First Citizens BancShares, Inc. (NASDAQ: FCNCA) (“First Citizens”),
the parent company of First-Citizens Bank & Trust Company, and
CIT Group Inc. (NYSE: CIT) (“CIT”), the parent company of CIT Bank,
N.A., jointly announced today that 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 transformational partnership will create
greater scale to drive growth, improve profitability and enhance
stockholder value. 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. 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.
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%
and CIT stockholders will own approximately 39% 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 will 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 Directors of the combined company will
consist of 14 directors, the current 11 First Citizens Board
members and three CIT Board members, including Ms. 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,” said Frank Holding, Jr. “We have
long admired CIT’s market-leading commercial business, including
their strong market position across multiple asset classes. 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.”
Ellen R. Alemany, Chairwoman and CEO of CIT, said,
“Frank and I have long respected each other’s companies and believe
this transaction will accelerate our strategic goals by bringing
together the expertise of both banks to create scale, strength and
value. I'm proud of the work we have done to transform CIT in
recent years to a leading, national commercial bank. 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.”
Financially Compelling Transaction for All
Stockholders
Significant Earnings Per Share Accretion
and Tangible Book Value Per Share Accretion: The
transaction is targeted to deliver in excess of 50% EPS accretion
once cost savings are fully phased in. The tangible book value per
share accretion is targeted to be in excess of 30% at closing.
Cost Synergies: The companies have
identified approximately 10% in targeted pro forma combined
noninterest expense savings.
Long-term Stockholder Value Creation and
Tangible Book Value Per Share Growth Focus: The combined
company expects to continue to emphasize tangible book value growth
over time. On a pro forma basis, the combined company targets
delivering top-tier operating performance, with a ROTCE of
approximately 13%.
Strong Capital and Credit Reserve
Levels: The combined company is expected to have in excess
of 9.4% Tier I Common Equity at closing. The combined allowance for
credit losses will be approximately $1.8 billion in aggregate,
representing approximately 2.4% of the loan portfolio. The combined
company’s targeted strong capital ratios are designed to support
organic growth, additional acquisitions and capital management
strategies to enhance stockholder value.
Strategically Compelling for Both
Organizations
Enhanced Scale to Drive Growth, Improve
Profitability and Enhance Stockholder Value: The pro forma
organization, with over $100 billion in assets and over $80 billion
in deposits, combines two high-quality companies focused on driving
strong, consistent growth and profitability. First Citizens
stockholders have enjoyed stock price performance that has exceeded
the Nasdaq Bank Index over the last 5-, 10- and 20-year periods.
This transaction provides a platform for growth and profitability
that is expected to drive stockholder returns for many years into
the future.
Combines First Citizens’ Lower Cost Deposit
Franchises and CIT’s Market-Leading Nationwide Commercial
Franchise: The combined company expects to benefit from
the combination of First Citizens’ strong, low-cost deposit base
and CIT’s leading nationwide lending platform. CIT’s industry,
asset class and capital markets expertise can deliver financing
solutions to First Citizens’ strong client base. First Citizens
brings a full suite of banking products and services to CIT
commercial and retail customers, including deposit, mortgage, auto
financing, merchant services, credit and debit cards, wealth
management and trust solutions. First Citizens’ strong deposit
suite and low-cost funding is targeted to enable the pro forma
company to expand its business and compete more effectively with
larger competitors. CIT’s HOA business is also expected to continue
to be an important low-cost funding source.
Experienced Management Teams with
Significant Integration Experience: This merger combines
two highly respected management teams operating complementary
business lines. Both companies have significant merger integration
experience and proven track records of successfully integrating
acquisitions to drive stockholder value. First Citizens has been in
a continuous merger and integration cycle for the last 10+ years
acquiring over 25 companies resulting in superior business
performance and stock price performance over this time period.
CIT’s three acquisitions since 2014 represent over $30 billion in
acquired and integrated assets.
Combined Company Poised For Long-Term
Growth: Several of the combined companies’ business lines
will be enhanced through this combination. The combined Southern
Californian branch and deposit-gathering footprint will be
substantially enhanced. The mortgage business is targeted to double
in size with attractive growth prospects. Complementary SBA
business lines are targeted to significantly increase in scale and
present additional opportunities for growth.
Significant Opportunity to Optimize the
Balance Sheet and Earnings: Lower funding costs are
targeted to enable CIT’s commercial lines to compete more
effectively, and a diversified funding mix should enable the
combined company to reduce financing costs through improved credit
ratings for CIT’s businesses and additional scale and
diversification.
Combined Company Laser-Focused on Credit
Quality, Capital Adequacy and Risk Management: First
Citizens has a long track record of significantly below peer
Non-Performing Asset ratios and Net Charge-Off ratios. Both
companies have completed extensive due diligence. This transaction
provides immediate product and geographic diversification.
Strong Reputation, Robust Customer
Relationships and Similar Cultures Reduce Integration
Risk: The combined company is designed to leverage the
strong reputation of both companies with the goal of delivering
strong performance and results for customers, colleagues and
communities.
Company Well Positioned for Long-Term Value
Creation Due to Stable Low-Cost Deposits, Strong Presence in
High-Growth MSAs Nationwide and Online Platform, Providing Diverse
Funding Mix: First Citizens’ deposit costs are currently
0.13% and have historically been consistently below peer funding
costs. CIT’s direct banking deposit platform offers a unique
opportunity to scale online deposits in a cost-efficient manner and
its leading homeowner association deposit channel offers additional
growth and diversification.
Approval and Timing
The merger is expected to close in the first half
of 2021, subject to satisfaction of customary closing conditions,
including receipt of regulatory approvals and approval by the
stockholders of each company.
Transaction Advisors
Piper Sandler & Co. served as financial advisor
to First Citizens, with Smith, Anderson, Blount, Dorsett, Mitchell
& Jernigan, L.L.P. serving as legal advisor. Keefe, Bruyette
& Woods, A Stifel Company, and Morgan Stanley & Co. LLC
served as financial advisor to CIT, with Sullivan & Cromwell
LLP serving as legal advisor.
Joint Investor Conference Call
There will be a joint conference call to discuss
the transaction at 8 a.m. Eastern time today. To listen to the live
call, please dial 1-888-317-6003 (U.S.), 1-866-284-3684 (Canada) or
1-412-317-6061 (international) and enter the participant code
7110614.
A link to the live webcast, along with the related
presentations, will be available on the investor relations section
of each company’s website at ir.cit.com/CorporateProfile and
firstcitizens.com/investor-relations.
An audio replay will be available an hour after the
conclusion of the call. To access the replay, dial 1-877-344-7529
(U.S.), 1-855-669-9658 (Canada) or 1-412-317-0088 (international)
and use access number 10149208. This replay will be available
through November 30, 2020.
About First Citizens
First Citizens is the financial holding company for
Raleigh, North Carolina-headquartered First Citizens Bank &
Trust Company. First-Citizens Bank & Trust Company provides a
broad range of financial services to individuals, businesses,
professionals and the medical community through branch offices in
19 states, including digital banking, mobile banking, ATMs and
telephone banking. As of June 30, 2020, First Citizens had total
assets of $47.9 billion. For more information, visit First
Citizens’ website at firstcitizens.com. First Citizens Bank.
Forever First®.
About CIT
CIT is a leading national bank focused on
empowering businesses and personal savers with the financial
agility to navigate their goals. CIT Group Inc. (NYSE: CIT) is a
financial holding company with over a century of experience and
operates a principal bank subsidiary, CIT Bank, N.A. (Member FDIC,
Equal Housing Lender). CIT’s commercial banking segment includes
commercial financing, community association banking, middle market
banking, equipment and vendor financing, factoring, railcar
financing, treasury and payments services, and capital markets and
asset management. CIT's consumer banking segment includes a
national direct bank and regional branch network. As of June 30,
2020, CIT had total assets of $61.7 billion. Discover more at
cit.com/about.
Forward-Looking Statements
This communication contains “forward-looking
statements” within the meaning of the Private Securities Litigation
Reform Act of 1995 regarding the financial condition, results of
operations, business plans and future performance of First Citizens
and CIT. Words such as “anticipates," "believes," "estimates,"
"expects," "forecasts," "intends," "plans," "projects," “targets,”
“designed,” "could," "may," "should," "will" or other similar words
and expressions are intended to identify these forward-looking
statements. These forward-looking statements are based on First
Citizens’ and CIT's current expectations and assumptions regarding
First Citizens’ and CIT’s businesses, the economy, and other future
conditions.
Because forward-looking statements relate to future
results and occurrences, they are subject to inherent risks,
uncertainties, changes in circumstances and other factors that are
difficult to predict. Many possible events or factors could affect
First Citizens’ and/or CIT’s future financial results and
performance and could cause the actual results, performance or
achievements of First Citizens and/or CIT to differ materially from
any anticipated results expressed or implied by such
forward-looking statements. Such risks and uncertainties include,
among others, (1) the risk that the cost savings, any revenue
synergies and other anticipated benefits of the proposed merger may
not be realized or may take longer than anticipated to be realized,
including as a result of the impact of, or problems arising from,
the integration of the two companies or as a result of the strength
of the economy and competitive factors in areas where First
Citizens and CIT do business, (2) disruption to the parties’
businesses as a result of the announcement and pendency of the
proposed merger and diversion of management’s attention from
ongoing business operations and opportunities, (3) the occurrence
of any event, change or other circumstances that could give rise to
the right of one or both of the parties to terminate the definitive
merger agreement between First Citizens and CIT, (4) the risk that
the integration of First Citizens’ and CIT’s operations will be
materially delayed or will be more costly or difficult than
expected or that First Citizens and CIT are otherwise unable to
successfully integrate their businesses, (5) the failure to obtain
the necessary approvals of the stockholders of First Citizens
and/or CIT, (6) the outcome of any legal proceedings that may be
instituted against First Citizens and/or CIT, (7) the failure to
obtain required governmental approvals (and the risk that such
approvals may result in the imposition of conditions that could
adversely affect the combined company or the expected benefits of
the proposed transaction), (8) reputational risk and potential
adverse reactions of First Citizens’ and/or CIT’s customers,
suppliers, employees or other business partners, including those
resulting from the announcement or completion of the proposed
merger, (9) the failure of any of the closing conditions in the
definitive merger agreement to be satisfied on a timely basis or at
all, (10) delays in closing the proposed merger, (11) the
possibility that the proposed merger may be more expensive to
complete than anticipated, including as a result of unexpected
factors or events, (12) the dilution caused by First Citizens’
issuance of additional shares of its capital stock in connection
with the proposed merger, (13) general competitive, economic,
political and market conditions, and (14) other factors that may
affect future results of CIT and/or First Citizens including
changes in asset quality and credit risk, the inability to sustain
revenue and earnings growth, changes in interest rates and capital
markets, inflation, customer borrowing, repayment, investment and
deposit practices, the impact, extent and timing of technological
changes, capital management activities, and other actions of the
Federal Reserve Board and legislative and regulatory actions and
reforms, and (15) the impact of the global COVID-19 pandemic on
First Citizens’ and/or CIT’s businesses, the ability to complete
the proposed merger and/or any of the other foregoing risks.
Except to the extent required by applicable law or
regulation, each of First Citizens and CIT disclaims any obligation
to update such factors or to publicly announce the results of any
revisions to any of the forward-looking statements included herein
to reflect future events or developments. Further information
regarding First Citizens, CIT and factors which could affect the
forward-looking statements contained herein can be found in First
Citizens’ Annual Report on Form 10-K for the fiscal year ended
December 31, 2019, its Quarterly Reports on Form 10-Q for the
periods ended March 31, 2020 and June 30, 2020, and its other
filings with the Securities and Exchange Commission (the “SEC”),
and in CIT’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2019, its Quarterly Reports on Form 10-Q for the
periods ended March 31, 2020 and June 30, 2020, and its other
filings with the SEC.
Important Information about the Merger and
Where to Find It
First Citizens intends to file a registration
statement on Form S-4 with the SEC to register the shares of First
Citizens’ capital stock that will be issued to CIT’s stockholders
in connection with the proposed transaction. The registration
statement will include a joint proxy statement of First Citizens
and CIT that also constitutes a prospectus of First Citizens. The
definitive joint proxy statement/prospectus will be sent to the
stockholders of First Citizens and CIT seeking their approval of
the proposed merger and the issuance of First Citizens shares in
the proposed merger.
INVESTORS AND SECURITY HOLDERS ARE URGED TO READ
THE REGISTRATION STATEMENT ON FORM S-4 AND THE JOINT PROXY
STATEMENT/PROSPECTUS INCLUDED WITHIN THE REGISTRATION STATEMENT ON
FORM S-4 WHEN THEY BECOME AVAILABLE (AND ANY OTHER RELEVANT
DOCUMENTS FILED WITH THE SEC IN CONNECTION WITH THE PROPOSED
TRANSACTION OR INCORPORATED BY REFERENCE INTO THE JOINT PROXY
STATEMENT/PROSPECTUS) BECAUSE SUCH DOCUMENTS WILL CONTAIN IMPORTANT
INFORMATION REGARDING FIRST CITIZENS, CIT, THE PROPOSED MERGER AND
RELATED MATTERS.
Investors and security holders may obtain free
copies of these documents and other documents filed with the SEC by
First Citizens or CIT through the website maintained by the SEC at
http://www.sec.gov or from First Citizens at its website,
www.firstcitizens.com, or from CIT at its website, www.cit.com.
Documents filed with the SEC by First Citizens will be available
free of charge by accessing the “Newsroom” page of First Citizens’
website at www.firstcitizens.com or, alternatively, by directing a
request by telephone or mail to First Citizens BancShares, Inc.,
Mail Code: FCC-22, PO Box 27131, Raleigh, North Carolina
27611-7131, (919) 716-7000, and documents filed with the SEC by CIT
will be available free of charge by accessing CIT’s website at
www.cit.com under the tab “About Us,” and then under the heading
“Investor Relations” or, alternatively, by directing a request by
telephone or mail to CIT Group Inc., One CIT Drive, Livingston, New
Jersey 07039, (866) 542-4847.
Participants in Solicitation
First Citizens, CIT, and certain of their
respective directors and executive officers may be deemed
participants in the solicitation of proxies from the stockholders
of each of First Citizens and CIT in connection with the proposed
merger under the rules of the SEC. Certain information regarding
the interests of the directors and executive officers of First
Citizens and CIT and other persons who may be deemed participants
in the solicitation of the stockholders of First Citizens or of CIT
in connection with the proposed merger and a description of their
direct and indirect interests, by security holdings or otherwise,
will be included in the joint proxy statement/prospectus related to
the proposed merger, which will be filed with the SEC. Additional
information about First Citizens, the directors and executive
officers of First Citizens and their ownership of First Citizens
common stock can also be found in First Citizens’ definitive proxy
statement in connection with its 2020 annual meeting of
stockholders, as filed with the SEC on February 26, 2020, and other
documents subsequently filed by First Citizens with the SEC.
Additional information about CIT, the directors and executive
officers of CIT and their ownership of CIT common stock can also be
found in CIT’s definitive proxy statement in connection with its
2020 annual meeting of stockholders, as filed with the SEC on April
2, 2020, and other documents subsequently filed by CIT with the
SEC. These documents can be obtained free of charge from the
sources described above.
First Citizens Contact
Information
Barbara Thompson Director of Corporate
Communications and Brand Marketing(919)
716-2716barbara.thompson@firstcitizens.com
Tom HeathDirector of Investor Relations(919)
716-4565tom.heathIII@firstcitizens.comCIT Contact
Information
Gina ProiaEVP, Chief Marketing and Communications
Officer 212-771-6008gina.proia@cit.com
Barbara CallahanSVP and Head of Investor
Relations973-740-5058barbara.callahan@cit.com
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