CIT Group’s banking subsidiary CIT Bank has signed a definitive agreement to acquire Mutual of Omaha Bank in a cash and stock deal valued at $1bn.
The deal is aligned with CIT Group’s strategy to further diversify its portfolio and bolster commercial banking capabilities.
Under the terms of the agreement, the acquirer will pay up to $150m of CIT common stock and the remaining portion in cash consideration.
Established in 1909, Mutual of Omaha provides insurance and financial products to individuals, businesses and groups across the US.
The transaction will see the transfer of $6.8bn in deposits. It includes $4.5bn of homeowner’s association (HOA) deposits from nearly 31,000 community associations and $2.3bn from commercial and consumer financial centres.
Furthermore, around $8.3bn of total assets, including $3.9bn of middle-market commercial loans, are also part of the transaction.
However, Mutual’s mortgage subsidiary, Synergy One Lending, is not a part of this transaction.
CIT chairwoman and CEO Ellen Alemany said: “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.”
The Mutual of Omaha Bank acquisition is expected to close in the first quarter of 2020. The closing is subject to regulatory approval and other customary closing conditions.
Once complete, CIT will have around $42.1bn in total deposits and $58.9bn in total assets.