CIT Group Merges with First Citizens Forming 19th Largest US Bank with $100B in Assets

Source: Streetwise Reports   10/16/2020

Shares of CIT Group traded 25% higher after the company reported it entered into a definitive agreement to merge with First Citizens BancShares in an all stock deal.

Prior to the opening of U.S. markets today, CIT Group Inc. (CIT:NYSE) and First Citizens BancShares Inc. (FCNCA :NASDAQ) announced that the two companies have “entered into a definitive agreement under which the companies will combine in an all-stock merger of equals to create the 19^th largest bank in the U.S. based on assets.”

The report noted that First Citizens BancShares is the parent company of First-Citizens Bank & Trust Co. and CIT Group is the parent company of CIT Bank. N.A.

The firms indicated that transaction serves to combine the complementary strengths of First Citizens’ large retail deposit franchise and broad suite of banking services with CIT’s strong national commercial lending position and expertise.

The report noted that the merger creates a greater diversified deposit strategy with the more than the 550 First Citizens’ full-service retail banking locations operating largely in the Southeastern U.S. and CIT’s rapidly expanding growing residential and HOA business in Southern California.

The companies reported that the transaction has already been unanimously approved by the Boards of Directors of both companies. Under the terms of the merger agreement, CIT stockholders will “receive 0.0620 shares of First Citizens class A common stock for each share of CIT common stock they own.” The report indicated that after the merger transaction has been completed, First Citizens and CIT stockholders will own approximately 61% and 39% respectively in the combined company, which will operate under the First Citizens name and trade under the current First Citizens Nasdaq ticker symbol FCNCA.

The report indicated that First Citizens’ Chairman and CEO Frank Holding, Jr. will maintain his present roles and that CIT Groups’ Chair and CEO Ellen R. Alemany will assume the role of Vice Chair of the combined company. The companies indicated that the merger is expected to close in H1/21 subject to the approval by the shareholders of each company along with the satisfaction of customary closing conditions and necessary regulatory approvals.

First Citizens Chairman and CEO Frank Holding, Jr. remarked, “We have long admired CIT’s market-leading commercial business, including their strong market position across multiple asset classes…First Citizens has a long history of delivering strong returns to our stockholders, gathering low-cost deposits and driving strong earnings, which are all supported by an exceptional credit culture, strong capital and excellent risk management. Together, First Citizens and CIT will be able to leverage both companies’ unique attributes to create the 19th largest bank in the country, well-positioned to compete across the U.S.”

CIT Chair and CEO Ellen R. Alemany commented, “We believe this transaction will accelerate our strategic goals by bringing together the expertise of both banks to create scale, strength and value. I’m proud of the work we have done to transform CIT in recent years to a leading, national commercial bank. This transaction will build on those efforts and more fully unlock the potential in our core franchises.”

First-Citizens Bank & Trust Co. provides a wide range of financial services to individuals and business customers and operates branch offices that offer ATMs, digital banking, mobile banking and telephone banking in 19 states. The report stated that as of June 30, 20020, First Citizens had total assets of $47.9 billion.

CIT Group owns CIT Bank N.A.; CIT Bank’s commercial banking segment services include community and middle market banking, commercial lending, equipment and vendor financing, treasury and payments services, capital markets, asset management and other services. CIT also operates a consumer banking segment that includes both a national direct bank and regional branch network. The report indicated that CIT had total assets of $61.7 billion as of June 30, 20020.

CIT Group began the day with a market capitalization of around $1.9 billion with approximately 98.45 million shares outstanding and a short interest of about 6.2%. CIT shares opened nearly 21% higher today at $23.86 (+$4.12, +20.87%) over yesterday’s $19.74 closing price. The stock has traded today between $23.50 and $25.70 per share and is currently trading at $24.77 (+$5.03, +25.48%).

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