Patriot National Bancorp in Stamford, Connecticut, said it raised more than $50 million of capital via a private placement and will soon have a new top executive.
The $974 million-asset Patriot in January hired Banc of California founder Steven Sugarman to spearhead the capital raise. Sugarman, who joined Patriot as president and a director of the holding company, led the private placement and will soon be in line to become Patriot's top executive.
The company on Thursday also announced the pending departure of CEO David Lowery on April 15 and the execution of a long-term employment agreement with Sugarman. The company did not say if Sugarman's title would change.
"The new capital will enable Patriot to meet the bespoke needs of its clients, safely and soundly. The future is bright for Patriot," Sugarman said in a press release.
Patriot, which has yet to report its fourth-quarter earnings, said in a regulatory filing last month that it expected to report a $9.5 million net loss, compared with $900,000 in net income a year earlier. The company cited a $7.7 million loan-loss provision linked to two large commercial real estate loans.
In the third quarter, Patriot reported a $27 million third-quarter loss that reflected the full valuation of a $25.1 million deferred tax asset.
After the third-quarter loss, Patriot hired an investment bank and launched a strategic review, including a possible sale, but the company ultimately partnered with Sugarman to recapitalize the bank by issuing shares of common stock and non-voting preferred stock to a group of accredited investors. Net proceeds from the offering will be used to increase the equity capital and strengthen the balance sheet of Patriot National and its banking subsidiary, Patriot Bank, the company said.
"The completion of the capital raise marks a positive inflection point for Patriot," Michael Carrazza, the company's chairman, said in the release.
Sugarman previously helped recapitalize Pacific Trust Bank in 2010 and later rebranded it as Banc of California. He was also part of a group that acquired and recapitalized Commerce Home Mortgage in Irvine, California, in 2018. And he led an effort to recapitalize the Omaha, Nebraska-based Legent Clearing in 2011.
Patriot's strategic evaluation and capital raise followed the
The deal was nixed after the two companies determined they could not "satisfy certain of the closing conditions to the merger and recapitalization," according to a press release from American Challenger at the time. The deal had called for Patriot to raise at least $875 million of fresh capital.
Since then, the bank has struggled to find its footing. Amid deterioration in its commercial and consumer loan books, as well as high deposit costs tied to elevated interest rates, the bank reported a $4.2 million loss for 2023. It lost $30 million over nine months ended Sept. 30, 2024.
The bank has seven branches in Connecticut and one in Scarsdale, New York, according to its website.
Patriot's private placement was co-led by affiliates of FlyHouse Management. Performance Trust Capital Partners served as strategic advisor to the company and placement agent.
