SCHEDULE: CEO Sugarman Boosts Stake in Patriot National Bancorp

Steven Sugarman and his trust increased their beneficial ownership in Patriot National Bancorp to 9.5% through stock conversions and RSU vesting.

Summary

• Steven Sugarman, President and CEO of Patriot National Bancorp Inc., along with the Steven and Ainslie Sugarman Living Trust and Ainslie Sugarman, collectively increased their beneficial ownership.
• On July 3, 2025, 25,000 shares of Series A Preferred Stock held by the Trust automatically converted into 2,000,000 shares of non-voting common stock.
• On October 20, 2025, the Trust converted these 2,000,000 shares of non-voting common stock into 2,000,000 shares of voting common stock, with no additional consideration paid.
• Steven Sugarman holds an aggregate of 5,749,551 restricted stock units (RSUs) granted under his Employment Agreement with the Issuer.
• On March 25, 2026, 2,089,043 shares of the Issuer's common stock were delivered to Mr. Sugarman upon the expiration of the restricted period for 4,049,593 RSUs granted on March 20, 2025.
• 1,960,550 shares were withheld to cover Mr. Sugarman's tax obligations related to the RSU vesting.
• The current beneficial ownership reported is 11,109,021 shares of voting common stock, representing 9.5% of the class.
• This beneficial ownership excludes 552,927 RSUs granted effective July 1, 2025, and 1,147,031 RSUs granted effective October 1, 2025, which are subject to future vesting.
• Mr. Sugarman's beneficial ownership is contractually limited to not exceed 9.99% of the Issuer's voting securities, in compliance with Federal Reserve Board regulations.

Sentiment

Score: 7

Explanation: StockSavvy.ai views this as a moderately positive development, reflecting increased insider alignment and the execution of pre-established equity compensation and conversion agreements, which are routine but reinforce management's commitment.

Positives

• Increased beneficial ownership by the CEO and related entities signals strong alignment of management interests with shareholders.
• The conversion of preferred stock and non-voting common stock into voting common stock simplifies the ownership structure for the reporting persons.

Negatives

• A significant portion of vested RSUs (1,960,550 shares) was withheld to cover tax obligations, reducing the immediate net share increase for the CEO.

Risks

• The agreement limiting Mr. Sugarman's beneficial ownership to 9.99% of voting securities could restrict his ability to further increase his stake beyond this threshold, potentially limiting future accumulation of shares if it would exceed Federal Reserve Board regulations relating to bank control.

Future Outlook

The filing primarily reports past events related to stock conversions and RSU vesting. It notes that additional RSUs granted effective July 1, 2025, and October 1, 2025, are subject to future vesting, which will impact beneficial ownership when they vest.

Management Comments

• Steven Sugarman's beneficial ownership of the Issuer's stock shall not be more than 9.99% of the number of shares of its voting securities issued and outstanding, pursuant to an agreement with the Issuer, to the extent it would exceed Federal Reserve Board regulations relating to bank control.

Industry Context

StockSavvy.ai notes that increased insider ownership, particularly by a CEO, often signals confidence in the company's future prospects and aligns management's interests with those of shareholders. The 9.99% ownership limitation is a common regulatory constraint for bank holding companies, designed to prevent any single entity from gaining undue control without additional regulatory approvals, reflecting the highly regulated nature of the banking sector.

Comparison to Industry Standards

• A CEO holding a 9.5% stake in their company, as seen with Steven Sugarman in Patriot National Bancorp, is a significant level of insider ownership. This is generally viewed positively by investors as it indicates strong alignment with shareholder interests, often exceeding the average insider ownership percentages observed in many publicly traded companies.
• In the regional banking sector, such substantial insider stakes are not uncommon, particularly in smaller to mid-sized institutions where founders or long-serving executives maintain significant equity positions. For example, similar levels of insider ownership can be observed in community banks like Bank of Marin Bancorp or First Foundation Inc., where key executives and their families often hold meaningful percentages, reinforcing stability and long-term commitment.
• The 9.99% ownership cap is a standard regulatory measure for bank holding companies, ensuring compliance with Federal Reserve Board regulations and preventing any single entity from triggering 'control' thresholds that would necessitate more stringent regulatory oversight. This is a common practice across the U.S. banking industry, including institutions comparable to Patriot National Bancorp.

Corporate Governance

Related Party Transactions

• The conversion of Series A Preferred Stock and non-voting common stock into voting common stock involved the Steven and Ainslie Sugarman Living Trust, a related party.
• The grant and vesting of Restricted Stock Units (RSUs) to Steven Sugarman, the President and CEO, are transactions with a related party under his employment agreement.

Stakeholder Impact

• Shareholders: Increased insider ownership by the CEO can be seen as a positive signal of confidence in the company's future, potentially aligning management's long-term interests with those of other shareholders.
• Regulatory Authorities: The adherence to the 9.99% ownership limit demonstrates compliance with Federal Reserve Board regulations, which is crucial for maintaining regulatory standing in the banking sector.

Next Steps

• Future vesting of 552,927 Restricted Stock Units granted effective July 1, 2025.
• Future vesting of 1,147,031 Restricted Stock Units granted effective October 1, 2025.

Key Dates

Recommendation

The filing details routine conversions and RSU vesting for the CEO, which are pre-planned events and do not introduce new fundamental information to warrant a change in investment thesis. While increased insider ownership is generally positive, it's an expected outcome of existing agreements and unlikely to significantly alter the company's valuation or outlook in the short term.

Keywords

Patriot National Bancorp, Steven Sugarman, Schedule 13D, beneficial ownership, common stock, RSU vesting, stock conversion, bank control, corporate governance, insider ownership