On Monday, CIT Group (NYSE:CIT) did extremely well for a company that will, technically, soon cease to exist. It is merging with First Citizens BancShares (OTC:FCNCB), and the combined company will retain the First Citizens branding and that company's ticker symbol.
The merger, plus encouraging third-quarter results also released on Friday, strapped a rocket to CIT's stock. On Monday, against the backdrop of a gloomy market, investors continued to pile in, giving the shares an additional 5.3% boost.
As with other banks, CIT's Q3 was far more encouraging than its coronavirus-afflicted Q2. Revenue was up considerably not only on a quarter-over-quarter basis (15%), but also on a year-over-year basis (4%).
On the bottom line, the $83 million was miles better than the previous quarter's $98 million loss. Although the former was almost 60% lower than that of the year-ago quarter, it was far better than that expected by analysts tracking the stock.
Again, like other banks this quarter, a considerable reduction in loan-loss provisions helped CIT enormously. After all, fears are receding -- sensibly or not -- that lenders will be hit by a big wave of pandemic-related defaults.
The First Citizens/CIT tie-up already felt like a pretty good bargain for shareholders of the latter bank. With the sector as a whole doing better than expected lately, sentiment is improving and the CIT's earnings beat/merger combination is very attractive for investors.