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Note 10 - Regulatory and Operational Matters | 9 Months Ended
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Sep. 30, 2018
Notes to Financial Statements |
Regulatory Capital Requirements under Banking Regulations [Text Block] | Note 10: Regulatory and Operational Matters In November 2018 the Bank entered into a formal written agreement (the “Agreement”) with the Office of the Comptroller of the Currency (the “OCC”). Under the terms of the Agreement, the Bank has appointed a Compliance Committee of three independent outside directors and one member of management responsible for monitoring adherence to the Agreement and has appointed a Lead Independent Director. The Agreement also states that by December 31, 2018 the Board and Bank will 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 Losses, and assumptions used in the Bank’s interest rate risk model. Under the Agreement the Bank has also agreed to provide a revised written 3 -year strategic and capital plan for the Bank by December 31, 2018. The Bank has taken or put into process many of the steps identified in the Agreement. Further details pertaining to the Agreement are provided in Part II Item 5: Other information. Federal and state regulatory authorities have adopted standards requiring financial institutions to maintain increased levels of capital. Effective January 1, 2015, federal banking agencies imposed four minimum capital requirements on a community bank’s risk-based capital ratios consisting of Total Capital, Tier 1 Capital, Common Equity Tier 1 ( “CET1” ) Capital, and a Tier 1 Leverage Capital ratio. The risk-based capital ratios measure the adequacy of a bank's capital against the riskiness of its on- and off-balance sheet assets and activities. Failure to maintain adequate capital is a basis for "prompt corrective action" or other regulatory enforcement action. In assessing a bank's capital adequacy, regulators also consider other factors such as interest rate risk exposure, liquidity, funding and market risks, quality and level of earnings, concentrations of credit, quality of loans and investments, nontraditional activity risk, policy effectiveness, and management's overall ability to monitor and control risk. Capital adequacy is one of the most important factors used to determine the safety and soundness of individual banks and the banking system. Under the instituted regulatory framework, to be considered “well capitalized”, a financial institution must generally have a Total Capital ratio of at least 10%, a Tier 1 Capital ratio of at least 8.0%, a CET1 Capital ratio at least 6.5%, and a Tier 1 Leverage Capital ratio of at least 5.0%. However, regardless of a financial institution’s ratios, the OCC may require increased capital ratios or impose dividend restrictions based on the other factors it considers in assessing a bank’s capital adequacy. Management continuously assesses the adequacy of the Bank’s capital in order to maintain its “well capitalized” status. The Company’s and the Bank’s regulatory capital amounts and ratios at September 30, 2018 and December 31, 2017 are summarized as follows:
(In thousands) |  | Patriot National Bancorp, Inc. |  |  | Patriot Bank, N.A. |
|  | September 30, 2018 |  |  | December 31, 2017 |  |  | September 30, 2018 |  |  | December 31, 2017 |
|  | Amount ($) |  |  | Ratio (%) |  |  | Amount ($) |  |  | Ratio (%) |  |  | Amount ($) |  |  | Ratio (%) |  |  | Amount ($) |  |  | Ratio (%) |
Total Capital (to risk weighted assets): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Actual |  |  | 88,781 |  |  |  | 10.328 |  |  |  | 74,264 |  |  |  | 10.092 |  |  |  | 97,403 |  |  |  | 11.385 |  |  |  | 83,711 |  |  |  | 11.406 |
To be Well Capitalized (1) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 85,554 |  |  |  | 10.000 |  |  |  | 73,393 |  |  |  | 10.000 |
For capital adequacy with Capital Buffer (2) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 84,485 |  |  |  | 9.875 |  |  |  | 67,889 |  |  |  | 9.250 |
For capital adequacy |  |  | 68,767 |  |  |  | 8.000 |  |  |  | 58,868 |  |  |  | 8.000 |  |  |  | 68,443 |  |  |  | 8.000 |  |  |  | 58,715 |  |  |  | 8.000 |
Tier 1 Capital (to risk weighted assets): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Actual |  |  | 72,165 |  |  |  | 8.395 |  |  |  | 67,959 |  |  |  | 9.235 |  |  |  | 90,787 |  |  |  | 10.612 |  |  |  | 77,407 |  |  |  | 10.547 |
To be Well Capitalized (1) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 68,443 |  |  |  | 8.000 |  |  |  | 58,715 |  |  |  | 8.000 |
For capital adequacy with Capital Buffer (2) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 67,374 |  |  |  | 7.875 |  |  |  | 53,210 |  |  |  | 7.250 |
For capital adequacy |  |  | 51,575 |  |  |  | 6.000 |  |  |  | 44,151 |  |  |  | 6.000 |  |  |  | 51,333 |  |  |  | 6.000 |  |  |  | 44,036 |  |  |  | 6.000 |
Common Equity Tier 1 Capital (to risk weighted assets): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Actual |  |  | 64,165 |  |  |  | 7.465 |  |  |  | 59,959 |  |  |  | 8.148 |  |  |  | 90,787 |  |  |  | 10.612 |  |  |  | 77,407 |  |  |  | 10.547 |
To be Well Capitalized (1) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 55,610 |  |  |  | 6.500 |  |  |  | 47,706 |  |  |  | 6.500 |
For capital adequacy with Capital Buffer (2) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 54,541 |  |  |  | 6.375 |  |  |  | 42,201 |  |  |  | 5.750 |
For capital adequacy |  |  | 38,681 |  |  |  | 4.500 |  |  |  | 33,113 |  |  |  | 4.500 |  |  |  | 38,499 |  |  |  | 4.500 |  |  |  | 33,027 |  |  |  | 4.500 |
Tier 1 Leverage Capital (to average assets): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Actual |  |  | 72,165 |  |  |  | 7.847 |  |  |  | 67,959 |  |  |  | 8.219 |  |  |  | 90,787 |  |  |  | 9.917 |  |  |  | 77,407 |  |  |  | 9.360 |
To be Well Capitalized (1) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 45,775 |  |  |  | 5.000 |  |  |  | 41,351 |  |  |  | 5.000 |
For capital adequacy |  |  | 36,785 |  |  |  | 4.000 |  |  |  | 33,072 |  |  |  | 4.000 |  |  |  | 36,620 |  |  |  | 4.000 |  |  |  | 33,081 |  |  |  | 4.000 |
( 1 ) | Designation as "Well Capitalized" does not apply to bank holding companies - the Company. Such categorization of capital adequacy only applies to insured depository institutions - the Bank.
( 2 ) | The Capital Conservation Buffer implemented by the FDIC began to be phased in beginning January 1, 2016. It was not applicable to periods prior to that date and does not apply to bank holding companies - the Company.
Under the final capital rules that became effective on January 1, 2015, there was a requirement for a CET1 capital conservation buffer of 2.5% of risk-weighted assets, which is in addition to the other minimum risk-based capital standards in the rule. Institutions that do not maintain this required capital buffer become subject to progressively more stringent limitations on the percentage of earnings that may be distributed to shareholders or used for stock repurchases and on the payment of discretionary bonuses to senior executive management. The capital buffer requirement is being phased in over three years beginning in 2016. The 1.25% capital conversation buffer for 2017 has been included in the minimum capital adequacy ratios in the 2017 column in the table above. The capital conversation buffer increased to 1.875% for 2018, which has been included in the minimum capital adequacy ratios in the 2018 column above. The capital buffer requirement effectively raises the minimum required Total Capital ratio to 10.5%, the Tier 1 capital ratio to 8.5% and the CET1 capital ratio to 7.0% on a fully phased-in basis, which will be effective beginning on January 1, 2019. Management believes that, as of September 30, 2018, Patriot satisfies all capital adequacy requirements under the Basel III Capital Rules on a fully phased-in basis, as if all such requirements were currently in effect.

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- Definition The entire disclosure for banks, savings institutions, and credit unions, for regulatory capital requirements imposed by the Federal Reserve System (FRB), the Federal Deposit Insurance Corporation (FDIC), the Office of Thrift Supervision (OTS) or for any state imposed capital requirements, as applicable. The disclosure may include (1) a description of regulatory capital requirements (a) for capital adequacy purposes and (b) established by the prompt corrective action provisions of Section 38 of the Federal Depository Insurance Act; (2) the actual or possible material effects of noncompliance with such requirements; (3) whether the entity is in compliance with the regulatory capital requirements including (a) required and actual ratios and amounts of Tier 1 leverage, Tier 1 risk-based, and total risk-based capital, tangible capital (for savings institutions), and Tier 3 capital for market risk (for certain banks and bank holding companies), (b) factors that may significantly affect capital adequacy; (4) the prompt corrective action category in which the entity was classified as of its most recent notification; (5) whether management believes any conditions or events since notification have changed the entity's category. Also may include additional information that might be disclosed in situations where substantial doubt about the entity's ability to continue as a going concern for a reasonable period of time. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 942 -SubTopic 505 -Section 50 -Paragraph 1C -URI http://asc.fasb.org/extlink&oid=84167132&loc=SL5958572-112826 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 942 -SubTopic 505 -Section 50 -Paragraph 1D -URI http://asc.fasb.org/extlink&oid=84167132&loc=SL5958573-112826 Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 942 -SubTopic 505 -Section 50 -Paragraph 1B -URI http://asc.fasb.org/extlink&oid=84167132&loc=SL5958570-112826 Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 942 -SubTopic 505 -Section 50 -Paragraph 1A -URI http://asc.fasb.org/extlink&oid=84167132&loc=SL5958569-112826 Reference 5: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 942 -SubTopic 505 -Section 50 -Paragraph 1G -URI http://asc.fasb.org/extlink&oid=84167132&loc=SL5958577-112826 Reference 6: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 942 -SubTopic 505 -Section 50 -Paragraph 1F -URI http://asc.fasb.org/extlink&oid=84167132&loc=SL5958575-112826 Reference 7: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 942 -SubTopic 505 -Section 50 -Paragraph 1E -URI http://asc.fasb.org/extlink&oid=84167132&loc=SL5958574-112826 Reference 8: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 942 -SubTopic 505 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=84167132&loc=SL5958568-112826 Reference 9: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 942 -SubTopic 505 -Section 50 -Paragraph 1H -URI http://asc.fasb.org/extlink&oid=84167132&loc=d3e65071-112826 + Details
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