CIT Group Inc. said its profit fell in the first quarter, as the
firm reported a decline in net finance margin and saw lower
profitability in its commercial finance business.
The lender's top and bottom line results fell short of Wall
Street expectations.
The New Jersey-based bank reported earnings of $103.7 million,
down from $117.2 million a year earlier. On a per-share basis, CIT
reported a profit of 59 cents, unchanged from the previous year's
first quarter due to a lower share count.
Revenue increased 7.9% to $423.8 million.
Analysts expected 73 cents in per-share profit and $456.7
million in revenue, according to Thomson Reuters.
"Our results reflected lower profitability in our North American
commercial finance business as well as lower utilization rates in
our transportation business," said Chief Executive John Thain.
CIT, under Mr. Thain, has pushed to expand its consumer and
commercial businesses and last summer agreed to buy the parent
company of Los Angeles-based OneWest Bank NA for $3.4 billion, a
deal CIT has said it hopes to close in the first half of this year.
That deal will give CIT a network of branches and boost the firm's
assets, which stood at $46.4 billion at the end of the most recent
quarter.
Mr. Thain said Tuesday that CIT remains focused on expanding
commercial banking and deposit franchises through the OneWest deal
and also said CIT would return an additional $200 million through
share repurchases.
Net finance margin, an important indicator of lending
profitability, was 4.57%, down from 4.88% in the prior quarter and
lower than the 4.73% reported a year earlier. Net finance revenue
was $337 million, up from $322 million at the end of December but
down from $373 million a year ago. The decreases from prior periods
were driven primarily by lower net rental yields in aerospace, the
company said.
CIT Bank's total assets grew to $21.5 billion as of March 31, up
from $21.1 billion at the end of the prior quarter. The bank funded
$1.5 billion in new business volume during the period, down from
$1.9 billion in the last quarter, and loans rose to $15.1 billion
from $15 billion at the end of December. Deposits increased to
$16.8 billion for $15.9 billion a quarter earlier and from $13.1
billion a year earlier.
Shares, down 1.1% this year through Monday's close, were
inactive in premarket trading.
Write to Lisa Beilfuss at lisa.beilfuss@wsj.com
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