XML 36 R18.htm IDEA: XBRL DOCUMENT v3.25.1
Borrowings
 12 Months Ended
Dec. 31, 2024
Debt Disclosure [Abstract]  
Borrowings Borrowings
As of December 31, 2024 and 2023, total borrowings were $33.1 million and $201.1 million, respectively. Borrowings consist primarily of FHLB advances, FRB borrowing, senior notes, subordinated notes, junior subordinated debentures and a note payable.
The senior notes, subordinated notes, junior subordinated debentures contain affirmative covenants that require the Company to: maintain its and its subsidiaries’ legal entity and tax status, pay its income tax obligations on a timely basis, and comply with SEC and FDIC reporting requirements.
Federal Home Loan Bank borrowings
The Company is a member of the Federal Home Loan Bank of Boston ("FHLB-B"). Borrowings from the FHLB-B are limited to the lesser of a percentage of the value of qualified collateral or a percentage of the Bank’s total assets per the most recently-filed Call Report, as defined on the FHLB-B Statement of Products Policy. Qualified collateral, as defined, primarily consists of mortgage-backed securities and loans receivable that are required to be free and clear of liens and encumbrances, and may not be pledged for any other purposes.
As of December 31, 2024, the Company had $60.2 million in discounted value of pledged collateral with the FHLB-B. The maximum borrowing capacity is limited to the lesser of 5.00% of the Bank’s most recently reported Call Report total assets or the discount value of the pledged collateral. Accordingly, the Company’s maximum borrowing capacity with the FHLB-B is $48.7 million. Of this amount, $45.0 million was used by a standby letter of credit, as described further in Note 18, Financial Instruments with Off-Balance-Sheet Risk. Additionally, $250,000 of the maximum borrowing capacity was used by an overnight line of credit designed to cover the Bank for temporary overdraft positions. As of December 31, 2024 and 2023, no funds had been borrowed under the line of credit.
FHLB-B advances are structured to facilitate the Bank’s management of its balance sheet and liquidity requirements. In 2024, the Company repaid $30.0 million in long-term advances and $68.0 million in short-term borrowings. As a result, the outstanding advances decreased from $101.0 million as of December 31, 2023, to $3.0 million as of December 31, 2024. At December 31, 2024, the FHLB-B advances carried a fixed interest rate of 4.55% with a remaining maturity of 9 days.
Interest expense incurred for FHLB-B borrowing for the years ended December 31, 2024, 2023 and 2022 were $1.1 million, $4.2 million and $3.5 million, respectively.
Correspondent Bank - Lines of Credit
Patriot has entered into unsecured federal funds sweep and federal funds line of credit facility agreements with certain correspondent Banks. As of December 31, 2024 and 2023, borrowings available under the agreements totaled $5.0 million and $22.0 million, respectively. The purpose of the agreements is to provide a credit facility intended to satisfy overnight federal account balance requirements and to provide for daily settlement of FRB, Automated Clearing House (“ACH”), and other clearinghouse transactions.
There was no outstanding balance under the agreements at December 31, 2024 and 2023. Interest expense incurred for the year ended December 31, 2024, 2023 and 2022 was $4,000, $117,000 and $34,000, respectively.
Other Borrowing
The Federal Reserve Bank of New York (“FRBNY”) accepts securities and loan pledges from qualifying depository institutions to secure borrowings from the Federal Reserve Discount Window (“Discount Window”). Patriot has pledged eligible securities and loans as collateral to support its borrowing capacity at the FRBNY. As of December 31, 2024, Patriot had pledged eligible securities and loans with a book value of $87.7 million, with a collateral value of $64.7 million. A total of $20.0 million and $24.0 million was borrowed from the Discount Window and fully repaid during the years ended December 31, 2024 and 2023, respectively. There was no outstanding balance under the agreements as of December 31, 2024 and 2023. Interest expense incurred for the years ended December 31, 2024 and 2023 was $32,000 and $48,000, respectively. In 2022, no funds were borrowed from the Discount Window, and no interest expense was incurred.
In July 2023, the Bank established a collateralized funding line of $73.8 million at par value under the Federal Reserve's newly established Bank Term Funding Program ("BTFP"). The program provided additional funding to eligible depository institutions, assuring they could meet the needs of all their depositors. The program served as an additional source of liquidity against high-quality securities, eliminating the need of an institution to quickly sell those securities in times of stress. The line allowed for a fixed rate borrowing for up to one year, with repayment permitted at any time without penalty. The BTFP ceased allowing any new advances after March 11, 2024. As of December 31, 2024, Patriot had paid off the BTFP borrowing of $70.0 million that was outstanding as of December 31, 2023. Interest expense incurred was $2.3 million and $1.8 million for the years ended December 31, 2024 and 2023. In 2022, no funds were borrowed under the BTFP, and no interest expense was incurred.
Senior notes
On December 22, 2016, the Company issued $12 million of senior notes (“2016 Senior Notes”) bearing interest at 7% per annum. On November 17, 2021, the original maturity date of the Senior Notes were extended from December 22, 2021 to June 30, 2022.
On June 22, 2022, the Company amended and restated the Senior Notes. The maturity date of the Senior Notes were further extended to December 31, 2022, and the interest rate increases from (i) 7% to 7.25% from July 1, 2022 until September 30, 2022 and (ii) from 7.25% to 7.50% thereafter. The Senior Notes were repaid in December 2022.

On December 21, 2022, the Company completed an issuance and sale of $12 million in aggregate principal amount of 8.50% fixed rate Senior Notes due January 15, 2026 (“2022 Senior Notes”). In connection with the issuance of the Senior Notes, the Company incurred $360,000 of costs, which are being amortized over the term of the 2022 Senior Notes to recognize a constant rate of interest expense. As of December 31, 2024, unamortized debt issuance cost of $139,000 was deducted from the face amount of the Senior Notes included in the Consolidated Balance Sheet. The Senior Notes were amended in March 2025. See Note 24. Subsequent Events for more information.
The 2022 Senior Note Purchase Agreement contains certain customary representations, warranties, and covenants made by each of the Company and the Note Purchasers (“Purchasers”). The 2022 Senior Notes are not subject to any sinking fund and are not convertible into or exchangeable for any other securities or assets of the Company or any of its subsidiaries. The 2022 Senior Notes are not subject to redemption at the option of the holders. Principal and interest on the 2022 Senior Notes are subject to acceleration only in limited circumstances. The 2022 Senior Notes are an unsecured, unsubordinated obligation and ranks equally in right of payment to all of the Company’s existing and future unsecured indebtedness, liabilities and other obligations that are not subordinated in right of payment to the Senior Note, and will be effectively subordinated to any of the Company’s existing and future secured indebtedness, to the extent of the value of the collateral securing such indebtedness. The 2022 Senior Notes are the obligations of the Company only and are not obligations of, and are not guaranteed by, any of the Company’s affiliates.
For the year ended December 31, 2024, 2023 and 2022, the Company recognized interest expense of $1.2 million, $1.2 million and $866,000, respectively, and the debt issuance cost amortization expense was $139,000, $139,000 and zero, respectively. As of December 31, 2024 and 2023, $470,000 and $470,000 of interest was included in accrued expenses and other liabilities on the Consolidated Balance Sheet, respectively.
Subordinated notes
On June 29, 2018, the Company entered into certain subordinated note purchase agreements with two institutional accredited investors and completed a private placement of $10 million of fixed-to-floating rate subordinated notes with the maturity date of September 30, 2028 (the “Subordinated Notes”) pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended, and Rule 506(b) of Regulation D promulgated thereunder.
The Subordinated Notes initially bear interest at 6.25% per annum, from and including June 29, 2018, to but excluding, June 30, 2023, payable semi-annually in arrears. From and including June 30, 2023, until but excluding June 30, 2028 or an early redemption date, the interest rate shall reset quarterly to an interest rate per annum equal to the then current three-month LIBOR, which was replaced by SOFR in 2023 (but not less than zero) plus 332.5 basis points, payable quarterly in arrears. The Company may, at its option, beginning on June 30, 2023 and on any scheduled interest payment date thereafter, redeem the Subordinated Notes. Interest on the Subordinated Notes is payable beginning on December 30, 2018. The Subordinated Notes were amended in March 2025. See Note 24. Subsequent Events for more information.
In connection with the issuance of the Subordinated Notes, the Company incurred $291,000 of debt issuance costs, which are being amortized over the term of the Subordinated Notes to recognize a constant rate of interest expense. At December 31, 2024 and 2023, $102,000 and $131,000 of unamortized debt issuance costs have been deducted from the face amount of the Subordinated Notes included in the Consolidated Balance Sheet, respectively. For the years ended December 31, 2024, 2023 and 2022, the Company recognized interest expense of $889,000, $786,000 and $654,000, respectively.
Junior subordinated debt owed to unconsolidated trust
In 2003, the Patriot National Statutory Trust I (“the Trust”), which has no independent assets and is wholly-owned by the Company, issued $8.0 million of trust preferred securities. The proceeds, net of a $240,000 placement fee, were invested in junior subordinated debentures issued by the Company, which invested the proceeds in the Bank. The Bank used the proceeds to fund its operations.
Trust preferred securities currently qualify for up to 25% of the Company’s Tier I Capital, with the excess qualifying as Tier 2 Capital.
The junior subordinated debentures are unsecured obligations of the Company. The debentures are subordinate and junior in right of payment to all present and future senior indebtedness of the Company. In addition to its obligations under the junior subordinated debentures and in conjunction with the Trust, the Company issued an unconditional guarantee of the trust preferred securities.
The junior subordinated debentures bear interest at three-month LIBOR (replaced by SOFR) plus 3.15% (7.74% at December 31, 2024) and mature on March 26, 2033, at which time the principal amount borrowed will be due. Beginning in the second quarter of 2009, the Company opted to defer payment of quarterly interest on the junior subordinated debentures for 20 consecutive quarters. In June of 2014, the Company brought the debt current by paying approximately $1.7 million of interest in arrears to the holders of the junior subordinated debentures. On bringing the debt current and, as permitted under the terms of the junior subordinated debentures, the Company again opted to defer payment of quarterly interest through September 2016, when a $0.7 million payment was made to bring the debt current. In December 2024, the Company opted to defer payment of the quarterly interest, as permitted under the terms of the junior subordinated debentures.
The placement fee of $240,000 is amortized and included as a component of the periodic interest expense on the junior subordinated debentures, in order to produce a constant rate of interest expense. For the years ended December 31, 2024, 2023 and 2022, $10,000, $9,000 and $9,000 of debt placement fee amortization has been included in interest expense recognized of $707,000, $695,000 and $412,000, respectively. As of December 31, 2024 and 2023, the unamortized placement fee deducted from the face amount of the junior subordinated debt owed to the unconsolidated trust amounted to $101,000 and $111,000, respectively, and accrued interest on the junior subordinated debentures was $174,000 and $12,000, respectively.
At its option, exercisable on a quarterly basis, the Company may redeem the junior subordinated debentures from the Trust, which would then redeem the trust preferred securities.
Note Payable
In September 2015, the Bank purchased the property in which its Fairfield, Connecticut branch is located for approximately $2.0 million, a property it had been leasing until that date. The purchase price was primarily satisfied by issuing the seller a $2.0 million, nine-year, promissory note bearing interest at a fixed rate of 1.75% per annum. As of December 31, 2024 and 2023, the note had a balance outstanding of $162,000 and $376,000, respectively. The note originally set to mature in August 2024, was extended from August 25, 2024 to September 1, 2025, with the Bank continuing its scheduled principal and interest payments. The note is secured by a first Mortgage Deed and Security Agreement on the purchased property. Interest expense incurred for the years ended December 31, 2024, 2023 and 2022 was $5,000, $8,000 and $12,000, respectively.
Maturity of borrowings
At December 31, 2024, the contractual maturities of the Company’s borrowings in future periods were as follows:
(In thousands)
Year ending December 31,FHLB and FRB
Borrowings		Senior
Notes		Subordinated
Notes		Junior
Subordinated
Debt		Note
Payable		Total
2025$3,000 $— $— $— $162 $3,162 
2026— 12,000 — — — 12,000 
2027— — — — — — 
2028— — 10,000 — — 10,000 
2029— — — — — — 
Thereafter— — — 8,248 — 8,248 
Total contractual maturities of borrowings3,000 12,000 10,000 8,248 162 33,410 
Unamortized debt issuance costs— (139)(102)(101)— (342)
Balance of borrowings as of December 31, 2024$3,000 $11,861 $9,898 $8,147 $162 $33,068