CIT Group announced it entered into a definitive agreement and plan of merger with IMB Holdco, the parent company of OneWest Bank, for $3.4 billion in cash and stock.

OneWest Bank is a privately owned regional bank formed in 2009 that operates 73 retail branches in Southern California, with approximately $23 billion in assets, including commercial and residential mortgage loans, and $15 billion in deposits. Following the close of the transaction, CIT Bank will merge with OneWest Bank under the “CIT Bank” name and CIT will have assets of $67 billion and $28 billion in deposits.

CIT expects the transaction to be 20% accretive to earnings per share in 2016 generating an internal rate of return of 15%.

Following the close of the transaction, Steven T. Mnuchin, chairman of IMB Holdco, will join CIT Group as vice chairman and will also become a member of its board of directors. Alan Frank, an independent director from OneWest Bank will also join the CIT Board, increasing its size from 13 to 15 members.

“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,” said CIT CEO John Thain. “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, while maintaining a strong capital position. We look forward to welcoming OneWest Bank’s talented employees to CIT as we build our franchise and meet the financing needs of our customers.”

J.P. Morgan Securities LLC is serving as financial advisor to CIT, and Wachtell, Lipton, Rosen & Katz is serving as CIT’s legal counsel. Goldman, Sachs & Co., Bank of America Merrill Lynch and Cleary, Gottlieb, Steen & Hamilton LLP represent IMB Holdco LLC. Sullivan & Cromwell is serving as joint regulatory counsel for CIT and IMB Holdco LLC.