First-Citizens Bank & Trust Company, the parent company of First Citizens BancShares, has entered into an all-stock merger of equal with CIT Group, the parent company of CIT Bank, to create the 19th largest bank in the US based on assets.
The combined company will have over $100bn in assets and over $80bn in deposits, on pro forma basis.
The new entity will operate under brand name of First Citizens.
It will be domiciled in North Carolina, and operate in New York, California, Nebraska, Arizona, Florida, New Jersey and South Carolina, among other US states.
The deal was unanimously approved by the Boards of Directors of both the companies.
Terms of the deal
Under the agreement, CIT shareholders will receive 0.0620 shares of First Citizens class A common stock in exchange for each CIT common stock held.
First Citizens will own nearly 61% of the combined entity while CIT stockholders will own the remaining stake.
The merger will deliver 50% earnings per share (EPS) accretion, after reaching the tangible book value per share in excess of 30% and combined non-interest cost savings of nearly 10%.
The combined entity is anticipated to have a Common Equity Tier 1 (CET1) ratio of over 9.4% at closing.
The company will have combined bad loans provisions of $1.8bn, representing 2.4% of the entire loan book.
First Citizens Chairman and CEO Frank Holding said: “This is a transformational partnership for First Citizens and CIT designed to create long-term value for all of our constituents including our stockholders, our customers, our associates and our communities.
“We have long admired CIT’s market-leading commercial business, including their strong market position across multiple asset classes.
“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 US.”
CIT chairwoman and CEO Ellen Alemany said: “I am 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.
“In addition, the strength that is created as a larger US bank will enable greater opportunities for our team, our customers and our communities.”
Subject to the receipt of regulatory approvals, the merger is expected to close in the first half of 2021.