The parent company of Stamford-based Patriot Bank has agreed to acquire American Challenger Development Corp. in a reverse subsidiary merger that will see American Challenger’s leadership take over management of the combined entity.
Patriot National Bancorp said in a statement today that it will acquire American Challenger Development Corp., which is also based in Stamford, in a deal valued at approximately $119 million. Through the reverse subsidiary merger, American Challenger will become a wholly owned subsidiary of Patriot, and the combined company will adopt American Challenger’s business plan and technology.
“The merger will create a purpose-driven, digital-first national bank with highly efficient operations to generate industry leading financial performance and a technology driven banking experience that will offer competitive rates and a premium customer experience,” Patriot Bank and American Challenger said in a joint statement.
Following the merger, Patriot Bank will operate as two divisions, according to the statement: the Patriot Bank Division, which will continue to operate Patriot Bank’s existing business, and the American Challenger Division.
American Challenger was formed in January 2020 to establish a new digital bank that would operate nationally. About a year later, the Office of the Comptroller of the Currency gave the company preliminary conditional approval for a charter.
The boards of directors of Patriot and American Challenger have approved the deal, which is expected to close in the first quarter of 2022, subject to the regulatory approvals and other closing conditions. Patriot’s shareholders will also need to approve the deal.
The deal calls for American Challenger common shareholders to receive 4,092 shares of Patriot common stock for each American Challenger common share they own, and American Challenger preferred shareholders to receive an amount in cash equal to $75,413.22 per share, as well as any accrued and unpaid dividends on the American Challenger preferred stock, according to the statement.
As part of the deal, Patriot also plans to recapitalize and raise $890 million. The bank has already entered into definitive agreements with investors for $540 million and plans to raise another $350 million
After the merger, Patriot stock will continue to trade under the ticker PNBK. Immediately before the merger, Patriot will change its jurisdiction of incorporation from Connecticut to Delaware, the statement said.
Michael Carrazza, Patriot’s current chairman, will remain on the board of directors as vice-chair after the merger.
“We’re excited to have engineered this industry-disrupting merger,” Carrazza said in the statement. “The combination transforms Patriot to what will become the largest digital bank in the U.S. Customers will benefit from an expanded array of services and a tech-savvy banking experience, while shareholders should benefit from the compelling value that will be created.”
He added that Patriot’s team would “remain intact.” Patriot Bank’s current executive team will lead the Patriot Bank Division of the combined entity, according to the statement, including Patriot Bank’s CEO Robert Russell.
American Challenger’s executives will take over leadership of the combined company, including Raymond J. Quinlan, CEO; Felix Scherzer, chairman and president; Andrew Morgan, chief financial officer; Betsy Wynnick, chief risk officer and former chief risk officer of United Bank; and Steve Schlussler, chief credit officer.
“We are building a digital bank that will leverage the best in technology and operational excellence to serve our customers and communities,” Quinlan said in the statement. “This will be evident in the design and pricing of our banking products, in our delivery of superior personal service and in our clear commitment to corporate social responsibility. We believe in ‘banking for good’ and through our actions we will demonstrate that we are a purpose-driven financial institution.”
