First Citizens to Buy CIT Group--2nd Update
By Orla McCaffrey
First Citizens BancShares Inc. said Friday it plans to buy CIT
Group Inc. in an all-stock deal valued at roughly $2.2 billion.
The combination of First Citizens, based in Raleigh, N.C., and
CIT, based in New York City, would create one of the larger
regional banks in the U.S. with more than $100 billion in assets.
The company will keep the First Citizens name and ticker symbol
after the merger and will continue to be run by the First Citizens
The combination would be one of the bigger bank tie-ups in
recent years. Two larger regional banks, BB&T and SunTrust,
merged last year to become Truist Financial Corp., the largest bank
deal since the financial crisis ushered in stricter
Regional lenders are struggling to compete with big national
banks such as JPMorgan Chase & Co. and Bank of America Corp.,
which have raked in deposits by attracting customers with flashy
apps and ubiquitous branches. Low interest rates have weighed on
bank profits, especially those of regional banks that rely more on
traditional lending than their larger competitors.
At first blush, the pairing seems odd. CIT operates a national
commercial lending and equipment leasing business. First Citizens,
run by the same North Carolina family for three generations,
operates more than 500 branches in 19 states.
The merger should give the commercial lending operations a boost
through First Citizens' low-cost deposits, which can replace more
"It's an excellent strategic combination because you're marrying
a really solid deposit franchise to a bank that has always
struggled to find a good funding base," said Abbott Cooper, founder
of Driver Management, a bank-focused investment-management
First Citizens shares rose 7% in morning trading to $377.65.
CIT's shares jumped 20% to $24.05.
CIT shareholders will receive 0.062 share of First Citizens
Class A stock for each share of CIT common stock, valuing them at
about $21.91 based on Thursday's closing prices. That is an 11%
premium over where CIT shares closed Thursday.
First Citizens shareholders will own about 61% of the combined
company, and CIT shareholders will own the remaining 39%.
The chairman and chief executive of the combined company will be
Frank Holding Jr., who currently holds those roles at First
Citizens. Ellen Alemany, the chairwoman and CEO of CIT, will become
CIT Group also owns OneWest, a retail bank that was previously
run by Steven Mnuchin, now the Treasury secretary. OneWest was
created during the financial crisis when a consortium led by Mr.
Mnuchin bought out failed lender IndyMac. Although the group
revived the bank's fortunes, it was criticized for foreclosing on
CIT on Friday reported a 40% drop in third-quarter profit from a
year ago. First Citizens reported a 14% profit increase.
The deal is expected to close in the first half of next
--Matt Grossman contributed to this article.
Write to Orla McCaffrey at firstname.lastname@example.org
(END) Dow Jones Newswires
October 16, 2020 11:31 ET (15:31 GMT)
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