Patriot National Bancorp Buys American Challenger For $119M, Seeks To Create Largest US Digital Challenger Bank

Patriot National Bancorp, Inc. PNBK, the parent company of Patriot Bank, N.A. has announced its $119 million acquisition of American Challenger Development Corp., with the goal of creating the largest digital challenger bank.

What Happened: The Stamford, Connecticut-headquartered Patriot will conduct a reverse subsidiary merger that will result in American Challenger as its subsidiary. Following the transaction, Patriot will operate as two divisions: the Patriot Bank Division that will continue the bank’s existing business and the American Challenger Division that will focus on digital banking.

American Challenger is also based in Stamford and was founded in 2020 with the goal of developing best-in-class digital banking technology and software. Patriot will adopt American Challenger’s proprietary technology platform for its operations to create a digital challenger bank, an app-based financial services provider that conducts business entirely online and does not operate physical locations.

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What Happens Next: Michael Carrazza, chairman of Patriot, predicted the combined entity “will become the largest digital bank,” adding that Patriot’s customer base “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.”

Carrazza will become vice chairman of the new combined entity while American Challenger Founder, Chairman and President Felix Scherzer will become chairman and Raymond J. Quinlan, CEO of American Challenger, will serve as chief executive.

“We are building a digital bank that will leverage the best in technology and operational excellence to serve our customers and communities,” Quinlan said. “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.”

What Else Happened: In a simultaneous announcement, Patriot entered into separate agreements with investors consisting of a private placement in an aggregate principal amount of approximately $540 million as part of its $890 million merger recapitalization.

Separately, American Challenger entered into a term sheet that would result in a strategic partnership with Sunlight Financial LLC, the residential solar and energy-efficiency home improvement financing platform of Sun Financial Holdings Inc., with respect to a new, multi-year loan purchase program for up to $1.75 billion.

“As a responsible, full-service digital bank, we will be focused on lending in ways that help communities and the planet, with the intent of investing over half of its assets in support of sustainability, local community, and good health,” Scherzer said.

Patriot National Bancorp Trading Action: As of 12:50 p.m. ET, the company's shares were trading at $13.40, up 34% from the open. The stock's 52-week range spans $6.85 to $16.70.

Photo: Patriot Bank