As of June 30, 2026 and December 31, 2025, the Company had no SBA loans held for sale. During the three and six months ended June 30, 2026 and 2025, no SBA loans previously classified as held for sale were transferred to held for investment.

Loans serviced for others totaled approximately $30.6 million and $32.1 million at June 30, 2026 and December 31, 2025, respectively. The related servicing asset was $0.6 million at both June 30, 2026 and December 31, 2025 and is included in other assets on the Consolidated Balance Sheets. Servicing assets represent the estimated fair value of retained servicing rights, net of servicing costs, at the time loans are sold. Servicing assets are amortized in proportion to, and over the period of, estimated net servicing revenues. Impairment will be evaluated based on stratifying the underlying financial assets by date of origination and term. Fair value is determined using prices for similar assets with similar characteristics, when available, or based upon discounted cash flows using market-based assumptions. Any impairment, if temporary, would be reported as a valuation allowance.

The Company retains servicing rights on certain SBA loans previously sold to third parties. Serviced loans sold to others are not included in the accompanying Consolidated Balance Sheets. Loans serviced for others totaled approximately $30.6 million and $32.1 million at June 30, 2026 and December 31, 2025, respectively. The related servicing asset was $0.6 million and $0.6 million at both June 30, 2026 and December 31, 2025 and is included in other assets on the Consolidated Balance Sheets. Income and fees collected for loan servicing are credited to non-interest income when earned, net of amortization on the related servicing assets.

In the second quarter of 2025, the Bank suspended the residential mortgage originations. As of June 30, 2026 and December 31, 2025, the Company had no residential mortgage loans held for sale. The related mortgage servicing asset was $70 thousand and $71 thousand, respectively. During the three and six months ended June 30, 2026, no residential mortgage loans were transferred from held for sale to held for investment. For the three and six months ended June 30, 2025, $3.8 million residential mortgage loans were transferred to held for investment from held for sale.

The following table presents an analysis of the activity in the servicing assets for SBA loans and residential mortgage loans for the three and six months ended June 30, 2026 and 2025:


	Three Months Ended June 30,				Six Months Ended June 30,
(In thousands)	2026		2025		2026		2025
Beginning balance	$	650	$	764	$	660	$	766
Servicing rights capitalized	—		22		—		48
Servicing rights amortized	(12)		(20)		(22)		(34)
Servicing rights disposed	—		(20)		—		(34)
Ending balance	$	638	$	746	$	638	$	746

Patriot is party to program management arrangements under which the Bank originates commercial credit card receivables for certain card programs. The applicable card program manager markets the program and purchases the related receivables from the Bank shortly after origination. These receivables are classified as loans held for sale. As of June 30, 2026 and December 31, 2025, the Bank had credit card loans held for sale totaling $23.7 million and $24.5 million, respectively. The credit card loans are sold to the buyer as a whole loan sale transaction, priced at par, thus there is no servicing asset or gain or loss on sale.

At June 30, 2026, approximately $20.0 million of credit card receivables that had been expected to be sold to a program manager remained on the Bank’s Consolidated Balance Sheets after the anticipated sale was not completed. Management determined that classification of these receivables as held for sale remained appropriate based on the Bank’s continuing intent to sell the receivables and the short-term nature of the portfolio. Accordingly, the receivables remain outside the scope of the current expected credit loss model.

During the quarter ended June 30, 2026, the Company recorded a valuation allowance of approximately $5.5 million on these receivables through other expense, resulting in a carrying value of approximately $14.6 million at June 30, 2026. Fair value was estimated using discounted expected cash flows and significant unobservable inputs, including expected collections, credit losses, timing of collections and costs and uncertainties associated with administering and resolving the portfolio. Accordingly, the measurement is classified within Level 3 of the fair value hierarchy.

In connection with the program manager’s failure to purchase certain receivables and other breaches of its contractual obligations, the Bank incurred losses subject to contractual indemnification. Upon the program manager’s breach, the Bank exercised its contractual indemnification and setoff rights, including its contractual right to apply funds on deposit against obligations owed to the Bank, and applied approximately $5.3 million of the program manager’s deposit balances against such indemnifiable losses. The Company recognized this amount as other income during the second quarter of 2026, partially offsetting the $5.5 million fair value adjustment recorded on the related credit card receivables.

The Bank is pursuing additional contractual, insurance and legal remedies for losses not covered by the amounts applied; no potential recoveries from such additional remedies have been recognized.