Patriot National Bancorp, Inc. (NASDAQ: PNBK), the parent company of Patriot Bank, NA announced its $ 119 million acquisition of American Challenger Development Corp., with the aim of creating the largest digital challenger bank.

What happened: The Patriot, headquartered in Stamford, Connecticut, will conduct a reverse affiliate merger that will make American Challenger its affiliate. Following the transaction, Patriot will operate in two divisions: the Patriot Bank division which will continue the existing activities of the bank and the US Challenger division which will focus on digital banking.

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

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What happens next: Michel Carrazza, president of Patriot, predicted that the combined entity “will become the world’s largest digital bank,” adding that Patriot customers “will benefit from an expanded range of services and a state-of-the-art banking experience, while that shareholders should benefit from the compelling value that is being created. “

Carrazza will become vice president of the new combined entity while the founder, chairman and chairman of the American Challenger Felix Scherzer will become president and Raymond J. Quinlan, CEO of American Challenger, will assume the role of Managing Director.

“We are building a digital bank that will leverage the best of technology and operational excellence to serve our customers and our communities,” said Quinlan. “This will be evident in the design and pricing of our banking products, in our delivery of high quality personalized services 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 goal-oriented financial institution. “

What else happened: In a concurrent announcement, Patriot entered into separate deals with investors consisting of a private placement totaling approximately $ 540 million in equity as part of its $ 890 million merger recapitalization.

In addition, American Challenger has entered into a terms sheet that would result in a strategic partnership with Sunlight Financial LLC, the financing platform for the improvement of residential solar and energy efficient Sun Financial Management Inc., on a new multi-year loan purchase program of up to $ 1.75 billion.

“As a responsible, full-service digital bank, we will focus on lending in ways that help communities and the planet, with the intention of investing more than half of its assets in supporting sustainability, local community and good health, ”Scherzer said. noted.

Patriot National Bancorp commercial action: As of 12:50 p.m. ET, the company’s shares were trading at $ 13.40, up 34% from the opening. The stock’s 52-week range runs from $ 6.85 to $ 16.70.

Photo: Patriote Bank