First Citizens BancShares in Raleigh, North Carolina, and CIT Group in New York said late Thursday that they are extending the deadline for closing their
The two companies announced the deal in October 2020 and had planned to complete it by Oct. 15 of this year. With that target date looming, First Citizens and CIT said in a joint release that they would extend the deal deadline to March 1, 2022.
The merger would create a top-20 bank with more than $110 billion of assets.
The companies did not cite a specific reason for the delay, but they did note in the release that they had received approval from the Office of the North Carolina Commissioner of Banks and the Federal Deposit Insurance Corp. However, “action by the Federal Reserve Board is the remaining regulatory approval required to complete the merger, and both parties are committed to continuing to seek such approval.”
A Fed spokeswoman declined to comment Thursday. In January, officials from both the Fed and FDIC extended by a month the comment period for the merger, citing in part
Christopher Marinac, director of research at Janney Montgomery Scott, said in a recent interview that investors had begun to ask more questions about the timing of the deal and whether there were any imminent threats standing in the way of the two banks and the finish line. He said no problems were publicly known, but he did note that the pandemic had affected staffing capabilities within regulatory agencies, suggesting that the delay may have more to do with the Fed wrapping up its work than any issues at the banks.
“Put it this way, I’ve looked back over a lot of years, and I’m not aware of an instance in which the FDIC approved a merger and then the Fed had not,” Marinac said. “Now anything is possible, and there is always a first time for everything.”
In the release, issued after markets closed Thursday, First Citizens and CIT said they had “responded to all questions issued by the staff of the Federal Reserve Board, and the staff has informed us that they do not have further questions at this time. The parties have been informed that the application is presently at the governor level. The Board of Governors has not provided a timeframe for its decision on the application.”
The companies added that if the deal is not completed by March 1, either party has the right to call it off.
The merger would combine two companies with long histories of acquisitions. The $55 billion-asset First Citizens has bought more than 25 banks over the past decade.
CIT bought the $23 billion-asset OneWest Bank in Pasadena, California, in 2015 and the $8.3 billion-asset Mutual of Omaha Bank in Nebraska last year. Those acquisitions pushed the company's assets above $60 billion.
CIT and First Citizens billed their agreement as a merger of equals, but First Citizens would be the
Frank Holding Jr., First Citizens’ chairman and CEO, would retain those titles.
