
(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.

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.

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.

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.

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.

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.

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.

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.

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.


(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


(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


(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 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.

•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.

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.


	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


(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


(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


(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

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.

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.


(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



(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.