Please ensure Javascript is enabled for purposes of website accessibility

First Citizens BancShares and CIT Merging to Create $100B Asset Bank

By Bram Berkowitz – Updated Oct 16, 2020 at 9:33AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The deal will create the 19th largest bank in the U.S., spread across many geographic markets.

The $49-billion asset First Citizens BancShares (FCNCA -2.17%) is merging with the $61-billion asset CIT Group (CIT) in an all-stock deal that will create the 19th largest bank in the U.S., it was announced today.

The combined company will be headquartered in Raleigh, North Carolina, and have a significant presence in New York; New Jersey; Pasadena, California; Omaha, Nebraska; Phoenix; Jacksonville, Florida; and Columbia, South Carolina, among other locations.

As part of the deal, CIT shareholders will get 0.0620 shares of First Citizens Class A common stock for each of their CIT common shares. At the end of the transaction, First Citizens shareholder will own roughly 61% of the combined entity, while CIT stockholders will own roughly 39%.

CIT and First Citizens BancShares

Image source: CIT and First Citizens.

The new entity will operate under the First Citizens brand and trade under the ticker FCNCA on the Nasdaq.

First Citizens CEO Frank Holding Jr. will lead the combined company, while CIT CEO Ellen R. Alemany will become vice chairwoman and serve on the board of directors.

"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," Holding said in a statement.

Although CIT is the bigger bank and this is more of a merger of equals, First Citizens looks more like the buyer here because it's trading at about 104% tangible book value, while CIT is trading at about 40% of tangible book value, making First Citizens' currency more valuable.

At the exchange rate in the deal, CIT shareholders are swapping their shares for an implied value of $21.91 per share, or a roughly 11% premium over the closing price of the stock on Thursday.

The deal is expected to increase earnings per share of the combined company by 50% once costs savings of 10% are realized, and when the deal closes, tangible book value accretion is expected to be more than 30%.

Shares of CIT jumped by more than 20% this morning, while shares of First Citizens rose by more than 8% right off the bat.

Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

CIT Group Inc. Stock Quote
CIT Group Inc.
First Citizens BancShares, Inc. Stock Quote
First Citizens BancShares, Inc.
$791.52 (-2.17%) $-17.56

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/27/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.