Grasshopper Bancorp and Auto Club Trust Unveil Merger Plans

Grasshopper Bancorp and Auto Club Trust Announce Merger

Grasshopper Bancorp, Inc. and Auto Club Trust, FSB have today made headlines with their announcement of a definitive merger agreement. This agreement states that Grasshopper's banking arm, Grasshopper Bank, N.A., will be acquiring Auto Club Trust through a combination of cash and stock transactions. The boards of directors from both companies have unanimously endorsed this plan, which is contingent on common closing conditions, including the necessary regulatory approvals. The transaction is anticipated to close in the first half of the upcoming year.

Overview of Auto Club Trust

Auto Club Trust is a federally chartered savings bank boasting total assets approaching $495 million. It is based in Dearborn, Michigan, and operates as a subsidiary of The Auto Club Group, the second-largest AAA club in North America. Together with its property-casualty insurance affiliate, the Auto Club Insurance Association, Auto Club Trust delivers a vast array of membership and financial services to over 13 million members across 14 states. This includes a range of offerings from property and casualty insurance to life insurance.

Grasshopper Bank’s Vision

With assets totaling about $835 million, Grasshopper Bank has cemented its position as a digital bank that focuses on serving the business and innovation sectors. The bank has a robust history of embracing technology, which allows it to offer customers a seamless banking experience both directly and via white-label solutions through its embedded finance platform. Post-merger, Grasshopper Bank aims to enhance their consumer and business banking programs, becoming the primary banking provider for AAA members across the ACG's territory.

Leadership Statements

Michael Butler, Chairman and CEO of Grasshopper and Grasshopper Bank, expressed his enthusiasm regarding the merger, stating that it merges Grasshopper’s digital prowess with Auto Club Trust's exemplary service known to AAA members. He believes that this partnership will significantly improve the financial services offered to the community.

Joseph J. Richardson, President and CEO of The Auto Club Group, added that this merger will empower them to extend banking products to their members. The collaboration is expected to blend the core capabilities and resources of both institutions, enhancing their financial service offerings.

Key Transaction Highlights

This merger will create a high-performing financial institution that will hold approximately $1.4 billion in assets. Grasshopper Bank will become the exclusive provider of certain depository and lending services tailored to over 13 million AAA members in the ACG territory, significantly enlarging its market engagement.

Financial Implications

This transaction includes a commitment from Grasshopper to secure roughly $35 million in new equity capital, and it will grant ACG a 4.9% stake in Grasshopper. Additionally, this merger is projected to enhance Grasshopper's tangible book value by 48.5% at the time of completion.

The Future of Grasshopper Bank

Looking ahead, Grasshopper Bank plans to maintain its operations across various lines of business following the merger. Its focus will remain on delivering tailored financial services to its existing client base as well as the new one made available through AAA.

About Grasshopper Bank

Grasshopper Bank stands out as a digital banking institution with a strong focus on the business and innovation sectors. With its impressive suite of financial products and industry expertise, it aims to revolutionize banking experiences, stepping away from traditional methods. The bank caters to various segments, including small businesses and startups, and prides itself on delivering specialized services including SBA lending and commercial real estate lending. It operates under the regulations of the Federal Deposit Insurance Corporation.

About Auto Club Trust

As a key subsidiary within ACG, Auto Club Trust plays a crucial role in promoting financial services and benefits for its AAA members. The bank's mission aligns with ACG's broader objectives, aimed at enhancing mobility and traffic safety for millions across its service areas.

Frequently Asked Questions

What is the primary aim of the Grasshopper and Auto Club Trust merger?

The merger aims to create a stronger financial institution by combining Grasshopper Bank's digital banking capabilities with Auto Club Trust's service experience for AAA members.

How will this merger affect current customers of both banks?

Current customers can expect an expanded range of banking products and improved services, particularly for AAA members in the ACG territory.

What distinguishes Grasshopper Bank from traditional banks?

Grasshopper Bank focuses on a digital-first approach, offering tailored products and services that align with the needs of modern businesses and innovation sectors.

What are the anticipated financial benefits of this merger?

The transaction is expected to create a financial institution with assets totaling around $1.4 billion and will enhance Grasshopper's tangible book value at close.

When is the merger expected to be finalized?

The merger is anticipated to finalize in the first half of the upcoming year, subject to regulatory approvals and customary closing conditions.

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