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Regulatory and Operational Matters
 6 Months Ended
Jun. 30, 2025
Regulatory Capital Requirements under Banking Regulations [Abstract]  
Regulatory and Operational Matters Regulatory and Operational Matters
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.
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%. 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. 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 conversation buffer of 2.5% has been included in the minimum capital adequacy ratios as of June 30, 2025.
On April 17, 2024, based on its supervisory profile, the Bank was notified by the OCC that it established individual minimum capital ratios (“IMCR”) for the Bank. Specifically, the Bank is required to maintain the following ratios: a common equity tier 1 capital ratio of 10.00%, a Tier 1 capital ratio of 10.00%, a Tier 1 leverage ratio of 9.00% and a total capital ratio of 11.50%. As of December 31, 2024, the Bank did not meet all of its regulatory capital requirements. During 2024, the Bank significantly reduced its total and risk-based assets to work towards achieving the OCC requirements.
On January 14, 2025, the Bank entered into an agreement with the OCC (the "OCC Agreement"), pursuant to which the Bank agreed, through its board of directors to take certain actions in the areas of strategic planning, capital planning, Bank Secrecy Act / Anti-Money Laundering risk management, payment activities oversight, credit administration and concentrations risk management. The Bank’s Board appointed a Compliance Committee in January 2025, as required, to oversee the progress and compliance with the OCC Agreement.
The Bank has been working to address each of the items identified in the OCC Agreement. The Company has completed the Private Placement in March 2025, which was critical to address the Capital Plan and Higher Minimums Articles and pivotal to the Strategic Plan Article in the OCC Agreement.
On January 17, 2025, the OCC notified the Bank that, in connection with the entry into the OCC Agreement, the individual minimum capital ratios previously established on April 17, 2024 for the Bank has been terminated.
The Capital Plan and Higher Minimums Articles in the OCC Agreement established capital minimums that need to be met and maintained. The Bank is required to maintain the following ratios: a common equity tier 1 capital ratio of 10.00%, a Tier 1 capital ratio of 10.00%, a Tier 1 leverage ratio of 9.00% and a total capital ratio of 11.50%.
As of June 30, 2025, the Private Placement resulted in capital ratios that are in excess of the minimums required by the OCC Agreement. Although the Private Placement on March 20, 2025, has resulted in the Bank's capital ratios exceeding both standard "well capitalized" levels and the higher minimums set forth in the OCC Agreement, the Bank remains classified as "adequately capitalized" rather than "well capitalized" due to the specific terms of that agreement.
The Company and Bank’s regulatory capital amounts and ratios at June 30, 2025 and December 31, 2024 are summarized as follows:
June 30, 2025December 31, 2024
Patriot National Bancorp, Inc.Patriot Bank, N.A.Patriot National Bancorp, Inc.Patriot Bank, N.A.
(Dollar amounts in thousands)AmountRatioAmountRatioAmountRatioAmountRatio
Total Capital (to risk weighted assets):
Actual$103,357 16.48 %$102,531 16.34 %$44,534 6.07 %$56,536 7.71 %
To be Well Capitalized(1)— — 62,731 10.00 %— — 73,309 10.00 %
For capital adequacy50,166 8.00 %50,185 8.00 %58,667 8.00 %58,648 8.00 %
Individual minimum capital ratio(2)— — %72,141 11.50 %— — %84,306 11.50 %
Tier 1 Capital (to risk weighted assets):
Actual90,380 14.41 %97,902 15.61 %33,545 4.57 %55,546 7.58 %
To be Well Capitalized(1)— — 50,185 8.00 %— — 58,648 8.00 %
For capital adequacy37,625 6.00 %37,639 6.00 %44,001 6.00 %43,986 6.00 %
Individual minimum capital ratio(2)— — %62,731 10.00 %— — %73,309 10.00 %
Common Equity Tier 1 Capital
(to risk weighted assets):
Actual82,380 13.14 %97,902 15.61 %25,545 3.48 %55,546 7.58 %
To be Well Capitalized(1)— — 40,775 6.50 %— — 47,651 6.50 %
For capital adequacy28,219 4.50 %28,229 4.50 %33,000 4.50 %32,989 4.50 %
Individual minimum capital ratio(2)— — %62,731 10.00 %— — %73,309 10.00 %
Tier 1 Leverage Capital (to average assets):
Actual90,380 9.32 %97,902 10.10 %33,545 3.50 %55,546 5.79 %
To be Well Capitalized(1)— — 48,479 5.00 %— — 47,948 5.00 %
For capital adequacy38,785 4.00 %38,783 4.00 %38,368 4.00 %38,358 4.00 %
Individual minimum capital ratio(2)— — %87,262 9.00 %— — %86,306 9.00 %
(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. Under the OCC Agreement the Bank will not be designated as Well Capitalized until the OCC has evaluated the sustainability of the minimum capital ratios.
(2) The Capital ratios established by the OCC began to be required on April 17, 2024. It was not applicable to periods prior to that date and does not apply to bank holding companies - the Company.