Shares of First Citizens BancShares (FCNCA) this week jumped 23.05% after announcing its merger deal with CIT group last Friday. The companies entered into an all-stock merger of equals to form the 19th largest bank in the United States based on assets.
As per the terms of the agreement, holders of CIT’s common stock will get 0.0620 shares of First Citizens class A common stock against each of the CIT’s share they have been holding. The merger will result in a combined company with nearly 61% of the stakes owned by stockholders of First Citizens while remaining part of the ownership will be held by stockholders of CIT.
Companies are expecting closing the merger deal in the first half of next year which will eventually create a combine entity that will have more than $100 billion in assets while holding deposits of more than $80 billion.
The combined entity will bring full suite of banking products and low-cost retail deposit franchise of FCNCA together with strong market positions and nationwide commercial lending franchise of CIT, said First Citizens in its statement.
FCNCA remained admiring CIT’s commercial business for being in leading position in the market as well as for holding stronger positions across several asset classes in the banking industry, said Frank Holding, Chief Executive Officer of First Citizens. CIT came up showing remarkable achievements in enhanced risk management approaches, in keeping hold of best talent in the industry, and in reducing cost of funds.
Companies are seeing the transaction making up more than 50% of the EPS after setting the cost savings processes up with closure of the deal resulting in per share accretion of more than 30% of the tangible book value. Moreover, companies are expecting saving about 10% of pro forma non-interest costs with conclusion of the merger deal.