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Loans Receivable and Allowance for Credit Losses | 3 Months Ended
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Mar. 31, 2023
Credit Loss [Abstract] |
Loans Receivable and Allowance for Credit Losses | Loans Receivable and Allowance for Credit Losses As of March 31, 2023 and December 31, 2022, loans receivable, net, consisted of the following:
(In thousands) |  | March 31, 2023 |  | December 31, 2022
Loan portfolio segment: |  |  |  |
Commercial Real Estate |  | $ | 464,410 |  |  | $ | 437,443 |
Residential Real Estate |  | 118,892 |  |  | 124,140 |
Commercial and Industrial |  | 153,773 |  |  | 138,787 |
Consumer and Other |  | 132,410 |  |  | 141,091 |
Construction |  | 7,052 |  |  | 4,922 |
Construction to Permanent - CRE |  | 2,232 |  |  | 1,933 |
Loans receivable, gross |  | 878,769 |  |  | 848,316 |
Allowance for credit losses |  | (17,801) |  |  | (10,310) |
Loans receivable, net |  | $ | 860,968 |  |  | $ | 838,006 |
Patriot's lending activities are conducted principally in: Connecticut; the southern counties of New York including Westchester, Nassau, Suffolk, and the five Boroughs of New York City; and the Northern Counties of New Jersey, including Passaic, Bergen, Essex, Hudson and Union. 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. 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. During the three months ended March 31, 2023, Patriot did not purchase any commercial real estate loans. There were $20.7 million commercial real estate loans purchased during the three months ended March 31, 2022. 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 months ended March 31, 2023 and 2022, Patriot did not purchase any residential real estate loans. 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 totaled $5.8 million at March 31, 2023 and December 31, 2022. The syndicated and leveraged loans 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. Further originations in this loan class are not expected. 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 has purchased unsecured consumer loans from a third party which are higher yielding loans of 2-5 year terms that are expected to incur an increased level of charge-offs. Loans outstanding under this program at March 31, 2023 and December 31, 2022 totaled $76.2 million and $78.9 million, respectively. Loans purchased under this program totaled $9.3 million for the quarter ended March 31, 2023, and $18.4 million for the three months ended March 31, 2022. The Company does not originate any loans 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. During the three months ended March 31, 2023, Patriot purchased home equity line of credit loans (“HELOC”) of $1.3 million. No HELOC was purchased in the first quarter of 2022. 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. The construction loans outstanding at March 31, 2023 and December 31, 2022 totaled $7.1 million and $4.9 million, respectively. Construction to Permanent - Commercial Real Estate 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 commercial real estate 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 predefined 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. However, during the pandemic in 2021, the SBA temporarily increased the guarantees to 90% and reverted to 75% on October 1, 2021. 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 $34.0 million and $32.5 million as of March 31, 2023 and December 31, 2022, respectively. During the three months ended March 31, 2023 and 2022, no SBA loans previously classified as held for sale were transferred to held for investment. Small Business Administration Paycheck Protection Program Under the Paycheck Protection Program of the CARES Act, small business loans were authorized 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 participated in the SBA’s Paycheck Protection Program in 2021. Paycheck Protection Program loans totaled $158,000 and $157,000 as of March 31, 2023 and December 31, 2022, respectively, which are included in the commercial and industrial loan classifications. Allowance for Credit Losses As described in Note 2, “Summary of Significant Accounting Policies,” the Company adopted ASU 2016-13 on January 1, 2023, which introduced the CECL methodology for estimating all expected losses over the life of a financial asset. Under the CECL methodology, the allowance for credit losses ("ACL") is measured on a collective basis for pools of loans with similar risk characteristics. For loans that do not share similar risk characteristics with the collectively evaluated pools, evaluations are performed on an individual basis. For all loan segments collectively evaluated, losses are predicted over a period of time determined to be reasonable and supportable, and at the end of the reasonable and supportable forecast period losses are reverted to long-term historical averages. The estimated loan losses for all loan segments are adjusted for changes in qualitative factors not inherently considered in the quantitative analyses. The Company estimates expected credit losses for pooled loans using a modeling method that incorporates probability of default (PD) and loss given default (LGD). The PD model employs a quarterly risk-rating transition method to estimate the probability of default by simulating loan downgrades and assigning increasing default probabilities to each loan. This captures the likelihood that borrowers will be unable to repay their loans according to the original terms. The LGD calculation considers characteristics such as collateral value and vintage, underlying collateral characteristics (e.g., CRE vs. residential, owner-occupied vs. investment), and other relevant underwriting characteristics. Commercial and industrial loans include risks associated with borrower’s cash flow, debt service coverage and management’s expertise. These loans are subject to the risk that the Company may have difficulty converting collateral to a liquid asset if necessary, as well as risks associated with degree of specialization, mobility and general collectability in a default situation. These commercial loans may be subject to many different types of risks, including fraud, bankruptcy, economic downturn, deteriorated or non-existent collateral, and changes in interest rates. Real estate construction loans include risks associated with the borrower’s credit-worthiness, contractor’s qualifications, borrower and contractor performance, and the overall risk and complexity of the proposed project. Construction lending is also subject to risks associated with sub-market dynamics, including population, employment trends and household income. During times of economic stress, this type of loan has typically had a greater degree of risk than other loan types. Real estate mortgage loans consist of loans secured by commercial and residential real estate. Commercial real estate lending is divided into Investment CRE and Owner-Occupied CRE. Investment CRE is dependent upon successful management, marketing and expense supervision necessary to maintain the property. Repayment of these loans may be adversely affected by conditions in the real estate market or the general economy. Owner-Occupied CRE is utilized by a business for the purpose of providing the space needs for that business and the running of its operations. Repayment is dependent on the cash flow and successful operations of the business. Repayment of these loans may be adversely affected by conditions in the specific owner’s industry. Also, commercial real estate loans typically involve relatively large loan balances to a single borrower. Residential real estate lending risks are generally less significant than those of other loans. Real estate lending risks include fluctuations in the value of real estate, bankruptcies, economic downturn and customer financial problems. Consumer loans carry a moderate degree of risk compared to other loans. They are generally more risky than traditional residential real estate loans and CRE loans, but less risky than many commercial loans and carry generally low relative balances across a diverse borrowing pool. Risk of default is usually determined by the well-being of the local economies. During times of economic stress, there is usually some level of job loss both nationally and locally, which directly affects the ability of the consumer to repay debt. We maintain an ACL for credit losses on unfunded commercial lending commitments and letters of credit to provide for the risk of loss inherent in these arrangements. The allowance is computed using a methodology similar to that used to determine the ACL for loans, modified to take into account the probability of a drawdown on the commitment. The ACL on unfunded loan commitments is classified as a liability account on the consolidated balance sheets within other liabilities, while the corresponding provision for these credit losses is recorded as a component of provision for credit losses. The allowance for credit losses on unfunded commitments was $700,000 at March 31, 2023. The following tables summarize the activity in the allowance for credit losses, allocated to segments of the loan portfolio, for the three months ended March 31, 2023 and loan and lease losses for three months ended March 31, 2022:
(In thousands) | Commercial Real Estate |  | Residential Real Estate |  | Commercial and Industrial |  | Consumer and Other |  | Construction |  | Construction to Permanent - CRE |  | Unallocated |  | Total |
Three Months Ended March 31, 2023 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Allowance for credit losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
December 31, 2022 | $ | 6,966 |  |  | $ | 665 |  |  | $ | 1,403 |  |  | $ | 1,207 |  |  | $ | 24 |  |  | $ | 10 |  |  | $ | 35 |  |  | $ | 10,310 |  |
Impact of ASC 326 Adoption | 1,626 |  |  | 189 |  |  | 219 |  |  | 5,347 |  |  | (4) |  |  | 29 |  |  | (35) |  |  | 7,371 |  |
Charge-offs | — |  |  | — |  |  | (2) |  |  | (1,796) |  |  | — |  |  | — |  |  | — |  |  | (1,798) |  |
Recoveries | — |  |  | — |  |  | 7 |  |  | 173 |  |  | — |  |  | — |  |  | — |  |  | 180 |  |
Provisions (credits) | 1,217 |  |  | (1) |  |  | 172 |  |  | 341 |  |  | 1 |  |  | 8 |  |  | — |  |  | 1,738 |  | (1)
March 31, 2023 | $ | 9,809 |  |  | $ | 853 |  |  | $ | 1,799 |  |  | $ | 5,272 |  |  | $ | 21 |  |  | $ | 47 |  |  | $ | — |  |  | $ | 17,801 |  |
Three Months Ended March 31, 2022 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Allowance for loan and lease losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
December 31, 2021 | $ | 5,063 |  |  | $ | 1,700 |  |  | $ | 2,532 |  |  | $ | 253 |  |  | $ | 78 |  |  | $ | 41 |  |  | $ | 238 |  |  | $ | 9,905 |  |
Charge-offs | — |  |  | — |  |  | (68) |  |  | (47) |  |  | (70) |  |  | — |  |  | — |  |  | (185) |  |
Recoveries | — |  |  | 1 |  |  | 15 |  |  | 1 |  |  | — |  |  | — |  |  | — |  |  | 17 |  |
Provisions (credits) | (174) |  |  | (189) |  |  | 381 |  |  | 112 |  |  | 48 |  |  | (32) |  |  | (146) |  |  | — |  |
March 31, 2022 | $ | 4,889 |  |  | $ | 1,512 |  |  | $ | 2,860 |  |  | $ | 319 |  |  | $ | 56 |  |  | $ | 9 |  |  | $ | 92 |  |  | $ | 9,737 |  |
(1) The allowance and provision for the three months ended March 31, 2023 are not comparable to prior periods due to the adoption of CECL. The provision on credit losses for three months ended March 31, 2023 does not include the credit on unfunded commitments of $402,000 for the three months ended March 31, 2023. The following tables summarize, by loan portfolio segment, the amount of loans receivable evaluated individually and collectively for impairment as of March 31, 2023:
(In thousands) | Commercial Real Estate |  | Residential Real Estate |  | Commercial and Industrial |  | Consumer and Other |  | Construction |  | Construction to Permanent - CRE |  | Unallocated |  | Total
March 31, 2023 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Allowance for loan and lease losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment | $ | 6,352 |  |  | $ | 29 |  |  | $ | 754 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 7,135 |
Collectively evaluated for impairment | 3,457 |  |  | 824 |  |  | 1,045 |  |  | 5,272 |  |  | 21 |  |  | 47 |  |  | — |  |  | 10,666 |
Total allowance for loan and lease losses | $ | 9,809 |  |  | $ | 853 |  |  | $ | 1,799 |  |  | $ | 5,272 |  |  | $ | 21 |  |  | $ | 47 |  |  | $ | — |  |  | $ | 17,801 |
Loans receivable, gross: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment | $ | 11,368 |  |  | $ | 2,491 |  |  | $ | 7,559 |  |  | $ | 512 |  |  | $ | 2,317 |  |  | $ | — |  |  | $ | — |  |  | $ | 24,247 |
Collectively evaluated for impairment | 453,042 |  |  | 116,401 |  |  | 146,214 |  |  | 131,898 |  |  | 4,735 |  |  | 2,232 |  |  | — |  |  | 854,522 |
Total loans receivable, gross | $ | 464,410 |  |  | $ | 118,892 |  |  | $ | 153,773 |  |  | $ | 132,410 |  |  | $ | 7,052 |  |  | $ | 2,232 |  |  | $ | — |  |  | $ | 878,769 |
The following tables presents the balance in the allowance for loan and lease losses and the recorded investment in loans by portfolio segment based on impairment method as of December 31, 2022:
(In thousands) | Commercial Real Estate |  | Residential Real Estate |  | Commercial and Industrial |  | Consumer and Other |  | Construction |  | Construction to Permanent - CRE |  | Unallocated |  | Total
December 31, 2022 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Allowance for loan and lease losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment | $ | 5,430 |  |  | $ | 5 |  |  | $ | 608 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 6,043 |
Collectively evaluated for impairment | 1,536 |  |  | 660 |  |  | 795 |  |  | 1,207 |  |  | 24 |  |  | 10 |  |  | 35 |  |  | 4,267 |
Total allowance for loan losses | $ | 6,966 |  |  | $ | 665 |  |  | $ | 1,403 |  |  | $ | 1,207 |  |  | $ | 24 |  |  | $ | 10 |  |  | $ | 35 |  |  | $ | 10,310 |
Loans receivable, gross: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment | $ | 11,241 |  |  | $ | 2,508 |  |  | $ | 4,653 |  |  | $ | 514 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 18,916 |
Collectively evaluated for impairment | 426,202 |  |  | 121,632 |  |  | 134,134 |  |  | 140,577 |  |  | 4,922 |  |  | 1,933 |  |  | — |  |  | 829,400 |
Total loans receivable, gross | $ | 437,443 |  |  | $ | 124,140 |  |  | $ | 138,787 |  |  | $ | 141,091 |  |  | $ | 4,922 |  |  | $ | 1,933 |  |  | $ | — |  |  | $ | 848,316 |
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, credit 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 credit 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 by the Credit Department either annually, biannually, or every 4 years, depending upon the amount of the bank’s exposure and other credit metrics. Additionally, Patriot retains an independent third-party loan review expert to perform a semi-annual analysis of the results of its risk rating process. The semi-annual 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 semi-annual review, are required to be reported to the Audit Committee of the Board of Directors. 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 upon confirmation of the partial loss amount, but may be deferred in certain cases until the credit moves from doubtful to a partial or full loss classification. 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. If either type of loan is classified as "full 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. The following tables summarize loan amortized cost by vintage, credit quality indicator and class of loans based on year of origination:
| Term of Loans by Origination |  |  |  |
As of March 31, 2023: | 2023 |  | 2022 |  | 2021 |  | 2020 |  | 2019 |  | Prior |  | Revolving |  | Total Loans Receivable Gross
Loan portfolio segment: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial Real Estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | $ | 32,600 |  |  | $ | 167,018 |  |  | $ | 129,918 |  |  | $ | 3,750 |  |  | $ | 30,339 |  |  | $ | 68,519 |  |  | $ | — |  |  | $ | 432,144 |
Special mention | — |  |  | — |  |  | — |  |  | — |  |  | 10,933 |  |  | 4,941 |  |  | — |  |  | 15,874 |
Substandard | — |  |  | — |  |  | — |  |  | — |  |  | 10,981 |  |  | 5,411 |  |  | — |  |  | 16,392 |
| 32,600 |  |  | 167,018 |  |  | 129,918 |  |  | 3,750 |  |  | 52,253 |  |  | 78,871 |  |  | — |  |  | 464,410 |
Residential Real Estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | 191 |  |  | 1,274 |  |  | 3,533 |  |  | 12,170 |  |  | 16,084 |  |  | 82,044 |  |  | 527 |  |  | 115,823 |
Special mention | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 617 |  |  | — |  |  | 617 |
Substandard | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 2,452 |  |  | — |  |  | 2,452 |
| 191 |  |  | 1,274 |  |  | 3,533 |  |  | 12,170 |  |  | 16,084 |  |  | 85,113 |  |  | 527 |  |  | 118,892 |
Commercial and Industrial: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | 633 |  |  | 16,042 |  |  | 23,495 |  |  | 8,377 |  |  | 9,288 |  |  | 5,013 |  |  | 82,113 |  |  | 144,961 |
Special mention | — |  |  | — |  |  | — |  |  | — |  |  | 549 |  |  | 11 |  |  | — |  |  | 560 |
Substandard | — |  |  | 732 |  |  | 969 |  |  | 432 |  |  | 4,401 |  |  | 1,306 |  |  | 412 |  |  | 8,252 |
| 633 |  |  | 16,774 |  |  | 24,464 |  |  | 8,809 |  |  | 14,238 |  |  | 6,330 |  |  | 82,525 |  |  | 153,773 |
Consumer and Other: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | 4,999 |  |  | 62,902 |  |  | 8,460 |  |  | — |  |  | 6,186 |  |  | 15,490 |  |  | 34,302 |  |  | 132,339 |
Substandard | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 71 |  |  | — |  |  | 71 |
| 4,999 |  |  | 62,902 |  |  | 8,460 |  |  | — |  |  | 6,186 |  |  | 15,561 |  |  | 34,302 |  |  | 132,410 |
Construction: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | — |  |  | — |  |  | 4,225 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 4,225 |
Special mention | — |  |  | — |  |  | — |  |  | — |  |  | 510 |  |  | — |  |  | — |  |  | 510 |
Substandard | — |  |  | — |  |  | — |  |  | 2,317 |  |  | — |  |  | — |  |  | — |  |  | 2,317 |
| — |  |  | — |  |  | 4,225 |  |  | 2,317 |  |  | 510 |  |  | — |  |  | — |  |  | 7,052 |
Construction to Permanent -CRE: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | — |  |  | — |  |  | 2,232 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 2,232 |
| — |  |  | — |  |  | 2,232 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 2,232 |
Total | $ | 38,423 |  |  | $ | 247,968 |  |  | $ | 172,832 |  |  | $ | 27,046 |  |  | $ | 89,271 |  |  | $ | 185,875 |  |  | $ | 117,354 |  |  | $ | 878,769 |
Loans receivable, gross: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | $ | 38,423 |  |  | $ | 247,236 |  |  | $ | 171,863 |  |  | $ | 24,297 |  |  | $ | 61,897 |  |  | $ | 171,066 |  | $ | — |  | $ | 116,942 |  |  | $ | 831,724 |
Special mention | — |  |  | — |  |  | — |  |  | — |  |  | 11,992 |  |  | 5,569 |  | — |  | — |  |  | 17,561 |
Substandard | — |  |  | 732 |  |  | 969 |  |  | 2,749 |  |  | 15,382 |  |  | 9,240 |  | — |  | 412 |  |  | 29,484 |
Loans receivable, gross | $ | 38,423 |  |  | $ | 247,968 |  |  | $ | 172,832 |  |  | $ | 27,046 |  |  | $ | 89,271 |  |  | $ | 185,875 |  |  | $ | 117,354 |  |  | $ | 878,769 |
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 March 31, 2023.
(In thousands) |  | Performing (Accruing) Loans |  |  |  |
As of March 31, 2023: |  | 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 |  | $ | 4,387 |  |  | $ | — |  |  | $ | — |  |  | $ | 4,387 |  |  | $ | 427,757 |  |  | $ | 432,144 |  |  | $ | — |  |  | $ | 432,144 |
Special mention |  | — |  |  | — |  |  | — |  |  | — |  |  | 15,874 |  |  | 15,874 |  |  | — |  |  | 15,874 |
Substandard |  | 327 |  |  | — |  |  | — |  |  | 327 |  |  | 4,698 |  |  | 5,025 |  |  | 11,367 |  |  | 16,392 |
|  | 4,714 |  |  | — |  |  | — |  |  | 4,714 |  |  | 448,329 |  |  | 453,043 |  |  | 11,367 |  |  | 464,410 |
Residential Real Estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | 174 |  |  | — |  |  | 329 |  |  | 503 |  |  | 115,320 |  |  | 115,823 |  |  | — |  |  | 115,823 |
Special mention |  | — |  |  | — |  |  | — |  |  | — |  |  | 617 |  |  | 617 |  |  | — |  |  | 617 |
Substandard |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 2,452 |  |  | 2,452 |
|  | 174 |  |  | — |  |  | 329 |  |  | 503 |  |  | 115,937 |  |  | 116,440 |  |  | 2,452 |  |  | 118,892 |
Commercial and Industrial: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | 372 |  |  | — |  |  | 1,318 |  |  | 1,690 |  |  | 143,271 |  |  | 144,961 |  |  | — |  |  | 144,961 |
Special mention |  | — |  |  | — |  |  | — |  |  | — |  |  | 560 |  |  | 560 |  |  | — |  |  | 560 |
Substandard |  | 547 |  |  | — |  |  | — |  |  | 547 |  |  | 120 |  |  | 667 |  |  | 7,585 |  |  | 8,252 |
|  | 919 |  |  | — |  |  | 1,318 |  |  | 2,237 |  |  | 143,951 |  |  | 146,188 |  |  | 7,585 |  |  | 153,773 |
Consumer and Other: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | 1,126 |  |  | 899 |  |  | 1,745 |  |  | 3,770 |  |  | 128,569 |  |  | 132,339 |  |  | — |  |  | 132,339 |
Substandard |  | — |  |  | — |  |  | — |  |  | — |  |  | 23 |  |  | 23 |  |  | 48 |  |  | 71 |
|  | 1,126 |  |  | 899 |  |  | 1,745 |  |  | 3,770 |  |  | 128,592 |  |  | 132,362 |  |  | 48 |  |  | 132,410 |
Construction: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | — |  |  | — |  |  | — |  |  | — |  |  | 4,225 |  |  | 4,225 |  |  | — |  |  | 4,225 |
Special mention |  | — |  |  | — |  |  | — |  |  | — |  |  | 510 |  |  | 510 |  |  | — |  |  | 510 |
Substandard |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 2,317 |  |  | 2,317 |
|  | — |  |  | — |  |  | — |  |  | — |  |  | 4,735 |  |  | 4,735 |  |  | 2,317 |  |  | 7,052 |
Construction to Permanent -CRE: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | — |  |  | — |  |  | — |  |  | — |  |  | 2,232 |  |  | 2,232 |  |  | — |  |  | 2,232 |
|  | — |  |  | — |  |  | — |  |  | — |  |  | 2,232 |  |  | 2,232 |  |  | — |  |  | 2,232 |
Total |  | $ | 6,933 |  |  | $ | 899 |  |  | $ | 3,392 |  |  | $ | 11,224 |  |  | $ | 843,776 |  |  | $ | 855,000 |  |  | $ | 23,769 |  |  | $ | 878,769 |
Loans receivable, gross: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 6,059 |  |  | $ | 899 |  |  | $ | 3,392 |  |  | $ | 10,350 |  |  | $ | 821,374 |  |  | $ | 831,724 |  |  | $ | — |  |  | $ | 831,724 |
Special mention |  | — |  |  | — |  |  | — |  |  | — |  |  | 17,561 |  |  | 17,561 |  |  | — |  |  | 17,561 |
Substandard |  | 874 |  |  | — |  |  | — |  |  | 874 |  |  | 4,841 |  |  | 5,715 |  |  | 23,769 |  |  | 29,484 |
Loans receivable, gross |  | $ | 6,933 |  |  | $ | 899 |  |  | $ | 3,392 |  |  | $ | 11,224 |  |  | $ | 843,776 |  |  | $ | 855,000 |  |  | $ | 23,769 |  |  | $ | 878,769 |
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, 2022.
(In thousands) |  | Performing (Accruing) Loans |  |  |  |
As of December 31, 2022: |  | 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 |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 401,313 |  |  | $ | 401,313 |  |  | $ | — |  |  | $ | 401,313 |
Special mention |  | — |  |  | — |  |  | — |  |  | — |  |  | 24,559 |  |  | 24,559 |  |  | — |  |  | 24,559 |
Substandard |  | 330 |  |  | — |  |  | — |  |  | 330 |  |  | — |  |  | 330 |  |  | 11,241 |  |  | 11,571 |
|  | 330 |  |  | — |  |  | — |  |  | 330 |  |  | 425,872 |  |  | 426,202 |  |  | 11,241 |  |  | 437,443 |
Residential Real Estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | 330 |  |  | — |  |  | — |  |  | 330 |  |  | 120,715 |  |  | 121,045 |  |  | — |  |  | 121,045 |
Special mention |  | — |  |  | — |  |  | — |  |  | — |  |  | 625 |  |  | 625 |  |  | — |  |  | 625 |
Substandard |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 2,470 |  |  | 2,470 |
|  | 330 |  |  | — |  |  | — |  |  | 330 |  |  | 121,340 |  |  | 121,670 |  |  | 2,470 |  |  | 124,140 |
Commercial and Industrial: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | 2 |  |  | — |  |  | 230 |  |  | 232 |  |  | 131,092 |  |  | 131,324 |  |  | — |  |  | 131,324 |
Special mention |  | — |  |  | — |  |  | — |  |  | — |  |  | 597 |  |  | 597 |  |  | — |  |  | 597 |
Substandard |  | 1,488 |  |  | 412 |  |  | — |  |  | 1,900 |  |  | 133 |  |  | 2,033 |  |  | 4,833 |  |  | 6,866 |
|  | 1,490 |  |  | 412 |  |  | 230 |  |  | 2,132 |  |  | 131,822 |  |  | 133,954 |  |  | 4,833 |  |  | 138,787 |
Consumer and Other: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | 929 |  |  | 3,175 |  |  | 925 |  |  | 5,029 |  |  | 135,990 |  |  | 141,019 |  |  | — |  |  | 141,019 |
Substandard |  | — |  |  | — |  |  | — |  |  | — |  |  | 23 |  |  | 23 |  |  | 49 |  |  | 72 |
|  | 929 |  |  | 3,175 |  |  | 925 |  |  | 5,029 |  |  | 136,013 |  |  | 141,042 |  |  | 49 |  |  | 141,091 |
Construction: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | 895 |  |  | — |  |  | — |  |  | 895 |  |  | 3,503 |  |  | 4,398 |  |  | — |  |  | 4,398 |
Special mention |  | — |  |  | — |  |  | — |  |  | — |  |  | 524 |  |  | 524 |  |  | — |  |  | 524 |
|  | 895 |  |  | — |  |  | — |  |  | 895 |  |  | 4,027 |  |  | 4,922 |  |  | — |  |  | 4,922 |
Construction to Permanent - CRE: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | — |  |  | — |  |  | — |  |  | — |  |  | 1,933 |  |  | 1,933 |  |  | — |  |  | 1,933 |
|  | — |  |  | — |  |  | — |  |  | — |  |  | 1,933 |  |  | 1,933 |  |  | — |  |  | 1,933 |
Total |  | $ | 3,974 |  |  | $ | 3,587 |  |  | $ | 1,155 |  |  | $ | 8,716 |  |  | $ | 821,007 |  |  | $ | 829,723 |  |  | $ | 18,593 |  |  | $ | 848,316 |
Loans receivable, gross: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 2,156 |  |  | $ | 3,175 |  |  | $ | 1,155 |  |  | $ | 6,486 |  |  | $ | 794,546 |  |  | $ | 801,032 |  |  | $ | — |  |  | $ | 801,032 |
Special mention |  | — |  |  | — |  |  | — |  |  | — |  |  | 26,305 |  |  | 26,305 |  |  | — |  |  | 26,305 |
Substandard |  | 1,818 |  |  | 412 |  |  | — |  |  | 2,230 |  |  | 156 |  |  | 2,386 |  |  | 18,593 |  |  | 20,979 |
Loans receivable, gross |  | $ | 3,974 |  |  | $ | 3,587 |  |  | $ | 1,155 |  |  | $ | 8,716 |  |  | $ | 821,007 |  |  | $ | 829,723 |  |  | $ | 18,593 |  |  | $ | 848,316 |
The following tables summarize non-performing (i.e., non-accruing) loans by aging category and status, within the applicable loan portfolio segment as of March 31, 2023 and December 31, 2022:
(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 March 31, 2023: |  |  |  |  |  |  |  |  |  |  |  |
Loan portfolio segment: |  |  |  |  |  |  |  |  |  |  |  |
Commercial Real Estate: |  |  |  |  |  |  |  |  |  |  |  |
Substandard |  | $ | — |  |  | $ | — |  |  | $ | 11,367 |  |  | $ | 11,367 |  |  | $ | — |  |  | $ | 11,367 |
Residential Real Estate: |  |  |  |  |  |  |  |  |  |  |  |
Substandard |  | 641 |  |  | — |  |  | 1,795 |  |  | 2,436 |  |  | 16 |  |  | 2,452 |
Commercial and Industrial: |  |  |  |  |  |  |  |  |  |  |  |
Substandard |  | — |  |  | 914 |  |  | 5,521 |  |  | 6,435 |  |  | 1,150 |  |  | 7,585 |
Consumer and Other: |  |  |  |  |  |  |  |  |  |  |  |
Substandard |  | — |  |  | — |  |  | 27 |  |  | 27 |  |  | 21 |  |  | 48 |
Construction: |  |  |  |  |  |  |  |  |  |  |  |
Substandard |  | 2,317 |  |  | — |  |  | — |  |  | 2,317 |  |  | — |  |  | 2,317 |
Total non-accruing loans |  | $ | 2,958 |  |  | $ | 914 |  |  | $ | 18,710 |  |  | $ | 22,582 |  |  | $ | 1,187 |  |  | $ | 23,769 |
As of December 31, 2022: |  |  |  |  |  |  |  |  |  |  |  |
Loan portfolio segment: |  |  |  |  |  |  |  |  |  |  |  |
Commercial Real Estate: |  |  |  |  |  |  |  |  |  |  |  |
Substandard |  | $ | — |  |  | $ | — |  |  | $ | 11,241 |  |  | $ | 11,241 |  |  | $ | — |  |  | $ | 11,241 |
Residential Real Estate: |  |  |  |  |  |  |  |  |  |  |  |
Substandard |  | 657 |  |  | — |  |  | 1,796 |  |  | 2,453 |  |  | 17 |  |  | 2,470 |
Commercial and Industrial: |  |  |  |  |  |  |  |  |  |  |  |
Substandard |  | 46 |  |  | 395 |  |  | 3,196 |  |  | 3,637 |  |  | 1,196 |  |  | 4,833 |
Consumer and Other: |  |  |  |  |  |  |  |  |  |  |  |
Substandard |  | — |  |  | — |  |  | 27 |  |  | 27 |  |  | 22 |  |  | 49 |
Total non-accruing loans |  | $ | 703 |  |  | $ | 395 |  |  | $ | 16,260 |  |  | $ | 17,358 |  |  | $ | 1,235 |  |  | $ | 18,593 |
If non-accrual loans had been performing in accordance with the original contractual terms, additional interest income (net of cash collected) of approximately $63,000 and $115,000 would have been recognized during the three months ended March 31, 2023 and 2022. Interest income collected and recognized on non-accruing loans for the three months ended March 31, 2023 and 2022 was $282,000 and $90,000, 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 six months of timely payment history. The Bank considers loans under $100,000 and consumer installment loans to be pools of smaller homogeneous loan balances, and therefore are collectively evaluated for impairment, and not individually measured for impairment. Loan Modifications Made to Borrowers Experiencing Financial Difficulty 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. Substantially all 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. 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 loan, the loan continues accruing interest. Non-accruing modified loans 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. During the three months ended March 31, 2023 and 2022, the Company had no modified loans made to borrowers experiencing financial difficulty. There were no modified loans that had a payment default during the three months ended March 31, 2023 and were modified in the twelve months prior to that default to borrowers experiencing financial difficulty. At March 31, 2023 and December 31, 2022, there were no commitments to advance additional funds under the modified loans. Individually Evaluated Loans The following table reflects information about the individually evaluated loans by class as of March 31, 2023 and December 31, 2022:
(In thousands) |  | March 31, 2023 |  | December 31, 2022
|  | Recorded Investment |  | Principal Outstanding |  | Related Allowance |  | Recorded Investment |  | Principal Outstanding |  | Related Allowance
With no related allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |
Commercial Real Estate |  | $ | 387 |  |  | $ | 430 |  |  | $ | — |  |  | $ | 2,435 |  |  | $ | 2,428 |  |  | $ | — |
Residential Real Estate |  | 763 |  |  | 882 |  |  | — |  |  | 2,402 |  |  | 2,224 |  |  | — |
Commercial and Industrial |  | 2,524 |  |  | 4,801 |  |  | — |  |  | 1,939 |  |  | 2,424 |  |  | — |
Consumer and Other |  | 512 |  |  | 512 |  |  | — |  |  | 514 |  |  | 514 |  |  | — |
Construction |  | 2,317 |  |  | 2,317 |  |  | — |  |  | — |  |  | — |  |  | — |
|  | 6,503 |  |  | 8,942 |  |  | — |  |  | 7,290 |  |  | 7,590 |  |  | — |
With a related allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |
Commercial Real Estate |  | $ | 10,981 |  |  | $ | 10,968 |  |  | $ | 6,352 |  |  | 8,806 |  |  | 8,656 |  |  | 5,430 |
Residential Real Estate |  | 1,728 |  |  | 1,553 |  |  | 29 |  |  | 106 |  |  | 105 |  |  | 5 |
Commercial and Industrial |  | 5,035 |  |  | 5,241 |  |  | 754 |  |  | 2,714 |  |  | 2,863 |  |  | 608 |
Consumer and Other |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
|  | 17,744 |  |  | 17,762 |  |  | 7,135 |  |  | 11,626 |  |  | 11,624 |  |  | 6,043 |
Individually evaluated loans, Total: |  |  |  |  |  |  |  |  |  |  |  |
Commercial Real Estate |  | 11,368 |  |  | 11,398 |  |  | 6,352 |  |  | 11,241 |  |  | 11,084 |  |  | 5,430 |
Residential Real Estate |  | 2,491 |  |  | 2,435 |  |  | 29 |  |  | 2,508 |  |  | 2,329 |  |  | 5 |
Commercial and Industrial |  | 7,559 |  |  | 10,042 |  |  | 754 |  |  | 4,653 |  |  | 5,287 |  |  | 608 |
Consumer and Other |  | 512 |  |  | 512 |  |  | — |  |  | 514 |  |  | 514 |  |  | — |
Construction |  | 2,317 |  |  | 2,317 |  |  | — |  |  | — |  |  | — |  |  | — |
Total |  | $ | 24,247 |  |  | $ | 26,704 |  |  | $ | 7,135 |  |  | $ | 18,916 |  |  | $ | 19,214 |  |  | $ | 6,043 |
The following table summarizes additional information regarding individually evaluated loans by class for the three months ended March 31, 2023 and 2022.
(In thousands) |  | Three Months Ended March 31, 2023 |  | Three Months Ended March 31, 2022 |  |  |  |
|  | Average Recorded Investment |  | Interest Income Recognized |  | Average Recorded Investment |  | Interest Income Recognized |  |  |  |  |  |  |  |
With no related allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial Real Estate |  | $ | 899 |  |  | $ | — |  |  | $ | 6,806 |  |  | $ | 32 |  |  |  |  |  |  |  |  |
Residential Real Estate |  | 1,179 |  |  | 3 |  |  | 2,840 |  |  | 8 |  |  |  |  |  |  |  |  |
Commercial and Industrial |  | 2,402 |  |  | 82 |  |  | 621 |  |  | 4 |  |  |  |  |  |  |  |  |
Consumer and Other |  | 513 |  |  | 9 |  |  | 522 |  |  | 4 |  |  |  |  |  |  |  |  |
Construction |  | 1,738 |  |  | — |  |  | — |  |  | — |  |  |  |  |  |  |  |  |
|  | 6,731 |  |  | 94 |  |  | 10,789 |  |  | 48 |  |  |  |  |  |  |  |  |
With a related allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial Real Estate |  | 10,405 |  |  | 154 |  |  | 8,873 |  |  | 25 |  |  |  |  |  |  |  |  |
Residential Real Estate |  | 1,352 |  |  | 1 |  |  | 1,328 |  |  | 21 |  |  |  |  |  |  |  |  |
Commercial and Industrial |  | 4,052 |  |  | 43 |  |  | 2,738 |  |  | 2 |  |  |  |  |  |  |  |  |
Consumer and Other |  | 18 |  |  | — |  |  | 165 |  |  | 1 |  |  |  |  |  |  |  |  |
|  | 15,827 |  |  | 198 |  |  | 13,104 |  |  | 49 |  |  |  |  |  |  |  |  |
Individually evaluated loans, Total: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial Real Estate |  | 11,304 |  |  | 154 |  |  | 15,679 |  |  | 57 |  |  |  |  |  |  |  |  |
Residential Real Estate |  | 2,531 |  |  | 4 |  |  | 4,168 |  |  | 29 |  |  |  |  |  |  |  |  |
Commercial and Industrial |  | 6,454 |  |  | 125 |  |  | 3,359 |  |  | 6 |  |  |  |  |  |  |  |  |
Consumer and Other |  | 531 |  |  | 9 |  |  | 687 |  |  | 5 |  |  |  |  |  |  |  |  |
Construction |  | 1,738 |  |  | — |  |  | — |  |  | — |  |  |  |  |  |  |  |  |
Total |  | $ | 22,558 |  |  | $ | 292 |  |  | $ | 23,893 |  |  | $ | 97 |  |  |  |  |  |  |  |  |
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 5.8% 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. 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.

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