Note 1:

Basis of Financial Statement Presentation and Restatement of Consolidated Financial Statements

The accompanying unaudited condensed consolidated financial statements of Patriot National Bancorp, Inc. (the “Company”) and its wholly-owned subsidiaries including Patriot Bank N.A. (the “Bank”), have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. 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 have been omitted. The accompanying unaudited condensed consolidated financial statements presented herein should be read in conjunction with the previously filed audited financial statements of the Company and notes thereto for the year ended December 31, 2015.

The Consolidated Balance Sheet at December 31, 2015 presented herein has been derived from the audited financial statements of the Company at that date, but does not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.

Effective June 30, 2016, the Company has reclassified loans secured by 1-4 Family Non-owner occupied real estate to “Residential” from the “Commercial Real Estate” classification. Amounts presented for prior periods have been reclassified for consistency with the current period. See Note 3: Loans Receivable and Allowance for Loan Losses for additional information. Certain additional other prior period amounts have been reclassified to conform to current year presentation.

The information furnished reflects, in the opinion of management, all normal recurring adjustments necessary for a fair presentation of the results for the interim periods presented. The results of operations for the three and six months ended June 30, 2016 are not necessarily indicative of the results of operations that may be expected for the remainder of 2016.

Restatement of Consolidated Financial Statements

The Company has restated its previously filed interim financial statements as of and for the three and six months ended June 30, 2016. The restatement had the effect of reducing net income for the three months ended June 30, 2016 from net income of $614 thousand to a net loss of $582 thousand. For the six months then ended, net income was reduced from $1,267 thousand to $71 thousand. Basic and diluted income per share was reduced from $0.16 to a loss of $0.15 for the three months ended June 30, 2016, and from $0.32 to $0.02 for the six months then ended.

The Company has determined to increase the loan loss reserve for one specific impaired loan due to information and further analysis regarding the full collectability of this loan.

Subsequent to filing the original Form 10-Q, information became known, which was available at the time the impairment analysis was prepared, regarding the valuation of certain collateral included in the analysis. To fully reserve for this loan, an increase in the Company’s loan loss provision for the three months ended June 30, 2016 of $1,959,128 is required.

The $1.96 million increase in the Company’s loan loss provision has been reflected herein, as well as its impact on earnings, earnings per share, loans receivable, the allowance for loan losses, deferred tax assets, regulatory capital and equity. The effect of these changes on the consolidated financial statements of the Company is as follows.

	Three Months Ended June 30, 2016								Six Months Ended June 30, 2016
	Previously Reported		Adjustment			Restated			Previously Reported		Adjustment			Restated
	(in thousands, except shares and per share amounts)

Provision for loan losses	$	-	$	1,959		$	1,959		$	-	$	1,959		$	1,959
Income before income taxes		1,011		(1,959	)		(948	)		2,082		(1,959	)		123
(Benefit) expense for income taxes		397		(763	)		(366	)		815		(763	)		52
Net income		614		(1,196	)		(582	)		1,267		(1,196	)		71
Total comprehensive income (loss)		650		(1,196	)		(546	)		1,338		(1,196	)		142

Basic and diluted income per share	$	0.16	$	(0.31	)	$	(0.15	)	$	0.32	$	(0.30	)	$	0.02

Consolidated Statement of Cash Flows:
Net income		N/A		N/A			N/A			1,267		(1,196	)		71
Provision for loan losses		N/A		N/A			N/A			-		1,959			1,959
Deferred income taxes		N/A		N/A			N/A			646		(762	)		(117	)

	As of June 30, 2016
	Previously Reported			Adjustment			Restated
Loans receivable, net of allowance for loan losses	$	523,404		$	(1,959	)	$	521,445
Deferred tax asset		13,073			763			13,836
Total assets		653,055			1,196			651,859
Accumulated deficit		(43,565	)		(1,196	)		(44,761	)
Total shareholders' equity		66,110			(1,196	)		61,914

The restatement had no impact on the Company‘s consolidated financial statements as of and for the periods ended June 30, 2015 or December 31, 2015.