First Citizens Bancshares (FCNCA) - Get First Citizens BancShares, Inc. Class A Report and CIT Group (CIT) - Get CIT Group Inc. Report agreed to merge, creating the 19th largest U.S. bank based on assets.
Shares of First Citizens, Raleigh, N.C., at last check rose 7.4% to $379.34. Shares of CIT Group, New York, jumped 21% to $23.80.
Under the terms, First Citizens will swap 0.062 Class A common share for each share of CIT. At the closing First Citizens holders would own about 61% and CIT holders roughly 39% of the combined company.
The combined company, headquartered in Raleigh, would operate under the First Citizens name and trade under its ticker, FCNCA, on the Nasdaq.
As a strategic matter, the companies said, “the transaction brings together ... First Citizens' low-cost retail deposit franchise and full suite of banking products with CIT's national commercial lending expertise and strong market positions.”
The combine bank would have more than $100 billion of assets and $80 billion of deposits.
Both companies' boards have approved the terms. The deal is subject to conditions including a vote of shareholders of both companies and regulatory clearances. The transaction is expected to close in first-half 2021.
Frank Holding Jr., chairman and chief executive of First Citizens, will retain the same roles at the combined company.
Ellen Alemany, chairwoman and CEO of CIT, will become vice chairwoman and serve on the board.
The board of the combined company will consist of 14 directors, the current 11 First Citizens Board members and three CIT board members, including Alemany.
The two banks are expecting to increase earnings per share by 50% once cost savings are fully phased in.
Separately, CIT Group reported third-quarter earnings of 84 cents a share compared with $1.29 in the year-earlier period. The latest figure beat the Zacks consensus estimate of 14 cents per share.
“Third-quarter results reflected a return to profitability for CIT as we continued to navigate the business amid a dynamic economic environment related to the pandemic,” Alemany said in a statement.
First Citizens has about 6,800 employees, while CIT Group has roughly 4,300 workers.