Stamford, Connecticut-based Patriot National Bank has agreed to take remedial steps after the Office of the Comptroller of the Currency found the bank in “troubled condition” and not an “eligible bank” for certain regulatory purposes, according to a Securities and Exchange Commission filing Tuesday.
The OCC has found “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, the agreement noted.
Patriot must appoint a compliance committee by Jan. 31, of at least three members to ensure the bank adheres to the OCC agreement.
The committee, within 30 days, must submit a report detailing progress on corrective actions and goals set by the OCC – and follow up quarterly.
The OCC wants the bank to achieve and maintain a common equity tier 1 capital ratio of at least 10% by Feb. 25, according to the agreement.
Patriot also must submit a written strategic plan outlining the objectives of the bank’s overall risk profile, earnings performance, growth, and operational aspects that the bank wants to develop.
Earlier this month, Patriot appointed Steven Sugarman as president to help raise capital and lead the company’s restructuring process.
Sugarman’s primary focus would be to make the company more “well capitalized” while addressing efforts to boost its strategic plan, establish regulatory compliance, and ensure that the firm’s platform has proper policies and internal controls, the company said.
Sugarman’s hire followed an evaluation process launched in December that aimed “to explore capital markets and strategic initiatives” – a result of a potential tie-up with neobank American Challenger Development Corp. that fell through in July 2022 over an inability to satisfy certain closing conditions.
Patriot named David Finn, the bank’s interim CFO and executive vice president since October, to the finance chief role permanently, effective Jan. 14, the SEC filing noted.
Under the OCC agreement, Patriot must also submit a written risk management framework, a detailed plan of the remedial actions necessary to achieve BSA compliance, a BSA/AML risk management plan for prepaid card products, suspicious activity monitoring and reporting program, an institution-wide BSA/AML risk assessment and review and report on fraud suspicious activity monitoring, within the given timeframes.
Patriot National reported a loss of nearly $27 million for the quarter ending Sept. 30. The company’s total assets declined to $974.1 million, from $1.09 billion, at the end of 2023.
