North Carolina-based First Citizens BancShares and New York-based CIT Group jointly said Friday that they have agreed to an all-stock merger in a bid for scale that will create the 19th-largest lender in the U.S., with nearly $110 billion in assets and more than $80 billion in deposits.
First Citizens is the parent company of First-Citizens Bank & Trust and has acquired more than 25 companies over the past 10 years. As of June, it had $47.9 billion in assets and 550 branches across 19 states. Meanwhile, CIT, the parent company of CIT Bank, had $61.7 billion in assets as of June and has made several acquisitions in the past years, including OneWest Bank in 2015 and Mutual of Omaha Bank this January.
Based on the terms of the deal, CIT shareholders will receive 0.0620 shares of First Citizen common stock for each share of CIT common stock they hold. First Citizens stockholders will own around 61% of the merged entity, with CIT shareholders owning the remaining 39%.
“The transaction brings together the complementary strengths of First Citizens’ low-cost retail deposit franchise and full suite of banking products with CIT’s national commercial lending expertise and strong market positions,” First Citizens and CIT said Friday.
The new entity, which will operate under the First Citizens name and trade under its ticker symbol, FCNCA, will be headquartered in North Carolina and have operation centers in locations including New York; New Jersey; Omaha, Nebraska; Phoenix, Arizona; and Jacksonville, Florida.
With the merger, the banks expect to boost earnings by share accretion by 50% once cost savings have been completed. The companies also said they have pinpointed around 10% in “targeted pro forma combined noninterest expense savings.” The deal is expected to close in the first half of 2021.
Frank Holding, Jr., the current chairman and CEO of First Citizens, will hold the same roles at the new entity, while Ellen R. Alemany, the chairwoman and CEO of CIT, will become the vice chairwoman of the merged company. The combined entity’s board will consist of 14 directors, including the current 11 First Citizens board members and three CIT board members, together with Alemany.
“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,” said Holding. “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 United States.”
Alemany added, “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.”
Piper Sandler served as the financial advisor to First Citizens, with Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan working as its legal advisor. Keefe, Bruyette & Woods and Morgan Stanley served as the financial advisor to CIT, with Sullivan & Cromwell working as its legal advisor.