PNBK Narrows Losses, Boosts Capital Amidst Asset Decline

TL;DR

**PNBK is recapitalizing and cutting losses, but core banking operations are still shrinking, making it a speculative turnaround play.**

AI Summary

PATRIOT NATIONAL BANCORP, INC. (PNBK) reported a net loss of $2.657 million for the three months ended September 30, 2025, a significant improvement from the $26.954 million net loss in the same period of 2024. For the nine months ended September 30, 2025, the net loss was $10.435 million, also an improvement from the $30.334 million loss in the prior year. Total assets decreased to $950.752 million as of September 30, 2025, from $1,012.292 million at December 31, 2024. Total deposits also declined to $830.855 million from $966.597 million over the same period. Net interest income remained relatively stable at $5.010 million for the three months ended September 30, 2025, compared to $4.999 million in 2024, but decreased for the nine-month period to $13.152 million from $15.426 million. A notable change was the recovery of provision for credit loss of $431 thousand in Q3 2025, contrasting with a $1.026 million provision in Q3 2024. Non-interest income saw a boost from Digital Payments income, which rose to $2.684 million in Q3 2025 from $1.333 million in Q3 2024. The company also completed a $5.45 million private placement of Series A Preferred Stock and a registered direct offering of common stock expected to generate approximately $25.6 million.

Why It Matters

PNBK's ability to significantly reduce its net loss, from $26.954 million to $2.657 million year-over-year for the quarter, suggests a potential turnaround in operational efficiency or a reduction in one-time charges. The capital raises, including a $5.45 million preferred stock issuance and a $25.6 million common stock offering, are crucial for strengthening the bank's balance sheet and supporting future growth, especially given the decline in total assets from $1.012 billion to $950.752 million. For investors, this indicates a recapitalization effort, but the continued decline in deposits and loans receivable (from $700.167 million to $581.479 million) highlights ongoing challenges in core banking operations and competitive pressures in the financial market. Employees might see increased job security due to improved financial stability, while customers could benefit from a more robust institution, though the shrinking loan portfolio suggests a more conservative lending environment.

Risk Assessment

Risk Level: medium — Despite a significant reduction in net loss, PNBK's total assets decreased by over $61 million from December 31, 2024, to September 30, 2025, and loans receivable declined by over $118 million. The company also reported an accumulated deficit of $97.343 million as of September 30, 2025, indicating historical losses. While capital raises provide liquidity, the shrinking balance sheet and continued net losses, albeit smaller, present ongoing operational risks.

Analyst Insight

Investors should monitor PNBK's ability to stabilize its deposit base and grow its loan portfolio in upcoming quarters. The recent capital raises provide a buffer, but sustained profitability and asset growth are critical for long-term value creation. Consider this a high-risk, high-reward opportunity, suitable for investors with a strong appetite for turnaround plays.

Financial Highlights

debt To Equity

N/A

revenue

$16.186M

operating Margin

N/A

total Assets

$950.752M

total Debt

$16.438M

net Income

-$2.657M

eps

N/A

gross Margin

N/A

cash Position

$201.530M

revenue Growth

-11.5%

Revenue Breakdown

Key Numbers

• $2.657M — Net Loss (Q3 2025) (Significant improvement from $26.954M net loss in Q3 2024)
• $10.435M — Net Loss (9M 2025) (Improvement from $30.334M net loss in 9M 2024)
• $950.752M — Total Assets (Sep 30, 2025) (Decreased from $1,012.292M at Dec 31, 2024)
• $830.855M — Total Deposits (Sep 30, 2025) (Decreased from $966.597M at Dec 31, 2024)
• $581.479M — Loans Receivable (Sep 30, 2025) (Decreased from $700.167M at Dec 31, 2024)
• $5.010M — Net Interest Income (Q3 2025) (Stable compared to $4.999M in Q3 2024)
• $431K — Recovery of Provision for Credit Loss (Q3 2025) (Shift from $1.026M provision in Q3 2024)
• $2.684M — Digital Payments Income (Q3 2025) (Increased from $1.333M in Q3 2024)
• $5.45M — Proceeds from Preferred Stock Issuance (Capital raise completed on March 20, 2025)
• $25.6M — Expected Proceeds from Common Stock Offering (Registered direct offering announced August 29, 2025)

Key Players & Entities

• PATRIOT NATIONAL BANCORP, INC. (company) — Registrant
• PNBK (company) — Ticker symbol
• Unity Bancorp Inc. (company) — Converted senior note to common stock
• American Bank Incorporated (company) — Converted senior note to common stock
• NASDAQ Global Market (regulator) — Exchange where PNBK Common Stock is registered
• Securities and Exchange Commission (regulator) — Regulates PNBK filings
• $2.657 million (dollar_amount) — Net loss for three months ended September 30, 2025
• $26.954 million (dollar_amount) — Net loss for three months ended September 30, 2024
• $950.752 million (dollar_amount) — Total assets as of September 30, 2025
• $1,012.292 million (dollar_amount) — Total assets as of December 31, 2024

FAQ

Risk Factors

• Deterioration in Loan Portfolio Quality [medium — financial]: The allowance for credit losses was $(7.187) million as of September 30, 2025, compared to $(7.305) million at December 31, 2024. While the net loan portfolio decreased from $700.167 million to $581.479 million, the provision for credit losses shifted from a $1.026 million expense in Q3 2024 to a recovery of $431 thousand in Q3 2025. This shift, coupled with a decrease in loans receivable, warrants close monitoring of asset quality.
• Declining Deposit Base [medium — financial]: Total deposits decreased to $830.855 million as of September 30, 2025, from $966.597 million at December 31, 2024. This represents a decline of $135.742 million, or approximately 14.0%. A shrinking deposit base can impact funding costs and liquidity.
• Capital Raising Activities and Dilution [medium — financial]: The company completed a $5.45 million private placement of Series A Preferred Stock and expects approximately $25.6 million from a registered direct offering of common stock. While these actions bolster capital, they also introduce potential dilution for existing common shareholders, especially with the issuance of 31,985,103 shares of common stock and warrants in the August 2025 offering.
• Impact of New Accounting Standards [low — regulatory]: The company is evaluating the impact of recently issued accounting pronouncements, including ASU 2024-03 and ASU 2025-01 regarding expense disaggregation disclosures. While not expected to have a material impact on financial statements, compliance and implementation require resources.
• Legislative Changes (OBBBA) [low — regulatory]: The enactment of the One Big Beautiful Bill Act (OBBBA) in July 2025 introduces changes to tax provisions. The company is currently assessing the potential impact of these legislative changes on its financial statements.

Industry Context

The banking industry is characterized by intense competition, stringent regulatory oversight, and sensitivity to interest rate fluctuations. Banks like PNBK operate within a landscape where deposit gathering, loan origination, and fee-based income are key revenue drivers. Recent trends include a focus on digital transformation, evolving customer expectations, and the ongoing impact of macroeconomic conditions on credit quality and investment returns.

Regulatory Implications

As a financial institution, PNBK is subject to extensive regulation by federal and state authorities, including the Federal Reserve and the FDIC. Compliance with capital adequacy requirements, consumer protection laws, and anti-money laundering regulations is paramount. Changes in accounting standards and legislative acts, such as the OBBBA, also necessitate ongoing assessment and adaptation to ensure continued compliance.

What Investors Should Do

1. Monitor loan portfolio performance and allowance for credit losses.
2. Analyze the impact of capital raises on shareholder value.
3. Evaluate the growth drivers of Digital Payments income.
4. Assess the trend in deposit outflows.
5. Track the company's progress in managing its operational expenses and interest income.

Key Dates

• 2025-03-20: Completion of $5.45 million private placement of Series A Preferred Stock — Provided capital infusion, though the gross proceeds were significantly lower than the stated preference value.
• 2025-07-03: Conversion of Series A Preferred Stock into Non-Voting Common Stock — Transformed preferred equity into common equity, impacting share structure and potential dilution.
• 2025-07-25: Notice of conversion of Amended Senior Note by Unity Bancorp Inc. — Indicates a debt-to-equity conversion, increasing common shares outstanding.
• 2025-07-26: Notice of conversion of Amended Senior Note by American Bank Incorporated — Another debt-to-equity conversion, further increasing common shares outstanding.
• 2025-08-29: Entered into stock purchase and warrant purchase agreements for registered direct offering — Announced a significant capital raise expected to generate approximately $25.6 million, but also involving substantial share issuance.
• 2025-09-30: End of Q3 2025 — Reporting period for the 10-Q, showing a reduced net loss compared to the prior year.

Glossary

Allowance for credit losses

An estimate of the amount of uncollectible loans in a company's loan portfolio. It is a contra-asset account that reduces the carrying value of loans on the balance sheet. (Indicates management's assessment of potential loan defaults and impacts net interest income through the provision for credit losses.)

Available-for-sale securities

Investments in debt or equity securities that are not classified as held-to-maturity or trading securities. They are reported at fair value on the balance sheet, with unrealized gains and losses recorded in other comprehensive income. (Represents a portion of the company's investment portfolio, contributing to interest and dividend income and subject to market value fluctuations.)

Core deposit intangible, net

An intangible asset representing the value of a bank's stable, low-cost core deposits over time. It is typically amortized over its useful life. (A component of the balance sheet that reflects the value derived from the bank's deposit franchise.)

Federal Reserve Bank (FRB) stock

Stock that member banks are required to purchase from the Federal Reserve System as a condition of membership. It represents a capital investment in the Federal Reserve. (A required holding for member banks, appearing on the balance sheet as an investment.)

Federal Home Loan Bank (FHLB) stock

Stock that member institutions must purchase from the Federal Home Loan Bank System to access its lending services. It represents a capital investment in the FHLB. (A required holding for member institutions, appearing on the balance sheet as an investment.)

Provision for credit loss

An expense recognized by financial institutions to account for potential losses on loans and other credit exposures. It is an estimate of the amount that may not be collected. (Directly impacts the company's net income and reflects management's assessment of credit risk in the loan portfolio.)

Registered direct offering

A type of public offering where a company sells securities directly to a small group of institutional investors or accredited investors, with the securities being registered with the SEC. (A method used by the company to raise capital, as seen with the expected $25.6 million offering.)

Series A Non-Cumulative Perpetual Convertible Preferred Stock

A class of preferred stock that pays a fixed dividend (non-cumulative means missed dividends are not owed), has no maturity date (perpetual), and can be converted into a specified number of common shares. (Represents a form of capital raised by the company, which was later converted into common stock.)

Year-Over-Year Comparison

Compared to the prior year's filing (likely for the period ending September 30, 2024), PATRIOT NATIONAL BANCORP INC. shows a significant reduction in net losses, from $26.954 million in Q3 2024 to $2.657 million in Q3 2025. Total assets and deposits have decreased, indicating a contraction in the balance sheet. Net interest income for the nine-month period declined, but Q3 saw stability. A key positive development is the recovery of provision for credit losses and a substantial increase in Digital Payments income, offsetting some of the revenue pressures. The company has also actively engaged in capital raising activities, issuing preferred stock and planning a common stock offering.

Filing Documents

• pnbk-20250930.htm (10-Q) — 3830KB
• a20250930_pnbk10-qxexx311.htm (EX-31.1) — 12KB
• a20250930_pnbk10-qxexx312.htm (EX-31.2) — 12KB
• a20250930_pnbk10-qxexx32.htm (EX-32) — 10KB
• 0001628280-25-052358.txt ( ) — 18182KB
• pnbk-20250930.xsd (EX-101.SCH) — 71KB
• pnbk-20250930_cal.xml (EX-101.CAL) — 136KB
• pnbk-20250930_def.xml (EX-101.DEF) — 434KB
• pnbk-20250930_lab.xml (EX-101.LAB) — 918KB
• pnbk-20250930_pre.xml (EX-101.PRE) — 689KB
• pnbk-20250930_htm.xml (XML) — 4654KB

- FINANCIAL INFORMATION

PART I- FINANCIAL INFORMATION 3

: Consolidated Financial Statements

Item 1: Consolidated Financial Statements 3 Consolidated Balance Sheets (Unaudited) 4 Consolidated Statements of Operations (Unaudited) 5 Consolidated Statements of Comprehensive Loss (Unaudited) 7 Consolidated Statements of Shareholder s ' Equity (Unaudited) 8 Consolidated Statements of Cash Flows (Unaudited) 10

Notes to Consolidated Financial Statements (Unaudited)

Notes to Consolidated Financial Statements (Unaudited) 11

: 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 50

: Quantitative and Qualitative Disclosures about Market Risk

Item 3: Quantitative and Qualitative Disclosures about Market Risk 72

: Disclosure Controls and Procedures

Item 4: Disclosure Controls and Procedures 74

- OTHER INFORMATION

PART II - OTHER INFORMATION 75

: Legal Proceedings

Item 1: Legal Proceedings 75

: Other Information

Item 5: Other Information 75

: Exhibits

Item 6: Exhibits 76

- FINANCIAL INFORMATION

PART I- FINANCIAL INFORMATION

: Consolidated Financial Statements

Item 1: Consolidated Financial Statements 3 PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS September 30, 2025 December 31, 2024 (In thousands, except share data) Unaudited Assets Cash and due from banks: Noninterest bearing deposits and cash $ 2,106 $ 3,295 Interest bearing deposits 178,889 144,273 Restricted cash 20,535 15,042 Total cash, cash equivalents and restricted cash 201,530 162,610 Investment securities: Available-for-sale securities, at fair value 105,549 79,992 Other investments, at cost — 4,450 Total investment securities 105,549 84,442 Federal Reserve Bank (FRB) stock, at cost 2,452 1,377 Federal Home Loan Bank (FHLB) stock, at cost 679 779 Loans receivable (net of allowance for credit losses: 2025: $( 7,187 ) and 2024: $( 7,305 )) 581,479 700,167 Loans held for sale 18,408 15,702 Accrued interest and dividends receivable 4,257 5,488 Premises and equipment, net 28,210 28,865 Other real estate owned — 2,843 Core deposit intangible, net 121 156 Other assets 8,067 9,863 Total assets $ 950,752 $ 1,012,292 Liabilities Deposits: Noninterest bearing deposits $ 87,766 $ 119,212 Interest bearing deposits 743,089 847,385 Total deposits 830,855 966,597 FHLB, FRB and correspondent bank borrowings — 3,000 Senior notes, net — 11,861 Subordinated debt, net 8,283 9,898 Junior subordinated debt owed to unconsolidated trust, net 8,155 8,147 Note payable — 162 Advances from borrowers for taxes and insurance 2,391 1,472 Accrued expenses and other liabilities 6,045 6,890 Total liabilities 855,729 1,008,027 Commitments and Contingencies Shareholders' equity Common stock, $ .01 par value per share, 200,000,000 shares authorized, which include 170,000,000 of Voting Common Stock and 30,000,000 shares of Non-Voting Common Stock; As of September 30, 2025: 115,064,758 shares issued; 114,991,017 shares outstanding; As of December 31, 2024: 4,065,593 shares issued; 3,991,852 shares outstanding. As of Se

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 ("U.S. 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 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 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 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. The information furnished

Notes to Consolidated Financial Statements (Unaudited)

Notes to Consolidated Financial Statements (Unaudited) Common Stock On July 25, 2025, Unity Bancorp Inc. provided the Company with formal notice of its desire to convert 100 % of its outstanding principal balance and accrued unpaid interest of its Amended Senior Note, in an aggregate amount of $ 2.0 million, into 2,673,369 shares of the Company's common stock, par value $ 0.01 per share (the "Common Stock") at $ 0.75 per share. On July 26, 2025, American Bank Incorporated provided the Company with formal notice of its desire to convert 100 % of its outstanding principal balance and accrued unpaid interest of its Amended Senior Note, in an aggregate amount of approximately $ 0.8 million, into 1,071,258 shares of Common Stock at $ 0.75 per share. On August 29, 2025, the Company entered into a stock purchase agreement and a separate warrant purchase agreement with certain accredited Investors, pursuant to which the Company agreed to issue and sell, in a registered direct offering by the Company directly to the Investors (the "Offering"), an aggregate of 31,985,103 shares of the Company's common stock (the "Shares". The Shares consist of (a) 19,196,000 shares of the Company's voting Common Stock ("Voting Common Stock"), and (b) 12,789,103 shares of the Company's non-voting Common Stock (the "Non-Voting Common Stock") that will be issuable six months after closing of the Offering upon exercise of three-year warrants (the "Warrants"). Upon such Warrant holders or their assignees meeting certain conditions (the "Non-Control Conditions"), the Non-Voting Common Stock may be exchanged for shares of Voting Common Stock. The Shares will be sold to the investors at a price per share of $ 1.25 per Share and the Warrants will be sold to investors at a price of $ 0.125 per warrant share. The Warrants are exercisable no earlier than six months after the closing of the Offering at an exercise price of $ 1.56 per share, subject to increase to as much as $ 1.685 per share under ce

Notes to Consolidated Financial Statements (Unaudited)

Notes to Consolidated Financial Statements (Unaudited) ASU 2024-01 In March 2024, the FASB issued ASU No. 2024-01 Compensation—Stock Compensation (Topic 718): Scope Applications of Profits Interests and Similar Awards . ASU 2024-01 adds an example to Topic 718 which illustrates how to apply the scope guidance to determine whether profits interests and similar awards should be accounted for as share-based payment arrangements under Topic 718 or under other U.S. GAAP. ASU 2024-01 is effective for annual periods beginning after December 15, 2025, although early adoption is permitted. Upon adoption, ASU 2024-01 is not expected to have an impact on the Company's Consolidated Financial Statements. ASU 2024-03 and ASU 2025 -01 In November 2024, the FASB issued ASU 2024-03: Income Statement-Reporting Comprehensive Income Expense Disaggregation Disclosures (Subtopic 220-40); Disaggregation of Income Statement Expenses . In January 2025, the FASB issued ASU 2025-01: Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date . The amendments in ASU 2024-03 require public business entities to disclose, on an annual and interim basis, disaggregated information about certain income statement expense line items by breaking down certain expense line items into specified natural expense categories, including purchases of inventory, employee compensation, depreciation, intangible asset amortization, and depletion. The amendments in ASU 2024-03 are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. The amendments in ASU 2024-03 can be applied on a prospective basis or retrospective basis and early adoption is permitted. The amendments in ASU 2025-01 clarify the effective date of ASU 2024-03 stating that all public business entities are required to adopt the update in annual reporting periods beginning after December 15, 2

Notes to Consolidated Financial Statements (Unaudited)

Notes to Consolidated Financial Statements (Unaudited) Note 3. Available-for-Sale Securities The amortized cost, gross unrealized gains, gross unrealized losses and fair values of available-for-sale securities at September 30, 2025 and December 31, 2024 are as follows: (In thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized (Losses) Fair Value September 30, 2025: Federal Farm Credit Bank $ 13,903 $ — $ ( 2,748 ) $ 11,155 Fannie Mae 19,631 31 ( 1,939 ) 17,723 FHLMC 33,844 132 ( 3,888 ) 30,088 GNMA 30,524 — ( 4,400 ) 26,124 U. S. Government agency and mortgage-backed securities 97,902 163 ( 12,975 ) 85,090 Corporate bonds 15,996 — ( 2,501 ) 13,495 Subordinated notes 4,000 — ( 375 ) 3,625 SBA loan pools 4,146 — ( 807 ) 3,339 Total available-for-sale securities $ 122,044 $ 163 $ ( 16,658 ) $ 105,549 December 31, 2024: Federal Farm Credit Bank $ 13,897 $ — $ ( 3,355 ) $ 10,542 Fannie Mae 11,468 — ( 2,415 ) 9,053 FHLMC 18,942 — ( 4,689 ) 14,253 GNMA 31,382 — ( 5,007 ) 26,375 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 14 Table of Contents PATRIOT NATIONAL BANCORP, INC. AND SUBSIDIARIES Notes t

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