CIT Group Inc., today announced that it has entered into a definitive agreement and plan of merger with IMB Holdco LLC, the parent company of OneWest Bank N.A. (“OneWest Bank”), for $3.4 billion in cash and stock.
OneWest Bank is a privately owned regional bank formed in 2009 that operates 73 retail branches in Southern California, with approximately $23 billion in assets, including commercial and residential mortgage loans, and $15 billion in deposits. Following the close of the transaction, CIT Bank, CIT’s banking subsidiary, will merge with OneWest Bank under the “CIT Bank” name and CIT will have assets of $67 billion and $28 billion in deposits
CIT expects the transaction to be 20% accretive to earnings per share in 2016 generating an internal rate of return (IRR) of 15%.
CIT Group Inc. will continue to be led by John A. Thain, Chairman and Chief Executive Officer. Following the close of the transaction, Steven T. Mnuchin, Chairman of IMB Holdco LLC, will join CIT Group Inc. as Vice Chairman and will also become a member of its Board of Directors. Alan Frank, an independent director from OneWest Bank will also join the CIT Board, increasing its size from 13 to 15 members.
“This transformational transaction will combine CIT’s national middle market lending platform with OneWest’s wholesale lending and branch banking franchise to create a unique provider of retail and institutional financial services,” said Thain. “The transaction diversifies and lowers the cost of CIT's deposits, broadens the products we can offer to our middle market clients, is accretive to earnings and return on equity, and accelerates the utilization of our NOL, while maintaining a strong capital position. We look forward to welcoming OneWest Bank’s talented employees to CIT as we build our franchise and meet the financing needs of our customers.”
Mnuchin said, “We have spent the last five years building OneWest Bank into a premier regional bank in Southern California. We are confident that this transaction will provide our retail and commercial customers with access to the broad range of high-quality financial products and services offered by CIT, and allow OneWest to benefit from CIT’s expansive client base and global reach. I look forward to joining the CIT Board, and to ensuring a smooth integration of CIT Bank and OneWest for the benefit of both companies’ stakeholders.”
Under the terms of the Agreement, IMB Holdco LLC shareholders will receive $2.0 billion in cash and 31.3 million shares of CIT Group Inc. common stock currently valued at $1.4 billion assuming a CIT stock price of $44.33.
The transaction has been approved by the boards of directors of both companies and is subject to customary closing conditions and regulatory approvals.
J.P. Morgan Securities LLC is serving as financial advisor to CIT, and Wachtell, Lipton, Rosen & Katz is serving as CIT’s legal counsel. Goldman, Sachs & Co., Bank of America Merrill Lynch and Cleary, Gottlieb, Steen & Hamilton LLP represent IMB Holdco LLC. Sullivan & Cromwell is serving as joint regulatory counsel for CIT and IMB Holdco LLC.
Founded in 2000, CIT Bank is the U.S. commercial bank subsidiary of CIT Group Inc. (NYSE: CIT). It provides lending and leasing to the small business, middle-market and transportation sectors. As of June 30, 2014, it had approximately $14 billion of deposits and more than $18 billion of assets.
Founded in 1908, CIT is a financial holding company with approximately $35 billion in financing and leasing assets. It provides financing, leasing and advisory services to its clients and their customers across more than 30 industries. CIT maintains leadership positions in middle market lending, factoring, retail and equipment finance, as well as aerospace, equipment and rail leasing.
OneWest Bank is a Southern California bank, focused on delivering personalized, relationship-based banking to its customers. The bank has 73 retail branches conveniently located throughout Southern California to serve consumers and businesses, small and large. With total assets of $23 billion, OneWest has the size and strength to offer a wide array of banking products and services and the stability to protect its depositors.
To view the entire press release issued by CIT, click here.