CIT to Acquire Mutual of Omaha Bank
CIT Group and Mutual of Omaha have announced that CIT’s banking subsidiary, CIT Bank, will acquire Mutual’s savings bank subsidiary, Mutual of Omaha Bank, for a purchase price of $1 billion. The purchase price will be comprised primarily of cash and up to $150 million of CIT common stock, the amount of which will be determined by CIT. The transaction will diversify and enhance CIT’s funding profile with stable, lower-cost deposits from Mutual of Omaha Bank’s market-leading homeowner’s association (HOA) banking business. In addition, it will advance CIT’s strategic plan, extend its commercial banking capabilities and enhance profitability.
The transaction includes $6.8 billion in deposits, $4.5 billion of which are HOA deposits from more than 31,000 community associations nationwide, and $2.3 billion of which are from commercial and consumer financial centers in key markets. In addition, $8.3 billion of total assets, including $4.1 billion of middle-market commercial loans, are part of the transaction, which adds to CIT’s growing franchise. On a pro forma basis, CIT will have approximately $42.1 billion of total deposits and $58.9 billion of total assets.
“Following our multi-year strategic transformation, we entered the next phase of our plan focused on thoughtful growth and value creation. This transaction squarely aligns to those goals by immediately enhancing our deposit and commercial banking capabilities and improving our profitability. This is a unique opportunity to accelerate our strategic plan through the addition of a market-leading HOA deposit franchise, a broader set of product and technology solutions and an expanded business footprint that complements CIT’s existing franchise.” – CIT Chairwoman and Chief Executive Officer Ellen R. Alemany.
“Mutual of Omaha Bank has a talented and dedicated team that built a successful, vibrant institution. The integration of Mutual of Omaha Bank into CIT creates great opportunity to leverage the strengths of both institutions. This transaction allows Mutual of Omaha to focus on, and invest in, growth in its core insurance businesses.” – Mutual of Omaha Chairman and CEO James Blackledge.
CIT Strategic Benefits
The acquisition will accelerate the next phase of CIT’s strategic plan and complement the company’s focus on serving small and midsized businesses with thoughtful solutions, competitive financing and deposit products. The HOA business offers a national, highly scalable deposit channel with a strong market presence and differentiated technology-enabled solutions. The commercial banking business and financial centers add additional talent and expertise in key metro markets that supplement CIT’s presence.
CIT Financial Benefits
The transaction is expected to improve CIT’s deposit costs by approximately 20 basis points upon closing. The company’s return on tangible common equity ratio is expected to be enhanced by 80 basis points in 2020 and increase to more than 100 basis points over two years. The transaction is expected to be accretive to 2020 estimated earnings per share (EPS) by 2 percent, based on CIT’s consensus estimate with cost savings fully phased in, and EPS accretion is expected to grow to double-digits over time.
The transaction is expected to close in the first quarter of 2020, subject to regulatory approval and satisfaction of other customary closing conditions. The agreement excludes Mutual’s mortgage subsidiary, Synergy One Lending.
