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CIT Bank N.A has announced a definitive agreement to acquire Mutual of Omaha Bank in a deal worth $1 billion.

CIT Bank is a subsidiary of CIT Group and Mutual of Omaha is a savings bank subsidiary of Mutual.

The acquisition is expected to close in Q1 of 2020, subject to regulatory approval and satisfaction of other customary closing conditions.

The agreement excludes Mutual's mortgage subsidiary, Synergy One Lending.

The purchase price will be comprised primarily of cash and up to $150 million of CIT common stock, the amount of which will be determined by CIT.

The deal was made to diversify CIT’s funding profile with stable, lower-cost deposits from Mutual of Omaha Bank's homeowner's association (HOA) banking business.

The transaction includes $6.8bn in deposits, $4.5bn of which are HOA deposits from more than 31,000 community associations nationwide, and $2.3 billion of which are from commercial and consumer financial centers in key markets.

In addition, $8.3bn of total assets, including $3.9bn of middle-market commercial loans, are part of the transaction, which adds to CIT's growing franchise.

On a pro forma basis, CIT will have approximately $42.1bn of total deposits and $58.9bn of total assets.

Ellen R. Alemany, CIT chairwoman and chief executive, said: "Following our multi-year strategic transformation, we entered the next phase of our plan focused on thoughtful growth and value creation.

“This transaction squarely aligns to those goals by immediately enhancing our deposit and commercial banking capabilities and improving our profitability.

“This is a unique opportunity to accelerate our strategic plan through the addition of a market-leading HOA deposit franchise, a broader set of product and technology solutions and an expanded business footprint that complements CIT's existing franchise."

James Blackledge, Mutual of Omaha chairman and chief executive, said the acquisition creates an opportunity to leverage the strength of both institutions.

He said: “This transaction allows Mutual of Omaha to focus on, and invest in, growth in its core insurance businesses."

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