Connecticut-based Patriot National has entered into an agreement with the Office of the Comptroller of the Currency (OCC) to address a series of regulatory violations and operational shortcomings.

According to a filing with the Securities and Exchange Commission (SEC) in the last week, the OCC identified “unsafe or unsound practices” tied to the bank’s strategic and capital planning, anti-money laundering (AML) compliance, payment oversight, credit administration, and risk management.

The OCC’s findings mean Patriot National Bank is not classified as an “eligible bank” for certain regulatory purposes. In response, the bank has committed to taking extensive corrective actions.

Under the agreement, Patriot must establish a compliance committee by January 31. This committee, comprising at least three members, will oversee the bank’s adherence to the OCC’s mandates. Within 30 days, the committee must submit an initial report detailing the bank’s progress on remedial actions and objectives. Quarterly updates will follow.

Additionally, the OCC has directed Patriot to maintain a common equity tier 1 capital ratio of no less than 10% by February 25.

The bank has also been ordered to submit a comprehensive strategic plan outlining its approach to risk management, earnings improvement, operational growth, and other key priorities.

The bank’s leadership has undergone a significant shake-up as part of its restructuring efforts. Earlier this month, Patriot appointed Steven Sugarman as its new president, tasking him with raising capital and steering the company through its restructuring process.

Sugarman’s mandate includes strengthening the bank’s capitalization, enhancing its strategic plan, and bolstering regulatory compliance through updated policies and internal controls.

The leadership overhaul continued with the permanent appointment of David Finn as chief financial officer, effective January 14. Finn had served as interim CFO since October 2024 and has been instrumental in managing the bank’s financial restructuring.

Patriot National’s current struggles follow a challenging year during which it reported a $27 million loss for the quarter ending September 30, 2024 and revealed its total assets declined from $1.09 billion in 2023 to $974.1 million as of September 30.

The bank’s financial difficulties were compounded by a failed merger with neobank American Challenger Development Corp. in July 2022. The deal collapsed after the parties were unable to meet certain closing conditions, prompting Patriot to explore alternative capital markets and strategic initiatives.

The OCC agreement also requires Patriot to implement a written risk management framework, a roadmap for remedial actions to achieve Bank Secrecy Act (BSA) compliance, and a comprehensive AML risk management plan. The bank must address deficiencies in its suspicious activity monitoring program, fraud detection systems, and institution-wide risk assessments. Specific deadlines have been established to ensure these measures are implemented promptly.

The bank’s compliance efforts will include an emphasis on prepaid card products and suspicious activity reporting, areas flagged by the OCC as requiring urgent attention. Patriot National Bank’s leadership expressed optimism about its ability to overcome these challenges. “Our primary focus is to ensure that Patriot is well-capitalized, operationally sound, and compliant with all regulatory requirements,” Sugarman said in a statement earlier this month.

The bank’s progress will be closely monitored by both the OCC and investors as it works to regain stability and restore confidence. For now, Patriot faces a long road to recovery as it grapples with financial losses, regulatory scrutiny, and the need for operational overhaul.