What happened

The stock market was having a strong day on Friday, but regional bank CIT Group (CIT) was a big standout. As of 10:45 a.m. EDT, shares of the bank stock were higher by more than 22% for the day.

So what

The reason for the spike is that New York-based CIT Group has agreed to merge with North Carolina-based First Citizens BancShares (FCNCB), whose stock is also about 17% higher on the day.

Bank teller greeting a customer.

Image source: Getty Images.

While the deal is being treated as a merger of equals, First Citizens is technically the acquirer. The combined companies will operate under the First Citizens name, and First Citizens chairman and CEO Frank Holding Jr. will assume those roles in the combined company.

The merger is being completed in an all-stock deal. Upon closing of the merger, CIT shareholders will receive 0.062 shares of First Citizen stock for each CIT share they own.

This will result in First Citizens stockholders owning about 61% of the combined company, with CIT shareholders owning the other 39%. The combined bank will have total assets of approximately $110 billion.

Now what

The companies say the merger will be immediately accretive to earnings upon completion, as the retail deposit focus of First Citizens' business and the commercial lending focus of CIT will result in significant synergies.

The merger isn't exactly a done deal just yet and is expected to be finalized in the first half of 2021. However, based on today's price action in shares of both banks, it's clear that investors in both CIT and First Citizens are happy about the decision and don't foresee any big regulatory roadblocks.