John Thain, former CEO of the New York Stock Exchange, Merrill Lynch and CIT Group
John Thain, former CEO of the New York Stock Exchange, Merrill Lynch and CIT Group Bloomberg News

CIT Group Inc. (NYSE: CIT), the commercial lender led by John A. Thain, agreed to buy OneWest Bank parent IMB Holdco LLC for $3.4 billion, attaching a regional bank to a national loan platform in an effort to boost profitability.

IMB Holdco shareholders will receive $2 billion in cash and 31.3 million shares of CIT common stock, which is valued at $1.4 billion at a CIT stock price of $44.33, and both boards of directors approved the deal, New York-based CIT said today in a statement. CIT shares surged 8.8 percent to $47.80 at 8:46 a.m. in early trading in New York after closing yesterday at $43.95.

Thain, 59, will continue to lead CIT as chairman and chief executive officer and Steven T. Mnuchin, chairman of closely held IMB Holdco, will become CIT’s vice chairman and join the board of the combined company, according to the statement. Both men worked together at Goldman Sachs Group Inc., where Thain rose to become president before leaving in 2004 to lead the New York Stock Exchange. Mnuchin, 51, spent 17 years at the investment bank, becoming chief information officer in 1999.

“The transaction diversifies and lowers the cost of CIT’s deposits, broadens the products we can offer to our middle- market clients, is accretive to earnings and return on equity,” Thain said in the statement.

CIT expects the transaction to add 20 percent to earnings per share in 2016, according to the statement. The company also said today that its board approved a stock repurchase of as much as $500 million through June 30, 2015.

Thain, the former Merrill Lynch & Co. chairman who was hired by CIT to lead a turnaround after the company’s 2009 bankruptcy, has about $2 billion in excess capital, exceeding what regulators said is needed to cushion against potential losses. Last month, he increased CIT’s quarterly dividend 50 percent amid frustration from investors seeking bigger capital returns.


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