Patriot National Bancorp is no longer the Connecticut national bank living under a formal supervisory agreement. The Office of the Comptroller of the Currency ended the January Formal Agreement on the last day of June, and a week later told the board that Patriot Bank is no longer in troubled condition. That sequence is the entire equity story in miniature. Steven Sugarman, the former Banc of California chief who led the recapitalization, now has a charter that can raise wholesale funds, use reciprocal deposits, and spend less on examiners and consultants. The market still has to decide whether the cleanup produced a bank that earns its cost of capital, or only a bank that is allowed to try.
The second quarter delivered the first GAAP profit of the rebuild, and it was thin enough to invite both readings. Net income came in at $143 thousand against a year-ago loss of $5 million. Net interest income more than doubled as the loan book was rebuilt and securities yields rose. The margin printed at 3.03 percent. A year earlier it sat at 1.85 percent. Those are real operating gains. They sit next to a cost base that is still built for remediation, a credit-card receivable that did not sell, and a material weakness in internal control that the latest quarterly filing says remains open. The first half is still a net loss. One clean quarter does not retire that fact.
The stock last changed hands near $0.97, or about 1.3 times stated book. Book itself is $89 million after a year of dilution, accumulated deficit, and a large unrealized loss in the bond book. Trailing earnings are still negative, so the multiple that matters is price to tangible book, not a price-to-earnings story that does not yet exist. The open question is simple. Does the post-agreement franchise convert a three-percent margin and a high-net-worth deposit push into repeatable earnings, or does expense, third-party payments risk, and leftover credit noise keep the print at breakeven?