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Charleston Business

First Citizens BancShares, CIT Group Announce Partnership to Create Commercial Bank

Oct 16, 2020 01:26PM ● By David Dykes

First Citizens BancShares, Inc. (NASDAQ: FCNCA), parent company of First-Citizens Bank & Trust Company, and CIT Group Inc. (NYSE: CIT), parent company of CIT Bank, N.A., jointly announced 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.

The partnership will create greater scale to drive growth, improve profitability and enhance stockholder value, company officials said.

The transaction brings together the complementary strengths of 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 officials said.

In addition, it creates a more diversified deposit strategy with First Citizens' 550+ full-service retail banking locations in key growth MSAs, including across the Southeast, and CIT's rapidly growing homeowner association business, leading direct bank and complementary Southern California retail branch network, the officials said.

Under 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.  First Citizens stockholders will own approximately 61 percent and CIT stockholders will own approximately 39 percent of the combined company.

The combined company will operate under the First Citizens name and will trade under the First Citizens ticker symbol FCNCA on the Nasdaq stock market.  The combined company will be headquartered in Raleigh, N.C., and 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 retain the same roles at the combined company. Ellen R. Alemany, chairwoman and CEO of CIT, will assume the role of vice chairwoman and play a key role in the merger integration.  In addition, she will serve on the board of directors of the combined company.

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.

"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.  "We have long admired CIT's market-leading commercial business, including their strong market position across multiple asset classes.”

He added, “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." 

Said Alemany:  “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.”