Courtesy photo / File

The parent company of Stamford-based Patriot Bank has received conditional approval from its federal regulator to move forward with the acquisition of American Challenger Development Corp.

Patriot National Bancorp Inc. said in a statement yesterday that the Office of the Comptroller of the Currency on June 30 had conditionally approved Patriot Bank’s application to substantially change its asset composition, required as part of the merger agreement between Patriot and American Challenger, also based in Stamford.

In addition to merging with American Challenger, the deal calls for Patriot to raise $875 million in capital. The OCC approval will terminate if the proposed transactions are not completed in six months.

“The receipt of OCC approval is a significant and necessary milestone that has been achieved toward completing our merger with American Challenger,” Michael Carrazza, Patriot’s chairman, said in the statement. “We are thrilled to have gained regulatory support for our forward business plan and intentions to create one of the largest digital-forward banks in the country.”

The closing of the capital raise and merger transaction remain subject to shareholder approval, the statement said. The bank added that it is working closely with American Challenger and investors to meet remaining closing conditions.

Patriot Bank had $925 million in assets as of March 31, according to FDIC data, and eight branches in Fairfield and New Haven counties, as well as one branch in Scarsdale, New York. American Challenger was formed in January 2020 to establish a new digital bank that would operate nationally.

The companies originally planned a reverse subsidiary merger, but the merger agreement was amended earlier this year to have Patriot as the surviving entity.