Mutual of Omaha Bank is being acquired by CIT Group Inc. for $1 billion, Mutual of Omaha and CIT Group announced Tuesday.
The purchase price primarily will be made up of cash and up to $150 million of CIT common stock.
Mutual of Omaha Bank has 26 locations nationwide, including five in Omaha and one in Lincoln. It also has locations in Kansas City and Denver as well as Arizona, California, Nevada, Texas, Hawaii and Florida. The bank also has a loan production office in Des Moines.
"Mutual of Omaha Bank has a talented and dedicated team that built a successful, vibrant institution," Mutual of Omaha Chairman and CEO James Blackledge said in a press release. "The integration of Mutual of Omaha Bank into CIT creates great opportunity to leverage the strengths of both institutions. This transaction allows Mutual of Omaha to focus on, and invest in, growth in its core insurance businesses."
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CIT Chairwoman and CEO Ellen Alemany said the transaction aligns with CIT's goals for "thoughtful growth and value creation" and will immediately improve profitability.
The transaction offers a broader set of product and technology solutions and an expanded business footprint that complements CIT's existing franchise, Alemany said.
CIT is a New York-based financial holding company that has about $50 billion in assets. Its Pasadena, California-based banking subsidiary, CIT Bank, is acquiring Mutual of Omaha Bank. CIT's consumer banking segment includes its national online bank, CIT Bank, and a Southern California branch bank, OneWest Bank.
The transaction is expected to close in the first quarter of 2020, subject to regulatory approval and satisfaction of other customary closing conditions. The agreement excludes Mutual's mortgage subsidiary, Synergy One Lending.
The transaction includes $6.8 billion in deposits, $4.5 billion of which are homeowners association 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, $8.3 billion of total assets, including $3.9 billion of middle-market commercial loans, are part of the transaction.
In 2007, Mutual of Omaha said it was pursuing a unique strategy among insurance companies when it entered the banking business.
"By acquiring existing banks and creating a network of offices in dozens of states over the next several years, Mutual is sinking hundreds of millions of its cash surplus into a new line of business," a World-Herald article from September 2007 said.
At the time, Jeffrey Schmid, CEO of Mutual's banking division, said, "The idea is to create a bank that rivals the insurance company."
Schmid and Michael Homa, the bank president, were buying three banks and looking for more, the article said. The bank opened its headquarters branch in the fall of 2007 on the first floor of a Mutual building just south of the insurance company's home office.
Schmid and Homa were interested in buying banks in Texas, Arizona, California, Florida, Utah and Washington, plus some states in the Northeast and maybe elsewhere, the article said. They were seeking banks with about $200 million in assets that want to grow to $1 billion each.
Initial targets, Schmid said, were fast-growing cities with a high density of Mutual of Omaha insurance clients and agents.
The bank had an advantage that few new banks had: a nationally known brand with near-instant name recognition and a cachet of friendly financial strength that dates back to the "Mutual of Omaha's Wild Kingdom" television series.
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Fortune rank: No. 3 with revenue of $242.1 billion; down from No. 2 last year. First cracked Fortune list in 1989 at No. 205.
History: The holding company of large- and medium-sized firms and investments has grown largely from the singular wisdom of Chairman and CEO Warren Buffett. It started as an investment pool of family and friends in Omaha in the mid-1950s. In 1965, Buffett bought the textile company that gave Berkshire its name. (Ironically, he later called it his worst investment.) His philosophy of buying successful companies with firm niches and keeping leadership in place has achieved returns well in excess of the stock market. The move into insurance was key, as Buffett uses premium reserves available for investment to fund additional purchases. Forbes notes that Berkshire now generates nearly three-quarters of its revenue from its non-financial operating businesses. At 87, Buffett is the oldest CEO of a Fortune 500 company. The company has maintained its offices at Omaha’s Kiewit Plaza since 1962.
Fortune rank: No. 137 on revenue of $21.7 billion; down from No. 126 from last year.
History: Founded in 1955 as American Family Life Insurance by John Amos and his brothers Paul and Bill in Columbus, Georgia, Aflac pays benefits when people are sick or injured. It gained wider recognition starting in 2000 with a marketing campaign using a duck that announces its name. In 2002, Aflac moved its legal domicile to Nebraska for tax reasons and located a regional office in Omaha, although its main offices remain in Georgia.
Fortune rank: No. 141 on revenue of $21.2 billion; up from No. 143 last year. Listed each year since non-manufacturing companies were added to the list in 1995.
History: The company was created by the 1862 Pacific Railway Act, an act of Congress that called for construction of a transcontinental rail line from the Missouri River to the West Coast. The first track was laid out of Omaha in 1865, and U.P. grew into a national icon. Multiple mergers over 150 years helped U.P. amass the nation’s largest rail network, with operations in 23 western states and prime rail connections into Mexico. In 2004, the railroad opened a new 19-story headquarters downtown that serves about 2,900 of the company’s 42,000 employees.
Fortune rank: No. 313 on revenue of $9.5 billion; the same ranking as last year.
History: Founded in 1868 in Sacramento, California, as Pacific Mutual Life Insurance Co., the company’s life insurance, annuity and other financial products pay $2.3 billion in benefits each year. Although its main office is in Newport Beach, California, in 2004 Pacific Life moved its legal domicile to Nebraska for tax reasons and now has a regional office in Omaha’s Aksarben Village.
Peter Kiewit Sons’ Inc.
Fortune rank: No. 339 on revenue of $8.7 billion; down from No. 324 last year. Made its Fortune debut in 1991 and since 1998 has been listed every year but one. Is privately held but qualifies for the Fortune list because it publicly reports revenue.
History: Three sons of Peter Kiewit took over their father’s Omaha construction company, with the youngest, also named Peter, credited with turning it into one of the nation’s largest. The company took off while building military installations during World War II and the Cold War. It also built more miles of Interstate system than any other contractor, causing Fortune to dub Peter Kiewit “the Colossus of Roads.” Today, it is one of the largest employee-owned firms in the world and one of only a handful of construction companies big enough to take on billion-dollar projects.
Mutual of Omaha
Fortune rank: No. 337 on revenue of $8.7 billion; up from No. 342 last year. Made its debut in 1995, dropped off in 2006 and 2007, but solidly on the list since.
History: Got off to a humble start in 1909 as the Mutual Benefit Health and Accident Association, initially struggling to attract policyholders. Under the leadership of Creighton medical student C.C. Criss and later V.J. Skutt, it grew and by the 1950s had emerged as a leading health and accident insurer. The name was changed to Mutual of Omaha in 1962, and a year later it became a household name with sponsorship of the popular “Wild Kingdom” TV show. The company rebranded its familiar Native American head logo in 2001, expanded into banking in 2007, and renewed its commitment to its midtown Omaha headquarters by developing the mixed-use Midtown Crossing.
Fortune rank: No. 630 on revenue of $3.7 billion; up from No. 674 last year.
History: Founder Joe Ricketts saw an opportunity in 1975 when the Securities and Exchange Commission eliminated the practice of fixed brokerage commissions. Ricketts’ firm, First Omaha Securities Inc., began offering discounted commissions and helped usher in a new era of investing, coupled with technology that evolved from touch-tone phones to the Internet. Forty years later, TD Ameritrade has more than 11 million client accounts with more than $1.2 trillion in assets and custodial services for more than 6,000 independent registered investment advisers. Clients trade more than 940,000 times each day.
Green Plains Inc.
Fortune rank: No. 648 on revenue of $3.6 billion; up from No. 662 last year.
History: Since its founding in 2004, Green Plains Inc. has grown to be North America’s second-largest producer of ethanol. The Omaha-based firm grew rapidly through a series of acquisitions that gives it control over various segments of the industry, from grain handling to production to marketing and distribution. Green Plains makes about 1.5 billion gallons of ethanol each year.
Fortune rank: No. 782 on revenue of $2.7 billion; up from No. 804 last year.
History: In 1946, Robert B. Daugherty spent nearly his life’s savings — $5,000 — to buy a small manufacturing company on a farm near Valley to build farm elevators. Years later, with the invention of center-pivot irrigation, Valmont found its niche. It then expanded into steel pipe and tubing manufacturing for irrigation systems and other industries. Through acquisitions and new construction, the company grew to be a global player in certain segments of the agriculture, communications and utilities markets. Today, Valmont’s worldwide operations are constantly looking for opportunities to expand its four business sectors: engineered support structures (steel and aluminum poles for traffic lights, street lighting, etc.); utility support structures (poles for electrical transmission lines, etc.); irrigation; and coatings (galvanization).
Fortune rank: No. 929 on revenue of $2.1 billion; up from No. 934 last year.
History: Clarence L. Werner founded Werner Enterprises Inc. in 1956 at age 19. It grew to become a premier transportation and logistics company with operations throughout North America, Asia, Europe, South America, Africa and Australia. The Omaha-based company is among the five largest truckload carriers in the United States, offering diverse services that include dedicated; medium-to-long-haul, regional and local van; expedited; temperature-controlled; and flatbed. Werner also provides freight management, truck brokerage, intermodal and international services. International services are provided through subsidiary companies and include ocean, air and ground transportation; freight forwarding; and customs brokerage.