STAMFORD, Conn.--(BUSINESS WIRE)--American Challenger Development Corp. (“American Challenger”), today announced that it and Patriot National Bancorp (Patriot), the holding company for Patriot Bank, N.A., have mutually agreed to terminate their merger agreement, previously announced on November 14, 2021, under which American Challenger was to merge with and into Patriot, with Patriot surviving (the “Merger”), and Patriot would have completed a capital raise of at least $875 million to enable the pro forma company to implement American Challenger’s business plan (the “Recapitalization”). The termination was approved by both companies’ boards of directors after careful consideration and in light of the parties’ expected inability to satisfy certain of the closing conditions to the Merger and Recapitalization.
American Challenger is exploring a sale of the company and has hired Citi as its strategic advisor in this process.
American Challenger is a turn-key digital bank technology and operations platform ready to launch a national retail deposit, lending and commercial operation. American Challenger received initial conditional approval from the Office of the Comptroller of the Currency (“OCC”) for the formation of a de novo national bank on December 23, 2020, and Patriot Bank received conditional OCC approval to implement American Challenger’s business plan on June 30, 2022, in satisfaction of one of the conditions to completion of the Merger.
The company’s modern, cloud-based, proprietary technology generates significant operating efficiencies that it believes will allow any bank to reduce the cost-to-income ratio for its digital operations to below 30%. The company’s operating efficiency will allow it to offer better deposit rates for the consumer while translating into expected all-in funding cost savings of approximately 150 basis points.
American Challenger has fully developed its brand identity "Cache," including a marketing and launch plan, as well as a state-of-the-art digital and highly personal human experience. Customers can open an account in less than one minute and close a mortgage in as little as 20 days with a single point of contact banker via video.
In addition to building its proprietary asset origination capabilities, American Challenger has a signed pipeline for first-lien secured purchase assets as well as corresponding sweep funding arrangements. American Challenger’s business plan contemplates asset growth of more than $10 billion over three years, with a target return on minimum required common equity of approximately 25%.
American Challenger can be the turn-key solution for any domestic or foreign bank to immediately launch a profitable US nationwide digital DTC bank and/or generate significant savings by replacing its existing bank technology stack via American Challenger’s core migration tool.
About American Challenger Development Corp.
American Challenger was formed in January 2020 for purposes of establishing a new digital national bank headquartered in Stamford, CT and developing best-in-class digital banking technology and software, which it has developed in partnership with Temenos, a global leader in core banking software solutions.