorded Investment, Total	22,200,000			22,200,000		19,600,000
Impaired Financing Receivable, Related Allowance	$ 1,600,000			$ 1,600,000		$ 1,500,000
Number of Impaired Loans	30			30		27
Impaired Financing Receivable, Non-Performing Loans, Discount to Appraisal Value, Percent	12.00%			12.00%
Impaired Financing Receivable, Non-Performing Loans, Discount of Appraisal Value, Selling Costs, Percent	8.00%			8.00%
SBA CARES Act Paycheck Protection Program [Member]
Percentage of Principal Balance Guaranteed	75.00%			75.00%
Transfer of Loans Held-for-sale to Portfolio Loans				$ 9,542,000
Syndicated and Leveraged Loans [Member]
Loans and Leases Receivable, Net Amount, Total	$ 60,600,000			60,600,000		$ 71,500,000
Non-Accrual Loans [Member]
Impaired Financing Receivable, Interest Income, Cash Basis Method, Total	21,000	$ 129,000		$ 106,000	$ 474,000
Commercial Real Estate Portfolio Segment [Member]
Maximum Percentage of Credit Extension Based on Market Value of Collateral				75.00%
Financing Receivable, Modifications, Number of Contracts				1	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%
Residential Portfolio Segment [Member]
Payments to Acquire Loans Receivable	2,500,000	4,600,000		$ 16,600,000	$ 20,900,000
Consumer Portfolio Segment [Member]
Financing Receivable, Modifications, Number of Contracts				2
Consumer Portfolio Segment [Member] | Education Loans [Member]
Payments to Acquire Loans Receivable	0	$ 0		$ 14,900,000	$ 7,300,000
Construction to Permanent Portfolio Segment [Member] | Minimum [Member]
Loans Receivable, Term (Year)				20 years
Construction to Permanent Portfolio Segment [Member] | Maximum [Member]
Loans Receivable, Term (Year)				25 years
Commercial and Industrial Loans [Member]
Loans and Leases Receivable, Net Amount, Total	21,500,000			$ 21,500,000		9,600,000
Commercial Portfolio Segment [Member]
Loans and Leases Receivable, Reviewed Annually Threshold	250,000			250,000
Commercial and Industrial Portfolio Segment [Member]
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Carrying Amount, Net	0			0		$ 179,000
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Allowance for Loan Losses	$ 0			$ 0

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Note 4 - Loans Receivable and Allowance for Loan and Lease Losses - Loan Portfolio (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Jun. 30, 2020	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Dec. 31, 2018
Allowance for loan and lease losses	$ (11,171)	$ (11,148)	$ (10,115)	$ (8,405)	$ (8,458)	$ (7,609)
Loans receivable, net	740,127		802,049
Business Activities Loans [Member]
Loans receivable, gross	751,298		812,164
Allowance for loan and lease losses	(11,171)		(10,115)
Loans receivable, net	740,127
Acquired Loans [Member]
Loans receivable, gross			812,164
Allowance for loan and lease losses			(10,115)
Loans receivable, net			802,049
Commercial Real Estate Portfolio Segment [Member]
Allowance for loan and lease losses	(4,397)	(4,274)	(3,789)	(2,089)	(1,978)	(1,866)
Commercial Real Estate Portfolio Segment [Member] | Business Activities Loans [Member]
Loans receivable, gross	292,067		314,414
Allowance for loan and lease losses	(4,397)		(3,789)
Commercial Real Estate Portfolio Segment [Member] | Acquired Loans [Member]
Loans receivable, gross			314,414
Residential Portfolio Segment [Member]
Allowance for loan and lease losses	(1,537)	(1,910)	(1,038)	(965)	(936)	(1,059)
Residential Portfolio Segment [Member] | Business Activities Loans [Member]
Loans receivable, gross	162,976		175,489
Allowance for loan and lease losses	(1,537)		(1,038)
Residential Portfolio Segment [Member] | Acquired Loans [Member]
Loans receivable, gross			175,489
Commercial Portfolio Segment [Member]
Allowance for loan and lease losses	(3,470)	(3,526)	(4,340)	(4,355)	(4,208)	(3,558)
Commercial Portfolio Segment [Member] | Business Activities Loans [Member]
Loans receivable, gross	147,248		173,875
Allowance for loan and lease losses	(3,470)		(4,340)
Commercial Portfolio Segment [Member] | Acquired Loans [Member]
Loans receivable, gross			173,875
Consumer Portfolio Segment [Member]
Allowance for loan and lease losses	(540)	(534)	(341)	(368)	(664)	(641)
Consumer Portfolio Segment [Member] | Business Activities Loans [Member]
Loans receivable, gross	73,127		85,934
Allowance for loan and lease losses	(540)		(341)
Consumer Portfolio Segment [Member] | Acquired Loans [Member]
Loans receivable, gross			85,934
Construction Portfolio Segment [Member]
Allowance for loan and lease losses	(818)	(666)	(477)	(448)	(467)	(350)
Construction Portfolio Segment [Member] | Business Activities Loans [Member]
Loans receivable, gross	61,534		48,388
Allowance for loan and lease losses	(818)		(477)
Construction Portfolio Segment [Member] | Acquired Loans [Member]
Loans receivable, gross			48,388
Construction to Permanent Portfolio Segment [Member]
Allowance for loan and lease losses	(189)	$ (149)	(130)	$ (115)	$ (105)	$ (108)
Construction to Permanent Portfolio Segment [Member] | Business Activities Loans [Member]
Loans receivable, gross	14,346		14,064
Allowance for loan and lease losses	$ (189)		(130)
Construction to Permanent Portfolio Segment [Member] | Acquired Loans [Member]
Loans receivable, gross			$ 14,064

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Note 4 - Loans Receivable and Allowance for Loan and Lease Losses - Summary of Changes in Accretable Discount for PCI (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Accretable discount, beginning of period		$ (201)	$ (47)	$ (792)
Accretion		9	2	43
Other changes, net		141	45	698
Accretable discount, end of period		$ (51)		$ (51)

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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		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Dec. 31, 2019
Balance	$ 11,148	$ 8,458	$ 10,115	$ 7,609
Charge-offs	(75)	(282)	(810)	(2,589)
Recoveries	13	129	67	183
Provisions (credits)	85	100	1,799	3,202
Balance	11,171	8,405	11,171	8,405
Total allowance for loan and lease losses	11,171	8,405	10,115	7,609	$ 11,171	$ 10,115
Business Activities Loans [Member]
Balance			10,115
Balance	11,171		11,171
Allowance for loan losses: Individually evaluated for impairment					1,568	1,496
Allowance for loan losses: Collectively evaluated for impairment					9,603	8,619
Total allowance for loan and lease losses	11,171		10,115		11,171	10,115
Loans receivable, gross: Individually evaluated for impairment					22,165	19,628
Loans receivable, gross: Collectively evaluated for impairment					729,133	792,360
Total loans receivable, gross					751,298	812,164
PCI loans individually evaluated for impairment						176
Commercial Real Estate Portfolio Segment [Member]
Balance	4,274	1,978	3,789	1,866
Charge-offs	(35)	0	(400)	0
Recoveries				2
Provisions (credits)	158	111	1,008	221
Balance	4,397	2,089	4,397	2,089
Total allowance for loan and lease losses	4,397	2,089	3,789	1,866	4,397	3,789
Commercial Real Estate Portfolio Segment [Member] | Business Activities Loans [Member]
Balance			3,789
Balance	4,397		4,397
Allowance for loan losses: Individually evaluated for impairment					1,552	1,496
Allowance for loan losses: Collectively evaluated for impairment					2,845	2,293
Total allowance for loan and lease losses	4,397		3,789		4,397	3,789
Loans receivable, gross: Individually evaluated for impairment					15,521	13,034
Loans receivable, gross: Collectively evaluated for impairment					276,546	301,380
Total loans receivable, gross					292,067	314,414
PCI loans individually evaluated for impairment
Residential Portfolio Segment [Member]
Balance	1,910	936	1,038	1,059
Charge-offs		(105)	(13)	(117)
Recoveries	1	9	1	9
Provisions (credits)	(374)	125	511	14
Balance	1,537	965	1,537	965
Total allowance for loan and lease losses	1,537	965	1,038	1,059	1,537	1,038
Residential Portfolio Segment [Member] | Business Activities Loans [Member]
Balance			1,038
Balance	1,537		1,537
Allowance for loan losses: Individually evaluated for impairment					5
Allowance for loan losses: Collectively evaluated for impairment					1,532	1,038
Total allowance for loan and lease losses	1,537		1,038		1,537	1,038
Loans receivable, gross: Individually evaluated for impairment					3,674	3,621
Loans receivable, gross: Collectively evaluated for impairment					159,302	171,868
Total loans receivable, gross					162,976	175,489
PCI loans individually evaluated for impairment
Commercial Portfolio Segment [Member]
Balance	3,526	4,208	4,340	3,558
Charge-offs	(34)	(74)	(352)	(2,366)
Recoveries	11	117	62	164
Provisions (credits)	(33)	104	(580)	2,999
Balance	3,470	4,355	3,470	4,355
Total allowance for loan and lease losses	3,470	4,355	4,340	3,558	3,470	4,340
Commercial Portfolio Segment [Member] | Business Activities Loans [Member]
Balance			4,340
Balance	3,470		3,470
Allowance for loan losses: Individually evaluated for impairment
Allowance for loan losses: Collectively evaluated for impairment					3,470	4,340
Total allowance for loan and lease losses	3,470		4,340		3,470	4,340
Loans receivable, gross: Individually evaluated for impairment					1,706	2,057
Loans receivable, gross: Collectively evaluated for impairment					145,542	171,642
Total loans receivable, gross					147,248	173,875
PCI loans individually evaluated for impairment						176
Consumer Portfolio Segment [Member]
Balance	534	664	341	641
Charge-offs	(6)	(103)	(45)	(106)
Recoveries	1	3	4	8
Provisions (credits)	11	(196)	240	(175)
Balance	540	368	540	368
Total allowance for loan and lease losses	540	368	341	641	540	341
Consumer Portfolio Segment [Member] | Business Activities Loans [Member]
Balance			341
Balance	540		540
Allowance for loan losses: Individually evaluated for impairment					11
Allowance for loan losses: Collectively evaluated for impairment					529	341
Total allowance for loan and lease losses	540		341		540	341
Loans receivable, gross: Individually evaluated for impairment					1,264	916
Loans receivable, gross: Collectively evaluated for impairment					71,863	85,018
Total loans receivable, gross					73,127	85,934
PCI loans individually evaluated for impairment
Construction Portfolio Segment [Member]
Balance	666	467	477	350
Charge-offs	0	0	0	0
Recoveries	0	0	0	0
Provisions (credits)	152	(19)	341	98
Balance	818	448	818	448
Total allowance for loan and lease losses	818	448	477	350	818	477
Construction Portfolio Segment [Member] | Business Activities Loans [Member]
Balance			477
Balance	818		818
Allowance for loan losses: Individually evaluated for impairment					0	0
Allowance for loan losses: Collectively evaluated for impairment					818	477
Total allowance for loan and lease losses	818		477		818	477
Loans receivable, gross: Individually evaluated for impairment
Loans receivable, gross: Collectively evaluated for impairment					61,534	48,388
Total loans receivable, gross					61,534	48,388
PCI loans individually evaluated for impairment
Construction to Permanent Portfolio Segment [Member]
Balance	149	105	130	108
Charge-offs	0	0	0	0
Recoveries	0	0	0	0
Provisions (credits)	40	10	59	7
Balance	189	115	189	115
Total allowance for loan and lease losses	189	115	130	108	189	130
Construction to Permanent Portfolio Segment [Member] | Business Activities Loans [Member]
Balance			130
Balance	189		189
Allowance for loan losses: Individually evaluated for impairment					0	0
Allowance for loan losses: Collectively evaluated for impairment					189	130
Total allowance for loan and lease losses	189		130		189	130
Loans receivable, gross: Individually evaluated for impairment					0	0
Loans receivable, gross: Collectively evaluated for impairment					14,346	14,064
Total loans receivable, gross					14,346	14,064
PCI loans individually evaluated for impairment
Unallocated Financing Receivables [Member]
Balance	89	100		27
Charge-offs	0	0	0	0
Recoveries	0	0	0	0
Provisions (credits)	131	(35)	220	38
Balance	220	65	220	65
Total allowance for loan and lease losses	220	$ 65		$ 27	220
Unallocated Financing Receivables [Member] | Business Activities Loans [Member]
Balance
Balance	220		220
Allowance for loan losses: Individually evaluated for impairment					0	0
Allowance for loan losses: Collectively evaluated for impairment					220
Total allowance for loan and lease losses	$ 220				220
Loans receivable, gross: Individually evaluated for impairment					0	0
Loans receivable, gross: Collectively evaluated for impairment
Total loans receivable, gross
PCI loans individually evaluated for impairment

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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	Sep. 30, 2020	Dec. 31, 2019
Loans receivable, gross	$ 751,298	$ 812,164
Non-accruing loans	20,440	18,049
Commercial Real Estate Portfolio Segment [Member]
Loans receivable, gross	292,067	314,414
Non-accruing loans	14,447	11,961
Residential Portfolio Segment [Member]
Loans receivable, gross	162,976	175,489
Non-accruing loans	3,292	3,228
Commercial Portfolio Segment [Member]
Loans receivable, gross	147,248	173,875
Non-accruing loans	1,706	2,094
Consumer Portfolio Segment [Member]
Loans receivable, gross	73,127	85,934
Non-accruing loans	995	766
Construction Portfolio Segment [Member]
Loans receivable, gross	61,534	48,388
Non-accruing loans
Construction to Permanent Portfolio Segment [Member]
Loans receivable, gross	14,346	14,064
Non-accruing loans
Pass [Member]
Loans receivable, gross	685,258	777,551
Non-accruing loans
Pass [Member] | Commercial Real Estate Portfolio Segment [Member]
Loans receivable, gross	265,497	295,982
Non-accruing loans
Pass [Member] | Residential Portfolio Segment [Member]
Loans receivable, gross	159,434	170,561
Non-accruing loans
Pass [Member] | Commercial Portfolio Segment [Member]
Loans receivable, gross	112,436	163,388
Non-accruing loans
Pass [Member] | Consumer Portfolio Segment [Member]
Loans receivable, gross	72,011	85,168
Non-accruing loans
Pass [Member] | Construction Portfolio Segment [Member]
Loans receivable, gross	61,534	48,388
Non-accruing loans
Pass [Member] | Construction to Permanent Portfolio Segment [Member]
Loans receivable, gross	14,346	14,064
Non-accruing loans
Special Mention [Member]
Loans receivable, gross	7,437	836
Non-accruing loans
Special Mention [Member] | Commercial Real Estate Portfolio Segment [Member]
Loans receivable, gross		385
Non-accruing loans
Special Mention [Member] | Commercial and Industrial Portfolio Segment [Member]
Loans receivable, gross	7,437	451
Non-accruing loans
Substandard [Member]
Loans receivable, gross	58,603
Non-accruing loans	20,440
Substandard [Member] | Commercial Real Estate Portfolio Segment [Member]
Loans receivable, gross	26,570	18,047
Non-accruing loans	14,447	11,961
Substandard [Member] | Residential Portfolio Segment [Member]
Loans receivable, gross	3,542	4,928
Non-accruing loans	3,292	3,228
Substandard [Member] | Commercial Portfolio Segment [Member]
Loans receivable, gross	27,375	10,036
Non-accruing loans	1,706	2,094
Substandard [Member] | Consumer Portfolio Segment [Member]
Loans receivable, gross	1,116	766
Non-accruing loans	995	766
Substandard [Member] | Construction Portfolio Segment [Member]
Loans receivable, gross		33,777
Non-accruing loans		18,049
Performing Financial Instruments [Member]
Performing (accruing) loans, past due	6,325	4,441
Performing (accruing) loans, current	724,533	789,674
Loans receivable, gross	730,858	794,115
Performing Financial Instruments [Member] | Commercial Real Estate Portfolio Segment [Member]
Performing (accruing) loans, past due	2,333
Performing (accruing) loans, current	275,287	302,453
Loans receivable, gross	277,620	302,453
Performing Financial Instruments [Member] | Residential Portfolio Segment [Member]
Performing (accruing) loans, past due	2,962	658
Performing (accruing) loans, current	156,722	171,603
Loans receivable, gross	159,684	172,261
Performing Financial Instruments [Member] | Commercial Portfolio Segment [Member]
Performing (accruing) loans, past due	902	956
Performing (accruing) loans, current	144,640	170,825
Loans receivable, gross	145,542	171,781
Performing Financial Instruments [Member] | Consumer Portfolio Segment [Member]
Performing (accruing) loans, past due	128	2,827
Performing (accruing) loans, current	72,004	82,341
Loans receivable, gross	72,132	85,168
Performing Financial Instruments [Member] | Construction Portfolio Segment [Member]
Performing (accruing) loans, past due
Performing (accruing) loans, current	61,534	48,388
Loans receivable, gross	61,534	48,388
Performing Financial Instruments [Member] | Construction to Permanent Portfolio Segment [Member]
Performing (accruing) loans, past due
Performing (accruing) loans, current	14,346	14,064
Loans receivable, gross	14,346	14,064
Performing Financial Instruments [Member] | Pass [Member]
Performing (accruing) loans, past due	4,096	4,162
Performing (accruing) loans, current	681,162	773,389
Loans receivable, gross	685,258	777,551
Performing Financial Instruments [Member] | Pass [Member] | Commercial Real Estate Portfolio Segment [Member]
Performing (accruing) loans, past due	903
Performing (accruing) loans, current	264,594	295,982
Loans receivable, gross	265,497	295,982
Performing Financial Instruments [Member] | Pass [Member] | Residential Portfolio Segment [Member]
Performing (accruing) loans, past due	2,962	658
Performing (accruing) loans, current	156,472	169,903
Loans receivable, gross	159,434	170,561
Performing Financial Instruments [Member] | Pass [Member] | Commercial Portfolio Segment [Member]
Performing (accruing) loans, past due	200	677
Performing (accruing) loans, current	112,236	162,711
Loans receivable, gross	112,436	163,388
Performing Financial Instruments [Member] | Pass [Member] | Consumer Portfolio Segment [Member]
Performing (accruing) loans, past due	31	2,827
Performing (accruing) loans, current	71,980	82,341
Loans receivable, gross	72,011	85,168
Performing Financial Instruments [Member] | Pass [Member] | Construction Portfolio Segment [Member]
Performing (accruing) loans, past due
Performing (accruing) loans, current	61,534	48,388
Loans receivable, gross	61,534	48,388
Performing Financial Instruments [Member] | Pass [Member] | Construction to Permanent Portfolio Segment [Member]
Performing (accruing) loans, past due
Performing (accruing) loans, current	14,346	14,064
Loans receivable, gross	14,346	14,064
Performing Financial Instruments [Member] | Special Mention [Member]
Performing (accruing) loans, past due		279
Performing (accruing) loans, current	7,437	557
Loans receivable, gross	7,437	836
Performing Financial Instruments [Member] | Special Mention [Member] | Commercial Real Estate Portfolio Segment [Member]
Performing (accruing) loans, past due
Performing (accruing) loans, current		385
Loans receivable, gross		385
Performing Financial Instruments [Member] | Special Mention [Member] | Commercial and Industrial Portfolio Segment [Member]
Performing (accruing) loans, past due		279
Performing (accruing) loans, current	7,437	172
Loans receivable, gross	7,437	451
Performing Financial Instruments [Member] | Substandard [Member]
Performing (accruing) loans, past due	2,229
Performing (accruing) loans, current	35,934
Loans receivable, gross	38,163
Performing Financial Instruments [Member] | Substandard [Member] | Commercial Real Estate Portfolio Segment [Member]
Performing (accruing) loans, past due	1,430
Performing (accruing) loans, current	10,693	6,086
Loans receivable, gross	12,123	6,086
Performing Financial Instruments [Member] | Substandard [Member] | Residential Portfolio Segment [Member]
Performing (accruing) loans, past due
Performing (accruing) loans, current	250	1,700
Loans receivable, gross	250	1,700
Performing Financial Instruments [Member] | Substandard [Member] | Commercial Portfolio Segment [Member]
Performing (accruing) loans, past due	702
Performing (accruing) loans, current	24,967	7,942
Loans receivable, gross	25,669	7,942
Performing Financial Instruments [Member] | Substandard [Member] | Consumer Portfolio Segment [Member]
Performing (accruing) loans, past due	97
Performing (accruing) loans, current	24
Loans receivable, gross	121
Performing Financial Instruments [Member] | Substandard [Member] | Construction Portfolio Segment [Member]
Performing (accruing) loans, past due
Performing (accruing) loans, current		15,728
Loans receivable, gross		15,728
Financial Asset, 30 to 59 Days Past Due [Member] | Performing Financial Instruments [Member]
Performing (accruing) loans, past due	5,445	4,069
Financial Asset, 30 to 59 Days Past Due [Member] | Performing Financial Instruments [Member] | Commercial Real Estate Portfolio Segment [Member]
Performing (accruing) loans, past due	2,333
Financial Asset, 30 to 59 Days Past Due [Member] | Performing Financial Instruments [Member] | Residential Portfolio Segment [Member]
Performing (accruing) loans, past due	2,283	658
Financial Asset, 30 to 59 Days Past Due [Member] | Performing Financial Instruments [Member] | Commercial Portfolio Segment [Member]
Performing (accruing) loans, past due	702	606
Financial Asset, 30 to 59 Days Past Due [Member] | Performing Financial Instruments [Member] | Consumer Portfolio Segment [Member]
Performing (accruing) loans, past due	127	2,805
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	3,216	3,790
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	903
Financial Asset, 30 to 59 Days Past Due [Member] | Performing Financial Instruments [Member] | Pass [Member] | Residential Portfolio Segment [Member]
Performing (accruing) loans, past due	2,283	658
Financial Asset, 30 to 59 Days Past Due [Member] | Performing Financial Instruments [Member] | Pass [Member] | Commercial Portfolio Segment [Member]
Performing (accruing) loans, past due		327
Financial Asset, 30 to 59 Days Past Due [Member] | Performing Financial Instruments [Member] | Pass [Member] | Consumer Portfolio Segment [Member]
Performing (accruing) loans, past due	30	2,805
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		279
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] | Commercial and Industrial Portfolio Segment [Member]
Performing (accruing) loans, past due		279
Financial Asset, 30 to 59 Days Past Due [Member] | Performing Financial Instruments [Member] | Substandard [Member]
Performing (accruing) loans, past due	2,229
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	1,430
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	702
Financial Asset, 30 to 59 Days Past Due [Member] | Performing Financial Instruments [Member] | Substandard [Member] | Consumer Portfolio Segment [Member]
Performing (accruing) loans, past due	97
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	201	353
Financial Asset, 60 to 89 Days Past Due [Member] | Performing Financial Instruments [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] | Residential Portfolio Segment [Member]
Performing (accruing) loans, past due
Financial Asset, 60 to 89 Days Past Due [Member] | Performing Financial Instruments [Member] | Commercial Portfolio Segment [Member]
Performing (accruing) loans, past due	200	350
Financial Asset, 60 to 89 Days Past Due [Member] | Performing Financial Instruments [Member] | Consumer Portfolio Segment [Member]
Performing (accruing) loans, past due	1	3
Financial Asset, 60 to 89 Days Past Due [Member] | Performing Financial Instruments [Member] | Construction Portfolio Segment [Member]
Performing (accruing) loans, past due
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	201	353
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
Financial Asset, 60 to 89 Days Past Due [Member] | Performing Financial Instruments [Member] | Pass [Member] | Commercial Portfolio Segment [Member]
Performing (accruing) loans, past due	200	350
Financial Asset, 60 to 89 Days Past Due [Member] | Performing Financial Instruments [Member] | Pass [Member] | Consumer Portfolio Segment [Member]
Performing (accruing) loans, past due	1	3
Financial Asset, 60 to 89 Days Past Due [Member] | Performing Financial Instruments [Member] | Pass [Member] | Construction Portfolio Segment [Member]
Performing (accruing) loans, past due
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] | 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
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
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
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	679	19
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
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	679
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
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		19
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	679	19
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	679
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
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		19
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
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
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
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

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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	Sep. 30, 2020	Dec. 31, 2019
Non-accruing loans	$ 20,440	$ 18,049
Performing Financial Instruments [Member]
Performing (accruing) loans, past due	6,325	4,441
Performing (accruing) loans, current	724,533	789,674
Commercial Real Estate Portfolio Segment [Member]
Non-accruing loans	14,447	11,961
Commercial Real Estate Portfolio Segment [Member] | Performing Financial Instruments [Member]
Performing (accruing) loans, past due	2,333
Performing (accruing) loans, current	275,287	302,453
Residential Portfolio Segment [Member]
Non-accruing loans	3,292	3,228
Residential Portfolio Segment [Member] | Performing Financial Instruments [Member]
Performing (accruing) loans, past due	2,962	658
Performing (accruing) loans, current	156,722	171,603
Commercial Portfolio Segment [Member]
Non-accruing loans	1,706	2,094
Commercial Portfolio Segment [Member] | Performing Financial Instruments [Member]
Performing (accruing) loans, past due	902	956
Performing (accruing) loans, current	144,640	170,825
Consumer Portfolio Segment [Member]
Non-accruing loans	995	766
Consumer Portfolio Segment [Member] | Performing Financial Instruments [Member]
Performing (accruing) loans, past due	128	2,827
Performing (accruing) loans, current	72,004	82,341
Non-Accrual Loans [Member]
Performing (accruing) loans, past due	9,031	5,381
Performing (accruing) loans, current	11,409	12,668
Substandard [Member]
Non-accruing loans	20,440
Substandard [Member] | Performing Financial Instruments [Member]
Performing (accruing) loans, past due	2,229
Performing (accruing) loans, current	35,934
Substandard [Member] | Commercial Real Estate Portfolio Segment [Member]
Non-accruing loans	14,447	11,961
Substandard [Member] | Commercial Real Estate Portfolio Segment [Member] | Performing Financial Instruments [Member]
Performing (accruing) loans, past due	1,430
Performing (accruing) loans, current	10,693	6,086
Substandard [Member] | Residential Portfolio Segment [Member]
Non-accruing loans	3,292	3,228
Substandard [Member] | Residential Portfolio Segment [Member] | Performing Financial Instruments [Member]
Performing (accruing) loans, past due
Performing (accruing) loans, current	250	1,700
Substandard [Member] | Commercial Portfolio Segment [Member]
Non-accruing loans	1,706	2,094
Substandard [Member] | Commercial Portfolio Segment [Member] | Performing Financial Instruments [Member]
Performing (accruing) loans, past due	702
Performing (accruing) loans, current	24,967	7,942
Substandard [Member] | Consumer Portfolio Segment [Member]
Non-accruing loans	995	766
Substandard [Member] | Consumer Portfolio Segment [Member] | Performing Financial Instruments [Member]
Performing (accruing) loans, past due	97
Performing (accruing) loans, current	24
Substandard [Member] | Non-Accrual Loans [Member] | Commercial Real Estate Portfolio Segment [Member]
Performing (accruing) loans, past due	5,636	1,636
Performing (accruing) loans, current	8,811	10,325
Substandard [Member] | Non-Accrual Loans [Member] | Residential Portfolio Segment [Member]
Performing (accruing) loans, past due	1,585	1,872
Performing (accruing) loans, current	1,707	1,356
Substandard [Member] | Non-Accrual Loans [Member] | Commercial Portfolio Segment [Member]
Performing (accruing) loans, past due	1,706	1,724
Performing (accruing) loans, current		370
Non-accruing loans		2,094
Substandard [Member] | Non-Accrual Loans [Member] | Commercial Portfolio Segment [Member] | Performing Financial Instruments [Member]
Performing (accruing) loans, past due
Substandard [Member] | Non-Accrual Loans [Member] | Consumer Portfolio Segment [Member]
Performing (accruing) loans, past due	104	149
Performing (accruing) loans, current	891	617
Financial Asset, 30 to 59 Days Past Due [Member] | Performing Financial Instruments [Member]
Performing (accruing) loans, past due	5,445	4,069
Financial Asset, 30 to 59 Days Past Due [Member] | Commercial Real Estate Portfolio Segment [Member] | Performing Financial Instruments [Member]
Performing (accruing) loans, past due	2,333
Financial Asset, 30 to 59 Days Past Due [Member] | Residential Portfolio Segment [Member] | Performing Financial Instruments [Member]
Performing (accruing) loans, past due	2,283	658
Financial Asset, 30 to 59 Days Past Due [Member] | Commercial Portfolio Segment [Member] | Performing Financial Instruments [Member]
Performing (accruing) loans, past due	702	606
Financial Asset, 30 to 59 Days Past Due [Member] | Consumer Portfolio Segment [Member] | Performing Financial Instruments [Member]
Performing (accruing) loans, past due	127	2,805
Financial Asset, 30 to 59 Days Past Due [Member] | Non-Accrual Loans [Member]
Performing (accruing) loans, past due
Financial Asset, 30 to 59 Days Past Due [Member] | Substandard [Member] | Performing Financial Instruments [Member]
Performing (accruing) loans, past due	2,229
Financial Asset, 30 to 59 Days Past Due [Member] | Substandard [Member] | Commercial Real Estate Portfolio Segment [Member] | Performing Financial Instruments [Member]
Performing (accruing) loans, past due	1,430
Financial Asset, 30 to 59 Days Past Due [Member] | Substandard [Member] | Residential Portfolio Segment [Member] | Performing Financial Instruments [Member]
Performing (accruing) loans, past due
Financial Asset, 30 to 59 Days Past Due [Member] | Substandard [Member] | Commercial Portfolio Segment [Member] | Performing Financial Instruments [Member]
Performing (accruing) loans, past due	702
Financial Asset, 30 to 59 Days Past Due [Member] | Substandard [Member] | Consumer Portfolio Segment [Member] | Performing Financial Instruments [Member]
Performing (accruing) loans, past due	97
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
Financial Asset, 30 to 59 Days Past Due [Member] | Substandard [Member] | Non-Accrual Loans [Member] | Residential Portfolio Segment [Member]
Performing (accruing) loans, past due
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
Financial Asset, 60 to 89 Days Past Due [Member] | Performing Financial Instruments [Member]
Performing (accruing) loans, past due	201	353
Financial Asset, 60 to 89 Days Past Due [Member] | Commercial Real Estate Portfolio Segment [Member] | Performing Financial Instruments [Member]
Performing (accruing) loans, past due
Financial Asset, 60 to 89 Days Past Due [Member] | Residential Portfolio Segment [Member] | Performing Financial Instruments [Member]
Performing (accruing) loans, past due
Financial Asset, 60 to 89 Days Past Due [Member] | Commercial Portfolio Segment [Member] | Performing Financial Instruments [Member]
Performing (accruing) loans, past due	200	350
Financial Asset, 60 to 89 Days Past Due [Member] | Consumer Portfolio Segment [Member] | Performing Financial Instruments [Member]
Performing (accruing) loans, past due	1	3
Financial Asset, 60 to 89 Days Past Due [Member] | Non-Accrual Loans [Member]
Performing (accruing) loans, past due
Financial Asset, 60 to 89 Days Past Due [Member] | Substandard [Member] | Performing Financial Instruments [Member]
Performing (accruing) loans, past due
Financial Asset, 60 to 89 Days Past Due [Member] | Substandard [Member] | Commercial Real Estate Portfolio Segment [Member] | Performing Financial Instruments [Member]
Performing (accruing) loans, past due
Financial Asset, 60 to 89 Days Past Due [Member] | Substandard [Member] | Residential Portfolio Segment [Member] | Performing Financial Instruments [Member]
Performing (accruing) loans, past due
Financial Asset, 60 to 89 Days Past Due [Member] | Substandard [Member] | Commercial Portfolio Segment [Member] | Performing Financial Instruments [Member]
Performing (accruing) loans, past due
Financial Asset, 60 to 89 Days Past Due [Member] | Substandard [Member] | Consumer Portfolio Segment [Member] | Performing Financial Instruments [Member]
Performing (accruing) loans, past due
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
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
Financial Asset, Equal to or Greater than 90 Days Past Due [Member] | Performing Financial Instruments [Member]
Performing (accruing) loans, past due	679	19
Financial Asset, Equal to or Greater than 90 Days Past Due [Member] | Commercial Real Estate Portfolio Segment [Member] | Performing Financial Instruments [Member]
Performing (accruing) loans, past due
Financial Asset, Equal to or Greater than 90 Days Past Due [Member] | Residential Portfolio Segment [Member] | Performing Financial Instruments [Member]
Performing (accruing) loans, past due	679
Financial Asset, Equal to or Greater than 90 Days Past Due [Member] | Commercial Portfolio Segment [Member] | Performing Financial Instruments [Member]
Performing (accruing) loans, past due
Financial Asset, Equal to or Greater than 90 Days Past Due [Member] | Consumer Portfolio Segment [Member] | Performing Financial Instruments [Member]
Performing (accruing) loans, past due		19
Financial Asset, Equal to or Greater than 90 Days Past Due [Member] | Non-Accrual Loans [Member]
Performing (accruing) loans, past due	9,031	5,381
Financial Asset, Equal to or Greater than 90 Days Past Due [Member] | Substandard [Member] | Performing Financial Instruments [Member]
Performing (accruing) loans, past due
Financial Asset, Equal to or Greater than 90 Days Past Due [Member] | Substandard [Member] | Commercial Real Estate Portfolio Segment [Member] | Performing Financial Instruments [Member]
Performing (accruing) loans, past due
Financial Asset, Equal to or Greater than 90 Days Past Due [Member] | Substandard [Member] | Residential Portfolio Segment [Member] | Performing Financial Instruments [Member]
Performing (accruing) loans, past due
Financial Asset, Equal to or Greater than 90 Days Past Due [Member] | Substandard [Member] | Commercial Portfolio Segment [Member] | Performing Financial Instruments [Member]
Performing (accruing) loans, past due
Financial Asset, Equal to or Greater than 90 Days Past Due [Member] | Substandard [Member] | Consumer Portfolio Segment [Member] | Performing Financial Instruments [Member]
Performing (accruing) loans, past due
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	5,636	1,636
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	1,585	1,872
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	1,706	1,724
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	$ 104	$ 149

XML

Note 4 - Loans Receivable and Allowance for Loan and Lease Losses - Recorded Investment in TDRs (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020 USD ($)	Sep. 30, 2019 USD ($)	Sep. 30, 2020 USD ($)	Sep. 30, 2019 USD ($)	Dec. 31, 2019 USD ($)
Number of contracts	9		9		6
Recorded investment	$ 11,108		$ 11,108		$ 10,953
TDRs included in non-accrual loans	$ (11,108)		$ (11,108)		$ (10,953)
Number of Loans	0	0	3	2
Outstanding Recorded Investment, Pre-Modification			$ 178	$ 8,912
Outstanding Recorded Investment, Post-Modification			$ 177	8,911
Non-Accrual Loans [Member]
Number of contracts	3		3		2
Recorded investment	$ 9,384		$ 9,384		$ 9,337
TDRs included in non-accrual loans	$ (9,384)		$ (9,384)		$ (9,337)
Accrual Loans [Member]
Number of contracts	6		6		4
Recorded investment	$ 1,724		$ 1,724		$ 1,616
TDRs included in non-accrual loans	(1,724)		(1,724)		$ (1,616)
Contractual Interest Rate Reduction [Member]
Outstanding Recorded Investment, Post-Modification			56	111
Extended Maturity [Member]
Outstanding Recorded Investment, Post-Modification			121
Maturity and Rate Reduction [Member]
Outstanding Recorded Investment, Post-Modification				$ 8,800
Commercial Real Estate Portfolio Segment [Member]
Number of contracts	2		2		2
Recorded investment	$ 9,884		$ 9,884		$ 9,873
TDRs included in non-accrual loans	$ (9,884)		$ (9,884)		$ (9,873)
Number of Loans			1	2
Outstanding Recorded Investment, Pre-Modification			$ 57	$ 8,912
Outstanding Recorded Investment, Post-Modification			$ 56	$ 8,911
Residential Portfolio Segment [Member]
Number of contracts	3		3		2
Recorded investment	$ 437		$ 437		$ 393
TDRs included in non-accrual loans	$ (437)		$ (437)		$ (393)
Consumer Portfolio Segment [Member]
Number of contracts	4		4		2
Recorded investment	$ 787		$ 787		$ 687
TDRs included in non-accrual loans	$ (787)		$ (787)		$ (687)
Number of Loans			2
Outstanding Recorded Investment, Pre-Modification			$ 121
Outstanding Recorded Investment, Post-Modification			$ 121

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Note 4 - Loans Receivable and Allowance for Loan and Lease Losses - Impaired Loans (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019
Impaired loans, related allowance	$ 1,600,000		$ 1,600,000		$ 1,500,000
Impaired loans, recorded investment	22,200,000		22,200,000		19,600,000
With no allowance recorded, average recorded investment	13,653,000	$ 20,909,000	12,342,000	$ 19,717,000
With no allowance recorded, interest income recognized	37,000	252,000	114,000	709,000
With allowance recorded, average recorded investment	9,104,000		8,959,000	3,763,000
With allowance recorded, interest income recognized	2,000		43,000
Impaired Loans, Average recorded investment	22,757,000	20,909,000	21,301,000	23,480,000
Impaired Loans, interest income recognized	39,000	252,000	157,000	709,000
Business Activities Loans [Member]
Impaired loans with no related allowance recorded, recorded investment	13,096,000		13,096,000		10,828,000
Impaired loans with no related allowance recorded, unpaid principal balance	13,855,000		13,855,000		10,992,000
Impaired loans with a related allowance recorded, recorded investment	9,069,000		9,069,000		8,800,000
Impaired loans with a related allowance recorded, unpaid principal balance	9,069,000		9,069,000		8,800,000
Impaired loans, related allowance	1,568,000		1,568,000		1,496,000
Impaired loans, recorded investment	22,165,000		22,165,000		19,628,000
Impaired loans, unpaid principal balance	22,924,000		22,924,000		19,792,000
Commercial Real Estate Portfolio Segment [Member]
With no allowance recorded, average recorded investment	6,975,000	13,579,000	5,702,000	9,654,000
With no allowance recorded, interest income recognized	13,000	164,000	39,000	324,000
With allowance recorded, average recorded investment	8,975,000		8,876,000	275,000
With allowance recorded, interest income recognized			35,000
Impaired Loans, Average recorded investment	15,950,000	13,579,000	14,578,000	9,929,000
Impaired Loans, interest income recognized	13,000	164,000	74,000	324,000
Commercial Real Estate Portfolio Segment [Member] | Business Activities Loans [Member]
Impaired loans with no related allowance recorded, recorded investment	6,710,000		6,710,000		4,234,000
Impaired loans with no related allowance recorded, unpaid principal balance	7,116,000		7,116,000		4,309,000
Impaired loans with a related allowance recorded, recorded investment	8,811,000		8,811,000		8,800,000
Impaired loans with a related allowance recorded, unpaid principal balance	8,811,000		8,811,000		8,800,000
Impaired loans, related allowance	1,552,000		1,552,000		1,496,000
Impaired loans, recorded investment	15,521,000		15,521,000		13,034,000
Impaired loans, unpaid principal balance	15,927,000		15,927,000		13,109,000
Residential Portfolio Segment [Member]
With no allowance recorded, average recorded investment	3,641,000	3,696,000	3,603,000	2,202,000
With no allowance recorded, interest income recognized	12,000	37,000	45,000	28,000
With allowance recorded, average recorded investment	55,000		33,000	1,237,000
With allowance recorded, interest income recognized	1,000		4,000
Impaired Loans, Average recorded investment	3,696,000	3,696,000	3,636,000	3,439,000
Impaired Loans, interest income recognized	13,000	37,000	49,000	28,000
Residential Portfolio Segment [Member] | Business Activities Loans [Member]
Impaired loans with no related allowance recorded, recorded investment	3,565,000		3,565,000		3,621,000
Impaired loans with no related allowance recorded, unpaid principal balance	3,634,000		3,634,000		3,623,000
Impaired loans with a related allowance recorded, recorded investment	109,000		109,000
Impaired loans with a related allowance recorded, unpaid principal balance	109,000		109,000
Impaired loans, related allowance	5,000		5,000
Impaired loans, recorded investment	3,674,000		3,674,000		3,621,000
Impaired loans, unpaid principal balance	3,743,000		3,743,000		3,623,000
Commercial Portfolio Segment [Member]
With no allowance recorded, average recorded investment	1,716,000	2,656,000	1,936,000	1,684,000
With no allowance recorded, interest income recognized	2,000	39,000	4,000	99,000
With allowance recorded, average recorded investment				2,228,000
With allowance recorded, interest income recognized
Impaired Loans, Average recorded investment	1,716,000	2,656,000	1,936,000	3,912,000
Impaired Loans, interest income recognized	2,000	39,000	4,000	99,000
Commercial Portfolio Segment [Member] | Business Activities Loans [Member]
Impaired loans with no related allowance recorded, recorded investment	1,706,000		1,706,000		2,057,000
Impaired loans with no related allowance recorded, unpaid principal balance	1,840,000		1,840,000		2,060,000
Impaired loans, related allowance
Impaired loans, recorded investment	1,706,000		1,706,000		2,057,000
Impaired loans, unpaid principal balance	1,840,000		1,840,000		2,060,000
Consumer Portfolio Segment [Member]
With no allowance recorded, average recorded investment	1,321,000	978,000	1,101,000	897,000
With no allowance recorded, interest income recognized	10,000	12,000	26,000	108,000
With allowance recorded, average recorded investment	74,000		50,000	23,000
With allowance recorded, interest income recognized	1,000		4,000
Impaired Loans, Average recorded investment	1,395,000	978,000	1,151,000	920,000
Impaired Loans, interest income recognized	11,000	12,000	30,000	108,000
Consumer Portfolio Segment [Member] | Business Activities Loans [Member]
Impaired loans with no related allowance recorded, recorded investment	1,115,000		1,115,000		916,000
Impaired loans with no related allowance recorded, unpaid principal balance	1,265,000		1,265,000		1,000,000
Impaired loans with a related allowance recorded, recorded investment	149,000		149,000
Impaired loans with a related allowance recorded, unpaid principal balance	149,000		149,000
Impaired loans, related allowance	11,000		11,000
Impaired loans, recorded investment	1,264,000		1,264,000		916,000
Impaired loans, unpaid principal balance	1,414,000		1,414,000		$ 1,000,000
Construction Portfolio Segment [Member]
With no allowance recorded, average recorded investment				5,280,000
With no allowance recorded, interest income recognized				150,000
Impaired Loans, Average recorded investment				5,280,000
Impaired Loans, interest income recognized				$ 150,000

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Note 5 - Loans Held for Sale (Details Textual)	9 Months Ended
	Sep. 30, 2020 USD ($)	Sep. 30, 2019 USD ($)	Dec. 31, 2019 USD ($)
Loans Serviced By Entity But Owned By a Third Party	$ 18,600,000		$ 13,600,000
Servicing Asset, Total	301,000
Servicing Asset at Fair Value, Amount, Ending Balance	362,000
SBA CARES Act Paycheck Protection Program [Member]
Financing Receivable, Held-for-Sale, Not Part of Disposal Group, after Valuation Allowance, Ending Balance	1,800,000		15,300,000
Transfer of Loans Held-for-sale to Portfolio Loans	$ 9,542,000
Commercial Portfolio Segment [Member]
Number of Loans Held-for-Sale	1
Financing Receivable, Held-for-Sale, Not Part of Disposal Group, after Valuation Allowance, Ending Balance	$ 5,000,000
Commercial Portfolio Segment [Member] | SBA CARES Act Paycheck Protection Program [Member]
Financing Receivable, Held-for-Sale, Not Part of Disposal Group, after Valuation Allowance, Ending Balance	851,000		10,200,000
Commercial Real Estate Portfolio Segment [Member] | SBA CARES Act Paycheck Protection Program [Member]
Financing Receivable, Held-for-Sale, Not Part of Disposal Group, after Valuation Allowance, Ending Balance	$ 950,000		$ 5,100,000

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Note 5 - Loans Held for Sale - Analysis of the Activity in the SBA Servicing Assets (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Beginning balance	$ 221	$ 156	$ 201	$ 37
Servicing rights capitalized	86	44	115	169
Servicing rights amortized	(6)	(4)	(15)	(10)
Ending balance	$ 301	$ 196	$ 301	$ 196

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Note 6 - Goodwill and Other Intangible Assets (Details Textual) - USD ($)		3 Months Ended		9 Months Ended
	May 10, 2019	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Jun. 30, 2020	Dec. 31, 2019	Jun. 30, 2019	Dec. 31, 2018	May 10, 2018
Goodwill, Ending Balance		$ 1,107,000	$ 1,107,000	$ 1,107,000	$ 1,107,000	$ 1,107,000	$ 1,107,000	$ 1,107,000	$ 1,728,000
Goodwill, Purchase Accounting Adjustments					$ (621,000)
Goodwill, Impairment Loss		$ 0
Prime Bank [Member]
Goodwill, Ending Balance	$ 1,100,000								$ 1,700,000	$ 2,100,000
Goodwill, Purchase Accounting Adjustments	$ (621,000)
Business Acquisition, Goodwill, Tax Deductible Period (Year)	15 years

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Note 6 - Goodwill and Other Intangible Assets - Schedule of Goodwill (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Balance	$ 1,107	$ 1,107	$ 1,107	$ 1,728
Mesurement period adjustments				(621)
Balance	$ 1,107	$ 1,107	$ 1,107	$ 1,107

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Note 7 - Deposits (Details Textual) - USD ($) $ in Millions	Jul. 22, 2020	Sep. 30, 2020
Payments to Acquire Prepaid Debit Card Deposits	$ 50
Prepaid Debit Card Deposits		$ 60

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Note 7 - Deposits - Summary of Deposits (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Non-interest bearing, Balance	$ 161,871	$ 88,135
NOW, Balance	29,518	26,864
Savings, Balance	91,169	64,020
Money market, Balance	142,909	99,115
Certificates of deposit, less than $250,000, Balance	160,610	193,942
Certificates of deposit, $250,000 or greater, Balance	50,359	67,550
Brokered deposits, Balance	90,995	229,909
Interest bearing, Total, Balance	565,560	681,400
Deposits, Balance	$ 727,431	$ 769,535

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Note 7 - Deposits - Contractual Maturities of Certificates of Deposit (Details) $ in Thousands	Sep. 30, 2020 USD ($)
1 year or less	$ 266,497
More than 1 year through 2 years	30,858
More than 2 years through 3 years	2,449
More than 3 years through 4 years	1,163
More than 4 years through 5 years	997
Contractual Maturities of Certificates of Deposit, Total	301,964
Certificates of Deposits Less Than $250,000 [Member]
1 year or less	139,850
More than 1 year through 2 years	17,847
More than 2 years through 3 years	1,256
More than 3 years through 4 years	913
More than 4 years through 5 years	744
Contractual Maturities of Certificates of Deposit, Total	160,610
Certificates of Deposit $250,000 or Greater [Member]
1 year or less	41,249
More than 1 year through 2 years	8,163
More than 2 years through 3 years	694
More than 3 years through 4 years
More than 4 years through 5 years	253
Contractual Maturities of Certificates of Deposit, Total	50,359
Brokered Deposits [Member]
1 year or less	85,398
More than 1 year through 2 years	4,848
More than 2 years through 3 years	499
More than 3 years through 4 years	250
More than 4 years through 5 years
Contractual Maturities of Certificates of Deposit, Total	$ 90,995

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Note 8 - Derivatives (Details Textual) - Interest Rate Swap [Member] - Not Designated as Hedging Instrument [Member] $ in Millions	Sep. 30, 2020 USD ($)	Dec. 31, 2019 USD ($)	Nov. 30, 2018
Derivative, Number of Instruments Held, Total	4		2
Derivative, Collateral, Right to Reclaim Cash	$ 1.4	$ 1.1

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Note 8 - Derivatives - Schedule of Derivative Instruments (Details) - Not Designated as Hedging Instrument [Member] - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2020	Dec. 31, 2019	Jun. 30, 2020
Interest Rate Swap One [Member]
Derivative Asset, Notional Amount	$ 4,911	$ 4,944
Derivative, Maturity (Year)	8 years 219 days	9 years 109 days
Derivative, Fixed Rate	5.25%	5.25%
Derivative, Variable Rate		1.96%	1.96%
Derivative Liability, Notional Amount	$ 4,911	$ 4,944
Interest Rate Swap One [Member] | Other Assets [Member]
Interest rate swap receivable	1,087	617
Interest Rate Swap One [Member] | Other Liabilities [Member]
Derivative Liability, Fair Value	(1,087)	(617)
Interest Rate Swap Two [Member]
Derivative Asset, Notional Amount	$ 1,439	$ 1,444
Derivative, Maturity (Year)	8 years 292 days	9 years 182 days
Derivative, Fixed Rate	4.38%	4.38%
Derivative, Variable Rate		2.00%	2.00%
Derivative Liability, Notional Amount	$ 1,439	$ 1,444
Interest Rate Swap Two [Member] | Other Assets [Member]
Interest rate swap receivable	216	77
Interest Rate Swap Two [Member] | Other Liabilities [Member]
Derivative Liability, Fair Value	$ (216)	$ (77)

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Note 9 - Share-based Compensation and Employee Benefit Plan (Details Textual) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019
Labor and Related Expense	$ 3,460,000	$ 3,480,000	$ 10,966,000	$ 10,272,000
Common Stock, Dividends, Per Share, Cash Paid (in dollars per share)		$ 0.01		$ 0.01
Payments of Ordinary Dividends, Common Stock		$ 39,000		$ 116,000
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	48,000	53,000	$ 199,000	195,000
Restricted Stock [Member]
Share-based Payment Arrangement, Nonvested Award, Excluding Option, Cost Not yet Recognized, Amount	$ 226,000		$ 226,000
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition (Year)			1 year 361 days
2012 Stock Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized (in shares)	3,000,000		3,000,000
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant (in shares)	2,850,139		2,850,139
Share-based Payment Arrangement, Expense	$ 42,000	59,000	$ 123,000	162,000
2012 Stock Plan [Member] | Employee [Member]
Share-based Payment Arrangement, Expense	21,000	31,000	64,000	87,000
2012 Stock Plan [Member] | Patriot's External Directors [Member]
Share-based Payment Arrangement, Expense	21,000	28,000	59,000	75,000
Labor and Related Expense	$ 87,000	$ 153,000	$ 342,000	$ 423,000
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 (in shares)	0		0		0
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 (Year)			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 (Year)			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 (Year)			3 years

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Note 9 - Share-based Compensation and Employee Benefit Plan - Restricted Shares (Details) - Restricted Stock [Member] - $ / shares	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Unvested at beginning of year (in shares)	26,597	29,529	21,470	31,790
Unvested at beginning of year, weighted average grant date fair value (in dollars per share)	$ 8.89	$ 13.94	$ 12.91	$ 14.06
Vested (in shares)	(1,200)	(2,392)	(6,372)	(14,328)
Vested, weighted average grant date fair value (in dollars per share)	$ 17.41	$ 17.11	$ 16.20	$ 15.79
Granted (in shares)			12,484	9,675
Granted, weighted average grant date fair value (in dollars per share)			$ 6.12	$ 15.52
Forfeited (in shares)			(2,185)
Forfeited, weighted average grant date fair value (in dollars per share)			$ 15.92
Unvested at end of year (in shares)	25,397	27,137	25,397	27,137
Unvested at end of year, weighted average grant date fair value (in dollars per share)	$ 8.49	$ 13.66	$ 8.49	$ 13.66

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Note 10 - Earnings (Loss) Per Share (Details Textual) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Restricted Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in shares)	13,093	417	1,630	151

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Note 10 - Earnings (Loss) Per Share - Computation of Earnings Per Share Basic and Diluted (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended				9 Months Ended
	Sep. 30, 2020		Sep. 30, 2019		Sep. 30, 2020		Sep. 30, 2019
Net (loss) income attributable to Common shareholders	$ (87)		$ 27		$ (2,437)		$ (1,305)
Weighted average shares outstanding (in shares)	(3,935,898)		(3,922,783)		(3,934,138)		(3,920,678)
Basic (loss) earnings per share (in dollars per share)	$ (0.02)		$ 0.01		$ (0.62)		$ (0.33)
Net (loss) income attributable to Common shareholders	$ (87)		$ 27		$ (2,437)		$ (1,305)
Effect of potentially dilutive restricted common shares (in shares)		[1]		[2]		[3]		[4]
Weighted average diluted shares outstanding (in shares)	3,935,898		3,922,783		3,934,138		3,920,678
Diluted (loss) earnings per share (in dollars per share)	$ (0.02)		$ 0.01		$ (0.62)		$ (0.33)

[1] The weighted average diluted shares outstanding does not include 13,093 anti-dilutive restricted common shares for the three months ended September 30, 2020.

[2] The weighted average diluted shares outstanding does not include 417 anti-dilutive restricted common shares for the three months ended September 30, 2019.

[3] The weighted average diluted shares outstanding does not include 1,630 anti-dilutive restricted common shares for the nine months ended September 30, 2020.

[4] The weighted average diluted shares outstanding does not include 151 anti-dilutive restricted common shares for the nine months ended September 30, 2019.

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Note 11 - Financial Instruments with Off-balance Sheet Risk (Details Textual) - USD ($)	Sep. 30, 2020	Dec. 31, 2019
Banks Reserve Based on Analysis in Unfunded Commitments	$ 8,000	$ 8,000

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Note 11 - Financial Instruments with Off-balance Sheet Risk - Financial Instruments With Credit Risk (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Commitments to extend credit	$ 150,357	$ 145,065
Unused Line of Credit [Member]
Commitments to extend credit	73,751	71,101
Undisbursed Construction Loans [Member]
Commitments to extend credit	31,947	25,367
Home Equity Lines of Credit [Member]
Commitments to extend credit	19,825	20,032
Future Loan Commitments [Member]
Commitments to extend credit	24,165	27,822
Financial Standy Letter of Credit [Member]
Commitments to extend credit	$ 669	$ 743

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Note 12 - Regulatory and Operational Matters (Details Textual) $ in Billions	Sep. 30, 2020	Sep. 30, 2019 USD ($)	Jan. 01, 2019
Community Bank, Tier One Leverage Ratio		0.09
Community Bank, Tier One Leverage Capital Required for Capital Adequacy		$ 10
Capital Required to be Well Capitalized to Risk Weighted Assets		0.1
Tier One Risk Based Capital Required to be Well Capitalized to Risk Weighted Assets	0.08
Common Equity, Tier 1, Capital Required for Capital Adequacy to Risk Weighted Assets	0.065		0.07
Tier One Leverage Capital Required to be Well Capitalized to Average Assets	0.09
Capital Conservation Buffer	0.025
Capital Required for Capital Adequacy to Risk Weighted Assets			0.105
Tier One Risk Based Capital Required to be Well Capitalized to Risk Weighted Assets with Capital Buffer			0.085

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Note 12 - Regulatory and Operational Matters - Regulatory Capital Amounts and Ratios (Details) $ in Thousands		Sep. 30, 2020 USD ($)	Dec. 31, 2019 USD ($)	Sep. 30, 2019	Jan. 01, 2019
Total Capital (to Risk Weighted Assets) To Be Well Capitalized Under Prompt Corrective Action Provisions Ratio				0.1
Total Capital (to Risk Weighted Assets) For Capital Adequacy Purposes Ratio					0.105
Tier 1 Capital (to Risk Weighted Assets) To Be Well Capitalized Under Prompt Corrective Action Provisions Ratio		0.08
Tier 1 Capital (to Risk Weighted Assets) For Capital Adequacy Purposes With Capital Buffer Ratio					0.085
Common Equity Tier 1 Capital (to Risk Weighted Assets) For Capital Adequacy Purposes Ratio		0.065			0.07
Tier 1 Capital (to Average Assets) To Be Well Capitalized Under Prompt Corrective Action Provisions Ratio		0.09
Parent Company [Member]
Total Capital (to Risk Weighted Assets) Actual Amount		$ 87,925	$ 90,083
Total Capital (to Risk Weighted Assets) Actual Ratio		0.10924	0.1051
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		$ 64,389	$ 68,573
Total Capital (to Risk Weighted Assets) For Capital Adequacy Purposes Ratio		0.08	0.08
Tier 1 Capital (to Risk Weighted Assets) Actual Amount		$ 67,850	$ 69,957
Tier 1 Capital (to Risk Weighted Assets) Actual Ratio		0.0843	0.08161
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		$ 48,292	$ 51,430
Tier 1 Capital (to Risk Weighted Assets) For Capital Adequacy Purposes Ratio		0.06	0.06
Common Equity Tier 1 Capital (to Risk Weighted Assets) Actual Amount		$ 59,850	$ 61,957
Common Equity Tier 1 Capital (to Risk Weighted Assets) Actual Ratio		0.07436	0.07228
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		$ 36,219	$ 38,572
Common Equity Tier 1 Capital (to Risk Weighted Assets) For Capital Adequacy Purposes Ratio		0.045	0.045
Tier 1 Capital (to Average Assets) Actual Amount		$ 67,850	$ 69,957
Tier 1 Capital (to Average Assets) Actual Ratio		0.0715	0.07148
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		$ 37,960	$ 39,148
Tier 1 Capital (to Average Assets) For Capital Adequacy Purposes Ratio		0.04	0.04
Subsidiaries [Member]
Total Capital (to Risk Weighted Assets) Actual Amount		$ 98,800	$ 100,953
Total Capital (to Risk Weighted Assets) Actual Ratio		0.12332	0.11826
Total Capital (to Risk Weighted Assets) To Be Well Capitalized Under Prompt Corrective Action Provisions Amount	[1]	$ 80,115	$ 85,362
Total Capital (to Risk Weighted Assets) To Be Well Capitalized Under Prompt Corrective Action Provisions Ratio	[1]	0.1	0.1
Total Capital (to Risk Weighted Assets) For Capital Adequacy Purposes With Capital Buffer Amount	[2]	$ 84,121	$ 89,630
Total Capital (to Risk Weighted Assets) For Capital Adequacy Purposes With Capital Buffer Ratio	[2]	0.105	0.105
Total Capital (to Risk Weighted Assets) For Capital Adequacy Purposes Amount		$ 64,092	$ 68,290
Total Capital (to Risk Weighted Assets) For Capital Adequacy Purposes Ratio		0.08	0.08
Tier 1 Capital (to Risk Weighted Assets) Actual Amount		$ 88,772	$ 90,827
Tier 1 Capital (to Risk Weighted Assets) Actual Ratio		0.11081	0.1064
Tier 1 Capital (to Risk Weighted Assets) To Be Well Capitalized Under Prompt Corrective Action Provisions Amount	[1]	$ 64,092	$ 68,290
Tier 1 Capital (to Risk Weighted Assets) To Be Well Capitalized Under Prompt Corrective Action Provisions Ratio	[1]	0.08	0.08
Tier 1 Capital (to Risk Weighted Assets) For Capital Adequacy Purposes With Capital Buffer Amount	[2]	$ 68,098	$ 72,558
Tier 1 Capital (to Risk Weighted Assets) For Capital Adequacy Purposes With Capital Buffer Ratio	[2]	0.085	0.085
Tier 1 Capital (to Risk Weighted Assets) For Capital Adequacy Purposes Amount		$ 48,069	$ 51,217
Tier 1 Capital (to Risk Weighted Assets) For Capital Adequacy Purposes Ratio		0.06	0.06
Common Equity Tier 1 Capital (to Risk Weighted Assets) Actual Amount		$ 88,772	$ 90,827
Common Equity Tier 1 Capital (to Risk Weighted Assets) Actual Ratio		0.11081	0.1064
Common Equity Tier 1 Capital (to Risk Weighted Assets) To Be Well Capitalized Under Prompt Corrective Action Provisions Amount	[1]	$ 52,075	$ 55,485
Common Equity Tier 1 Capital (to Risk Weighted Assets) To Be Well Capitalized Under Prompt Corrective Action Provisions Ratio	[1]	0.065	0.065
Common Equity Tier 1 Capital (to Risk Weighted Assets) For Capital Adequacy Purposes With Capital Buffer Amount	[2]	$ 56,080	$ 59,753
Common Equity Tier 1 Capital (to Risk Weighted Assets) For Capital Adequacy Purposes With Capital Buffer Ratio	[2]	0.07	0.07
Common Equity Tier 1 Capital (to Risk Weighted Assets) For Capital Adequacy Purposes Amount		$ 36,052	$ 38,413
Common Equity Tier 1 Capital (to Risk Weighted Assets) For Capital Adequacy Purposes Ratio		0.045	0.045
Tier 1 Capital (to Average Assets) Actual Amount		$ 88,772	$ 90,827
Tier 1 Capital (to Average Assets) Actual Ratio		0.09352	0.09279
Tier 1 Capital (to Average Assets) To Be Well Capitalized Under Prompt Corrective Action Provisions Amount	[1]	$ 47,459	$ 48,944
Tier 1 Capital (to Average Assets) To Be Well Capitalized Under Prompt Corrective Action Provisions Ratio	[1]	0.05	0.05
Tier 1 Capital (to Average Assets) For Capital Adequacy Purposes Amount		$ 37,967	$ 39,155
Tier 1 Capital (to Average Assets) For Capital Adequacy Purposes Ratio		0.04	0.04

[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 13 - Fair Value and Interest Rate Risk (Details Textual) - USD ($) $ / shares in Units, $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Other Investments, Total	$ 4,450	$ 4,450
Solomon Hess SBA Loan Fund [Member]
Other Investments, Total	$ 4,450
Federal Home Loan Bank Certificates and Obligations (FHLB) [Member]
Stock Value Par or Stated Value per Share (in dollars per share)	$ 100

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Note 13 - Fair Value and Interest Rate Risk - Financial Assets and Liabilities (Details) - USD ($)	Sep. 30, 2020	Dec. 31, 2019
Fair value, total	$ 47,823,000	$ 48,317,000
SBA servicing assets	362,000
Reported Value Measurement [Member]
Financial assets, total	864,584,000	921,374,000
Financial liabilities, total	850,746,000	903,186,000
Estimate of Fair Value Measurement [Member]
Financial assets, total	854,620,000	914,414,000
Financial liabilities, total	860,323,000	907,534,000
Fair Value, Inputs, Level 1 [Member] | Reported Value Measurement [Member] | Brokered Deposits [Member]
Deposits	90,995,000	229,909,000
Fair Value, Inputs, Level 1 [Member] | Reported Value Measurement [Member] | Cash and Due from Banks [Member]
Cash and cash equivalents	3,231,000	2,693,000
Fair Value, Inputs, Level 1 [Member] | Reported Value Measurement [Member] | Interest-bearing Deposits [Member]
Cash and cash equivalents	46,405,000	36,711,000
Fair Value, Inputs, Level 1 [Member] | Estimate of Fair Value Measurement [Member] | Brokered Deposits [Member]
Deposits	91,521,000	230,073,000
Fair Value, Inputs, Level 1 [Member] | Estimate of Fair Value Measurement [Member] | Cash and Due from Banks [Member]
Cash and cash equivalents	3,231,000	2,693,000
Fair Value, Inputs, Level 1 [Member] | Estimate of Fair Value Measurement [Member] | Interest-bearing Deposits [Member]
Cash and cash equivalents	46,405,000	36,711,000
Fair Value, Inputs, Level 2 [Member] | Reported Value Measurement [Member]
Fair value, total	47,823,000	48,317,000
Other investments	4,450,000	4,450,000
Federal Reserve Bank stock	2,783,000	2,897,000
Federal Home Loan Bank stock	4,503,000	4,477,000
Loans held for sale	6,824,000	15,282,000
Accrued interest receivable	6,834,000	3,603,000
FHLB borrowings	90,000,000	100,000,000
Senior notes	11,909,000	11,853,000
Subordinated debt	9,774,000	9,752,000
Junior subordinated debt owed to unconsolidated trust	8,108,000	8,102,000
Accrued interest payable	1,091,000	1,971,000
Interest rate swap liability	1,303,000	694,000
Fair Value, Inputs, Level 2 [Member] | Reported Value Measurement [Member] | Demand Deposits [Member]
Deposits	161,871,000	88,135,000
Fair Value, Inputs, Level 2 [Member] | Reported Value Measurement [Member] | Savings Deposits [Member]
Deposits	91,169,000	64,020,000
Fair Value, Inputs, Level 2 [Member] | Reported Value Measurement [Member] | Money Market Deposits [Member]
Deposits	142,909,000	99,115,000
Fair Value, Inputs, Level 2 [Member] | Reported Value Measurement [Member] | Negotiable Order of Withdrawal (NOW) Accounts [Member]
Deposits	29,518,000	26,864,000
Fair Value, Inputs, Level 2 [Member] | Reported Value Measurement [Member] | Time Deposits [Member]
Deposits	210,969,000	261,492,000
Fair Value, Inputs, Level 2 [Member] | Reported Value Measurement [Member] | Interest Rate Swap [Member]
Interest rate swap receivable	1,303,000	694,000
Fair Value, Inputs, Level 2 [Member] | Estimate of Fair Value Measurement [Member]
Fair value, total	47,823,000	48,317,000
Other investments	4,450,000	4,450,000
Federal Reserve Bank stock	2,783,000	2,897,000
Federal Home Loan Bank stock	4,503,000	4,477,000
Loans held for sale	7,002,000	16,733,000
Accrued interest receivable	6,834,000	3,603,000
FHLB borrowings	97,786,000	103,962,000
Senior notes	12,033,000	11,722,000
Subordinated debt	10,145,000	9,747,000
Junior subordinated debt owed to unconsolidated trust	8,108,000	8,102,000
Accrued interest payable	1,091,000	1,971,000
Interest rate swap liability	1,303,000	694,000
Fair Value, Inputs, Level 2 [Member] | Estimate of Fair Value Measurement [Member] | Demand Deposits [Member]
Deposits	161,871,000	88,135,000
Fair Value, Inputs, Level 2 [Member] | Estimate of Fair Value Measurement [Member] | Savings Deposits [Member]
Deposits	91,169,000	64,020,000
Fair Value, Inputs, Level 2 [Member] | Estimate of Fair Value Measurement [Member] | Money Market Deposits [Member]
Deposits	142,909,000	99,115,000
Fair Value, Inputs, Level 2 [Member] | Estimate of Fair Value Measurement [Member] | Negotiable Order of Withdrawal (NOW) Accounts [Member]
Deposits	29,518,000	26,864,000
Fair Value, Inputs, Level 2 [Member] | Estimate of Fair Value Measurement [Member] | Time Deposits [Member]
Deposits	211,724,000	261,914,000
Fair Value, Inputs, Level 2 [Member] | Estimate of Fair Value Measurement [Member] | Interest Rate Swap [Member]
Interest rate swap receivable	1,303,000	694,000
Fair Value, Inputs, Level 3 [Member] | Reported Value Measurement [Member]
Loans receivable, net	740,127,000	802,049,000
SBA servicing assets	301,000	201,000
Note payable	1,044,000	1,193,000
Contingent consideration liability	86,000	86,000
Fair Value, Inputs, Level 3 [Member] | Estimate of Fair Value Measurement [Member]
Loans receivable, net	729,924,000	793,559,000
SBA servicing assets	362,000	280,000
Note payable	1,059,000	1,129,000
Contingent consideration liability	$ 86,000	$ 86,000

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Note 13 - Fair Value and Interest Rate Risk - Financial Assets Measured at Fair Value on a Recurring Basis (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Mar. 31, 2020	Dec. 31, 2019
Available-for-sale securities	$ 47,823		$ 48,317
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Available-for-sale securities	15,705		16,685
Corporate Debt Securities [Member]
Available-for-sale securities	17,250		17,313
Subordinated Notes [Member]
Available-for-sale securities	9,013		9,204
SBA Loan Pools [Member]
Available-for-sale securities	5,301		5,115
US States and Political Subdivisions Debt Securities [Member]
Available-for-sale securities	554
Fair Value, Recurring [Member]
Available-for-sale securities	47,823		48,317
Contingent consideration liability	86		86
Interest rate swap receivable	1,303		694
Interest rate swap liability	1,303		694
Impaired PCI Loans, net		$ 176
Fair Value, Recurring [Member] | Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Available-for-sale securities	15,705		16,685
Fair Value, Recurring [Member] | Corporate Debt Securities [Member]
Available-for-sale securities	17,250		17,313
Fair Value, Recurring [Member] | Subordinated Notes [Member]
Available-for-sale securities	9,013		9,204
Fair Value, Recurring [Member] | SBA Loan Pools [Member]
Available-for-sale securities	5,301		5,115
Fair Value, Recurring [Member] | US States and Political Subdivisions Debt Securities [Member]
Available-for-sale securities	554
Fair Value, Inputs, Level 1 [Member] | Fair Value, Recurring [Member]
Available-for-sale securities
Contingent consideration liability
Interest rate swap receivable
Interest rate swap liability
Impaired PCI Loans, net
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] | SBA Loan Pools [Member]
Available-for-sale securities
Fair Value, Inputs, Level 1 [Member] | Fair Value, Recurring [Member] | US States and Political Subdivisions Debt Securities [Member]
Available-for-sale securities
Fair Value, Inputs, Level 2 [Member] | Fair Value, Recurring [Member]
Available-for-sale securities	47,823		48,317
Contingent consideration liability
Interest rate swap receivable	1,303		694
Interest rate swap liability	1,303		694
Impaired PCI Loans, net
Fair Value, Inputs, Level 2 [Member] | Fair Value, Recurring [Member] | Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Available-for-sale securities	15,705		16,685
Fair Value, Inputs, Level 2 [Member] | Fair Value, Recurring [Member] | Corporate Debt Securities [Member]
Available-for-sale securities	17,250		17,313
Fair Value, Inputs, Level 2 [Member] | Fair Value, Recurring [Member] | Subordinated Notes [Member]
Available-for-sale securities	9,013		9,204
Fair Value, Inputs, Level 2 [Member] | Fair Value, Recurring [Member] | SBA Loan Pools [Member]
Available-for-sale securities	5,301		5,115
Fair Value, Inputs, Level 2 [Member] | Fair Value, Recurring [Member] | US States and Political Subdivisions Debt Securities [Member]
Available-for-sale securities	554
Fair Value, Inputs, Level 3 [Member] | Fair Value, Recurring [Member]
Available-for-sale securities
Contingent consideration liability	86		86
Interest rate swap receivable
Interest rate swap liability
Impaired PCI Loans, net		$ 176
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] | SBA Loan Pools [Member]
Available-for-sale securities
Fair Value, Inputs, Level 3 [Member] | Fair Value, Recurring [Member] | US States and Political Subdivisions Debt Securities [Member]
Available-for-sale securities

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Note 13 - Fair Value and Interest Rate Risk - Quantitative Information About Level 3 Fair Value Measurements (Details)	Sep. 30, 2020 USD ($)	Dec. 31, 2019 USD ($)
SBA servicing assets	$ 301,000
Fair Value, Inputs, Level 3 [Member]
SBA servicing assets		$ 280,000
Fair Value, Inputs, Level 3 [Member] | Minimum [Member] | Measurement Input, Discount Rate [Member]
SBA servicing assets		0.1473
Fair Value, Inputs, Level 3 [Member] | Maximum [Member] | Measurement Input, Discount Rate [Member]
SBA servicing assets		0.149
Fair Value, Inputs, Level 3 [Member] | Fair Value of Collateral Approach [Member]
Impaired loans, net	20,597,000	$ 18,132,000
Other Real Estate Owned	$ 1,954,000	$ 2,400,000
Fair Value, Inputs, Level 3 [Member] | Fair Value of Collateral Approach [Member] | Measurement Input, Discount Rate [Member]
Other Real Estate Owned	0.12	0.12
Fair Value, Inputs, Level 3 [Member] | Fair Value of Collateral Approach [Member] | Minimum [Member] | Measurement Input, Discount Rate [Member]
Impaired loans, net	0.08	0.08
Fair Value, Inputs, Level 3 [Member] | Fair Value of Collateral Approach [Member] | Maximum [Member] | Measurement Input, Discount Rate [Member]
Impaired loans, net	0.2	0.2
Fair Value, Inputs, Level 3 [Member] | Valuation Technique, Discounted Cash Flow [Member]
SBA servicing assets	$ 362,000
Fair Value, Inputs, Level 3 [Member] | Valuation Technique, Discounted Cash Flow [Member] | Minimum [Member] | Measurement Input, Discount Rate [Member]
SBA servicing assets	0.1473
Fair Value, Inputs, Level 3 [Member] | Valuation Technique, Discounted Cash Flow [Member] | Maximum [Member] | Measurement Input, Discount Rate [Member]
SBA servicing assets	0.149

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Note 14 - Subsequent Events (Details Textual) - USD ($)	Nov. 13, 2020	Sep. 30, 2020
Financing Receivable, Principal and Interest Deferred Payments		$ 244,400,000
Financing Receivable, Loans Remained on Deferment		$ 157,700,000
Subsequent Event [Member]
Financing Receivable, Loans Remained on Deferment	$ 59,100,000