First Citizens BancShares Entering Into A New Era With An Interesting Valuation

 

Whenever the words “transformative M&A” are used, it’s usually an apt description no matter how the deal goes - whether it goes well or not, it’s almost certain to meaningfully transform the future of the company doing the deal. First Citizens BancShares (NASDAQ:FCNCA) is no stranger to deals, but acquiring CIT Group brings an entirely new set of opportunities and risks to the table; the opportunity to leverage a national lending franchise with a low-cost deposit base, but also the risks inherent to integrating a very different sort of business.

Paying less than tangible book value certainly reduces some of the risk to the CIT deal, but management will still have tough choices to make down the line regarding whether or not to maintain certain lines of business and whether to change CIT’s underwriting practices. I expect the deal to allow First Citizens to generate mid-single-digit long-term core earnings growth off of a much larger asset base, and given the current valuation, these shares are worth closer consideration.

 

Read the full article here: 

First Citizens BancShares Entering Into A New Era With An Interesting Valuation