Agreement and Plan of Merger
On October 15, 2020, First Citizens BancShares, Inc. (“BancShares”) entered into an Agreement and Plan of Merger (the “Merger Agreement”) by and among
BancShares, First-Citizens Bank & Trust Company, a North Carolina chartered commercial bank and direct, wholly owned subsidiary of BancShares (“FCB”), FC Merger Subsidiary IX, Inc., a direct, wholly owned subsidiary of FCB (“Merger Sub”), and
CIT Group Inc., a Delaware corporation (“CIT”) and the parent company of CIT Bank, N.A., a national banking association (“CIT Bank”). Pursuant to the terms and subject to the conditions set forth in the Merger Agreement, Merger Sub will merge with
and into CIT, with CIT as the surviving entity (the “First-Step Merger”), and as soon as reasonably practicable following the effective time of the First-Step Merger, CIT will merge with and into FCB, with FCB as the surviving entity (together with
the First-Step Merger, the “Mergers”). The Merger Agreement further provides that immediately following the consummation of the Mergers, CIT Bank will merge with and into FCB, with FCB as the surviving bank (together with the Mergers, the
“Transaction”).
The Merger Agreement was unanimously approved by the Board of Directors of each
of BancShares and CIT. Subject to the fulfillment of customary closing conditions, certain of which are described below, the parties anticipate that the
Transaction will close in the first half of 2021.
Merger Consideration
Upon the terms and subject to the conditions set forth in the Merger Agreement, at the effective time of the First-Step Merger (the “Effective Time”), each
share of CIT common stock, par value $0.01 per share, issued and outstanding immediately prior to the Effective Time (“CIT Common Stock”), except for certain shares of CIT Common Stock owned by CIT or BancShares, will be converted into the right to
receive .06200 shares (the “Exchange Ratio” and such shares, the “Merger Consideration”) of BancShares Class A common stock, par value $1.00 per share (the “BancShares Common Stock”). Holders of CIT Common Stock will receive cash in lieu of
fractional shares.
In addition, at the Effective Time, each share of Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series A, par value $0.01 per share, of
CIT (“CIT Series A Preferred Stock”) and 5.625% Non-Cumulative Perpetual Preferred Stock, Series B, par value $0.01 per share, of CIT (“CIT Series B Preferred Stock”) issued and outstanding immediately prior to the Effective Time will automatically
be converted into the right to receive one share of a newly created series of preferred stock, Series B, of BancShares and one share of a newly created series of preferred stock, Series C, of BancShares (“New BancShares Series C Preferred Stock”),
respectively, having such rights, preferences, privileges and voting powers, and limitations and restrictions, taken as a whole, that are not materially less favorable to the holders thereof than the rights, preferences, privileges and voting
powers, and limitations and restrictions, taken as a whole, of the CIT Series A Preferred Stock and the CIT Series B Preferred Stock, respectively (taking into account (i) that CIT will not survive the consummation of the Transaction and (ii) any
adjustment to the right of optional redemption by BancShares that is reasonably necessary to obtain Tier 1 Capital treatment from the Board of Governors of the Federal Reserve System (the “Federal Reserve”) for such preferred stock).
Treatment of CIT Equity Awards
At the Effective Time, (i) each restricted stock unit award or performance stock unit award in respect of shares of CIT Common Stock, including any deferred
restricted stock unit award (each, a “CIT Award”) outstanding prior to the Effective Time, other than a CIT Director RSU Award (defined below), will automatically be converted into a restricted stock unit in respect of a number of shares of
BancShares Common Stock (a “BancShares Award”) equal to (a) the number of shares of CIT Common Stock subject to such CIT Award immediately prior to the Effective Time based on target level performance multiplied by (b) the Exchange Ratio, and such
BancShares Award will be subject to the same terms and conditions applicable to the existing CIT Award (except, in the case of performance stock unit awards, for any performance goals or metrics), and (ii) each restricted stock unit award in
respect of shares of CIT Common Stock that (a) is outstanding and unvested immediately prior to the Effective Time, (b) is held by a member of the Board of Directors of CIT, (c) will automatically vest upon the Effective Time in accordance with its
terms, and (d) is not subject to a deferral election (each, a “CIT Director RSU Award”) will automatically be converted into the right to receive the Merger Consideration.
Certain Governance Matters
Pursuant to the Merger Agreement, effective as of the Effective Time, the Boards of Directors of the combined company and the combined bank will consist of
14 directors, (i) 11 of whom will be members of the current Board of Directors of BancShares, and (ii) three of whom will be selected from among the current Board of Directors of CIT and will include as one of those three Ellen R. Alemany,
Chairwoman and Chief Executive Officer of CIT.
Certain Other Terms and Conditions of the Merger Agreement
The Merger Agreement contains customary representations and warranties from each of BancShares, FCB, Merger Sub, and CIT, each with respect to its and its
subsidiaries’ businesses, as applicable. In addition, the Merger Agreement includes customary covenants, including, among others, covenants relating to (i) each party’s business during the interim period between the execution of the Merger
Agreement and the Effective Time, (ii) each party’s obligations to cooperate with the other party and use reasonable best efforts to file all applications, notices, petitions, and filings in respect of, and obtain as promptly as practicable, the
requisite governmental and regulatory approvals, (iii) each of CIT’s and BancShares’ obligations to call a meeting of its stockholders to approve the Merger Agreement and the issuance of the shares of BancShares capital stock pursuant to the Merger
Agreement, respectively, (iv) each of CIT’s and BancShares’ obligations, subject to certain exceptions, to recommend that its stockholders approve the Merger Agreement and the issuance of the shares of BancShares capital stock pursuant to the
Merger Agreement, respectively, and (v) non-solicitation obligations and other provisions relating to potential competing acquisition proposals from other bidders for either CIT or BancShares, including a break-up fee of $64,000,000 payable in
certain circumstances.
The consummation of the Mergers is subject to the satisfaction or waiver (where legally permissible) of customary closing conditions, including, among
others, (i) receipt of the requisite approval of the Merger Agreement by the CIT stockholders, (ii) receipt of the requisite approval of the issuance of the shares of BancShares’ capital stock pursuant to the Merger Agreement by BancShares’
stockholders, (iii) receipt of authorization from Nasdaq for listing the shares of BancShares Common Stock and New BancShares Series C Preferred Stock that are issuable pursuant to the Merger Agreement, (iv) receipt of required regulatory
approvals, including the approval of the Federal Reserve, the Federal Deposit Insurance Corporation and the North Carolina Office of the Commissioner of Banks, (v) the absence of any order, injunction, decree or other legal restraint preventing the
consummation of the Mergers or any of the other transactions contemplated by the Merger Agreement or making the consummation of the Mergers or such transactions illegal, and (vi) the effectiveness of the registration statement on Form S-4 to be
filed by BancShares with the Securities and Exchange Commission (the “SEC”) in connection with the Transaction. In addition, each party’s obligation to effect the Transaction is subject to the satisfaction or waiver of certain other customary
conditions, including (a) the accuracy of the representations and warranties of the other party, subject to certain exceptions, (b) performance in all material respects by the other party of its obligations under the Merger Agreement, and (c) the
receipt by such party of an opinion from its counsel to the effect that the Mergers will together be treated as an integrated transaction that qualifies as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of
1986, as amended.
The Merger Agreement provides certain termination rights for each of CIT and BancShares, including, among others, if the First-Step Merger has not
been completed by October 15, 2021.
The representations, warranties and covenants of each party set forth in the Merger Agreement have been made only for the purposes of, and were and are
solely for the benefit of the parties to, the Merger Agreement, may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures made for the purposes of allocating contractual risk between
the parties to the Merger Agreement instead of establishing these matters as facts, and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors. Accordingly, the
representations and warranties may not describe the actual state of affairs at the date they were made or at any other time, and investors should not rely on them as statements of fact. In addition, such representations and warranties (i) will not
survive consummation of the Mergers, and (ii) were made only as of the date of the Merger Agreement or such other date as is specified in the Merger Agreement. Moreover, information concerning the subject matter of the representations and
warranties may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in the parties’ public disclosures. Accordingly, the Merger Agreement is included with this filing only to provide
investors with information regarding the terms of the Merger Agreement, and not to provide investors with any factual information regarding BancShares or CIT, their respective affiliates or their respective businesses. The Merger Agreement should
not be read alone, but should instead be read in conjunction with the other information regarding BancShares, CIT, their respective affiliates or their respective businesses, the Merger Agreement and the Transaction that will be contained in, or
incorporated by reference into, the Registration Statement on Form S-4 that will include a joint proxy statement of BancShares and CIT and a prospectus of BancShares, as well as in the Forms 10-K, Forms 10-Q and other filings that each of
BancShares and CIT make with the SEC.