Research, Forensic

Unsustainable Revenue at a Merger Target

Nick Elliott, CFA, VP, Forensic Research
Richard Sbaschnig, CFA, Senior Forensic Analyst
07 June 2021


We are concerned that First Citizens BancShares, Inc. (FCNC.A) pending merger with CIT Group Inc. (CIT) may not be able to hit EPS accretion targets, as purchase accounting marks may reduce CIT’s legacy revenue. In particular we are concerned about the unsustainable CIT revenue from previous purchase accounting accretion and gain on sale of its Legacy Consumer Mortgages and rail assets. Additionally, FCNC.A’s dual share class structure may cause selling pressure upon the merger due to index inclusion requirements. Thus, we are adding FCNC.A to our Biggest Concerns List.

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