CIT Group will buy privately owned OneWest Bank in a $3.4 billion cash-and-stock deal.
OneWest, a regional bank whose parent company is IMB Holdco LLC, runs 73 retail branches in southern California.
IMB shareholders will receive $2 billion in cash and 31.3 million CIT Group shares that are currently valued at $1.4 billion.
OneWest will merge with CIT Group's banking subsidiary CIT Bank, and all locations will operate under the CIT Bank sign.
The deal is expected to add 20 percent to CIT Group's 2016 earnings per share.
The boards of both companies have approved the sale. CIT Group's board will increase from 13, to 15 directors.
CIT Group reported its second-quarter financial results on Tuesday. For the period ended June 30, the company earned $246.9 million, or $1.29 per share. That's up from $183.6 million, or 91 cents per share, a year earlier.
Earnings from continuing operations were $1.02 per share.
Analysts surveyed by FactSet expected earnings of 86 cents per share.
Noninterest income, which comes from fees and other items, climbed to $613.3 million from $563.5 million. Non-accrual loans, or loans that are past due and in danger of default, dropped to $190 million from $279 million due to the sale of the small business lending portfolio.
CIT Group Inc., based in Livingston, New Jersey, also announced that its board has approved the repurchase of up to $500 million shares of its common stock through June 30, 2015. The company said it has repurchase $745 million of its stock since May 30, 2013. It has about $55 million left under previously authorized repurchase programs.