- Net Income includes After-Tax
Charges of ($163) million ($0.80) Per Diluted Share Related to
Discontinued Operations – Increased Interest Curtailment
Reserve and related contingent liabilities in Financial Freedom,
the reverse mortgage servicing business that was part of the
OneWest Bank acquisition in 2015;
- Stable Core Operating Trends –
Pre-tax income from continuing operations improved over $70 million
from the prior quarter resulting from a lower credit provision;
Non-accrual loans fell by 4%;
- Advanced Commercial Air
Separation – Filed Initial Form 10 Registration
Statement for C2 Aviation Capital and progressed to second round of
bidding in conjunction with our dual track process;
- Continued Portfolio Optimization
– Executed a definitive agreement to sell our Canadian
Equipment and Corporate Finance Business; Transferred remaining
Business Air assets to held for sale;
- Maintained Strong Capital
Ratios – Common Equity Tier 1 of 13.4% and Total Capital
Ratio of 14.1%.
CIT Group Inc. (NYSE:CIT), today reported net income of $14
million, $0.07 per diluted share, for the quarter ended June 30,
2016, compared to net income of $115 million, $0.66 per diluted
share for the year-ago quarter. Income from continuing operations
for the second quarter was $181 million, $0.90 per diluted share
compared to $115 million, $0.66 per diluted share in the year-ago
quarter.
Net income for the six month period ended June 30, 2016 was $161
million, $0.80 per diluted share, compared to $219 million, $1.24
per diluted share, for the period ended June 30, 2015. Income from
continuing operations for the six month period ended June 30, 2016
was $333 million, $1.65 per diluted share, compared to $219
million, $1.24 per diluted share for the six month period ended
June 30, 2015.
The loss of $167 million in discontinued operations relates to
Financial Freedom, a reverse mortgage servicing business that was
part of the OneWest Bank acquisition in August 2015. As disclosed
in CIT’s Form 10-K for fiscal year 2015, CIT determined that there
was a material weakness related to the Home Equity Conversion
Mortgage (“HECM”) interest curtailment reserve associated with this
business. During the current quarter, as a result of the ongoing
process to remediate the material weakness and taking into
consideration the investigation being conducted by the Office of
Inspector General (“OIG”) for the Department of Housing and Urban
Development, the Company recorded additional reserves, due to a
change in estimate, of $230 million. This review and the related
investigation are ongoing and, as a result, the amount of this
reserve could change prior to the filing of the current quarter
Form 10-Q.
“We are disappointed that the additional charges arising from
the legacy Financial Freedom business, which was part of the
OneWest Bank acquisition, offset the improved earnings from
continuing operations. Despite the impact it had on our financial
results, we made good progress this quarter advancing our strategic
goals,” said Ellen Alemany, Chief Executive Officer. “We filed the
initial Form 10 Registration Statement for C2 Aviation Capital as
part of our Commercial Air separation and have advanced to the
second round of the bidding process. We entered into a definitive
agreement to sell our Canadian Equipment and Corporate Finance
Business and we transferred our remaining Business Air assets to
held for sale. We remain committed to executing on our strategy to
grow our core businesses, reduce operating expenses and improve
returns.”
Summary of Second Quarter Financial
Results from Continuing Operations
All references in this section relate to continuing operations
and therefore do not include any of the assets or results of
operations of the discontinued operations.
On August 3, 2015, CIT acquired IMB HoldCo LLC, the parent
company of OneWest Bank, which impacts the comparability of current
results to prior periods. The current and prior quarters reflect a
full quarter of OneWest Bank’s results of operations while the
prior-year period does not include any results from OneWest
Bank.
Selected Financial Highlights
(Continuing Operations)
Change from: 2Q16 1Q16 2Q15 Prior Quarter*
Prior Year* ($ in millions, except per share data) Pre-tax income $
275 $ 204 $ 153 $ 71 $ 122 Net income $ 181 $ 152 $ 115 $ 29 $ 66
Diluted earnings per share (EPS) $ 0.90 $ 0.75 $ 0.66 $ 0.14 $ 0.24
Pre-tax return on average earning assets (ROAEA) 1.86
% 1.38 % 1.49 % 0.48 % 0.37 % Return on average earning assets
(ROAEA) 1.22 % 1.02 % 1.12 % 0.20 % 0.10 % Adjusted return on
tangible common equity (ROTCE)(1)
8.26
% 7.08 %
5.89
%
1.18
%
2.37
% Net finance margin(1) 3.65 % 3.74 % 3.33 % -0.08 % 0.32 % Net
efficiency ratio(1) 49.8 % 49.2 % 57.4 % 0.60 % -7.58 % Tangible
book value per share (TBVPS)(1) $ 48.45 $ 48.39 $ 47.51 $ 0.06 $
0.93 CET 1 Ratio(2)
13.4
% 13.1 % 14.4 %
0.3
%
-1.0
% Total Capital Ratio(2)
14.1
% 13.8 % 15.1 %
0.3
%
-1.0
% Net charge-offs as % of AFR 0.53 % 0.65 % 0.48 % -0.12 %
0.05 % Allowance for loan losses as % of finance receivables 1.31 %
1.29 % 1.14 % 0.02 % 0.17 % Average earning assets $ 59,229
$ 59,206 $ 41,159 $ 23 $ 18,070 Financing and leasing assets $
49,725 $ 50,286 $ 35,846 $ (561 ) $ 13,879 * Certain balances may
not sum due to rounding.
(1)See "Non-GAAP Measurements" at the end
of this press release and page 25 for reconciliation of non-GAAP to
GAAP financial information.
(2)Ratios based on the fully phased-in basis.
Income from continuing operations of $181 million included net
after-tax charges of $9 million from discrete items related to our
strategic initiatives. Discrete items included charges related to a
goodwill impairment on the business aircraft assets transferred to
held for sale and a restructuring charge resulting from operating
expense reduction initiatives. In addition to these items, income
this quarter included a lower credit provision primarily in the oil
and gas portfolio and a mark-to-market benefit on the total return
swap (“TRS”).
Tangible book value per share1 increased slightly to $48.45.
Estimated Common Equity Tier 1 and Total Capital ratios at June 30,
2016 increased to 13.4% and 14.1%, respectively, as calculated
under the fully phased-in Regulatory Capital Rules. Average earning
assets2 for the June 30, 2016 quarter were relatively flat at $59.2
billion reflecting growth in Transportation Finance offset by a
reduction in Commercial Banking and run-off in the liquidating
portfolios. The ROTCE3 of 8.26% increased from the prior quarter
reflecting earnings from continuing operations while the increase
from the year-ago quarter reflects the lower capital levels
primarily due to the acquisition of OneWest Bank.
Income Statement
Highlights:
Net Finance Revenue* Change from: ($ in
millions) 2Q16 1Q16 2Q15 Prior Quarter Prior Year
Interest income $ 495 $ 495 $ 284 $ (0 ) $ 212 Rental income on
operating leases 569 575 532
(6 ) 38 Finance revenue 1,065 1,071 816
(6 ) 249 Interest expense (283 ) (286 ) (265 ) 4 (17 ) Depreciation
on operating lease equipment (176 ) (175 ) (158 ) (1 ) (19 )
Maintenance and other operating lease expenses (65 )
(56 ) (49 ) (9 ) (16 ) Net finance revenue $
541 $ 553 $ 343 $ (12 ) $ 198
Average earning assets
$
59,229 $ 59,206 $ 41,159 $ 23 $ 18,070 Net finance margin 3.65 %
3.74 % 3.33 % -0.08 % 0.32 % * Certain balances may not sum due to
rounding.
Net finance revenue4 was $541 million in the current quarter,
compared to $553 million in the prior quarter and $343 million in
the year-ago quarter. Net finance revenue as a percentage of
average earning assets (“net finance margin”) decreased from the
prior quarter and increased from the year-ago quarter. The
decreases in net finance revenue and net finance margin from the
prior quarter were driven primarily by higher maintenance and other
operating lease costs and lower rental revenue as the prior quarter
reflected elevated collections on remarketed aircraft.
Average earning assets were essentially flat compared to the
prior quarter reflecting growth in Aerospace, Rail, Real Estate
Finance, and Other Consumer Banking, driven by new business volume,
offset by assets sales and higher prepayments in Commercial Finance
and run-off in the liquidating portfolios.
The increases in net finance revenue, net finance margin and
average earning assets from the year-ago quarter reflected the
benefits from the OneWest Bank acquisition.
Other Income* Change from: ($ in millions)
2Q16 1Q16 2Q15 Prior Quarter Prior Year Fee revenues
$ 28 $ 33 $ 25 $ (5 ) $ 3 Gains on sales of leasing equipment 28 11
22 17 7 Factoring commissions 24 26 27 (2 ) (3 ) Net gain (losses)
on derivatives and foreign currency exchange 10 9 (5 ) 1 15 Gains
on loan and portfolio sales 8 0 2 7 6 Gains (losses) on investments
6 (4 ) 4 10 3 Gain on OREO sales 4 2 - 2 4 Impairment on assets
held for sale (17 ) (22 ) (11 ) 5 (6 ) Other revenues 13
46 (0 ) (32 )
14 Total other income $ 104 $ 101
$ 64 $ 3 $ 41 * Certain balances
may not sum due to rounding.
Other income of $104 million included gains on assets sales,
primarily in Rail, mostly offset by impairment charges on certain
rail assets when transferred to held for sale, and a $4 million
goodwill impairment charge on the remaining business aircraft
assets, also transferred to assets held for sale. The current
quarter also included a $9 million mark-to-market benefit on the
TRS and a $5 million mark-to-market benefit on the mortgage backed
securities. The prior quarter included $10 million of net benefits
from international business exits,$18 million benefit from the
mark-to-market on the TRS partially offset by a $4 million
mark-to-market charge on the mortgage backed securities. The
year-ago quarter included a $9 million tax-related charge (that was
fully offset with a benefit to the tax provision) and a $6 million
negative mark-to-market on the TRS.
Operating Expenses* Change from: ($ in
millions) 2Q16 1Q16 2Q15 Prior Quarter Prior Year
Compensation and benefits $ (156 ) $ (172 ) $ (136 ) $ 16 $ (20 )
Technology (31 ) (30 ) (25 ) (1 ) (6 ) Professional fees (40 ) (39
) (21 ) (1 ) (19 ) Net occupancy expense (17 ) (18 ) (9 ) 1 (9 )
Advertising and marketing (4 ) (5 ) (7 ) 1 2 Other expenses
(73 ) (57 ) (37 ) (16 ) (36 )
Operating expenses before provision for
severance andfacilities exiting and intangible asset
amortization
(321 ) (322 ) (233 ) - (88 ) Provision for severance and facilities
exiting activities (10 ) (20 ) (1 ) 11 (9 ) Intangible asset
amortization (6 ) (6 ) (1 )
- (6 ) Total operating expenses $ (338 ) $
(349 ) $ (235 ) $ 11 $ (103 ) Net
efficiency ratio 49.8 % 49.2 % 57.4 % -0.6 % 7.6 % * Certain
balances may not sum due to rounding.
Operating expenses excluding restructuring costs and intangible
asset amortization5 were relatively flat to the prior quarter at
$321 million. The current quarter reflected elevated costs
primarily associated with the Commercial Air separation and higher
FDIC insurance, offset by lower employee cost as the prior quarter
included the annual benefit restarts. The current quarter also
included $8 million of other expenses related to real estate owned
(“REO”) that occurred in prior periods. The increase from the prior
year reflected the addition of OneWest Bank. The net efficiency
ratio5 of 50% reflected lower net finance revenue partially offset
by lower operating expenses as compared to the prior quarter and
improvement from the prior year reflects the addition of OneWest
Bank. Headcount at June 30, 2016 was 4,650, down from 4,740 in the
prior quarter, due to strategic initiatives, and up from 3,360 a
year-ago, due to the OneWest Bank acquisition. Restructuring costs
in this quarter and the prior quarter related to our strategic
initiatives to reduce operating expenses, while the amortization of
intangibles was primarily due to the OneWest Bank acquisition.
Income Taxes
The provision for income taxes of $94 million for the quarter
included $4 million of net discrete tax expense. The prior quarter
had an income tax expense of $53 million for the quarter, including
$14 million of discrete tax benefits from the resolution of a tax
position on an international portfolio that had been previously
sold. The current effective tax rate was 34% for the quarter, up
from 26% in the prior quarter and 25% in the year-ago quarter. The
increase in the effective tax rate is mainly attributable to the
impact of discrete items compared to the prior quarter and
increased domestic earnings, which shifted the geographic mix of
earnings compared to the year-ago quarter. Cash taxes were a net
payment of $6 million compared to less than $1 million in the prior
quarter and $4 million in the year-ago quarter.
Balance Sheet
Highlights:
Earning Assets* Change from: ($ in millions)
2Q16 1Q16 2Q15 Prior Quarter Prior Year Loans
(including assets held for sale) $ 32,700 $ 33,475 $ 20,448 $ (775
) $ 12,252 Operating lease equipment, net (including assets held
for sale) 17,025 16,811
15,398 214 1,627 Financing and
Leasing Assets 49,725 50,286 35,846 (561 ) 13,879 Interest bearing
cash 7,083 7,135 4,225 (52 ) 2,858 Investment securities 3,229
2,897 1,693 332 1,536 Indemnification asset 376 389 - (14 ) 376
Securities purchased under agreements to resell - - 750 - (750 )
Credit balances of factoring clients (1,215 ) (1,361
) (1,373 ) 146 158 Total Earning
Assets $ 59,197
$
59,346 $ 41,140 $ (149 ) $ 18,057 * Certain
balances may not sum due to rounding.
Earning assets at June 30, 2016 declined slightly from the prior
quarter, as collections and sales of loans offset $2.8 billion in
new originations. The increase from the year-ago quarter
principally reflects the assets acquired from OneWest Bank.
Interest bearing cash and investment securities were $10.3
billion at June 30, 2016, and consisted of $7.1 billion of cash
($0.6 billion of which was restricted cash), and $3.2 billion
of investment securities, primarily debt securities, Federal Home
Loan Bank (“FHLB”) stock and equities. The increase in investment
securities from the prior quarter reflects the initiative to deploy
cash into liquid investments. In addition, there was $1.0 billion
of non-interest bearing cash and other restricted balances.
Of the total cash and investment securities $1.7 billion of the
interest bearing cash and investment securities was at the
financial holding company, $8.2 billion was at CIT Bank and the
remaining $1.4 billion includes amounts at the operating
subsidiaries and restricted balances. In addition, there was $1.0
billion of non-interest bearing cash primarily at the operating
subsidiaries and other restricted balances.
Deposits and Borrowings* Change from: ($ in
millions) 2Q16 1Q16 2Q15 Prior Quarter Prior Year Total
Deposits $ 32,879 $ 32,893 $ 17,268 $ (14 ) $ 15,611
Unsecured borrowings $ 10,591 $ 10,587 $ 10,684 $ 4 $ (93 ) Secured
borrowings 6,919 7,425 5,645 (506 )
1,274 Total Borrowings $ 17,510 $ 18,013 $ 16,330 $
(502 ) $ 1,181 * Certain balances may not sum due to
rounding.
Deposits were essentially flat from the prior quarter. The
decline in secured borrowings related to the amortization,
redemption and maturities of structured financings. The increase in
secured borrowings from June 30, 2015 primarily reflected FHLB
borrowings related to the acquisition of OneWest Bank in the third
quarter of 2015, offset by a reduction in other secured borrowings.
At June 30, 2016, deposits represented approximately 65% of CIT’s
funding, with unsecured and secured borrowings comprising 21% and
14% of the funding mix, respectively. The weighted average coupon
rate on outstanding deposits and borrowings was 2.20% at June 30,
2016, down from 2.22% at March 31, 2016 and 3.04% at June 30,
2015.
Capital* Change from: ($ in millions, except
per share data) 2Q16 1Q16 2Q15 Prior Quarter Prior Year
Common Stockholders' Equity $ 11,124 $ 11,126 $ 8,807 $ (2 )
$ 2,317 Tangible Common Equity $ 9,786 $ 9,760 $ 8,220 $ 25 $ 1,566
Total risk-based capital(1) $ 9,539 $ 9,524 $ 8,409 $ 15 $ 1,130
Risk-weighted assets(1) $
67,733
$ 69,192 $ 55,665 $
(1,459
) $
12,068
Book value per share (BVPS) $ 55.07 $ 55.16 $ 50.91 $ (0.09
) $ 4.16 Tangible book value per share (TBVPS) $ 48.45
$
48.39 $ 47.51 $ 0.06 $ 0.93 CET 1 Ratio(1)
13.4
% 13.1 % 14.4 %
0.3
%
-1.0
% Total Capital Ratio(1)
14.1
% 13.8 % 15.1 %
0.3
%
-1.0
% Tier 1 Leverage Ratio(1) 13.9 %
13.8
% 17.7 %
0.1
% -3.8 % * Certain balances may not sum due to rounding.
(1)Balances and ratios based on the fully phased-in basis.
Common stockholders’ equity and tangible common equity were
essentially unchanged from the prior quarter. The acquisition of
OneWest Bank was the main contributor to the increase from June 30,
2015, primarily due to the issuance of common shares and the
reversal of the valuation allowance on our Federal deferred tax
asset in the third quarter of 2015. Tangible common equity also
increased from June 30, 2015, but by a lower amount due to the
increase in goodwill and intangibles resulting from the acquisition
of OneWest Bank. While regulatory capital also reflected the trends
noted above, the increase was less than the common equity increase
since the majority of the deferred tax asset balance is disallowed
for regulatory capital purposes. All regulatory capital ratios
increased from the prior quarter reflecting a reduction in risk
weighted assets. The decline in capital ratios from the prior year
reflected the acquisition of OneWest Bank as growth in regulatory
capital was more than offset by the increase in the risk-weighted
assets. The ratios presented are estimated Common Equity Tier 1 and
Total Capital ratios under the fully phased-in Regulatory Capital
Rules.
Book value per share and tangible book value per share were
relatively flat. Both amounts also increased from June 30, 2015, as
the increase in equity outpaced the increase in shares
outstanding.
In July 2016, the Board approved a $0.15 cash dividend payable
on August 26, 2016 to common shareholders of record as of August
12, 2016.
Asset Quality
Asset Quality* Change from: ($ in millions)
2Q16 1Q16 2Q15 Prior Quarter Prior Year Net
charge-offs (NCO) $ 41 $ 51 $ 24 $ (10 ) $ 18 NCO % of AFR 0.53 %
0.65 % 0.48 % -0.12 % 0.05 % Non-accrual $ 283 $ 295 $ 198 $ (12 )
$ 85 OREO $ 90 $ 100 $ - $ (10 ) $ 90 Provision for credit losses $
28 $ 99 $ 18 $ (71 ) $ 10 Total Portfolio Allowance as a % of
Finance Receivables (FR) 1.31 % 1.29 % 1.14 % 0.02 % 0.17 %
Allowance for loan losses plus principal
loss discount as %of FR (before principal loss discount) /
Commercial
1.83 % 1.87 % 1.79 % -0.04 % 0.04 % * Certain balances may not sum
due to rounding.
Excluding the impact relating to assets transferred to held for
sale in all periods, net charge-offs were $16 million (0.21% of
average finance receivables), compared to $42 million (0.53%) in
the prior quarter and $22 million (0.45%) in the year-ago quarter.
The current quarter net charge-offs includes $17 million in the
energy (oil and gas) portfolio, of which $10 million related to
loans which were sold or transferred to assets held for sale. Prior
quarter net charge-offs included $15 million in the energy (oil and
gas) portfolio.
Non-accrual loans of $283 million (0.93% of finance receivables)
decreased from the prior quarter as charge-offs and asset sales
generally offset a modest level of new non-accruals. The increase
compared to the year-ago quarter is primarily due to increases in
the energy portfolio. The provision for credit losses decreased
from the prior quarter elevated levels, as portfolio quality was
relatively unchanged and charge-offs, excluding the impact relating
to assets transferred to held for sale, were lower.
The allowance for loan losses was $399 million (1.31% of finance
receivables, 1.55% excluding loans subject to loss sharing
agreements with the FDIC) at June 30, 2016, compared to $405
million (1.29% of finance receivables, 1.52% excluding loans
subject to loss sharing agreements with the FDIC) at March 31, 2016
and $351 million (1.79% of finance receivables) at June 30, 2015.
The slight decrease in allowance for loan losses from the prior
quarter primarily reflected a reduction due to energy related
charge-offs and lower loan balances, partially offset by
approximately $10 million increase in the reserve for maritime
finance loans, while the increase from the year-ago quarter was
concentrated in the energy and maritime portfolios. Including the
impact of the principal loss discount on credit impaired loans,
which is essentially a reserve for credit losses on the discounted
loans, the commercial loan allowance to finance receivables was
1.83% compared to 1.87% at March 31, 2016. The consumer loans ratio
was 7.20% at June 30, 2016 and 7.86% at March 31, 2016,
respectively, as most of the consumer loans purchased were credit
impaired and are partially covered by loss sharing agreements with
the FDIC. The decrease from the prior quarter was driven by the
shift in asset mix as new originations offset the run-off of the
purchased credit impaired portfolio.
CIT’s loans to the oil and gas industry totaled $0.8 billion or
2.7% of total loans at June 30, 2016, of which 47% were criticized.
The decline of $0.1 billion in oil and gas loans was driven by loan
sales and pay downs. The portfolio has loss coverage of about 10.5%
of the principal balance, reflecting the purchase accounting
discount for loans acquired from OneWest Bank and the allowance for
loan losses. If market conditions remain the same, the portfolio
will likely experience additional downward credit migration.
Commercial Banking
Earnings Summary* Change from: ($ in millions) 2Q16
1Q16 2Q15 Prior Quarter Prior Year Interest income $
289 $ 287 $ 186 $ 2 $ 103 Rental income on operating leases 29 27
24 2 5 Interest expense (75 ) (74 ) (65 ) (1 ) (10 ) Depreciation
on operating lease equipment (22 ) (20 ) (18 )
(2 ) (4 ) Net finance revenue 222 221 128 1 94 Other
income 61 56 67 5 (6 ) Provision for credit losses (11 ) (74 ) (18
) 62 7 Operating expenses (149 ) (158 ) (133 )
10 (16 ) Income before income taxes $ 122
$ 44 $ 44 $ 78 $ 78
Select Average Balances Average finance receivables $ 21,041
$ 21,131 $ 15,041 $ (90 ) $ 6,000 Average earning assets $ 20,575 $
20,727 $ 14,502 $ (152 ) $ 6,073
Statistical Data Pre-tax
ROAEA 2.38 % 0.85 % 1.22 % 1.53 % 1.16 % Net finance margin 4.31 %
4.26 % 3.52 % 0.05 % 0.79 % New business volume $ 2,048 $ 1,581 $
1,523 $ 467 $ 525 Net efficiency ratio 52.1 % 56.8 % 67.9 % 4.7 %
15.8 % * Certain balances may not sum due to rounding.
Commercial Banking pre-tax earnings increased from the prior
quarter due to lower credit costs and operating expenses, while the
increase from the year-ago quarter also reflects the addition from
OneWest Bank.
Financing and leasing assets, which comprise the majority of
earning assets, were $21.5 billion at June 30, 2016, down slightly
from $22.0 billion at March 31, 2016, mostly driven by the decrease
in financing and leasing assets in Commercial Finance, and up from
$15.4 billion a year-ago, reflecting the acquisition of OneWest
Bank. New lending and leasing volume exceeded $2 billion and was up
from the prior and year-ago quarters, driven by strong origination
activity in Real Estate Finance, while factored volume was down
from both the prior and year-ago quarters.
Net finance revenue was essentially flat to the prior quarter,
and included interest recoveries of $6 million on a loan previously
charged off. The increase from the year-ago quarter reflected
higher earning assets and purchase accounting accretion on loans
acquired from OneWest Bank. Net finance margin of 4.31% was up
slightly from the prior and year-ago quarters from interest
recoveries on loans previously charged off. In addition, the
increase from the prior year was also due to purchase accounting
accretion on acquired loans.
Other income increased from the prior quarter primarily due to
gains on asset sales and recoveries of previous impairments on
assets held for sale, partially offset by lower capital market fees
and factoring commissions. The decline from the year-ago quarter
reflected lower gains on asset sales and lower factoring
commissions.
Operating expenses decreased from the prior quarter, as the
prior quarter included higher legal expenses in Commercial Finance
and higher sales and local taxes in Business Capital. The increase
from the year-ago quarter reflected the acquisition of OneWest
Bank.
Net charge-offs were $35 million (0.66% of average finance
receivables), compared to $32 million (0.60%) in the prior quarter
and $25 million (0.67%) in the year-ago quarter. Excluding assets
transferred to held for sale in all periods, net charge-offs were
$16 million in the current quarter, compared to $30 million in the
prior quarter and $24 million in the year-ago quarter. The decrease
in the current quarter compared to the prior quarter primarily
related to energy loans. Non-accrual loans were $208 million (1.00%
of finance receivables), compared to $215 million (1.00%) at March
31, 2016, and $98 million (0.65%) a year-ago. The increase in
balances from the year-ago quarter was primarily related to loans
in the energy sector. The provision for credit losses decreased
from the prior quarter, which included higher reserves and
charge-offs related to the energy portfolio.
Transportation Finance
Earnings Summary* Change from: ($ in millions) 2Q16 1Q16
2Q15 Prior Quarter Prior Year Interest income $ 50 $ 53 $ 44
$ (3 ) $ 6 Rental income on operating leases 537 545 498 (8 ) 39
Interest expense (147 ) (148 ) (149 ) 2 2 Depreciation on operating
lease equipment (155 ) (155 ) (137 ) 0 (18 ) Maintenance and other
operating lease expenses (65 ) (56 )
(49 ) (9 ) (16 ) Net finance revenue 220 238 208 (17
) 13 Other income 12 19 14 (7 ) (2 ) Provision for credit losses
(16 ) (23 ) (1 ) 7 (15 ) Operating expenses (62 ) (61
) (64 ) (2 ) 2 Income
before income taxes $ 154 $ 173 $ 157
$ (19 ) $ (2 )
Select Average Balances Average
finance receivables $ 2,726 $ 3,333 $ 3,048 $ (607 ) $ (322 )
Average operating leases $ 16,477 $ 16,364 $ 14,720 $ 113 $ 1,757
Average earning assets $ 20,946 $ 20,620 $ 18,957 $ 326 $ 1,989
Statistical Data Pre-tax ROAEA 2.94 % 3.36 % 3.30 % -0.41 %
-0.36 % Net finance margin 4.21 % 4.61 % 4.38 % -0.40 % -0.18 % New
business volume
$
461 $ 246 $ 744
$
215 $ (283 ) Net efficiency ratio 26.1 % 23.7 % 28.8 % -2.4 % 2.7 %
* Certain balances may not sum due to rounding.
Transportation Finance pre-tax earnings decreased from the prior
quarter, as lower net finance revenue and other income offset lower
credit costs, and were essentially flat with the year-ago quarter,
as higher net finance revenue on increased average earning assets
was offset by higher credit costs, largely in Maritime. The current
quarter results also reflected charges related to the transfer of
the remaining Business Air portfolio to held for sale and increased
operating expenses related to the planned Commercial Air
separation.
Financing and leasing assets totaled $20.0 billion at June 30,
2016, compared to $19.9 billion at March 31, 2016 and $18.3 billion
at June 30, 2015. Assets grew sequentially in Aerospace and Rail
and grew in all three divisions (Aerospace, Rail and Maritime) from
a year ago. Assets held for sale of $0.8 billion principally
included the Business Air portfolio, as the remaining Business Air
assets were transferred to held for sale during the quarter. New
business volume for the quarter totaled $0.5 billion, up from the
prior quarter reflecting additional aircraft and railcar
deliveries.
Net finance revenue was down from the prior quarter, as the
impact of higher maintenance and other operating lease expenses and
lower rentals offset lower funding costs. Net finance revenue
increased from the year-ago quarter primarily reflecting higher
average operating lease assets partially offset by higher
maintenance and other operating lease expenses. Net finance margin
was down from the prior and year-ago quarters reflecting the net
finance revenue trends described above. Gross yields in Aerospace
and Rail decreased from the prior quarter to 10.9% and 13.2%,
respectively, reflecting lower rental rates and higher cash
balances in Aerospace.
Other income declined from the prior and year-ago quarters
largely reflecting higher gains on asset sales in rail, which were
offset by impairments, including a $4 million goodwill impairment
charge related to the business aircraft assets transferred to held
for sale.
Operating expenses were relatively flat with the prior quarter,
as higher costs related to the Commercial Air separation offset
lower employee costs. The current and prior quarter included $9
million and $4 million of costs related to the Commercial Air
separation initiative, respectively.
Net charge-offs, excluding assets transferred to held for sale,
were negligible for the current and year-ago quarters, compared to
net charge-offs of $12 million (1.49% of average finance
receivables) related to the Aerospace loan portfolio in the prior
quarter. Non-accrual loans of $18 million (0.70% of finance
receivables) decreased from $22 million (0.78%) at March 31, 2016
and increased from $5 million (0.15%) a year-ago, and principally
consisted of business aircraft loans in each of the periods. The
provision for credit losses decreased from the prior quarter, but
continues to reflect reserve increases in Maritime and elevated
charges in the Business Air portfolio related to the assets
transferred to held for sale.
Utilization trends were relatively unchanged compared to the
prior quarter. All aircraft were on lease or under a commitment at
quarter-end resulting in 100% utilization, while Rail utilization
remained at approximately 94%. All of our aircraft scheduled
for delivery in the next 12 months and approximately 41% of the
total railcar order-book have lease commitments.
Consumer and Community Banking
Earnings Summary* Change from: ($ in millions)
2Q16 1Q16 2Q15 Prior Quarter Prior Year Interest
income $ 105 $ 103 $ - $ 2 $ 105 Interest expense (6 )
(9 ) - 3 (6 ) Net finance
revenue 100 94 - 5 100 Other income 12 8 - 4 12 Provision for
credit losses (1 ) (3 ) - 2 (1 ) Operating expenses (93 )
(82 ) - (11 ) (93 )
Income before income taxes $ 17 $ 17 $
- $ (0 )
$
17
Select Average Balances Average finance
receivables $ 7,156 $ 7,160 $ - $ (5 ) $ 7,156 Average earning
assets $ 7,729 $ 7,758 $ - $ (29 ) $ 7,729
Statistical Data
Pre-tax ROAEA 0.87 % 0.88 % - -0.01 % 0.87 % Net finance margin
5.15 % 4.86 % - 0.29 % 5.15 % New business volume
$
261 $ 215 $ - $ 47 $ 261 Net efficiency ratio 79.6 % 75.8 % - 3.8 %
79.6 % * Certain balances may not sum due to rounding.
Consumer and Community Banking pre-tax earnings remained
consistent with the prior quarter. The quarter benefited from
higher net finance revenue, higher other income due to gains on
REO, and lower credit provision, which were offset by higher
operating expenses, primarily from REO expenses ($8 million of
which related to prior periods).
Financing and leasing assets totaled $7.2 billion at June 30,
2016, down slightly from March 31, 2016, as the run-off of the
Legacy Consumer Mortgage (“LCM”) portfolios offset new volume. The
LCM portfolios make up $5.2 billion of the current quarter balance
with a significant portion covered by loss sharing agreements with
the FDIC. The benefit of these agreements is recorded within the
indemnification asset.
Non-accrual loans were $12 million (0.16% of finance
receivables) at June 30, 2016, up from $7 million (0.10% of finance
receivables) at March 31, 2016. The provision for credit losses
decreased slightly from the prior quarter.
Non-Strategic Portfolios (NSP)
Earnings Summary* Change from: ($ in millions)
2Q16 1Q16 2Q15 Prior Quarter Prior Year Interest
income $ 23 $ 25 $ 49 $ (2 ) $ (26 ) Rental income on operating
leases 4 4 10 0 (6 ) Interest expense (14 ) (15 ) (34 ) 1 20
Depreciation on operating lease equipment - -
(4 ) - 4 Net
finance revenue 14 14 21 (1 ) (8 ) Other income 7 15 (1 ) (8 ) 8
Provision for credit losses - - 1 - (1 ) Operating expenses
(12 ) (12 ) (35 ) 0
23 Income (loss) before income taxes $ 8 $ 17
$ (14 ) $ (9 ) $ 22
Select
Average Balances Average earning assets $ 1,385 $ 1,517 $ 2,558
$ (132 ) $ (1,174 )
Statistical Data Pre-tax ROAEA 2.34 %
4.38 % -2.16 % -2.04 % 4.50 % Net finance margin 3.90 % 3.77 % 3.30
% 0.13 % 0.60 % New business volume $ 61 $ 44 $ 216 $ 17 $ (154 ) *
Certain balances may not sum due to rounding.
NSP pre-tax earnings for the quarter reflected operations for
the remaining businesses in Canada and China. The prior quarter
reflected a gain of $24 million from the sale of the U.K. business,
partially offset by an $11 million impairment charge on assets held
for sale. The year-ago pre-tax loss was driven by the higher level
of operating expenses, reflective of the remaining businesses at
that time. Financing and leasing assets at June 30, 2016 totaled
$1.1 billion, down slightly from $1.2 billion at March 31, 2016 and
from $2.1 billion at June 30, 2015. Our remaining NSP businesses
are classified as held for sale. During this quarter we reached a
definitive agreement to sell the Canadian Equipment and Corporate
Finance business (approximately $750 million in financing and
leasing assets), subject to regulatory approvals, and expect the
transaction to close in the fourth quarter of this year.
Corporate & Other
Earnings Summary* Change from: ($ in millions)
2Q16 1Q16 2Q15 Prior Quarter Prior Year Interest
income $ 28 $ 27 $ 5 $ 0 $ 23 Interest expense (42 )
(41 ) (18 ) (0 ) (24 ) Net finance
revenue (14 ) (14 ) (13 ) (0 ) (1 ) Other income 13 4 (17 ) 9 30
Operating expenses (25 ) (37 )
(4 ) 11 (21 ) Loss before income taxes $ (26 )
$ (47 ) $ (34 ) $ 20 $ 8
Select Average Balances Average earning assets $ 8,595 $
8,585 $ 5,142 $ 10 $ 3,453
Statistical Data Pre-tax ROAEA
-1.21 % -2.17 % -2.62 % 0.95 % 1.41 % Net finance margin -0.66 %
-0.65 % -1.02 % -0.01 % 0.36 % * Certain balances may not
sum due to rounding.
Certain items are not allocated to operating segments and are
included in Corporate and Other, including interest expense,
primarily related to corporate liquidity costs, mark-to-market on
certain derivatives, restructuring charges, certain legal costs and
other operating expenses. Interest income increased slightly from
the prior quarter and is up from a year-ago quarter primarily
related to income generated from the investment portfolio. Other
income included a $9 million mark-to-market benefit on the TRS and
a $5 million mark-to-market benefit on mortgage backed securities
in the current quarter, compared to an $18 million benefit on the
TRS offset by a $4 million mark-to-market charge on mortgage backed
securities in the prior quarter. The prior year quarter included a
$9 million tax-related charge, (that was fully offset with a
benefit to the tax provision) and a negative mark-to-market
adjustment on the TRS of $6 million. Operating expenses for the
quarter reflected restructuring charges of $10 million, compared to
$20 million in the prior quarter, reflecting our previously
announced organizational changes, and $1 million in the year-ago
quarter.
Discontinued Operations
Income from discontinued operations, net of taxes, was a loss of
$167 million in the current quarter compared to a loss of $5
million in the prior quarter. In the current period, discontinued
operations predominantly relates to third-party reverse mortgage
servicing activity, known as Financial Freedom, which the Company
acquired in the OneWest Bank acquisition.
As a result of the ongoing review to remediate the material
weakness, and taking into consideration the investigation being
conducted by the OIG, the Company recorded additional reserves, due
to a change in estimate, of $230 million during the current
quarter.
Conference Call and Webcast
Chairwoman and Chief Executive Officer Ellen Alemany and Chief
Financial Officer Carol Hayles will discuss these results on a
conference call and audio webcast today, July 28, at 8:00 a.m.
(EDT). Interested parties may access the conference call live by
dialing 888-317-6003 for U.S., 866-284-3684 for Canadian callers or
412-317-6061 for international callers and reference access code
“0603321” or access the audio webcast at cit.com/investor. An audio
replay of the call will be available until 11:59 p.m. (EDT) on
August 28, 2016, by dialing 877-344-7529 for U.S. callers,
855-669-9658 for Canadian callers or 412-317-0088 for international
callers with the access code “10089399”, or at
cit.com/investor.
About CIT
Founded in 1908, CIT (NYSE: CIT) is a financial holding company
with more than $65 billion in assets. Its principal bank
subsidiary, CIT Bank, N.A., (Member FDIC, Equal Housing Lender) has
more than $30 billion of deposits and more than $40 billion of
assets. It provides financing, leasing and advisory services
principally to middle market companies across a wide variety of
industries primarily in North America, and equipment financing and
leasing solutions to the transportation sector. It also offers
products and services to consumers through its Internet bank
franchise and a network of retail branches in Southern California,
operating as OneWest Bank, a division of CIT Bank, N.A. cit.com
Forward-Looking Statements
This press release contains forward-looking statements
within the meaning of applicable federal securities laws that are
based upon our current expectations and assumptions concerning
future events, which are subject to a number of risks and
uncertainties that could cause actual results to differ materially
from those anticipated. The words “expect,” “anticipate,”
“estimate,” “forecast,” “initiative,” “objective,” “plan,” “goal,”
“project,” “outlook,” “priorities,” “target,” “intend,” “evaluate,”
“pursue,” “commence,” “seek,” “may,” “would,” “could,” “should,”
“believe,” “potential,” “continue,” or the negative of any of those
words or similar expressions is intended to identify
forward-looking statements. All statements contained in this press
release, other than statements of historical fact, including
without limitation, statements about our plans, strategies,
prospects and expectations regarding future events and our
financial performance, are forward-looking statements that involve
certain risks and uncertainties. While these statements represent
our current judgment on what the future may hold, and we believe
these judgments are reasonable, these statements are not guarantees
of any events or financial results, and our actual results may
differ materially. Important factors that could cause our actual
results to be materially different from our expectations include,
among others, the risk that CIT is unsuccessful in implementing its
strategy and business plan, the risk that CIT is unable to react to
and address key business and regulatory issues, the risk that CIT
is unable to achieve the projected revenue growth from its new
business initiatives or the projected expense reductions from
efficiency improvements, and the risk that CIT becomes subject to
liquidity constraints and higher funding costs. We describe these
and other risks that could affect our results in Item 1A, “Risk
Factors,” of our latest Annual Report on Form 10-K for the year
ended December 31, 2015, which was filed with the Securities and
Exchange Commission. Accordingly, you should not place undue
reliance on the forward-looking statements contained in this press
release. These forward-looking statements speak only as of the date
on which the statements were made. CIT undertakes no obligation to
update publicly or otherwise revise any forward-looking statements,
except where expressly required by law.
Non-GAAP Measurements
Net finance revenue, net operating lease revenue and average
earning assets are non-GAAP measurements used by management to
gauge portfolio performance. Operating expenses excluding
restructuring costs and intangible amortization is a non-GAAP
measurement used by management to compare period over period
expenses. Net efficiency ratio measures operating expenses (net of
restructuring costs and intangible amortization) to our level of
total net revenues. Total assets from continuing operations is a
non-GAAP measurement used by management to analyze the total asset
change on a more consistent basis. Tangible book value and tangible
book value per share are non-GAAP metrics used to analyze
banks.
______________________________
1 Adjusted ROATCE, Tangible book value and tangible book value
per share are non-GAAP measures. See “Non-GAAP Measurements” at the
end of this press release and page 25 for reconciliation of
non-GAAP to GAAP financial information.
2 Average earning asset components include interest earning
cash, investments, securities and indemnification assets. See
“Non-GAAP Measurements” at the end of this press release and page
25 for reconciliation of Earning Assets non-GAAP to GAAP financial
information.
3 Adjusted Return on Tangible Common Equity, which adjusts
tangible common equity for the reversal of the valuation allowance
and the amortization of intangibles in the numerator and the
disallowed deferred tax asset related to regulatory capital in the
denominator, is a non-GAAP measure. See “Non-GAAP Measurements” at
the end of this press release and page 25 for reconciliation of
non-GAAP to GAAP financial information.
4 Net finance revenue, net finance margin and net operating
lease revenue are non-GAAP measures. See “Non-GAAP Measurements” at
the end of this press release and page 25 for reconciliation of
non-GAAP to GAAP financial information.
5 Operating expenses excluding restructuring costs and
intangible asset amortization and Net efficiency ratio is a
non-GAAP measure. See “Non-GAAP Measurements” at the end of this
press release and page 25 for reconciliation of non-GAAP to GAAP
financial information.
CIT GROUP INC. AND SUBSIDIARIES
Unaudited Consolidated Statements of Income (dollars in
millions, except per share data) Quarters Ended
Six Months Ended June 30, March 31, June
30, June 30, 2016* 2016 2015
2016* 2015 Interest income Interest and fees
on loans $ 463.6 $ 464.5 $ 274.8 $ 928.1 $ 547.2 Other Interest and
dividends 31.7 30.9 9.0
62.6 17.6 Total interest income
495.3 495.4 283.8 990.7
564.8 Interest expense Interest on borrowings
(183.1 ) (186.9 ) (193.0 ) (370.0 ) (395.3 ) Interest on deposits
(99.4 ) (99.5 ) (72.2 ) (198.9 )
(141.2 ) Total interest expense (282.5 ) (286.4 )
(265.2 ) (568.9 ) (536.5 ) Net interest
revenue 212.8 209.0 18.6 421.8 28.3 Provision for credit losses
(28.1 ) (99.3 ) (18.4 ) (127.4 )
(53.0 ) Net interest revenue, after credit provision 184.7
109.7 0.2 294.4
(24.7 ) Non-interest income Rental income on operating
leases 569.3 575.4 531.7 1,144.7 1,062.3 Other income 104.3
100.9 63.5 205.2
149.9 Total non-interest income 673.6
676.3 595.2 1,349.9
1,212.2 Non-interest expenses Depreciation on
operating lease equipment (176.4 ) (175.3 ) (157.8 ) (351.7 )
(314.6 ) Maintenance and other operating lease expenses (64.9 )
(56.2 ) (49.4 ) (121.1 ) (95.5 ) Operating expenses (337.5 ) (348.5
) (235.0 ) (686.0 ) (476.6 ) Loss on debt extinguishment and
deposit redemption (4.1 ) (1.6 ) (0.1 )
(5.7 ) (0.1 ) Total other expenses (582.9 )
(581.6 ) (442.3 ) (1,164.5 ) (886.8 ) Income
from continuing operations before provision for income taxes 275.4
204.4 153.1 479.8 300.7
Provision for income taxes
(94.3 ) (52.7 ) (37.8 ) (147.0 )
(81.8 ) Income from continuing operations, before attribution of
noncontrolling interests 181.1 151.7 115.3 332.8 218.9 Net loss
attributable to noncontrolling interests, after tax -
- - - 0.1
Income from continuing operations 181.1 151.7
115.3 332.8 219.0
Discontinued operation Loss from discontinued operation (236.3 )
(7.4 ) - (243.7 ) - Benefit for income taxes 69.3
2.6 - 71.9 -
Loss from discontinued operation, net of taxes (167.0
) (4.8 ) - (171.8 ) - Net
income $ 14.1 $ 146.9 $ 115.3 $ 161.0 $
219.0 Basic income per common share Income from
continuing operations $ 0.90 $ 0.75 $ 0.66 $ 1.65 $ 1.25 Loss from
discontinued operation, net of taxes (0.83 ) (0.02 )
- (0.85 ) - Basic income per
common share $ 0.07 $ 0.73 $ 0.66 $ 0.80
$ 1.25 Average number of common shares - basic
(thousands) 201,893 201,394 173,785 201,647 175,019 Diluted
income per common share Income from continuing operations $ 0.90 $
0.75 $ 0.66 $ 1.65 $ 1.24 Loss from discontinued operation, net of
taxes (0.83 ) (0.02 ) - (0.85 )
- Diluted income per common share $ 0.07 $
0.73 $ 0.66 $ 0.80 $ 1.24 Average
number of common shares - diluted (thousands) 202,275 202,136
174,876 202,208 175,971 * Preliminary
CIT
GROUP INC. AND SUBSIDIARIES Unaudited Consolidated Balance
Sheets (dollars in millions, except per share data)
June 30, March 31, December 31, June
30, 2016* 2016 2015 2015
Assets Total cash and deposits $ 8,103.9 $ 8,141.8 $ 8,301.5
$ 5,465.3 Securities purchased under agreements to resell - - -
750.0 Investment securities 3,229.1 2,896.8 2,953.8 1,692.9 Assets
held for sale 2,403.3 2,211.2 2,092.4 1,086.8 Loans 30,456.8
31,408.6 31,671.7 19,649.3 Allowance for loan losses (399.4
) (404.6 ) (360.2 ) (350.9 ) Loans, net of
allowance for loan losses 30,057.4 31,004.0 31,311.5 19,298.4
Operating lease equipment, net 16,864.6 16,665.7 16,617.0
15,109.6 Indemnification assets 375.5 389.4 414.8 - Goodwill
1,169.7 1,195.1 1,198.3 565.9 Intangible assets 168.9 170.3 176.3
21.4 Unsecured counterparty receivable 570.2 556.3 537.8 538.2
Other assets 3,288.6 3,377.5 3,297.6 2,016.6 Assets of discontinued
operation 469.1 489.5 500.5
- Total assets $ 66,700.3 $ 67,097.6
$ 67,401.5 $ 46,545.1
Liabilities Deposits $ 32,879.1 $ 32,892.7 $ 32,782.2 $
17,267.8 Credit balances of factoring clients 1,215.2 1,361.0
1,344.0 1,373.3 Other liabilities 3,054.2 3,020.2 3,158.7 2,766.9
Borrowings Unsecured borrowings 10,591.2 10,587.3 10,636.3 10,684.2
Structured financings 3,923.8 4,309.0 4,687.9 5,497.9 FHLB advances
2,995.1 3,116.3 3,117.6
147.4 Total borrowings 17,510.1
18,012.6 18,441.8 16,329.5
Liabilities of discontinued operation 917.1
684.8 696.2 - Total liabilities
55,575.7 55,971.3 56,422.9
37,737.5
Equity Stockholders' equity
Common stock 2.1 2.1 2.0 2.0 Paid-in capital 8,749.8 8,739.4
8,718.1 8,615.6 Retained earnings 2,656.9 2,673.7 2,557.4 1,781.1
Accumulated other comprehensive loss (107.7 ) (117.4 ) (142.1 )
(158.8 ) Treasury stock, at cost (177.0 ) (172.0 )
(157.3 ) (1,432.8 ) Total common stockholders' equity
11,124.1 11,125.8 10,978.1 8,807.1 Noncontrolling interests
0.5 0.5 0.5 0.5
Total equity 11,124.6 11,126.3
10,978.6 8,807.6 Total liabilities and equity
$ 66,700.3 $ 67,097.6 $ 67,401.5 $ 46,545.1
Book Value Per Common Share Book value per
common share $ 55.07 $ 55.16 $ 54.61 $ 50.91 Tangible book value
per common share $ 48.45 $ 48.39 $ 47.77 $ 47.51 Outstanding common
shares (in thousands) 201,990 201,702 201,022 172,998 *
Preliminary
CIT GROUP INC. AND SUBSIDIARIES
Average Balances and Rates (dollars in millions)
Quarters Ended June 30, 2016 March 31,
2016 June 30, 2015
AverageBalance
Rate
AverageBalance
Rate
AverageBalance
Rate Assets Interest bearing deposits $
7,113.5 0.50 % $ 7,114.0 0.47 % $ 4,829.4 0.28 % Securities
purchased under agreements to resell - - - - 675.0 0.59 %
Investments 3,130.6 2.91 % 2,923.5 3.08 % 1,510.6 1.22 % Loans
(including held for sale) U.S. 31,784.4 5.87 % 32,091.5 5.74 %
18,130.4 5.41 % Non-U.S. 1,160.2 8.41 %
1,291.0 8.18 % 2,161.3 9.01 % Total Loans
32,944.6 5.96 % 33,382.5 5.84 %
20,291.7 5.83 % Total interest earning assets / interest
income 43,188.7 4.81 % 43,420.0 4.74 %
27,306.7 4.39 % Operating lease equipment, net
(including held for sale) U.S. 8,922.0 7.57 % 8,831.3 8.41 %
7,859.0 8.93 % Non-U.S. 8,003.5 7.95 % 7,890.0
8.02 % 7,422.2 8.04 % Total operating lease
equipment, net 16,925.5 7.75 % 16,721.3 8.23 % 15,281.2 8.49 %
Indemnification assets 379.8 -9.06 % 401.7
-3.09 % - - Total earning assets
60,494.0 5.56 % 60,543.0 5.67 %
42,587.9 5.91 % Non-interest earning assets Cash and due
from banks 1,051.4 1,331.4 952.7 Non-interest bearing deposits
Allowance for loan losses (398.9 ) (371.5 ) (358.0 ) All other
non-interest bearing assets 5,278.8 5,298.4 3,169.0 Assets of
discontinued operation 479.9 495.1
-
Total Average Assets $ 66,905.2 $
67,296.4 $ 46,351.6
Liabilities Borrowings
Deposits $ 31,643.5 1.26 % $ 31,829.1 1.25 % $ 16,844.6 1.71 %
Borrowings 17,853.7 4.10 % 18,210.4
4.11 % 16,423.8 4.70 % Total interest-bearing
liabilities 49,497.2 2.28 % 50,039.5
2.29 % 33,268.4 3.19 % Non-interest bearing deposits
1,124.9 1,080.2 90.3 Credit balances of factoring clients 1,264.9
1,337.5 1,428.6 Other non-interest bearing liabilities 3,093.3
3,063.7 2,776.7 Liabilities of discontinued operation 738.1 690.2 -
Noncontrolling interests 0.5 0.5 0.5 Stockholders' equity
11,186.3 11,084.8 8,787.1
Total Average Liabilities and Stockholders' Equity $
66,905.2 $ 67,296.4 $ 46,351.6
Six
Months Ended June 30, 2016 June 30, 2015
Assets Interest bearing deposits $ 7,110.7 0.49 % $ 5,390.1
0.27 % Securities purchased under agreements to resell - - 650.0
0.52 % Investments 3,045.7 2.98 % 1,526.2 1.11 % Loans (including
held for sale) U.S. 31,904.4 5.81 % 18,012.5 5.39 % Non-U.S.
1,230.6 8.26 % 2,203.2 9.18 % Total Loans
33,135.0 5.90 % 20,215.7 5.83 % Total
interest earning assets / interest income 43,291.4
4.77 % 27,782.0 4.29 % Operating lease equipment, net
(including held for sale) U.S. 8,873.5 7.99 % 7,821.1 9.03 %
Non-U.S. 7,951.6 7.98 % 7,424.1 8.05 %
Total operating lease equipment, net 16,825.1 7.99 % 15,245.2 8.56
% Indemnification assets 390.9 -5.99 % -
- Total earning assets 60,507.4 5.62 %
43,027.2 5.85 % Non-interest earning assets Cash and due
from banks 1,217.8 930.3 Allowance for loan losses (382.4 ) (352.3
) All other non-interest bearing assets 5,271.3 3,184.2 Assets of
discontinued operation 487.2 -
Total
Average Assets $ 67,101.3 $ 46,789.4
Liabilities Borrowings Deposits $ 31,727.6 1.25 % $ 16,546.2
1.71 % Borrowings 18,034.8 4.10 % 17,009.7
4.65 % Total interest-bearing liabilities 49,762.4
2.29 % 33,555.9 3.20 % Non-interest bearing
deposits 1,103.6 98.2 Credit balances of factoring clients 1,292.6
1,459.2 Other non-interest bearing liabilities 3,087.0 2,836.4
Liabilities of discontinued operation 718.3 - Noncontrolling
interests 0.5 (2.0 ) Stockholders' equity 11,136.9
8,841.7
Total Average Liabilities and
Stockholders' Equity $ 67,101.3 $ 46,789.4
CIT GROUP INC. AND SUBSIDIARIES Select
Accounts (dollars in millions) Quarters
Ended Six Months Ended June 30, March 31,
June 30, June 30, 2016 2016
2015 2016 2015 OTHER INCOME Fee
revenues $ 28.0 $ 32.7 $ 25.3 $ 60.7 $ 47.9 Gains on sales of
leasing equipment 28.0 11.2 21.5 39.2 53.5 Factoring commissions
24.1 26.4 27.0 50.5 56.5 Net gain (losses) on derivatives and
foreign currency exchange 10.4 9.3 (5.0 ) 19.7 (14.7 ) Gains on
loan and portfolio sales 7.7 0.3 2.1 8.0 8.7 Gains (losses) on
investments 6.3 (4.1 ) 3.8 2.2 4.5 Gain on OREO sales 3.5 1.7 - 5.2
- Impairment on assets held for sale (17.0 ) (22.1 ) (11.0 ) (39.1
) (21.1 ) Other revenues 13.3 45.5
(0.2 ) 58.8 14.6 Total other
income $ 104.3 $ 100.9 $ 63.5 $ 205.2 $
149.9
OPERATING EXPENSES Compensation and
benefits $ (155.9 ) $ (172.2 ) $ (135.6 ) $ (328.1 ) $ (282.1 )
Professional fees (39.5 ) (38.8 ) (20.8 ) (78.3 ) (40.3 )
Technology (31.3 ) (30.4 ) (24.9 ) (61.7 ) (47.2 ) Net occupancy
expense (17.4 ) (18.4 ) (8.6 ) (35.8 ) (18.0 ) Advertising and
marketing (4.4 ) (5.4 ) (6.7 ) (9.8 ) (15.8 ) Other expenses
(72.9 ) (56.6 ) (36.8 ) (129.5 ) (72.0
) Operating expenses, before provision for severance and facilities
exiting and intangible asset amortization (321.4 )
(321.8 ) (233.4 ) (643.2 ) (475.4 ) Provision
for severance and facilities exiting activities (9.7 ) (20.3 ) (1.1
) (30.0 ) (0.1 ) Intangible asset amortization (6.4 )
(6.4 ) (0.5 ) (12.8 ) (1.1 ) Total operating
expenses $ (337.5 ) $ (348.5 ) $ (235.0 ) $ (686.0 ) $ (476.6 )
June 30, March 31, December 31,
June30,
2016*
2016 2015 2015 TOTAL CASH AND
INVESTMENT SECURITIES Total cash and deposits $ 8,103.9 $
8,141.8 $ 8,301.5 $ 5,465.3 Securities purchased under agreements
to resell - - - 750.0 Investment securities 3,229.1
2,896.8 2,953.8 1,692.9
Total cash and investment securities $ 11,333.0 $
11,038.6 $ 11,255.3 $ 7,908.2
OTHER ASSETS Current and deferred federal and state tax
assets $ 1,180.9 $ 1,197.4 $ 1,252.5 $ 431.2 Deposits on commercial
aerospace equipment 764.6 774.3 696.0 816.9
Tax credit investments and investments in
unconsolidated subsidiaries
238.1 237.9 223.9 78.6 Property, furniture and fixtures 191.6 192.1
197.2 144.4 Other counterparty receivables 146.7 179.6 59.0 28.8
Fair value of derivative financial instruments 134.0 97.4 140.7
101.5 Other real estate owned and repossessed assets 91.6 105.4
127.3 2.6 Tax receivables, other than income taxes 82.1 105.7 98.2
103.0 Other 459.0 487.7
502.8 309.6 Total other assets $ 3,288.6
$ 3,377.5 $ 3,297.6 $ 2,016.6
OTHER LIABILITIES Equipment maintenance reserves
$
1,067.2 $ 1,042.2 $ 1,012.4 $ 982.5 Accrued expenses and accounts
payable 542.8 563.6 628.1 439.2 Current and deferred taxes payable
364.1 354.5 363.1 345.6 Accrued interest payable 200.4 161.0 209.6
221.2 Security and other deposits 197.6 179.9 263.0 265.9 Fair
value of derivative financial instruments 154.6 196.5 103.0 88.1
Valuation adjustment relating to aerospace commitments 73.1 73.1
73.1 117.1 Other liabilities 454.4 449.4
506.4 307.3 Total other
liabilities $ 3,054.2 $ 3,020.2 $ 3,158.7
$ 2,766.9 * Preliminary
CIT GROUP INC.
AND SUBSIDIARIES Financing and Leasing Assets
(dollars in millions) June 30, March
31, December 31, June 30, 2016 2016
2015 2015 Commercial Banking Commercial
Finance Loans $ 8,512.9 $ 9,329.4 $ 9,118.6 $ 6,734.8 Assets
held for sale 461.3 203.4 313.6 88.2
Financing and leasing assets 8,974.2 9,532.8
9,432.2 6,823.0
Real Estate Finance Loans 5,566.1
5,348.5 5,300.6 1,941.4 Assets held for sale - 14.4
57.0 - Financing and leasing assets 5,566.1
5,362.9 5,357.6 1,941.4
Business
Capital Loans 6,630.8 6,759.3 6,510.0 6,436.1 Operating lease
equipment, net 314.8 292.6 259.0 241.9 Assets held for sale
10.4 11.9 44.3 - Financing and leasing assets
6,956.0 7,063.8 6,813.3 6,678.0
Total Segment Loans 20,709.8 21,437.2 20,929.2 15,112.3
Operating lease equipment, net 314.8 292.6 259.0 241.9 Assets held
for sale 471.7 229.7 414.9 88.2
Financing and leasing assets 21,496.3 21,959.5
21,603.1 15,442.4
Transportation Finance
Aerospace
Loans
904.4 1,031.9 1,762.3 1,739.6 Operating lease equipment, net
9,685.6 9,594.3 9,765.2 8,816.7 Assets held for sale 764.1
723.8 34.7 243.9 Financing and leasing assets
11,354.1 11,350.0 11,562.2 10,800.2
Rail Loans 106.9 118.1 120.9 124.7 Operating lease
equipment, net 6,864.2 6,778.8 6,592.8 6,010.8 Assets held for sale
6.9 0.4 0.7 0.9 Financing and leasing
assets 6,978.0 6,897.3 6,714.4 6,136.4
Maritime Finance Loans 1,601.8 1,636.7 1,658.9 1,274.4
Assets held for sale 29.6 30.5 19.5
56.4 Financing and leasing assets 1,631.4 1,667.2
1,678.4 1,330.8
Total Segment Loans 2,613.1
2,786.7 3,542.1 3,138.7 Operating lease equipment, net 16,549.8
16,373.1 16,358.0 14,827.5 Assets held for sale 800.6
754.7 54.9 301.2 Financing and leasing assets
19,963.5 19,914.5 19,955.0 18,267.4
Consumer and Community Banking Other Consumer Banking
Loans 1,977.1 1,879.5 1,770.0 - Assets held for sale 3.3
2.6 3.9 - Financing and leasing assets
1,980.4 1,882.1 1,773.9 -
Legacy Consumer
Mortgages Loans 5,156.8 5,305.2 5,430.4 - Assets held for sale
34.6 48.0 41.2 - Financing and leasing
assets 5,191.4 5,353.2 5,471.6 -
Total Segment Loans 7,133.9 7,184.7 7,200.4 - Assets held
for sale 37.9 50.6 45.1 - Financing and
leasing assets 7,171.8 7,235.3 7,245.5
-
Non-Strategic Portfolios Loans - - - 1,398.3 Operating
lease equipment, net - - - 40.2 Assets held for sale 1,093.1
1,176.2 1,577.5 697.4 Financing and leasing
assets 1,093.1 1,176.2 1,577.5 2,135.9
Total financing and leasing assets $ 49,724.7 $ 50,285.5 $
50,381.1 $ 35,845.7
CIT GROUP INC. AND
SUBSIDIARIES Credit Metrics (dollars in millions)
Quarters Ended June 30, 2016 March 31,
2016 June 30, 2015 Gross Charge-offs to Average
Finance Receivables Commercial Banking(2) $ 38.0 0.72 % $ 35.8
0.68 % $ 29.8 0.79 % Transportation Finance(1) 6.6 0.97 % 19.6 2.35
% 0.7 0.09 % Consumer and Community Banking 0.5 0.03 % 0.7 0.04 % -
- Non-Strategic Portfolios - - - -
3.7 1.04 %
Total CIT $ 45.1 0.58 % $
56.1 0.71 % $ 34.2 0.70 %
Six Months Ended
June 30 2016 2015 Commercial
Banking(2) $ 73.8 0.70 % $ 52.4 0.70 % Transportation Finance(1)
26.2 1.71 % 0.7 0.05 % Consumer and Community Banking 1.2 0.03 % -
- Non-Strategic Portfolios - - 7.7 1.07
%
Total CIT $ 101.2 0.65 % $ 60.8 0.63 %
Quarters Ended June 30, 2016 March
31,2016 June 30, 2015 Net Charge-offs to Average
Finance Receivables Commercial Banking(2) $ 34.7 0.66 % $ 31.8
0.60 % $ 25.2 0.67 % Transportation Finance(1) 6.6 0.97 % 19.6 2.35
% 0.6 0.08 % Consumer and Community Banking (0.3 ) -0.02 % (0.1 )
-0.01 % - - Non-Strategic Portfolios - - -
- (2.3 ) (0.65 %)
Total CIT $ 41.0 0.53
% $ 51.3 0.65 % $ 23.5 0.48 %
Six Months
Ended June 30 2016 2015 Commercial
Banking(2) $ 66.5 0.63 % $ 44.5 0.59 % Transportation Finance(1)
26.2 1.71 % 0.6 0.04 % Consumer and Community Banking (0.4 ) -0.01
% - - Non-Strategic Portfolios - - (0.7 )
-0.10 %
Total CIT $ 92.3 0.59 % $ 44.4 0.46 %
Non-accruing Loans to Finance Receivables(3)
June 30, 2016 March 31, 2016 December 31, 2015
June 30, 2015 Commercial Banking $ 207.8 1.00 % $ 215.2 1.00
% $ 191.1 0.91 % $ 98.1 0.65 % Transportation Finance 18.2 0.70 %
21.7 0.78 % 15.4 0.43 % 4.7 0.15 % Consumer and Community Banking
11.7 0.16 % 7.1 0.10 % 5.2 0.07 % - - Non-Strategic Portfolios(3)
45.1
(3
)
51.1
(3
)
56.0
(3
)
95.2 6.81 %
Total CIT $ 282.8 0.93 % $ 295.1
0.94 % $ 267.7 0.85 % $ 198.0 1.01 %
PROVISION AND ALLOWANCE COMPONENTS Provision for Credit
Losses Quarters Ended Six Months Ended June
30, March 31, June 30, June 30, June
30, 2016 2016 2015
2016 2015 Specific
allowance - impaired loans $ 14.5 $ 21.8 $ 2.7 $ 36.3 $ 5.1
Non-specific allowance (27.4 ) 26.2 (7.8 ) (1.2 ) 3.5 Net
charge-offs 41.0 51.3
23.5 92.3 44.4 Totals $ 28.1
$ 99.3 $ 18.4 $ 127.4 $ 53.0
Allowance for Loan Losses
June 30,
March 31, December 31, June 30, 2016
2016 2015 2015 Specific
allowance - impaired loans $ 29.4 $ 40.2 $ 27.8 $ 17.5 Non-specific
allowance 370.0 364.4
332.4 333.4 Totals $
399.4 $ 404.6 $ 360.2
$ 350.9 Allowance for loan losses as a
percentage of total finance receivables 1.31 % 1.29 % 1.14 % 1.79 %
Allowance for loan losses as a percent of
finance receivables/Commercial
1.62 % 1.61 % 1.43 % 1.79 % Allowance for loan losses plus
principal loss discount as a percent of finance receivables (before
the principal loss discount)/Commercial 1.83 % 1.87 % 1.79 % 1.79 %
Allowance for loan losses plus principal loss discount as a percent
of finance receivables (before the principal loss
discount)/Consumer 7.20 % 7.86 % 8.62 % - In certain instances, we
use the term finance receivables synonymously with “Loans”, as
presented on the balance sheet. 1) Transportation Finance
charge-offs related to the transfer of receivables to assets held
for sale for the quarters ended June 30, 2016, March 31, 2016, and
June 30, 2015 totaled $7 million, $7 million, and $1 million,
respectively. 2) Commercial Banking charge-offs related to the
transfer of receivables to assets held for sale for the quarters
ended June 30, 2016, March 31, 2016, and June 30, 2015 totaled $19
million, $2 million, and $1 million, respectively. 3) Non-accrual
loans include loans held for sale. NSP non-accrual loans reflected
loans held for sale; since portfolio loans were insignificant, no %
is displayed.
CIT GROUP INC. AND
SUBSIDIARIES
Segment Results
(dollars in millions) Quarters Ended Six
Months Ended June 30, March 31, June 30,
June 30, 2016 2016 2016
2015 2016
2015 Commercial Banking Total interest income
$ 289.2 $ 287.1 $ 185.9 $ 576.3 $ 367.2 Total interest expense
(74.7 ) (73.6 ) (64.7 ) (148.3 ) (129.5 ) Provision for credit
losses (11.4 ) (73.5 ) (18.0 ) (84.9 ) (42.4 ) Rental income on
operating leases 28.7 27.1 23.8 55.8 46.9 Other income 60.9 55.5
67.3 116.4 130.9 Depreciation on operating lease equipment (21.5 )
(20.0 ) (17.5 ) (41.5 ) (34.7 ) Operating expenses (148.8 )
(158.4 ) (132.7 ) (307.2 ) (264.0 )
Income before provision for income taxes $ 122.4 $ 44.2
$ 44.1 $ 166.6 $ 74.4 Funded new
business volume $ 2,048.4 $ 1,581.4 $ 1,523.4 $ 3,629.8 $ 2,819.6
Average Earning Assets $ 20,575.1 $ 20,727.0 $ 14,501.8 $ 20,627.9
$ 14,428.4 Average Finance Receivables $ 21,040.7 $ 21,130.8 $
15,040.7 $ 21,035.6 $ 15,006.6
Transportation Finance Total
interest income $ 49.9 $ 52.7 $ 44.4 $ 102.6 $ 87.1 Total interest
expense (146.5 ) (148.1 ) (148.7 ) (294.6 ) (299.3 ) Provision for
credit losses (15.6 ) (22.7 ) (1.1 ) (38.3 ) (7.5 ) Rental income
on operating leases 536.6 544.5 497.9 1,081.1 994.6 Other income
11.7 18.8 13.8 30.5 49.2 Depreciation on operating lease equipment
(154.9 ) (155.3 ) (136.6 ) (310.2 ) (272.6 ) Maintenance and other
operating lease expenses (64.9 ) (56.2 ) (49.4 ) (121.1 ) (95.5 )
Operating expenses / loss on debt extinguishment (62.2 )
(60.7 ) (63.8 ) (122.9 ) (131.0 )
Income before provision for income taxes $ 154.1 $ 173.0
$ 156.5 $ 327.1 $ 325.0 Funded new
business volume $ 461.0 $ 245.9 $ 743.8 $ 706.9 $ 1,163.3 Average
Earning Assets $ 20,945.7 $ 20,619.5 $ 18,957.2 $ 20,761.9 $
18,933.6 Average Finance Receivables $ 2,726.0 $ 3,333.4 $ 3,047.5
$ 3,064.4 $ 2,994.4
Consumer and Community Banking Total
interest income $ 105.4 $ 103.2 $ - $ 208.6 $ - Total interest
expense (5.9 ) (8.9 ) - (14.8 ) - Provision for credit losses (1.1
) (3.1 ) - (4.2 ) - Other income 11.7 8.1 - 19.8 - Operating
expenses (93.2 ) (82.2 ) -
(175.4 ) - Income before provision for income taxes $
16.9 $ 17.1 $ - $ 34.0 $ -
Funded new business volume $ 261.3 $ 214.5 $ - $ 475.8 $ - Average
Earning Assets $ 7,728.6 $ 7,757.8 $ - $ 7,739.2 $ - Average
Finance Receivables $ 7,155.6 $ 7,160.4 $ - $ 7,154.2 $ -
Non-Strategic Portfolios Total interest income $ 23.2 $ 25.0
$ 48.8 $ 48.2 $ 101.6 Total interest expense (13.7 ) (14.5 ) (34.0
) (28.2 ) (72.0 ) Provision for credit losses - - 0.7 - (3.1 )
Rental income on operating leases 4.0 3.8 10.0 7.8 20.8 Other
income 6.7 14.5 (1.0 ) 21.2 (7.2 ) Depreciation on operating lease
equipment - - (3.7 ) - (7.3 ) Operating expenses (12.1 )
(12.2 ) (34.6 ) (24.3 ) (71.6 ) Income
(loss) before provision for income taxes $ 8.1 $ 16.6
$
(13.8 ) $ 24.7 $ (38.8 ) Funded new business volume $ 61.1 $
44.3 $ 215.5 $ 105.4 $ 416.9 Average Earning Assets $ 1,384.5 $
1,516.8 $ 2,558.0 $ 1,456.2 $ 2,648.8 Average Finance Receivables $
- $ - $ 1,423.5 $ - $ 1,442.6
Corporate and Other Total
interest income $ 27.6 $ 27.4 $ 4.7 $ 55.0 $ 8.9 Total interest
expense (41.7 ) (41.3 ) (17.8 ) (83.0 ) (35.7 ) Other income 13.3
4.0 (16.6 ) 17.3 (23.0 ) Operating expenses / loss on debt
extinguishment and deposit redemption (25.3 ) (36.6 )
(4.0 ) (61.9 ) (10.1 ) Loss before provision
for income taxes $ (26.1 ) $ (46.5 ) $ (33.7 ) $ (72.6 ) $ (59.9 )
Average Earning Assets $ 8,595.3 $ 8,585.3 $ 5,142.4 $ 8,629.6 $
5,557.1
Total CIT Total interest income $ 495.3 $ 495.4 $
283.8 $ 990.7 $ 564.8 Total interest expense (282.5 ) (286.4 )
(265.2 ) (568.9 ) (536.5 ) Provision for credit losses (28.1 )
(99.3 ) (18.4 ) (127.4 ) (53.0 ) Rental income on operating leases
569.3 575.4 531.7 1,144.7 1,062.3 Other income 104.3 100.9 63.5
205.2 149.9 Depreciation on operating lease equipment (176.4 )
(175.3 ) (157.8 ) (351.7 ) (314.6 ) Maintenance and other operating
lease expenses (64.9 ) (56.2 ) (49.4 ) (121.1 ) (95.5 ) Operating
expenses / loss on debt extinguishment (341.6 )
(350.1 ) (235.1 ) (691.7 ) (476.7 ) Income
from continuing operations before provision for income taxes $
275.4 $ 204.4 $ 153.1 $ 479.8 $ 300.7
Funded new business volume $ 2,831.8 $ 2,086.1 $ 2,482.7 $
4,917.9 $ 4,399.8 Average Earning Assets $ 59,229.2 $ 59,206.4 $
41,159.4 $ 59,214.8 $ 41,567.9 Average Finance Receivables $
30,922.3 $ 31,624.6 $ 19,511.7 $ 31,254.2 $ 19,443.6
CIT GROUP INC. AND SUBSIDIARIES Segment Margin
(dollars in millions) Quarters Ended Six
Months Ended June 30, March 31, June 30,
June 30, 2016 2016
2015 2016
2015 Commercial Banking Total Segment
AEA $ 20,575.1 $ 20,727.0 $ 14,501.8 $ 20,627.9 $ 14,428.4 Net
Finance Revenue 221.7 220.6 127.5 442.3 249.9 Gross yield 6.18 %
6.06 % 5.78 % 6.13 % 5.74 % Net Finance Margin 4.31 % 4.26 % 3.52 %
4.29 % 3.46 %
Average Earning Assets (AEA) Commercial
Finance $ 9,260.5 $ 9,545.4 $ 6,784.3 $ 9,381.4 $ 6,753.1 Real
Estate Finance 5,453.8 5,334.6 1,860.6 5,398.6 1,819.9 Business
Capital 5,860.8 5,847.0 5,856.9 5,847.9 5,855.4
Net Finance
Revenue Commercial Finance $ 94.5 $ 90.6 $ 45.1 $ 185.1 $ 89.2
Real Estate Finance 51.6 54.4 11.1 106.0 21.1 Business Capital 75.6
75.6 71.3 151.2 139.6
Gross yield Commercial Finance 5.38 %
5.03 % 4.40 % 5.22 % 4.40 % Real Estate Finance 5.18 % 5.44 % 4.00
% 5.31 % 3.97 % Business Capital 8.38 % 8.32 % 7.95 % 8.36 % 7.83 %
Net Finance Margin Commercial Finance 4.08 % 3.80 % 2.66 %
3.95 % 2.64 % Real Estate Finance 3.78 % 4.08 % 2.39 % 3.93 % 2.32
% Business Capital 5.16 % 5.17 % 4.87 % 5.17 % 4.77 %
Transportation Finance AEA $ 20,945.7 $ 20,619.5 $
18,957.2 $ 20,761.9 $ 18,933.6 Net Finance Revenue 220.2 237.6
207.6 457.8 414.3 Gross yield 11.20 % 11.59 % 11.44 % 11.40 % 11.43
% Net Finance Margin 4.21 % 4.61 % 4.38 % 4.41 % 4.38 %
Average
Earning Assets (AEA) Aerospace $ 12,255.8
$
12,050.9 $ 11,643.6 $ 12,137.1 $ 11,778.1 Rail 7,036.7 6,882.4
6,115.2 6,954.7 6,026.2 Maritime Finance 1,653.2 1,686.2 1,198.4
1,670.1 1,129.3
Net Finance Revenue Aerospace $ 110.6 $
119.6 $ 99.1 $ 230.2 $ 200.7 Rail 94.0 100.2 98.0 194.2 194.3
Maritime Finance 15.6 17.8 10.5 33.4 19.3
Gross yield
Aerospace 10.87 % 11.18 % 10.41 % 11.04 % 10.41 % Rail 13.16 %
13.73 % 14.65 % 13.45 % 14.63 % Maritime Finance 5.30 % 5.75 % 5.12
% 5.53 % 5.04 %
Net Finance Margin Aerospace 3.61 % 3.97 %
3.40 % 3.79 % 3.41 % Rail 5.34 % 5.82 % 6.41 % 5.58 % 6.45 %
Maritime Finance 3.77 % 4.22 % 3.50 % 4.00 % 3.42 %
Consumer and Community Banking Total Segment AEA $
7,728.6 $ 7,757.8 $ - $ 7,739.2 $ - Net Finance Revenue 99.5 94.3 -
193.8 - Gross yield 5.46 % 5.32 % - 5.39 % - Net Finance Margin
5.15 % 4.86 % - 5.01 % -
Average Earning Assets (AEA) Other
Consumer Banking $ 2,071.7 $ 1,941.8 $ - $ 2,003.5 $ - Legacy
Consumer Mortgages 5,656.9 5,816.0 - 5,735.7 -
Net Finance
Revenue Other Consumer Banking $ 37.1 $ 34.0 $ - $ 71.1 $ -
Legacy Consumer Mortgages 62.4 60.3 - 122.7 -
Gross yield
Other Consumer Banking 3.58 % 3.65 % - 3.62 % - Legacy Consumer
Mortgages 6.15 % 5.87 % - 6.01 % -
Net Finance Margin Other
Consumer Banking 7.16 % 7.00 % - 7.10 % - Legacy Consumer Mortgages
4.41 % 4.15 % - 4.28 % -
Non-Strategic Portfolios AEA
$ 1,384.5 $ 1,516.8 $ 2,558.0 $ 1,456.2 $ 2,648.8 Net Finance
Revenue 13.5 14.3 21.1 27.8 43.1 Gross yield 7.86 % 7.59 % 9.19 %
7.69 % 9.24 % Net Finance Margin 3.90 % 3.77 % 3.30 % 3.82 % 3.25 %
Gross Yield includes interest income and rental income as a
% of AEA. Net Finance Margin (NFM) reflects Net Finance Revenue
divided by AEA.
CIT GROUP INC. AND
SUBSIDIARIES Non-GAAP Disclosures (dollars in
millions) Non-GAAP financial measures disclosed by
management are meant to provide additional information and insight
relative to business trends to investors and, in certain cases, to
present financial information as measured by rating agencies and
other users of financial information. These measures are not in
accordance with, or a substitute for, GAAP and may be different
from, or inconsistent with, non-GAAP financial measures used by
other companies.
Quarters Ended Six Months
Ended June 30, March 31, June
30, June 30, Total Net Revenues(1)
2016 2016 2015 2016 2015
Interest income $ 495.3 $ 495.4 $ 283.8 $ 990.7 $ 564.8 Rental
income on operating leases 569.3 575.4
531.7 1,144.7 1,062.3
Finance revenue 1,064.6 1,070.8 815.5 2,135.4 1,627.1
Interest expense (282.5 ) (286.4 ) (265.2 ) (568.9 ) (536.5 )
Depreciation on operating lease equipment (176.4 ) (175.3 ) (157.8
) (351.7 ) (314.6 ) Maintenance and other operating lease expenses
(64.9 ) (56.2 ) (49.4 ) (121.1 )
(95.5 )
Net finance revenue (NFR) 540.8 552.9 343.1
1,093.7 680.5 Other income 104.3 100.9
63.5 205.2 149.9
Total net revenues $ 645.1 $ 653.8 $ 406.6
$ 1,298.9 $ 830.4
NFR as a %
of AEA 3.65 % 3.74 % 3.33 %
3.69 % 3.27 %
Net Operating Lease
Revenues(2) Rental income on operating leases $ 569.3 $
575.4 $ 531.7 $ 1,144.7 $ 1,062.3 Depreciation on operating lease
equipment (176.4 ) (175.3 ) (157.8 ) $ (351.7 ) $ (314.6 )
Maintenance and other operating lease expenses (64.9 )
(56.2 ) (49.4 ) $ (121.1 ) $ (95.5 )
Net
operating lease revenue $ 328.0 $ 343.9 $ 324.5
$ 671.9 $ 652.2
June 30,
March 31, December 31, June 30, Earning
Assets(3) 2016 2016 2015
2015 Loans $ 30,456.8 $ 31,408.6 $ 31,671.7 $ 19,649.3
Operating lease equipment, net 16,864.6 16,665.7 16,617.0 15,109.6
Assets held for sale 2,403.3 2,211.2 2,092.4 1,086.8 Credit
balances of factoring clients (1,215.2 ) (1,361.0 ) (1,344.0 )
(1,373.3 ) Interest bearing cash 7,082.8 7,135.0 6,820.3 4,224.8
Investment securities 3,229.1 2,896.8 2,953.8 1,692.9 Securities
purchased under agreements to resell - - - 750.0 Indemnification
assets 375.5 389.4 414.8
- Total earning assets $ 59,196.9 $ 59,345.7
$ 59,226.0 $ 41,140.1
Avereage
Earning Assets (for the respective quarters) $ 59,229.2
$ 59,206.4 $ 59,141.5 $ 41,159.4
Quarters Ended Six Months Ended June 30,
March 31, June 30, June 30, Adjusted
Operating Expenses 2016 2016 2015
2016 2015 Operating expenses $ (337.5 ) $ (348.5 ) $
(235.0 ) $ (686.0 ) $ (476.6 ) Provision for severance and
facilities exiting activities 9.7 20.3 1.1 30.0 0.1 Intangible
assets amortization 6.4 6.4 0.5
12.8 1.1
Operating expenses exclusive of
restructuring costs and intangibleassets amortization(4)
$ (321.4 ) $ (321.8 ) $ (233.4 ) $ (643.2 ) $ (475.4 )
Operating expenses (exclusive of
restructuring costs and intangibleassets amortization) as a % of
AEA
(2.17 %) (2.17 %) (2.27 %) (2.17
%) (2.29 %)
Total Net Revenue $ 645.1 $
653.8 $ 406.6 $ 1,298.9 $ 830.4
Operating expenses exclusive of
restructuring costs and intangibleassets amortization(4)
$ (321.4 ) $ (321.8 ) $ (233.4 ) $ (643.2 ) $ (475.4 ) Net
Efficiency Ratio(5) 49.8 % 49.2 % 57.4 % 49.5 % 57.2 %
June 30, March 31, December 31, June
30, 2016 2016 2015 2015
Continuing Operations Total Assets(6) Total Assets $
66,700.3 $ 67,097.6 $ 67,401.5 $ 46,545.1 Assets of discontinued
operation (469.1 ) (489.5 ) (500.5 ) -
Continuing operations total assets $ 66,231.2 $
66,608.1 $ 66,901.0 $ 46,545.1
June 30, March 31, December 31, June
30, Tangible Book Value(7) 2016
2016 2015 2015 Total common stockholders'
equity $ 11,124.1 $ 11,125.8 $ 10,978.1 $ 8,807.1 Less: Goodwill
(1,169.7 ) (1,195.1 ) (1,198.3 ) (565.9 ) Intangible assets
(168.9 ) (170.3 ) (176.3 ) (21.4 ) Tangible
book value 9,785.5 9,760.4 9,603.5 8,219.8 Less: Disallowed
deferred tax asset (842.4 ) (873.9 ) (904.5 )
(339.7 ) Adjusted tangible common equity(8) $ 8,943.1
$ 8,886.5 $ 8,699.0 $ 7,880.1 Average adjusted
tangible common equity $ 8,971.6 $ 8,825.1 $ 8,675.5
$ 7,917.7 (1) Total net revenues are the combination
of net finance revenue and other income and is an aggregation of
all sources of revenue for the Company. Total net revenues are used
by management to monitor business performance. (2) Total net
operating lease revenues are the combination of rental income on
operating leases less depreciation on operating lease equipment and
maintenance and other operating lease expenses. Total net operating
lease revenues are used by management to monitor portfolio
performance. (3) Earning assets are utilized in certain revenue and
earnings ratios. Earning assets are net of credit balances of
factoring clients. This net amount represents the amounts we fund.
(4) Operating expenses exclusive of restructuring costs and
intangible amortization is a non-GAAP measure used by management to
compare period over period expenses. (5) Net efficiency ratio is a
non-GAAP measurement used by management to measure operating
expenses (before restructuring costs and intangible amortization)
to the level of total net revenues. (6) Total assets from
continuing operations is a non-GAAP measurement used by management
to analyze the total asset change on a more consistent basis. (7)
Tangible book value is a non-GAAP measure, which represents an
adjusted common shareholders’ equity balance that has been reduced
by goodwill and intangible assets. Tangible book value is used to
compute a per common share amount, which is used to evaluate our
use of equity. (8) Return on average tangible common equity is
adjusted to remove the impact of intangible amortization, goodwill
impairment and the impact from valuation allowance reversals from
income from continuing operations, while the average tangible
common equity is reduced for disallowed deferred tax assets. Return
on average tangible common equity is another metric used to
evaluate our use of equity.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160728005491/en/
CIT MEDIA RELATIONS:Matt Klein,
973-597-2020DirectorMatt.Klein@cit.comorCIT INVESTOR
RELATIONS:Barbara Callahan, 973-740-5058Senior Vice
PresidentBarbara.Callahan@cit.com
CIT (NYSE:CIT)
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