Grasshopper Bank has merged with Auto Club Trust (ACT) in a cash and stock transaction.
Founded in 2019, Grasshopper Bank is a digital bank based in New York City, offering a range of digital banking solutions, including checking and savings accounts, flexible lending options, and API banking platforms.
A subsidiary of Auto Club Group (ACG), ACT is a financial institution offering various banking services, including auto loans, refinancing, and personal loans for new and used vehicles, small trucks, SUVs, and minivans. It is affiliated with American Automobile Association (AAA), a federation of motor clubs in North America, providing services like roadside assistance, travel support, and insurance, to its members.
With the transaction, which will see the merging of around $1.4 billion in assets, the bank becomes the exclusive provider of deposit and lending solutions for more than 13 million AAA and ACT club insured members.
As part of the transaction, Grasshopper raised approximately $34 million in new equity and ACG was issued an ownership stake in Grasshopper. Upon closing, the acquisition resulted in 31 per cent accretion to Grasshopper’s tangible book value, the firm said in a statement.
Grasshopper Bank said it will continue to strengthen its existing business lines and grow its product offering for existing customers.
“We’re excited to bring our industry-leading digital platform and exceptional service to The Auto Club Group’s members,” said Michael Butler, Grasshopper Bank’s chairman and chief executive. “By uniting our digital expertise with AAA’s legacy of trust and reliability, we have a unique opportunity to enhance financial services for current members while attracting new ones.”
Current chief information officer at ACT Jai Raju will join the Grasshopper Bank executive team as head of data, a new line that aims to strengthen the organisation’s customer service by leveraging data, automation and artificial intelligence (AI).
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