Conn.-based bank sells $65 million in bad loans, shuts branches

By David Jones | March 04, 2011 01:33PM

Stamford, Conn.-based community bank Patriot National Bancorp said it will close four of 19 branches and has sold $65 million in non-performing loans and real estate to ES Ventures One, in a bid to restore the lender to improved fiscal health.

The lender, which has one branch on Manhattan’s West Side, sold the assets after a two-year struggle to recover from the economic downturn.

Bank officials said they had multiple bids for the assets, which have accumulated over the past two years. They declined to characterize how much of a gain or loss the bank assumed on the sale, but said there were multiple bids for the portfolio, which includes mostly loans for single-family homes and a few commercial properties.

“We didn’t take these steps because we had a concern about the market,” said Chris Maher, president and chief executive of the bank. “We took these steps because we are not a company that’s in the business of owning real estate.”

The lender entered a February 2009 agreement with the Office of the Comptroller of the Currency, one of several federal agencies that regulate banks. Patriot agreed to take several steps to reduce its risk, lower its concentration of commercial real estate loans and also implement a program to raise capital.

For the first nine months of 2010, the lender lost $11.3 million, compared to a $19.7 million loss in the year-ago period.

In October, PNBK Holdings, an entity led by investor Michael Carrazza, completed a deal to recapitalize Patriot National, infusing the bank with $50 million.

Carrazza was named chairman of the new company, which also appointed four new members to the board of directors. Maher, a veteran banking executive, was tapped to be president and CEO.

The bank will be closing branches in Wilton, Fairfield, Stratford and Old Greenwich, Conn., resulting in a pre-tax charge against earnings of $3 million and annual cost savings of $1.8 million. The closures are scheduled to be completed before June 30.

The lender has three branches in New York State, including one at 45 West End Avenue in Manhattan.

The sale requires the approval of Patriot’s banking regulator and is expected to close before the end of the month.