- First Citizens BancShares, Inc. (NASDAQ: FCNCA) and CIT Group Inc. (NYSE: CIT) jointly announced that they have entered into a definitive agreement under which the companies will combine in an all-stock merger of equals
First-Citizens Bank & Trust Company parent company First Citizens BancShares, Inc. (NASDAQ: FCNCA) and CIT Bank parent company CIT Group Inc. (NYSE: CIT) — jointly announced that they have entered into a definitive agreement under which the companies will combine in an all-stock merger of equals to create the 19th largest bank in the United States based on assets. This partnership is expected to create a greater scale to drive growth, improve profitability, and enhance stockholder value.
The transaction brings together the complementary strengths of First Citizens’ low-cost retail deposit franchise and suite of banking products with CIT’s national commercial lending expertise and strong market positions. Plus it creates a more diversified deposit strategy with First Citizens’ 550+ full-service retail banking locations in key MSAs, including across the Southeast, and CIT’s growing homeowner association business, leading direct bank, and complementary Southern California retail branch network.
As part of the terms of the definitive merger agreement — which was unanimously approved by the Boards of Directors of both companies — CIT stockholders will receive 0.0620 shares of First Citizens class A common stock for each share of CIT common stock they own. And First Citizens stockholders will own approximately 61% and CIT stockholders will own approximately 39% of the combined company.
The combined company is going to operate under the First Citizens name and will trade under the First Citizens ticker symbol FCNCA on the Nasdaq stock market. And the combined company will be headquartered in Raleigh, N.C., and will maintain significant operation centers in New York, Pasadena, Omaha, Phoenix, Jacksonville, Fla., New Jersey and Columbia, S.C., among other locations.
Frank Holding, Jr., Chairman and CEO of First Citizens, will be retaining the same roles at the combined company. And Ellen Alemany, Chairwoman and CEO of CIT, will assume the role of Vice Chairwoman and play a key role in the merger integration. And she will serve on the Board of Directors of the combined company.
The Board of Directors of the combined company will consist of 14 directors, the current 11 First Citizens Board members, and three CIT Board members including Alemany.
This transaction is targeted to deliver in excess of 50% EPS accretion after cost savings are fully phased in. And the tangible book value per share accretion is targeted to be in excess of 30% at closing. Both the companies have identified approximately 10% in targeted pro forma combined noninterest expense savings.
The combined company is expected to have in excess of 9.4% Tier I Common Equity at closing. And the combined allowance for credit losses will be approximately $1.8 billion in aggregate, representing approximately 2.4% of the loan portfolio. And the combined company’s targeted strong capital ratios are designed for supporting organic growth, additional acquisitions, and capital management strategies to enhance stockholder value.
The pro forma organization — with over $100 billion in assets and over $80 billion in deposits — combines two high-quality companies focused on driving consistent growth and profitability. This deal provides a platform for growth and profitability that is expected to drive stockholder returns for many years into the future.
The merger is expected to close in the first half of 2021, subject to satisfaction of customary closing conditions including receipt of regulatory approvals and approval by the stockholders of each company.
Piper Sandler & Co. served as financial advisor to First Citizens with Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan, L.L.P. serving as legal advisor. And Keefe, Bruyette & Woods, A Stifel Company, and Morgan Stanley & Co. LLC served as financial advisor to CIT with Sullivan & Cromwell LLP serving as legal advisor.
KEY QUOTES:
“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. Under Ellen’s leadership, CIT has made tremendous progress in reducing its cost of funds, enhancing risk management processes and retaining key talent. 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 United States.”
— Frank Holding, Jr., Chairman and CEO of First Citizens
“Frank and I have long respected each other’s companies and 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. In addition, the strength that is created as a larger U.S. bank will enable greater opportunities for our team, our customers and our communities.”
— Ellen R. Alemany, Chairwoman and CEO of CIT
