STAMFORD – The financially troubled Patriot Bank took the first steps in meeting an agreement with federal regulator Office of Comptroller of the Currency (OCC) by replacing its CEO and entering into securities purchase agreements to raise more than $50 million in a private placement, the bank announced Thursday.
Patriot National Bancorp, which operates Patriot Bank, also announced the departure of CEO David Lowery and the execution of a long-term employment agreement with President Steven Sugarman. Sugarman previously served as the founder, chair, president and CEO of Banc of California; founder and chair of COR Clearing LLC; and continues to serve as Founder and CEO of The Change Company CDFI LLC.
Lowery will remain in his current role through April 15 or as otherwise determined by Lowery and Patriot National Bancorp, to ensure a seamless transition, the bank reported.
In January, the OCC found the bank took part in “unsafe or unsound practices” and violations of regulations related to strategic and capital planning, Bank Secrecy Act/anti-money laundering risk management, payment activities oversight, credit administration and concentrations risk management, according to a Jan. 22 report by Banking Dive.
At the time of the OCC report, the bank elevated interim CFO David Finn to CFO as of Jan. 14. He served in the interim capacity since October 2024. He also serves as executive vice president of the holding company and the bank.
As part of the agreement the city-based bank agreed to issue shares of common stock and non-voting preferred stock. Net proceeds from the offering will be used to increase the equity capital and strengthen the balance sheet of Patriot National Bancorp. Another part of the agreement called for the bank’s board to appoint a compliance committee of at least three members of which a majority shall be directors who are not employees or officers of the bank or any of its subsidiaries or affiliates.
“I am humbled by the strong investor demand to invest in Patriot Bank and our management team,” Sugarman said. “I am excited to have the opportunity to work with Patriot’s existing employees and to add additional directors, officers, and bankers to our team. The new capital will enable Patriot to meet the bespoke needs of its clients, safely and soundly. The future is bright for Patriot.”
Bank Chair Michael Carrazza expects the transition to new leadership will be seamless and put the bank in the right direction.
“The completion of the capital raise marks a positive inflection point for Patriot and will enable the bank to pursue the compelling market opportunity that exists,” Carrazza said. “We thank David Lowery for his leadership and his ability to navigate Patriot through this critical period. We appreciate David’s willingness to continue to ensure a seamless transition period and wish him great success in all his future endeavors.”
Chief Executive Officer David Lowery added, “I am proud to have helped lead the successful recapitalization of Patriot Bank and I thank the Patriot Bank employees for their hard work and support that made this possible.”
The private placement was led by Sugarman and affiliates of FlyHouse Management LLC.
Performance Trust Capital Partners LLC served as strategic advisor to the company and placement agent for the private placement. Michelman & Robinson LLP served as counsel for the lead investor and Blank Rome LLP, Pryor Cashman LLP, and Robinson & Cole LLP served as counsel for Patriot National Bank.
