Grasshopper Bank to acquire AAA Club savings bank

UPDATE: This article has been revised to include additional information from Grasshopper.

The all-digital Grasshopper Bank has agreed to acquire a savings bank, boosting its asset size over $1 billion. 

On Tuesday, the New York City-based Grasshopper, which has $835 million of assets, said it had entered a definitive merger agreement to acquire Auto Club Trust in a cash-and-stock transaction. Auto Club Trust, which is based in Dearborn, Michigan, and has $495 million of assets, is a federally chartered savings bank and a subsidiary of the Auto Club Group, a North American AAA club. Grasshopper did not disclose the purchase price.

Grasshopper specializes in banking for small businesses, startups, venture capital and private equity; Small Business Administration and commercial real estate lending; and banking-as-a-service. 

The transaction was unanimously approved by the boards of directors of each company and, assuming regulatory authorization, is expected to close in the first half of 2025. It will bump Grasshopper's asset size to $1.4 billion and afford the bank a potential audience of more than 13 million AAA members in the 14 states ACG covers. Grasshopper will raise about $35 million in new equity as part of the transaction, some of which will be used for growth capital after the acquisition closes. ACG will be issued a 4.9% ownership stake in Grasshopper.

"We look forward to adding Grasshopper Bank's award-winning digital banking experience to Auto Club Trust's existing marketing strategy, while expanding the consumer and business products provided to this community over time," said Michael Butler, Grasshopper Bank's chairman and CEO, in a press release. 

ACG President and CEO Joseph Richardson said the merger would let his company continue to offer banking products but with greater reach. Butler expects ACG's lineup to expand into business banking and lending after the acquisition closes, and the products and services to remain white-labeled to AAA. 

"This acquisition aligns perfectly with our strategy of providing innovative financial solutions to non-banks and brands," said Butler via email, "while also connecting to a longer term vision to broaden our offerings to consumers, in addition to the business client segments we serve today." 

Grasshopper launched in 2019, becoming the first de novo chartered by the Office of the Comptroller of the Currency in the Northeast since the financial crisis. The goal was to bank "entrepreneurial companies and their venture capital backers," then-CEO Judith Erwin said at the time. In 2023, it announced plans for a "marketplace strategy" where Grasshopper curates a small list of fintech partners for its customers.