Patriot National recruits new president to assist with capital raise

Three weeks after announcing it would explore strategic options, Patriot National Bancorp in Stamford, Connecticut, has tapped Banc of California founder Steven Sugarman to help facilitate a capital raise. 

The $974 million-asset Patriot announced in a Securities and Exchange Commission filing late Tuesday that it had hired Sugarman as president of the holding company for a nominal annual salary of $120,000. Following a successfully executed capital raise, Patriot, parent to Patriot National Bank, said it would consider awarding Sugarman a performance bonus and giving him a long-term employment agreement with a pay hike. 

Sugarman has a background in raising capital for financial institutions. He helped recapitalize Pacific Trust Bank — later rebranded as Banc of California — in 2010. Sugarman was also part of a group that acquired and recapitalized Commerce Home Mortgage in Irvine, California, in 2018. He led an effort to recapitalize the Omaha, Nebraska-based Legent Clearing in 2011.

Patriot reported a $27 million loss for the quarter ended Sept. 30. The company’s results included the full valuation of a $25.1 million deferred tax asset, which resulted in a hit to capital. Patriot’s 9.29% total capital ratio on Sept. 30 fell short of the 11.5% threshold needed to qualify as well capitalized. Patriot reported a $4.5 million loss for 2023 driven by increased funding costs and a spike in the allowance for credit losses. 

Companies typically recognize a valuation allowance after concluding they might not be able to realize some or all of a deferred tax asset.  

Sugarman founded The Change Company in 2017 to lend to Black, Hispanic and low-income borrowers. Since then, Change has grown into one of the nation’s largest Community Development Financial Institution lenders. Since its certification as a CDFI in April 2018, Change has made approximately $7.3 billion in loans to low- and moderate-income borrowers, according to its website. 

In 2020, Sugarman led a group that sought to acquire Broadway National, a Black-owned bank in Los Angeles. Broadway spurned the bid and opted to merge with CFBanc Corp., parent of City First Bank. 

In 2021, Change Co. sought to link with a special purpose acquisition company helmed by Colin Kaepernik. The deal collapsed in December of that year due to disagreements over the former San Francisco 49ers quarterback’s promotional responsibilities. 

Though its footprint covers two of the most affluent markets in the country, Fairfield County in Connecticut and Westchester County in New York, Patriot has struggled to find its footing in recent years. It operated under a written agreement with the Office of the Comptroller of the Currency between November 2018 and September 2021. A planned merger with American Challenger Development Corp., a Stamford-based fintech, was terminated in July 2022.

Sugarman joined Banc of California in 2010 and was appointed CEO in 2012. He stepped down in January 2017.