If specialty lender CIT Group (CIT) is indeed on the block, then Wells Fargo (WFC) should seriously consider buying it, one research analyst suggests.

Wells — like many banks — needs to grow earning assets, but it doesn't necessarily need more deposits or brick-and-mortar branches, Stifel Nicolaus' Christopher Mutascio said in a research note Monday. With margins expected to remain razor thin until interest rates finally rise, Mutascio wrote, a deal would give Wells the high-yielding loans it craves while providing CIT with a funding base that could accelerate its growth.

"If you managed a large-cap bank in the current environment, would you rather buy a smaller bank that is suffering from the same lack of revenue growth opportunities as you are, or buy a specialty finance lender that can significantly improve its profitability just by virtue of leveraging the bank's low-cost funding mix?" Mutascio wrote in his note to investors.

Wells has been aggressively buying up specialty businesses over the past year and it is expected to pursue more deals in an effort to grow both interest and noninterest income. One analyst even suggested earlier this month that it should buy Discover Financial (DFS), though its chief financial officer, Tim Sloan, largely put that idea to rest when he said a few days later that Wells preferred to grow its credit card business organically.

CIT caters primarily to small- and middle-market companies, offering asset-based loans, equipment financing and leasing, import-export financing and other commercial lending services. It is run by former Merrill Lynch head John Thain, who was named chairman and chief executive in early 2010 after the company — which had suffered steep losses on real estate loans — emerged from bankruptcy.

CIT has reportedly been shopping for a bank to buy in hopes of lowering its funding costs, but if it can't find a good match then Mutascio said he believes Thain would consider selling the firm. On Monday, Fox Business News reported that Thain has actually been shopping CIT since a bid to buy the online bank ING Direct fell through earlier this year. Capital One Financial (COF) wound up buying ING for about $9 billion.

CIT and Wells declined to comment on any deal speculation.

In an interview Tuesday, Mutascio said that the largest banks are already bumping up against regulatory deposit caps so if they want to grow their options are either to do so organically or buy specialty businesses. In his view, CIT and Wells would be a good match because Wells is already active in asset-based lending and factoring and understands the risks.

"Wells would be more comfortable with the risks because it knows these businesses," he said.

Mutascio also pointed out the two companies have a history; Wells acquired some real estate portfolios from CIT pre-bankruptcy.

Mutascio believes CIT could fetch $52 a share in a sale, or roughly $10.9 billion. That would represent a 33% premium over CIT's closing price Friday, before Mutascio released his report. The shares climbed 6% Monday on the deal speculation, to $41.25, but were down slightly late Tuesday.

Assuming Wells paid 50% in cash and 50% in stock, Mutascio estimated that a deal for CIT would boost Wells' earnings per share by about 5% and would be immediately accretive. If Wells paid all cash, then a deal would boost earnings per share by about 7%.

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