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CIT Group Inc., led by Wall Street veteran CEO John Thain, has agreed to buy the parent of OneWest Bank for $3.4 billion in cash and stock, moving the commercial lender into consumer banking.

The boards of directors of both companies have approved the deal, in which IMB Holdco LLC shareholders will receive $2 billion and 31.3 million shares of CIT Group common stock valued at $1.4 billion, at a share price of $44.33.

The merger is subject to the usual closing conditions and regulatory approvals. CIT Bank, a subsidiary of CIT Group, would merge with OneWest upon the deal’s completion, expected in the first half of 2015. Thain also said CIT would buy back about $500 million in common stock.

The deal gives CIT assets of $67 billion, well over the $50 billion threshold that puts it in the “systemically important” category as defined by the Federal Reserve, deeming it significant enough to the U.S. economy that it must meet certain capital standards under the Dodd-Frank Act.

Wachtell Lipton, Rosen & Katz were legal advisers to CIT on the deal, while Cleary Gottlieb Steen & Hamilton represented OneWest Bank. Sullivan & Cromwell represented CIT and IMB as joint regulatory counsel in the merger. Robert Ignato is CIT’s general counsel.

With $35 billion in assets, CIT Group provides financing, leasing and advisory services to various industries. Founded in 2000, CIT Bank has $14 billion in deposits and $18 billion in assets and mainly serves middle-market and small businesses, the company says.

CIT Group said the deal with OneWest more than doubles CIT Bank’s assets. It expects the transaction to add 20 percent to earnings per share in 2016 and generate an internal rate of return of 15 percent.

OneWest Bank, based in Pasadena, was founded in 2009 and serves individuals and businesses with 73 retail branches in Southern California. It owns assets valued at $23 billion, including residential and commercial mortgage loans and $15 billion in deposits. OneWest was born when IMB acquired the assets and operations of IndyMac Federal Bank for $13.9 billion in 2009 after it collapsed during the financial crisis a year earlier. Cleary advised on that acquisition.

Following the merger between CIT and OneWest, Thain—a former CEO of Merrill Lynch and Goldman Sachs, as well as of the New York Stock Exchange—will continue to hold his position as chairman and chief executive officer of CIT Group. Steven Mnuchin, chairman of IMB and formerly a partner at Goldman Sachs, will join CIT Group as vice chairman and a member of the CIT board of directors. Allan Frank, currently a member of the OneWest board, also will join the CIT board, which will increase its size from 13 to 15 members, according to a CIT news release.

“This transformational transaction will combine CIT’s national middle market lending platform with OneWest’s wholesale lending and branch banking franchise to create a unique provider of retail and institutional financial services,” Thain said in a statement. “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, and accelerates the utilization of our NOL [net operation loss], while maintaining a strong capital position.”

Mnuchin said in the same statement, “We are confident that this transaction will provide our retail and commercial customers with access to the broad range of high-quality financial products and services offered by CIT, and allow OneWest to benefit from CIT’s expansive client base and global reach.”

CIT Group’s legal team at Wachtell was led by corporate partners Edward Herlihy and David Karp and regulatory partner Richard Kim. Tax partner Joshua Holmes and executive compensation partner Jeannemarie O’Brien also advised on the OneWest deal, along with associates Tsz Him Kwok, Brandon Price, Michael Sabbah and Michael Schobel.

In 2008 Wachtell advised CIT on its transition to a bank holding company so that it could receive federal bailout money during the financial crisis. Also in 2008, the firm helped CIT Group sell its home lending business to Lone Star Funds for $1.5 billion.

CIT itself had filed for bankruptcy reorganization in October 2009 with help from Skadden, Arps, Slate, Meagher & Flom.

Cleary Gottlieb’s team for OneWest Bank was led by partners Christopher Austin and Benet O’Reilly. Regulatory partner Katherine Mooney Carroll, employee benefits partner Arthur Kohn and tax partner Yaron Reich also worked on the deal.

Cleary Gottlieb represented OneWest in its buy of LaJolla Bank’s operations from federal receivership at the FDIC in February 2010, as well as its acquisition of First Federal Bank of California in December 2009 in a similar transaction.

Sullivan & Cromwell’s regulatory counsel team for both CIT Group and IMB included senior chairman H. Rodgin Cohen, as well as partners Mitchell Eitel and Camille Orme in the financial services group, and associate Stephen Salley.

Sullivan & Cromwell also helped CIT Group in connection with its bankruptcy reorganization. Firm partner John Mead has served as an outside counsel to CIT since December 2009.