PNBK's Net Loss Widens to $7.8M Amidst Asset Contraction

TL;DR

**PNBK is bleeding cash and shrinking its loan book, but a massive capital injection offers a lifeline, making it a speculative turnaround play.**

AI Summary

PATRIOT NATIONAL BANCORP INC (PNBK) reported a significant net loss of $7.778 million for the six months ended June 30, 2025, a substantial increase from the $3.380 million net loss in the same period of 2024. Total assets decreased by 8.13% to $929.953 million as of June 30, 2025, from $1.012 billion at December 31, 2024. This decline was primarily driven by a 17.19% reduction in loans receivable, net, to $579.753 million from $700.167 million, and a 14.04% decrease in total deposits to $830.857 million from $966.597 million. Net interest income also fell by 21.91% to $8.142 million for the six months ended June 30, 2025, compared to $10.427 million in the prior year. The company's shareholders' equity, however, saw a dramatic increase to $66.201 million from $4.265 million, largely due to a $57.75 million private placement completed on March 20, 2025, which included the issuance of 90,832 shares of Series A Preferred Stock and 80,786,875 shares of common stock. Non-interest expense rose by 21.31% to $18.469 million, mainly due to increased salaries and benefits and professional services. The provision for credit losses decreased to $2.257 million from $3.750 million.

Why It Matters

PNBK's widening net loss and significant asset contraction signal potential operational challenges and a shrinking balance sheet, which could concern investors. The substantial capital raise, while boosting shareholders' equity, suggests a need for liquidity and could dilute existing common shareholders. For employees, continued losses might raise concerns about job security or future compensation. Customers could see impacts on loan availability or deposit rates as the bank navigates its financial position. In the broader market, PNBK's struggles highlight the pressures faced by smaller regional banks, especially concerning loan growth and deposit retention in a competitive environment.

Risk Assessment

Risk Level: high — The company reported a net loss of $7.778 million for the six months ended June 30, 2025, significantly worse than the $3.380 million loss in the prior year. Total assets decreased by 8.13% from $1.012 billion to $929.953 million, and loans receivable, net, dropped by 17.19% from $700.167 million to $579.753 million, indicating a shrinking core business and potential future revenue challenges.

Analyst Insight

Investors should exercise extreme caution and conduct thorough due diligence on PNBK. While the recent $57.75 million private placement has recapitalized the company, the persistent net losses and shrinking asset base suggest underlying operational issues that need to be addressed before considering any long-term investment.

Financial Highlights

debt To Equity

13.05

revenue

$24,042,000

operating Margin

N/A

total Assets

$929,953,000

total Debt

$863,752,000

net Income

-$7,778,000

eps

N/A

gross Margin

N/A

cash Position

$202,972,000

revenue Growth

-11.67%

Revenue Breakdown

Key Numbers

• $7.778M — Net Loss (6 months) (Increased from $3.380M in prior year, indicating worsening profitability.)
• $929.953M — Total Assets (Decreased by 8.13% from $1.012B at Dec 31, 2024, showing asset contraction.)
• $579.753M — Loans Receivable (net) (Decreased by 17.19% from $700.167M, impacting interest income.)
• $830.857M — Total Deposits (Decreased by 14.04% from $966.597M, indicating deposit outflow.)
• $66.201M — Shareholders' Equity (Increased significantly from $4.265M due to a $57.75M private placement.)
• $8.142M — Net Interest Income (6 months) (Decreased by 21.91% from $10.427M, reflecting pressure on core banking operations.)
• $18.469M — Total Non-interest Expense (6 months) (Increased by 21.31% from $15.225M, contributing to the net loss.)
• $2.257M — Provision for Credit Losses (6 months) (Decreased from $3.750M, potentially indicating a change in credit risk assessment or loan portfolio quality.)
• 97,190,958 — Common Shares Outstanding (As of August 14, 2025, significantly higher than prior periods due to capital raise.)
• $5.45M — Gross proceeds from Preferred Stock issuance (Part of the $57.75M private placement to bolster capital.)

Key Players & Entities

• PATRIOT NATIONAL BANCORP, INC. (company) — Registrant and parent company
• Patriot Bank, N.A. (company) — Wholly-owned subsidiary of PNBK
• SEC (regulator) — Securities and Exchange Commission
• $7.778 million (dollar_amount) — Net loss for six months ended June 30, 2025
• $3.380 million (dollar_amount) — Net loss for six months ended June 30, 2024
• $929.953 million (dollar_amount) — Total assets as of June 30, 2025
• $1.012 billion (dollar_amount) — Total assets as of December 31, 2024
• $57.75 million (dollar_amount) — Gross proceeds from private placement completed March 20, 2025
• 90,832 (dollar_amount) — Shares of Series A Preferred Stock issued
• 80,786,875 (dollar_amount) — Shares of common stock from Private Placement

FAQ

Risk Factors

• Deteriorating Profitability [high — financial]: The company reported a net loss of $7.778 million for the six months ended June 30, 2025, a substantial increase from the $3.380 million net loss in the same period of 2024. This indicates worsening operational performance and an inability to generate profits.
• Asset and Deposit Contraction [high — financial]: Total assets decreased by 8.13% to $929.953 million, driven by a 17.19% reduction in loans and a 14.04% decrease in total deposits. This contraction suggests a shrinking business and potential loss of market confidence.
• Declining Net Interest Income [high — financial]: Net interest income fell by 21.91% to $8.142 million for the six months ended June 30, 2025. This decline, coupled with rising non-interest expenses, puts significant pressure on the core banking operations.
• Rising Non-Interest Expenses [medium — operational]: Total non-interest expense rose by 21.31% to $18.469 million, primarily due to increased salaries, benefits, and professional services. This increase outpaced revenue generation and contributed to the widening net loss.
• Unrealized Losses on Securities [medium — financial]: Available-for-sale securities have aggregate unrealized losses of $18.009 million as of June 30, 2025, representing 18.3% of their amortized cost. While management does not believe these are credit-impaired, sustained market interest rate increases could exacerbate these losses.
• New Accounting Standards [low — regulatory]: The company is monitoring new accounting standards (ASU 2023-06, ASU 2023-09, ASU 2024-01) and the 'One Big Beautiful Bill Act'. While expected to be immaterial, changes in disclosure requirements or tax treatments could impact financial reporting and operations.

Industry Context

The banking industry is currently navigating a complex environment characterized by higher interest rates, which can pressure net interest margins and increase the cost of funding. While higher rates can boost interest income, they also increase the risk of unrealized losses on fixed-income securities and can lead to deposit outflows as customers seek higher yields elsewhere. Competition remains intense, requiring banks to manage operational costs effectively while adapting to evolving regulatory landscapes and technological advancements.

Regulatory Implications

PNBK operates under the purview of banking regulators, including the FDIC and potentially the Federal Reserve, depending on its charter and activities. Changes in capital requirements, liquidity rules, or consumer protection regulations could impact its operations and profitability. The company is also subject to SEC reporting requirements, necessitating accurate and timely financial disclosures.

What Investors Should Do

1. Monitor the trend in net interest income and non-interest expenses to assess if profitability can be restored.
2. Evaluate the impact of the $57.75 million private placement on the company's long-term capital structure and strategic initiatives.
3. Assess the risk associated with the $18.009 million in unrealized losses on available-for-sale securities, particularly if interest rates continue to rise.
4. Analyze the drivers behind the significant asset and deposit contraction to understand the company's competitive positioning and customer retention.
5. Observe management's strategy for reversing the trend of increasing net losses and asset shrinkage in future filings.

Key Dates

• 2025-03-20: Completion of Private Placement — Raised $57.75 million, significantly boosting shareholders' equity from $4.265 million to $66.201 million and strengthening the capital base.
• 2025-06-30: End of Second Quarter — Reporting period for the $7.778 million net loss and the significant asset and deposit contractions.
• 2025-07-04: Enactment of One Big Beautiful Bill Act — Potential future impact on tax treatments and financial reporting, currently under assessment by the company.
• 2025-08-14: Common Shares Outstanding Update — Reported 97,190,958 common shares outstanding, reflecting the impact of the capital raise on share count.

Glossary

Available-for-sale securities

Debt and equity securities that are not classified as held-to-maturity or trading securities. They are reported at fair value, with unrealized gains and losses included in other comprehensive income. (PNBK holds $80.627 million in these securities, which have experienced significant unrealized losses due to rising interest rates.)

Allowance for credit losses

A contra-asset account that reduces the carrying amount of loans receivable to their net realizable value. It represents management's estimate of probable credit losses inherent in the loan portfolio. (The allowance decreased slightly to $7.795 million from $7.305 million, while the provision for credit losses decreased to $2.257 million for the six-month period.)

Core deposit intangible

An intangible asset recognized when a bank acquires core deposits (e.g., through an acquisition) that are considered stable and low-cost. It represents the value of these deposits over market rates. (PNBK has a small remaining balance of $132,000, indicating the amortization of this asset over time.)

Net interest income

The difference between the interest income generated by a bank's interest-earning assets (like loans and securities) and the interest expense paid on its interest-bearing liabilities (like deposits and borrowings). (PNBK's net interest income declined significantly by 21.91% to $8.142 million, impacting overall profitability.)

Non-interest expense

Expenses incurred by a bank that are not directly related to interest income, such as salaries, rent, technology, and professional services. (PNBK's non-interest expenses increased by 21.31% to $18.469 million, contributing to the net loss.)

Preferred stock

A class of ownership in a corporation that has a higher claim on assets and earnings than common stock. It typically pays a fixed dividend and does not carry voting rights. (PNBK issued 90,832 shares of Series A Preferred Stock as part of its private placement, contributing $5.45 million to capital.)

Year-Over-Year Comparison

Compared to the prior year's six-month period, PATRIOT NATIONAL BANCORP INC (PNBK) has experienced a significant deterioration in financial performance. Net losses have more than doubled to $7.778 million from $3.380 million, while net interest income has fallen by 21.91%. Concurrently, non-interest expenses have surged by 21.31%, exacerbating the profitability issues. The company's balance sheet has contracted, with total assets down 8.13% and total deposits down 14.04%, primarily due to a sharp decline in loans receivable. A substantial capital raise via a private placement has dramatically increased shareholders' equity, but this has not yet translated into improved operational profitability.

Filing Documents

• pnbk-20250630.htm (10-Q) — 3707KB
• a2025q2_pnbk10-qxexx311.htm (EX-31.1) — 12KB
• a2025q2_pnbk10-qxexx312.htm (EX-31.2) — 12KB
• a2025q2_pnbk10-qxexx32.htm (EX-32) — 10KB
• 0001628280-25-040370.txt ( ) — 17583KB
• pnbk-20250630.xsd (EX-101.SCH) — 66KB
• pnbk-20250630_cal.xml (EX-101.CAL) — 130KB
• pnbk-20250630_def.xml (EX-101.DEF) — 415KB
• pnbk-20250630_lab.xml (EX-101.LAB) — 892KB
• pnbk-20250630_pre.xml (EX-101.PRE) — 659KB
• pnbk-20250630_htm.xml (XML) — 4506KB

- FINANCIAL INFORMATION

PART I- FINANCIAL INFORMATION 3

: Consolidated Financial Statements

Item 1: Consolidated Financial Statements 3 Consolidated Balance Sheets (Unaudited) 3 Consolidated Statements of Operations (Unaudited) 4 Consolidated Statements of Comprehensive Loss (Unaudited) 5 Consolidated Statements of Shareholder s ' Equity (Unaudited) 6 Consolidated Statements of Cash Flows (Unaudited) 8

Notes to Consolidated Financial Statements (Unaudited)

Notes to Consolidated Financial Statements (Unaudited) 9

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

Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations 46

: Quantitative and Qualitative Disclosures about Market Risk

Item 3: Quantitative and Qualitative Disclosures about Market Risk 66

: Disclosure Controls and Procedures

Item 4: Disclosure Controls and Procedures 68

- OTHER INFORMATION

PART II - OTHER INFORMATION 69

: Legal Proceedings

Item 1: Legal Proceedings 69

: Other Information

Item 5: Other Information 69

: Exhibits

Item 6: Exhibits 70

- FINANCIAL INFORMATION

PART I- FINANCIAL INFORMATION

: Consolidated Financial Statements

Item 1: Consolidated Financial Statements PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS June 30, 2025 December 31, 2024 (In thousands, except share data) Unaudited Assets Cash and due from banks: Noninterest bearing deposits and cash $ 2,632 $ 3,295 Interest bearing deposits 185,010 144,273 Restricted cash 15,330 15,042 Total cash, cash equivalents and restricted cash 202,972 162,610 Investment securities: Available-for-sale securities, at fair value 80,627 79,992 Other investments, at cost 4,450 4,450 Total investment securities 85,077 84,442 Federal Reserve Bank (FRB) stock, at cost 2,351 1,377 Federal Home Loan Bank (FHLB) stock, at cost 679 779 Loans receivable (net of allowance for credit losses: 2025: $( 7,795 ) and 2024: $( 7,305 )) 579,753 700,167 Loans held for sale 15,298 15,702 Accrued interest and dividends receivable 4,924 5,488 Premises and equipment, net 28,416 28,865 Other real estate owned 2,590 2,843 Core deposit intangible, net 132 156 Other assets 7,761 9,863 Total assets $ 929,953 $ 1,012,292 Liabilities Deposits: Noninterest bearing deposits $ 106,950 $ 119,212 Interest bearing deposits 723,907 847,385 Total deposits 830,857 966,597 FHLB, FRB and correspondent bank borrowings — 3,000 Senior notes, net 5,803 11,861 Subordinated debt, net 8,277 9,898 Junior subordinated debt owed to unconsolidated trust, net 8,152 8,147 Note payable 54 162 Advances from borrowers for taxes and insurance 2,976 1,472 Accrued expenses and other liabilities 7,633 6,890 Total liabilities 863,752 1,008,027 Commitments and Contingencies Shareholders' equity Preferred stock, no par value; 1,000,000 shares authorized; As of June 30, 2025: 90,832 shares issued and outstanding; As of December 31, 2024: no shares issued and outstanding. 5,099 — Common stock, $ .01 par value, 100,000,000 shares authorized; As of June 30, 2025: 85,869,969 shares issued; 85,796,228 shares outstanding; As of Decembe

Notes to consolidated financial statements (Unaudited)

Notes to consolidated financial statements (Unaudited) Note 1. Basis of Financial Statement Presentation The accompanying unaudited interim condensed Consolidated Financial Statements of Patriot National Bancorp, Inc. (the "Company" or "PNBK") 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, 2024. The Consolidated Balance Sheet at December 31, 2024 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 credit losses, the analysis and valuation of its investment securities, the valuation of deferred tax assets, 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

Notes to Consolidated Financial Statements (Unaudited)

Notes to Consolidated Financial Statements (Unaudited) Recently Issued Accounting Standards Recently issued Accounting Pronouncements not yet Adopted ASU 2023-06 In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative. The amendments in this Update modify the disclosure or presentation requirements of a variety of Topics in the Codification. Certain of the amendments represent clarifications to or technical corrections of the current requirements. For entities subject to the SEC's existing disclosure requirements and for entities required to file or furnish financial statements with or to the SEC in preparation for the sale of or for purposes of issuing securities that are not subject to contractual restrictions on transfer, the effective date for each amendment will be the date on which the SEC's removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited. For all other entities, the amendments will be effective two years later. The amendments in this Update should be applied prospectively. For all entities, if by June 30, 2027, the SEC has not removed the applicable requirement from Regulation S-X or Regulation S-K, the pending content of the related amendment will be removed from the Codification and will not become effective for any entity. The adoption of ASU 2023-06 is not expected to have an impact on the Company's financial condition or results of operations but could change certain disclosures. The Company will continue to monitor for SEC action, and plan accordingly for adoption. ASU 2023-09 In December 2023, the FASB issued ASU 202309 Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires more detailed disclosures of income taxes paid net of refunds received, income from continuing operations before income tax expense or benefit, and income tax expens

Notes to Consolidated Financial Statements (Unaudited)

Notes to Consolidated Financial Statements (Unaudited) One Big Beautiful Bill Act On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was enacted in the U.S. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. The Company is currently assessing its impact on its Consolidated Financial Statements, which are expected to be immaterial. Note 3. Available-for-Sale Securities The amortized cost, gross unrealized gains, gross unrealized losses and fair values of available-for-sale securities at June 30, 2025 and December 31, 2024 are as follows: (In thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized (Losses) Fair Value June 30, 2025: U. S. Government agency and mortgage-backed securities $ 74,295 $ — $ ( 13,905 ) $ 60,390 Corporate bonds 15,996 — ( 2,805 ) 13,191 Subordinated notes 4,000 — ( 456 ) 3,544 SBA loan pools 4,345 — ( 843 ) 3,502 Total available-for-sale securities $ 98,636 $ — $ ( 18,009 ) $ 80,627 December 31, 2024: U. S. Government agency and mortgage-backed securities $ 75,689 $ — $ ( 15,466 ) $ 60,223 Corporate bonds 15,996 — ( 3,261 ) 12,735 Subordinated notes 4,000 — ( 539 ) 3,461 SBA loan pools 4,562 — ( 989 ) 3,573 Total available-for-sale securities $ 100,247 $ — $ ( 20,255 ) $ 79,992 11 Table of Contents PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

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 June 30, 2025 and December 31, 2024: (In thousands) Less than 12 Months 12 Months or More Total Fair Value Unrealized (Loss) Fair Value Unrealized (Loss) Fair Value Unrealized (Loss) June 30, 2025: U. S. Government agency and mortgage-backed securities $ 2,004 $ ( 30 ) $ 58,386 $ ( 13,875 ) $ 60,390 $ ( 13,905 ) Corporate bonds — — 13,191 ( 2,805 ) 13,191 ( 2,805 ) Subordinated notes — — 3,544 ( 456 ) 3,544 ( 456 ) SBA loan pools — — 3,502 ( 843 ) 3,502 ( 843 ) Total available-for-sale securities $ 2,004 $ ( 30 ) $ 78,623 $ ( 17,979 ) $ 80,627 $ ( 18,009 ) December 31, 2024: U. S. Government agency and mortgage-backed securities $ 4,170 $ ( 160 ) $ 56,053 $ ( 15,306 ) $ 60,223 $ ( 15,466 ) Corporate bonds — — 12,735 ( 3,261 ) 12,735 ( 3,261 ) Subordinated notes — — 3,461 ( 539 ) 3,461 ( 539 ) SBA loan pools — — 3,573 ( 989 ) 3,573 ( 989 ) Total available-for-sale securities $ 4,170 $ ( 160 ) $ 75,822 $ ( 20,095 ) $ 79,992 $ ( 20,255 ) As of June 30, 2025 and December 31, 2024, all forty-four available-for-sale securities had unrealized losses with an aggregate decline of 18.3 % and 20.2 % from the amortized cost of those securities, respectively. At June 30, 2025 and December 31, 2024, no allowance for credit losses has been recognized on available-for-sale debt securities in an unrealized loss position as the Company does not believe any of the debt securities are credit impaired. This is based on the Company's analysis of the risk characteristics, including credit ratings, and other qualitative factors related to available-for-sale debt securities. The issuers of these debt securities continue to make timely principal and interest payments under the contractual terms of the securiti

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