Patriot National Bancorp has appointed Banc of California founder Steven Sugarman as president and member of the company’s board to aid in a capital raise and bring the company and the bank to a “well capitalized” status.
The hire comes close on the heels of launching an evaluation process last month “to explore capital markets and strategic initiatives.”
Patriot National, based in Stamford, Connecticut, tapped Sugarman because the board believed he was “well suited to successfully lead the Company’s strategic restructuring” process, according to a Monday filing with the Securities and Exchange Commission.
Sugarman will receive an annual base salary of $120,000 until the capital raise is completed successfully. The board will then consider him for a performance bonus based on his contribution to the capital raise and a long-term employment agreement with compensation aligned to peer financial institutions, the filing said.
His role will focus on addressing the company’s efforts to raise capital, boost its strategic plan, establish regulatory compliance, and ensure that the firm’s platform has proper policies and internal controls in place.
“[Sugarman’s] serial success in building bank and financial institution franchises on behalf of their shareholders was a critical consideration in selecting him for this appointment,” Patriot's Chairman Michael Carrazza said in a statement to American Banker.
Sugarman is the founder and CEO of The Change Company CDFI and serves as of counsel at Michelman & Robinson. Sugarman founded The Change Company in 2017 to extend lending and banking to Black, Latino, and low-income borrowers and communities. It received Community Development Financial Institution certification from the Treasury Department in May 2018. The company has given roughly $7.3 billion in loans to low- to moderate-income borrowers since it became a CDFI, according to the company’s website.
Sugarman was instrumental in the merger of Pacific Trust Bank and The Private Bank of California, which merged to form Banc of California in 2013. He had served as a director of First PacTrust Bancorp, the holding company of Pacific Trust Bank, in 2010. Following the merger, he led the combined bank until 2017.
Sugarman was CEO of COR Securities Holdings from 2011 until its sale to Axos Bank in 2019. He also founded COR Capital LLC and was a founding partner of GPS Partners, a $2 billion investment advisory firm.
“This role aligns closely with my previous experiences at Pacific Trust Bank, Legent Clearing, and Commerce Home Mortgage, where I had the opportunity to recapitalize and reorganize each financial institution to drive their turnaround success,” Sugarman said in a statement to American Banker. “I am confident that we will achieve similar success at Patriot.”
Patriot National reported a loss of $27 million for the quarter ending Sep. 30, 2024, compared to a loss of $3.8 million in the same quarter the previous year. The company's total assets declined to $974.1 million, from $1.09 billion at the end of 2023.
Patriot National has been seeking targeted strategic initiatives since its deal with neobank American Challenger Development Corp. fell through in July 2022 due to the parties’ inability to satisfy certain closing conditions related to the merger and recapitalization. The deal required Patriot National to raise at least $875 million.
Working with investment bank Performance Trust Capital Partners, the firm is gauging potential opportunities, including strategic partnership or merger and acquisition interest. However, Patriot National “expects a capital infusion or strategic partnering would more efficiently facilitate conditions for the Bank’s return to asset and loan growth,” according to last month’s SEC filing.
