UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Date
of Report (Date of earliest event reported): July 28, 2015 (July 28, 2015)
CIT
GROUP INC.
(Exact
name of registrant as specified in its charter)
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| Delaware |
001-31369 |
65-1051192 |
| (State or other |
(Commission |
(IRS Employer |
| jurisdiction of |
File Number) |
Identification No.) |
| incorporation) |
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11
West 42nd
Street
New
York, New York 10036
(Address
of registrant's principal executive office)
Registrant's
telephone number, including area code: (212) 461-5200
(Former
Name or Former Address, if Changed Since Last Report)
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant
under any of the following provisions (see General Instruction A.2. below):
[
] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[
] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[
] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[
] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Section
2 – Financial Information
Item
2.02. Results of Operations and Financial Condition.
This
Current Report on Form 8-K includes as an exhibit a press release, dated July 28, 2015, reporting the financial results of CIT
Group Inc. (the “Company”) as of and for the quarter ended June 30, 2015. The press release is attached as Exhibit
99.1. This press release includes certain non-GAAP financial measures. A reconciliation of those measures to the most directly
comparable GAAP measures is included as a table to the press release. The information furnished under this Item 2.02, including
Exhibit 99.1, shall be considered filed for purposes of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Section
7 – Regulation FD
Item
7.01. Regulation FD Disclosure.
In
addition, this Form 8-K includes a copy of the Company’s presentation to analysts and investors of its Second Quarter 2015
Financial Results for the quarter ended June 30, 2015, which is attached as Exhibit 99.2. The information included in Exhibit 99.2
shall not be considered filed for purposes of the Exchange Act. The Company also provides supplementary financial information on
its website, which is not incorporated by reference in this Form 8-K.
Section
9 – Financial Statements and Exhibits
Item
9.01. Financial Statements and Exhibits.
| 99.1 | Press release issued
by CIT Group Inc. on July 28, 2015 reporting its financial results as of and for the quarter ended June 30, 2015. |
| 99.2 | Presentation by CIT Group Inc. on July 28, 2015 regarding
its Second Quarter 2015 Financial Results. |
Forward-Looking
Statements
This
Form 8-K 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 Form 8-K, 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, 2014, which was filed with the Securities and Exchange Commission. Accordingly, you
should not place undue reliance on the forward-looking statements contained in this Form 8-K. 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.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
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CIT GROUP INC. |
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(Registrant) |
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By: |
/s/ Scott T. Parker |
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Scott T. Parker |
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Executive Vice President & |
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Chief Financial Officer |
Dated:
July 28, 2015
Exhibit 99.1
1
FOR IMMEDIATE RELEASE
CIT REPORTS SECOND QUARTER
2015 NET INCOME OF $115 MILLION
($0.66 PER DILUTED SHARE)
| § | Previously
Announced OneWest Bank Acquisition Expected to Close on August 3, 2015 – Received regulatory approvals; creates financial
holding company with more than $65 billion in assets; |
| § | Grew
Commercial Assets – Finance and leasing assets in Transportation & International Finance and North American Commercial
Finance grew 4% from a year ago and 1% from prior quarter; |
| § | Stable Net Finance Margin – Net Finance Margin
of approximately 4%; deposits exceed 50% of total funding; |
| § | Continued
Capital Return – Returned over $87 million of capital to shareholders through dividends and the repurchase of 1.3 million
shares. |
NEW
YORK – July 28, 2015 – CIT
Group Inc. (NYSE: CIT) today reported net income of $115 million, $0.66 per diluted share,
for the quarter ended June 30, 2015, compared to net income of $247 million, $1.29 per diluted share, for the second quarter of
2014. Net income for the six month period ended June 30, 2015 was $219 million, $1.24 per diluted share, compared to $364 million,
$1.88 per diluted share, for the period ended June 30, 2014. The three and six month periods ended June 30, 2014 included $52 million,
$0.27 per diluted share, and $54 million, $0.28 per diluted share, of income from a discontinued operation, respectively.
“I am very pleased
that we received regulatory approval for our acquisition of OneWest, which is on track to close next week,” said John A.
Thain, Chairman and Chief Executive Officer. “This transaction will expand our commercial banking franchise, enhance our
suite of products, and further diversify our deposit base and lower our funding costs through an established network of retail
branches in Southern California.
“Our quarterly
results reflect growth across our transportation businesses and the continuing competitive environment, particularly for middle
market lending. We remain focused on increasing shareholder value as we meet the financial needs of our customers.”
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 operation,
which were sold in the second quarter of 2014.
Income from continuing
operations of $115 million, net of a $38 million tax provision, reflects a stable Net Finance Margin (NFM) and lower provision
for credit losses. Net income includes $4 million of charges related to portfolios that we are exiting.
Total
assets from continuing operations1 at June 30, 2015 were
$46.7 billion, compared to $46.4 billion at March 31, 2015, and $44.2 billion at June 30, 2014. Financing and leasing assets in
North American Commercial Finance (NACF) and Transportation & International Finance (TIF) were $35.6 billion, up slightly
from March 31, 2015 and up $1.5 billion (4%) from a year ago reflecting the acquisition of Direct Capital in August 2014, which
was partially offset by $0.7 billion of asset sales. Non-Strategic Portfolios further declined to approximately $295 million,
reflecting portfolio run-off and asset sales. Total loans of $19.6 billion increased $0.2 billion from March 31, 2015 and by over
$1 billion from a year ago. Operating lease equipment of $15.1 billion rose by $0.2 billion from March 31, 2015 and $0.3 billion
from a year ago. Cash and securities totaled $7.9 billion, down $0.2 billion from March 31, 2015 and up $0.6 billion from June
30, 2014.
Net
finance revenue2 was $343 million, compared to $361 million in the year-ago quarter and $337 million in the prior quarter.
Average earning assets were $34.1 billion in the current quarter, up from $33.2 billion in the year-ago quarter and from $33.8
billion in the prior quarter. Net finance revenue as a percentage of average earning assets (“net finance margin”)
was 4.02%, compared to 4.35% in the year-ago quarter and 4.00% in the prior quarter. The decline from the year-ago quarter reflected
pressure on yields, the lack of interest recoveries and the absence of benefits from accelerated debt redemptions.
Other income of $64
million decreased from $94 million in the year-ago quarter and from $86 million in the prior quarter. The current quarter includes
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 derivative. The year-ago quarter benefited from an $11 million positive mark on the TRS derivative and $9 million of
counterparty receivable accretion.
Operating expenses were
$235 million, compared to $225 million in the year-ago quarter and $242 million in the prior quarter. Restructuring costs were
minimal in the current and prior quarter. The increase from the year-ago quarter reflects higher compensation costs, primarily
related to the addition of Direct Capital, as well as costs related to the pending acquisition of OneWest. The sequential quarter
decline reflects lower compensation costs. Headcount at June 30, 2015 was essentially unchanged from the prior quarter of 3,360
and up from 3,170 a year ago, driven by Direct Capital.
1 Total assets from continuing
operations is a non-GAAP measure. See “Non-GAAP Measurements” at the end of this press release and page 18 for reconciliation
of non-GAAP to GAAP financial information.
2 Net finance revenue, average
earning assets, 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 18 for reconciliation of non-GAAP to GAAP financial information.
The provision for income
taxes was $38 million compared to cash taxes of $4 million. The effective tax rate was approximately 25% in the current quarter,
including a $9 million benefit from a favorable resolution of an uncertain tax position, compared to 8% in the year-ago quarter
and 30% in the prior quarter. Income tax expense in the year-ago quarter was $18 million and $44 million in the prior quarter.
Credit and Allowance for Loan Losses
Credit metrics remain
at or near cycle lows. Non-accrual loans increased to $198 million, or 1.01% of finance receivables, at June 30, 2015 from $184
million (0.94%) at March 31, 2015 and $190 million (1.02%) at June 30, 2014. The increase was primarily in International Finance.
The provision for credit
losses was $18 million, compared to $10 million in the year-ago quarter and $35 million in the prior quarter. The decline from
the prior quarter is primarily due to a decrease in the non-specific reserve. Net charge-offs were $23 million, or 0.48% as a percentage
of average finance receivables, versus $21 million (0.45%) in the year-ago quarter and $21 million (0.43%) in the prior quarter.
Charge-offs in the quarter were impacted by one energy-related account in NACF whereas the prior quarter mostly reflected transfers
of assets to held for sale. Recoveries of $11 million were higher than the $8 million recorded in the year-ago quarter and $6 million
in the prior quarter.
The allowance for loan
losses was $351 million (1.79% of finance receivables) at June 30, 2015, compared to $357 million (1.83%) at March 31, 2015 and
$341 million (1.83%) at June 30, 2014. Specific reserves were $18 million at June 30, 2015, compared to $15 million at March 31,
2015 and $22 million at June 30, 2014.
Capital and Funding
Our
estimated Common Equity Tier 1 and Total Capital ratios at June 30, 2015 were 14.4% and 15.1%3, as calculated under
the fully phased-in Regulatory Capital Rules, compared to 14.1% and 14.8% at March 31, 2015, respectively. At June 30, 2014, Tier
1 and Total Capital ratios reported under the previously effective capital rules were 16.0% and 16.7%, respectively. The change
from the year-ago quarter primarily reflects an increase in risk-weighted assets due to higher
transportation order book commitments and asset growth and, to a lesser extent, a decline in regulatory capital resulting from
goodwill and intangibles recorded with the Direct Capital acquisition. The impact of the change in Regulatory Capital Rules at
January 1, 2015 was minimal. Preliminary fully phased-in risk-weighted assets totaled $55.7 billion at June 30, 2015, compared
to $56.3 billion in the prior quarter and from $51.0 billion at June 30, 2014.
Book
value per share grew to $50.91 at June 30, 2015 from $50.26 at March 31, 2015 and $46.42 at June 30, 2014. Tangible book value
per share4 increased to $47.51 at June 30, 2015 from $46.89 at March
3 Preliminary ratios are
based on a preliminary fully phased-in Basel III estimate.
4 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 18 for reconciliation of non-GAAP to GAAP financial information.
31, 2015 and $44.16 at June 30, 2014. The
increases in book value and tangible book value per share primarily reflected our net income, including the partial reversals of
the valuation allowance in the second half of 2014, and continued net benefit from share repurchases.
Cash and investment
securities totaled $7.5 billion at June 30, 2015, and were comprised of $5.5 billion of cash, $0.7 billion of reverse repurchase
securities, $0.8 billion of short-term investments and $0.5 billion of debt securities available for sale, compared to $7.7 billion
at March 31, 2015 and $6.8 billion at June 30, 2014. Cash and investment securities at June 30, 2015 consisted of $2.6 billion
related to the bank holding company and $3.4 billion at CIT Bank (excluding $0.1 billion of restricted cash), with the remainder
comprised of cash at operating subsidiaries and other restricted balances of approximately $1.5 billion. CIT had approximately
$1.4 billion of unused and committed liquidity under a $1.5 billion revolving credit facility at June 30, 2015.
Deposits grew to $17.3
billion from $16.8 billion at March 31, 2015, and $13.9 billion at June 30, 2014, as we
surpassed $10 billion of online deposits during the quarter. At June 30, 2015, deposits
represented approximately 51% of CIT’s funding, with unsecured and secured borrowings comprising 32% and 17% of the funding
mix, respectively, reflecting the ongoing shift from unsecured borrowings to deposit funding. The weighted average coupon rate
on outstanding deposits and long-term borrowings in continuing operations was 3.04% at June 30,
2015, unchanged from March 31, 2015 and down from 3.20% at June 30, 2014.
During the quarter,
we returned over $87 million in capital to our shareholders including $26 million in dividends and $61 million from repurchases
of 1.3 million common shares at an average price of $45.87 per share.
In July 2015, the Board
approved a $0.15 cash dividend payable on August 28, 2015 to common shareholders of record as of August 14, 2015 and we repurchased
an additional 0.7 million shares under a 10b 5-1 repurchase plan for an aggregate purchase price of $30 million. Approximately
$109 million of the authorized repurchase capacity remained at July 24, 2015.
Segment Highlights
Transportation & International Finance
Pre-tax earnings were
$157 million, up from $148 million in the year-ago quarter and unchanged from the prior quarter. The increase from the year-ago
quarter primarily reflected higher gains on asset sales and a lower provision for credit losses. The second quarter results reflects
lower provision for credit losses and operating expenses offset by reduced gains on asset sales, as compared to the prior quarter.
Financing and leasing
assets at June 30, 2015 were $19.3 billion, up from $18.8 billion at March 31, 2015 and $18.4 billion at June 30, 2014. The annual
increase reflects growth in all transportation divisions, partially offset by a reduction in International Finance. Assets held
for sale totaled $0.7 billion and largely
consists of the U.K. equipment finance portfolio
and certain commercial aircraft. New business volume for the quarter was $0.8 billion and consisted of $0.4 billion of operating
lease equipment, including the delivery of three new aircraft and approximately 1,900 new railcars, and the funding of $0.4 billion
of finance receivables, the majority of which was in Maritime Finance.
Net finance revenue
was $218 million, compared to $222 million in the year-ago quarter and $215 million in the prior quarter, reflecting asset growth
offset by yield compression. Net finance margin was 4.57%, down from 4.91% in the year-ago quarter, as lower yields in Aerospace
reflecting lower utilization and lease re-pricings, were partially offset by slightly higher yields in Rail. NFM was unchanged
from the prior quarter as lower funding costs offset yield compression. Gross yields in Aerospace decreased to 11.2% from 11.4%
in the prior quarter, while gross yields in Rail of 14.8% were unchanged sequentially.
Other income was $17
million, up from $10 million in the year-ago quarter and down from $34 million in the prior quarter, driven by variation in gains
on asset sales, predominantly in commercial aircraft.
Non-accrual loans of
$58 million (1.55% of finance receivables) increased from $39 million (1.10%) at March 31, 2015 and from $41 million (1.26%)
a year ago, primarily in International Finance. There was a slight net benefit in provision for credit losses compared to provisions
of $8 million in the year-ago quarter and $11 million in the prior quarter, with the current quarter provision reflecting recoveries
in China and minimal losses elsewhere. Net charge-offs reflected a $3 million net recovery this quarter (0.29% of finance receivables)
compared to net charge-offs of $13 million (1.48%) in the year-ago quarter and $2 million (0.17%) in the prior quarter. Net charge-offs
in the year-ago quarter include $9 million related to assets transferred to held for sale.
Operating expenses were
$78 million, up from $76 million a year ago and down from $82 million in the prior quarter reflecting lower employee costs.
Utilization was essentially
unchanged from the prior quarter in air and rail, with over 97% of aircraft and 98% of rail equipment leased or under a commitment
at quarter-end. During the quarter, we ordered approximately 1,400 freight rail cars delivering through 2017. All of our aircraft
scheduled for delivery in the next 12 months and approximately 60% of the total railcar order-book have lease commitments.
North American Commercial Finance
Pre-tax earnings were
$47 million, compared to $93 million in the year-ago quarter and $36 million in the prior quarter. The decrease from the year-ago
quarter reflects higher credit costs and operating expenses, lower interest recoveries, and the impact of portfolio re-pricing.
The increase from the prior quarter reflects lower credit costs, higher capital market fees, and higher net finance revenue.
Financing and leasing
assets were $16.3 billion, up slightly from March 31, 2015, and up $650 million (4%) from June 30, 2014. The increase from the
year-ago quarter primarily reflects the acquisition of Direct Capital and growth in Real Estate Finance. New lending and leasing
volume was $1.6 billion, slightly higher
than the year-ago quarter and up from $1.4
billion in the prior quarter. Factored volume declined 7% and 10% from year-ago and prior quarter levels, respectively.
Net finance revenue
of $133 million decreased from $146 million in the year-ago quarter reflecting lower levels of loan prepayments and interest recoveries.
Net finance revenue increased from $128 million in the prior quarter due to both slightly higher average earning assets and yields,
notably in Equipment Finance. Net finance margin was 3.60% compared to 4.13% in the year-ago quarter and 3.52% in the prior quarter.
The changes in net finance margin from the comparable periods reflect the items affecting the net finance revenues cited above.
Other income of $69 million was essentially unchanged from the year-ago quarter and up from $66 million in the prior quarter, reflecting
higher capital markets fees and higher gains partially offset by lower factoring commissions. Operating expenses were $135 million,
up from $120 million in the year-ago quarter, primarily reflecting the acquisition of Direct Capital, and were unchanged from the
prior quarter.
Non-accrual loans of
$111 million (0.70% of finance receivables) declined from $116 million (0.73%) at March 31, 2015, and from $132 million (0.86%)
a year ago. Provision for credit losses of $19 million was up from $3 million in the year-ago quarter and down from $24 million
in the prior quarter. The current quarter includes a charge-off on one energy-related account partially offset by a decrease in
non-specific reserves. Net charge-offs were $26 million (0.66% of average finance receivables), compared to $9 million (0.23%)
in the year-ago quarter and $19 million (0.49%) in the prior quarter. Net charge-offs include $1 million related to assets moved
to held for sale in the current quarter compared to $3 million in the year-ago quarter and $11 million in the prior quarter.
Non-Strategic Portfolios
Pre-tax losses were
$10 million, unchanged from the year-ago quarter and improved from $13 million in the prior quarter. The sequential trend reflected
higher gains on sale of equipment partially offset by higher impairment charges on held-for-sale portfolios.
Financing and leasing
assets were unchanged at $0.3 billion at June 30, 2015, compared to March 31, 2015, and were down from $0.7 billion a year-ago,
which reflects sales of international portfolios and portfolio run-off.
In the fourth quarter
of 2014, we signed separate definitive agreements to sell equipment leasing platforms in Mexico (approximately $0.2 billion in
assets at June 30, 2015), and Brazil (approximately $0.1 billion in assets at June 30, 2015). We received regulatory approval for
the sale of Mexico, and expect to close the transaction in the 2015 third quarter. Brazil is expected to close in the second half
of 2015, subject to regulatory approval.
Corporate and Other
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. Other income included a $6 million negative mark-to-market on the TRS derivative and the
previously mentioned $9 million tax-related charge.
CIT Bank
Total assets were $21.9
billion at June 30, 2015, up from $21.5 billion at March 31, 2015, reflecting new business volumes, and $18.3 billion at June 30,
2014 reflecting, in part, the acquisition of Direct Capital. CIT Bank funded $2 billion of new business volume in the current quarter.
Loans totaled $15.7 billion, up from $15.1 billion at March 31, 2015 and $13.4 billion at June 30, 2014. Operating lease equipment
was $2.2 billion, primarily railcars and some aircraft, up from $2.0 billion in the prior quarter and $1.8 billion at June 30,
2014. Cash and debt securities available for sale totaled $3.5 billion at June 30, 2015 was comprised of $3.0 billion of cash and
approximately $0.5 billion of debt securities, down from $3.8 billion at March 31, 2015, and up from $2.8 billion at June 30, 2014.
Preliminary estimated
Common Equity Tier 1 and Total Capital ratios were 12.5% and 13.8% at June 30, 2015, and 12.9% and 14.1% at March 31, 2015, respectively,
as calculated under the fully phased-in Regulatory Capital Rules. Tier 1 and Total Capital ratios, which were reported under the
previously effective capital rules, were 15.2% and 16.5% at June 30, 2014. The change from a year-ago quarter primarily reflects
an increase in risk weighted assets. The impact of the changes in regulatory capital rules at January 1, 2015 was minimal.
Deposits at June 30,
2015 were $17.3 billion, up from $16.8 billion at March 31, 2015 and $13.9 billion at June 30, 2014, and we surpassed $10 billion
of online deposits. The weighted average rate on outstanding deposits was 1.69%, compared to 1.66% at March 31, 2015 and 1.57%
at June 30, 2014.
Conference Call and Webcast
Chairman and Chief Executive Officer John
A. Thain and Chief Financial Officer Scott T.
Parker will discuss these results on a conference call and audio webcast today, July 28, 2015, 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 “9999477” 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 10, 2015, 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 “10068104”, or at
cit.com/investor.
About CIT
Founded in 1908, CIT (NYSE: CIT) is a financial
holding company with more than $35 billion in financing and leasing assets. It provides financing, leasing and advisory
services principally to middle market companies across more than 30 industries primarily in North America, and equipment financing
and leasing solutions to the transportation industry worldwide. Its U.S. commercial bank subsidiary, CIT Bank (Member FDIC), BankOnCIT.com,
offers a variety of savings options designed to help customers achieve their financial goals. 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, 2014, 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,
adjusted net finance revenue and average earning assets are non-GAAP measurements used by management to gauge portfolio performance.
Operating expenses excluding restructuring costs is a non-GAAP measurement used by management to compare period over period expenses.
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.
###
| CIT MEDIA RELATIONS: |
CIT INVESTOR RELATIONS: |
| C. Curtis Ritter |
Barbara Callahan |
| Senior Vice President of Corporate Communications |
Senior Vice President |
|
(973) 740-5390
Curt.Ritter@cit.com
Matt Klein
Vice President, Media Relations
(973) 597-2020
Matt.Klein@cit.com |
(973) 740-5058
Barbara.Callahan@cit.com
|
###
CIT GROUP INC. AND SUBSIDIARIES
Unaudited Consolidated Statements of Operations
(dollars in millions, except per share data)
| | |
Quarters Ended | |
Six Months Ended |
| | |
June 30, | |
March 31, | |
June 30, | |
June 30, |
| | |
2015 | |
2015 | |
2014 | |
2015 | |
2014 |
| Interest income | |
| | | |
| | | |
| | | |
| | | |
| | |
| Interest and fees on loans | |
$ | 274.8 | | |
$ | 272.4 | | |
$ | 301.4 | | |
$ | 547.2 | | |
$ | 594.8 | |
| Other Interest and dividends | |
| 9.0 | | |
| 8.6 | | |
| 8.4 | | |
| 17.6 | | |
| 17.2 | |
| Total interest income | |
| 283.8 | | |
| 281.0 | | |
| 309.8 | | |
| 564.8 | | |
| 612.0 | |
| Interest expense | |
| | | |
| | | |
| | | |
| | | |
| | |
| Interest on long-term borrowings | |
| (193.0 | ) | |
| (202.3 | ) | |
| (206.1 | ) | |
| (395.3 | ) | |
| (426.1 | ) |
| Interest on deposits | |
| (72.2 | ) | |
| (69.0 | ) | |
| (56.1 | ) | |
| (141.2 | ) | |
| (108.0 | ) |
| Total interest expense | |
| (265.2 | ) | |
| (271.3 | ) | |
| (262.2 | ) | |
| (536.5 | ) | |
| (534.1 | ) |
| Net interest revenue | |
| 18.6 | | |
| 9.7 | | |
| 47.6 | | |
| 28.3 | | |
| 77.9 | |
| Provision for credit losses | |
| (18.4 | ) | |
| (34.6 | ) | |
| (10.2 | ) | |
| (53.0 | ) | |
| (46.9 | ) |
| Net interest revenue, after credit provision | |
| 0.2 | | |
| (24.9 | ) | |
| 37.4 | | |
| (24.7 | ) | |
| 31.0 | |
| Non-interest income | |
| | | |
| | | |
| | | |
| | | |
| | |
| Rental income on operating leases | |
| 531.7 | | |
| 530.6 | | |
| 519.6 | | |
| 1,062.3 | | |
| 1,011.5 | |
| Other income | |
| 63.5 | | |
| 86.4 | | |
| 93.7 | | |
| 149.9 | | |
| 164.8 | |
| Total non-interest income | |
| 595.2 | | |
| 617.0 | | |
| 613.3 | | |
| 1,212.2 | | |
| 1,176.3 | |
| Other expenses | |
| | | |
| | | |
| | | |
| | | |
| | |
| Depreciation on operating lease equipment | |
| (157.8 | ) | |
| (156.8 | ) | |
| (157.3 | ) | |
| (314.6 | ) | |
| (306.1 | ) |
| Maintenance and other operating lease expenses | |
| (49.4 | ) | |
| (46.1 | ) | |
| (49.0 | ) | |
| (95.5 | ) | |
| (100.6 | ) |
| Operating expenses | |
| (235.0 | ) | |
| (241.6 | ) | |
| (225.0 | ) | |
| (476.6 | ) | |
| (458.5 | ) |
| Loss on debt extinguishment | |
| (0.1 | ) | |
| - | | |
| (0.4 | ) | |
| (0.1 | ) | |
| (0.4 | ) |
| Total other expenses | |
| (442.3 | ) | |
| (444.5 | ) | |
| (431.7 | ) | |
| (886.8 | ) | |
| (865.6 | ) |
| Income from continuing operations before provision for income taxes | |
| 153.1 | | |
| 147.6 | | |
| 219.0 | | |
| 300.7 | | |
| 341.7 | |
| Provision for income taxes | |
| (37.8 | ) | |
| (44.0 | ) | |
| (18.1 | ) | |
| (81.8 | ) | |
| (31.6 | ) |
| Income from continuing operations, before attribution of noncontrolling interests | |
| 115.3 | | |
| 103.6 | | |
| 200.9 | | |
| 218.9 | | |
| 310.1 | |
| Net (income) loss attributable to noncontrolling interests, after tax | |
| - | | |
| 0.1 | | |
| (5.7 | ) | |
| 0.1 | | |
| - | |
| Income from continuing operations | |
| 115.3 | | |
| 103.7 | | |
| 195.2 | | |
| 219.0 | | |
| 310.1 | |
| Discontinued operation | |
| | | |
| | | |
| | | |
| | | |
| | |
| Loss from discontinued operation, net of taxes | |
| - | | |
| - | | |
| (231.1 | ) | |
| - | | |
| (228.8 | ) |
| Gain on sale of discontinued operation | |
| - | | |
| - | | |
| 282.8 | | |
| - | | |
| 282.8 | |
| Income from discontinued operation, net of taxes | |
| - | | |
| - | | |
| 51.7 | | |
| - | | |
| 54.0 | |
| Net income | |
$ | 115.3 | | |
$ | 103.7 | | |
$ | 246.9 | | |
$ | 219.0 | | |
$ | 364.1 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Basic income per common share | |
| | | |
| | | |
| | | |
| | | |
| | |
| Income from continuing operations | |
$ | 0.66 | | |
$ | 0.59 | | |
$ | 1.03 | | |
$ | 1.25 | | |
$ | 1.61 | |
| Income from discontinued operation, net of taxes | |
| - | | |
| - | | |
| 0.27 | | |
| - | | |
| 0.28 | |
| Basic income per common share | |
$ | 0.66 | | |
$ | 0.59 | | |
$ | 1.30 | | |
$ | 1.25 | | |
$ | 1.89 | |
| Average number of common shares - basic (thousands) | |
| 173,785 | | |
| 176,260 | | |
| 190,231 | | |
| 175,019 | | |
| 193,134 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Diluted income per common share | |
| | | |
| | | |
| | | |
| | | |
| | |
| Income from continuing operations | |
$ | 0.66 | | |
$ | 0.59 | | |
$ | 1.02 | | |
$ | 1.24 | | |
$ | 1.60 | |
| Income from discontinued operation, net of taxes | |
| - | | |
| - | | |
| 0.27 | | |
| - | | |
| 0.28 | |
| Diluted income per common share | |
$ | 0.66 | | |
$ | 0.59 | | |
$ | 1.29 | | |
$ | 1.24 | | |
$ | 1.88 | |
| Average number of common shares - diluted (thousands) | |
| 174,876 | | |
| 177,072 | | |
| 191,077 | | |
| 175,971 | | |
| 194,036 | |
CIT GROUP INC. AND SUBSIDIARIES
Unaudited Consolidated Balance Sheets
(dollars in millions, except per share data)
| | |
June 30, | |
March 31, | |
December 31, | |
June 30, |
| | |
2015* | |
2015 | |
2014 | |
2014 |
| Assets | |
| | | |
| | | |
| | | |
| | |
| Total cash and deposits | |
$ | 5,465.3 | | |
$ | 6,306.9 | | |
$ | 7,119.7 | | |
$ | 6,427.6 | |
| Securities purchased under agreements to resell | |
| 750.0 | | |
| 450.0 | | |
| 650.0 | | |
| - | |
| Investment securities | |
| 1,692.9 | | |
| 1,347.4 | | |
| 1,550.3 | | |
| 823.1 | |
| Assets held for sale | |
| 1,086.8 | | |
| 1,051.9 | | |
| 1,218.1 | | |
| 1,328.9 | |
| | |
| | | |
| | | |
| | | |
| | |
| Loans | |
| 19,649.3 | | |
| 19,429.3 | | |
| 19,495.0 | | |
| 18,604.4 | |
| Allowance for loan losses | |
| (350.9 | ) | |
| (356.5 | ) | |
| (346.4 | ) | |
| (341.0 | ) |
| Loans, net of allowance for loan losses | |
| 19,298.4 | | |
| 19,072.8 | | |
| 19,148.6 | | |
| 18,263.4 | |
| | |
| | | |
| | | |
| | | |
| | |
| Operating lease equipment, net | |
| 15,109.6 | | |
| 14,887.8 | | |
| 14,930.4 | | |
| 14,788.3 | |
| Goodwill | |
| 565.9 | | |
| 563.6 | | |
| 571.3 | | |
| 403.1 | |
| Unsecured counterparty receivable | |
| 538.2 | | |
| 537.1 | | |
| 559.2 | | |
| 565.8 | |
| Other assets | |
| 2,150.1 | | |
| 2,198.5 | | |
| 2,132.4 | | |
| 1,551.5 | |
| Assets of discontinued operation | |
| - | | |
| - | | |
| - | | |
| 1.0 | |
| Total assets | |
$ | 46,657.2 | | |
$ | 46,416.0 | | |
$ | 47,880.0 | | |
$ | 44,152.7 | |
| | |
| | | |
| | | |
| | | |
| | |
| Liabilities | |
| | | |
| | | |
| | | |
| | |
| Deposits | |
$ | 17,267.8 | | |
$ | 16,758.1 | | |
$ | 15,849.8 | | |
$ | 13,939.0 | |
| Credit balances of factoring clients | |
| 1,373.3 | | |
| 1,505.3 | | |
| 1,622.1 | | |
| 1,296.5 | |
| Other liabilities | |
| 2,766.9 | | |
| 2,735.2 | | |
| 2,888.8 | | |
| 2,741.5 | |
| Long-term borrowings | |
| | | |
| | | |
| | | |
| | |
| Unsecured borrowings | |
| 10,732.8 | | |
| 10,732.6 | | |
| 11,932.4 | | |
| 12,232.4 | |
| Secured borrowings | |
| 5,708.8 | | |
| 5,925.7 | | |
| 6,523.4 | | |
| 5,313.1 | |
| Total long-term borrowings | |
| 16,441.6 | | |
| 16,658.3 | | |
| 18,455.8 | | |
| 17,545.5 | |
| Liabilities of discontinued operation | |
| - | | |
| - | | |
| - | | |
| 0.9 | |
| Total liabilities | |
| 37,849.6 | | |
| 37,656.9 | | |
| 38,816.5 | | |
| 35,523.4 | |
| Equity | |
| | | |
| | | |
| | | |
| | |
| Stockholders' equity | |
| | | |
| | | |
| | | |
| | |
| Common stock | |
| 2.0 | | |
| 2.0 | | |
| 2.0 | | |
| 2.0 | |
| Paid-in capital | |
| 8,615.6 | | |
| 8,598.0 | | |
| 8,603.6 | | |
| 8,582.0 | |
| Retained earnings | |
| 1,781.1 | | |
| 1,692.3 | | |
| 1,615.7 | | |
| 905.8 | |
| Accumulated other comprehensive loss | |
| (158.8 | ) | |
| (163.1 | ) | |
| (133.9 | ) | |
| (77.5 | ) |
| Treasury stock, at cost | |
| (1,432.8 | ) | |
| (1,370.6 | ) | |
| (1,018.5 | ) | |
| (794.7 | ) |
| Total common stockholders' equity | |
| 8,807.1 | | |
| 8,758.6 | | |
| 9,068.9 | | |
| 8,617.6 | |
| Noncontrolling interests | |
| 0.5 | | |
| 0.5 | | |
| (5.4 | ) | |
| 11.7 | |
| Total equity | |
| 8,807.6 | | |
| 8,759.1 | | |
| 9,063.5 | | |
| 8,629.3 | |
| Total liabilities and equity | |
$ | 46,657.2 | | |
$ | 46,416.0 | | |
$ | 47,880.0 | | |
$ | 44,152.7 | |
| | |
| | | |
| | | |
| | | |
| | |
| Book Value Per Common Share | |
| | | |
| | | |
| | | |
| | |
| Book value per common share | |
$ | 50.91 | | |
$ | 50.26 | | |
$ | 50.13 | | |
$ | 46.42 | |
| Tangible book value per common share | |
$ | 47.51 | | |
$ | 46.89 | | |
$ | 46.83 | | |
$ | 44.16 | |
| Outstanding common shares (in thousands) | |
| 172,998 | | |
| 174,280 | | |
| 180,921 | | |
| 185,645 | |
| | |
| | | |
| | | |
| | | |
| | |
| * Preliminary | |
| | | |
| | | |
| | | |
| | |
CIT GROUP INC. AND SUBSIDIARIES
Average Balances and Rates
(dollars in millions)
| | |
Quarters Ended |
| | |
June 30, 2015 | |
March 31, 2015 | |
June 30, 2014 |
| | |
Average
Balance | |
Rate | |
Average
Balance | |
Rate | |
Average
Balance | |
Rate |
| Assets | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Interest bearing deposits | |
$ | 4,829.4 | | |
| 0.28 | % | |
$ | 5,951.6 | | |
| 0.27 | % | |
$ | 4,620.9 | | |
| 0.39 | % |
| Securities purchased under agreements to resell | |
| 675.0 | | |
| 0.59 | % | |
| 575.0 | | |
| 0.49 | % | |
| - | | |
| - | |
| Investments | |
| 1,510.6 | | |
| 1.22 | % | |
| 1,497.2 | | |
| 1.04 | % | |
| 2,035.8 | | |
| 0.77 | % |
| Loans (including held for sale) | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| U.S. | |
| 18,130.4 | | |
| 5.41 | % | |
| 17,908.2 | | |
| 5.36 | % | |
| 16,339.2 | | |
| 6.03 | % |
| Non-U.S. | |
| 2,161.3 | | |
| 9.01 | % | |
| 2,235.3 | | |
| 9.38 | % | |
| 3,510.0 | | |
| 8.49 | % |
| Total Loans | |
| 20,291.7 | | |
| 5.83 | % | |
| 20,143.5 | | |
| 5.84 | % | |
| 19,849.2 | | |
| 6.50 | % |
| Total interest earning assets / interest income | |
| 27,306.7 | | |
| 4.39 | % | |
| 28,167.3 | | |
| 4.22 | % | |
| 26,505.9 | | |
| 4.92 | % |
| Operating lease equipment, net (including held for sale) | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| U.S. | |
| 7,859.0 | | |
| 8.93 | % | |
| 7,769.5 | | |
| 9.15 | % | |
| 7,741.5 | | |
| 8.91 | % |
| Non-U.S. | |
| 7,422.2 | | |
| 8.04 | % | |
| 7,420.0 | | |
| 8.08 | % | |
| 6,921.8 | | |
| 8.14 | % |
| Total operating lease equipment, net | |
| 15,281.2 | | |
| 8.49 | % | |
| 15,189.5 | | |
| 8.63 | % | |
| 14,663.3 | | |
| 8.55 | % |
| Total earning assets | |
| 42,587.9 | | |
| 5.91 | % | |
| 43,356.8 | | |
| 5.82 | % | |
| 41,169.2 | | |
| 6.25 | % |
| Non-interest earning assets | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Cash and due from banks | |
| 952.7 | | |
| | | |
| 903.6 | | |
| | | |
| 1,213.1 | | |
| | |
| Allowance for loan losses | |
| (358.0 | ) | |
| | | |
| (347.7 | ) | |
| | | |
| (350.4 | ) | |
| | |
| All other non-interest bearing assets | |
| 3,285.5 | | |
| | | |
| 3,317.1 | | |
| | | |
| 2,546.5 | | |
| | |
| Assets of discontinued operation | |
| - | | |
| | | |
| - | | |
| | | |
| 931.2 | | |
| | |
| Total Average Assets | |
$ | 46,468.1 | | |
| | | |
$ | 47,229.8 | | |
| | | |
$ | 45,509.6 | | |
| | |
| Liabilities | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Borrowings | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Deposits | |
$ | 16,934.9 | | |
| 1.71 | % | |
$ | 16,382.2 | | |
| 1.68 | % | |
$ | 13,608.5 | | |
| 1.65 | % |
| Long-term borrowings | |
| 16,540.3 | | |
| 4.67 | % | |
| 17,603.9 | | |
| 4.60 | % | |
| 18,226.2 | | |
| 4.52 | % |
| Total interest-bearing liabilities | |
| 33,475.2 | | |
| 3.17 | % | |
| 33,986.1 | | |
| 3.19 | % | |
| 31,834.7 | | |
| 3.29 | % |
| Credit balances of factoring clients | |
| 1,428.6 | | |
| | | |
| 1,501.4 | | |
| | | |
| 1,301.7 | | |
| | |
| Other non-interest bearing liabilities | |
| 2,776.7 | | |
| | | |
| 2,870.6 | | |
| | | |
| 2,863.2 | | |
| | |
| Liabilities of discontinued operation | |
| - | | |
| | | |
| - | | |
| | | |
| 793.9 | | |
| | |
| Noncontrolling interests | |
| 0.5 | | |
| | | |
| (3.9 | ) | |
| | | |
| 8.4 | | |
| | |
| Stockholders' equity | |
| 8,787.1 | | |
| | | |
| 8,875.6 | | |
| | | |
| 8,707.7 | | |
| | |
| Total Average Liabilities and Stockholders' Equity | |
$ | 46,468.1 | | |
| | | |
$ | 47,229.8 | | |
| | | |
$ | 45,509.6 | | |
| | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| | |
Six Months Ended |
|
| | |
June 30, 2015 | |
June 30, 2014 |
|
| Assets | |
| | | |
| | | |
| | | |
| | |
|
| Interest bearing deposits | |
$ | 5,390.1 | | |
| 0.27 | % | |
$ | 4,955.8 | | |
| 0.37 | % |
|
| Securities purchased under agreements to resell | |
| 650.0 | | |
| 0.52 | % | |
| - | | |
| - | |
|
| Investments | |
| 1,526.2 | | |
| 1.11 | % | |
| 2,269.6 | | |
| 0.71 | % |
|
| Loans (including held for sale) | |
| | | |
| | | |
| | | |
| | |
|
| U.S. | |
| 18,016.6 | | |
| 5.39 | % | |
| 16,087.1 | | |
| 5.97 | % |
|
| Non-U.S. | |
| 2,203.2 | | |
| 9.18 | % | |
| 3,622.5 | | |
| 8.47 | % |
|
| Total Loans | |
| 20,219.8 | | |
| 5.83 | % | |
| 19,709.6 | | |
| 6.46 | % |
|
| Total interest earning assets / interest income | |
| 27,786.1 | | |
| 4.29 | % | |
| 26,935.0 | | |
| 4.77 | % |
|
| Operating lease equipment, net (including held for sale) | |
| | | |
| | | |
| | | |
| | |
|
| U.S. | |
| 7,821.1 | | |
| 9.03 | % | |
| 7,556.7 | | |
| 8.70 | % |
|
| Non-U.S. | |
| 7,424.1 | | |
| 8.05 | % | |
| 6,733.0 | | |
| 8.20 | % |
|
| Total operating lease equipment, net | |
| 15,245.2 | | |
| 8.56 | % | |
| 14,289.7 | | |
| 8.46 | % |
|
| Total earning assets | |
| 43,031.3 | | |
| 5.85 | % | |
| 41,224.7 | | |
| 6.10 | % |
|
| Non-interest earning assets | |
| | | |
| | | |
| | | |
| | |
|
| Cash and due from banks | |
| 930.3 | | |
| | | |
| 989.6 | | |
| | |
|
| Allowance for loan losses | |
| (352.3 | ) | |
| | | |
| (354.3 | ) | |
| | |
|
| All other non-interest bearing assets | |
| 3,301.5 | | |
| | | |
| 2,460.5 | | |
| | |
|
| Assets of discontinued operation | |
| - | | |
| | | |
| 2,167.6 | | |
| | |
|
| Total Average Assets | |
$ | 46,910.8 | | |
| | | |
$ | 46,488.1 | | |
| | |
|
| Liabilities | |
| | | |
| | | |
| | | |
| | |
|
| Borrowings | |
| | | |
| | | |
| | | |
| | |
|
| Deposits | |
$ | 16,644.3 | | |
| 1.70 | % | |
$ | 13,213.3 | | |
| 1.63 | % |
|
| Long-term borrowings | |
| 17,131.2 | | |
| 4.61 | % | |
| 18,497.8 | | |
| 4.61 | % |
|
| Total interest-bearing liabilities | |
| 33,775.5 | | |
| 3.18 | % | |
| 31,711.1 | | |
| 3.37 | % |
|
| Credit balances of factoring clients | |
| 1,459.2 | | |
| | | |
| 1,299.8 | | |
| | |
|
| Other non-interest bearing liabilities | |
| 2,836.4 | | |
| | | |
| 2,862.6 | | |
| | |
|
| Liabilities of discontinued operation | |
| - | | |
| | | |
| 1,852.0 | | |
| | |
|
| Noncontrolling interests | |
| (2.0 | ) | |
| | | |
| 10.3 | | |
| | |
|
| Stockholders' equity | |
| 8,841.7 | | |
| | | |
| 8,752.3 | | |
| | |
|
| Total Average Liabilities and Stockholders' Equity | |
$ | 46,910.8 | | |
| | | |
$ | 46,488.1 | | |
| | |
|
CIT GROUP INC. AND SUBSIDIARIES
Select Accounts
(dollars in millions)
| | |
Quarters Ended | |
Six Months Ended |
| | |
June 30, | |
March 31, | |
June 30, | |
June 30, |
| | |
2015 | |
2015 | |
2014 | |
2015 | |
2014 |
| OTHER INCOME | |
| | | |
| | | |
| | | |
| | | |
| | |
| Gains on sales of leasing equipment | |
$ | 21.5 | | |
$ | 32.0 | | |
$ | 16.0 | | |
$ | 53.5 | | |
$ | 24.4 | |
| Factoring commissions | |
| 27.0 | | |
| 29.5 | | |
| 28.3 | | |
| 56.5 | | |
| 56.9 | |
| Fee revenues | |
| 25.3 | | |
| 22.6 | | |
| 21.8 | | |
| 47.9 | | |
| 43.4 | |
| Gains on loan and portfolio sales | |
| 2.1 | | |
| 6.6 | | |
| 4.5 | | |
| 8.7 | | |
| 8.0 | |
| Gain on investments | |
| 3.8 | | |
| 0.7 | | |
| 5.6 | | |
| 4.5 | | |
| 9.1 | |
| (Losses) gains on derivatives and foreign currency exchange | |
| (5.0 | ) | |
| (9.7 | ) | |
| 8.3 | | |
| (14.7 | ) | |
| 1.2 | |
| Impairment on assets held for sale | |
| (11.0 | ) | |
| (10.1 | ) | |
| (14.3 | ) | |
| (21.1 | ) | |
| (15.4 | ) |
| Other revenues | |
| (0.2 | ) | |
| 14.8 | | |
| 23.5 | | |
| 14.6 | | |
| 37.2 | |
| Total other income | |
$ | 63.5 | | |
$ | 86.4 | | |
$ | 93.7 | | |
$ | 149.9 | | |
$ | 164.8 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| OPERATING EXPENSES | |
| | | |
| | | |
| | | |
| | | |
| | |
| Compensation and benefits | |
$ | (135.6 | ) | |
$ | (146.5 | ) | |
$ | (125.7 | ) | |
$ | (282.1 | ) | |
$ | (264.6 | ) |
| Technology | |
| (24.9 | ) | |
| (22.3 | ) | |
| (20.8 | ) | |
| (47.2 | ) | |
| (41.9 | ) |
| Professional fees | |
| (20.8 | ) | |
| (19.5 | ) | |
| (16.9 | ) | |
| (40.3 | ) | |
| (34.9 | ) |
| Net occupancy expense | |
| (8.6 | ) | |
| (9.4 | ) | |
| (8.5 | ) | |
| (18.0 | ) | |
| (17.4 | ) |
| Advertising and marketing | |
| (6.7 | ) | |
| (9.1 | ) | |
| (8.3 | ) | |
| (15.8 | ) | |
| (16.2 | ) |
| Provision for severance and facilities exiting activities | |
| (1.1 | ) | |
| 1.0 | | |
| (5.6 | ) | |
| (0.1 | ) | |
| (15.5 | ) |
| Other expenses | |
| (37.3 | ) | |
| (35.8 | ) | |
| (39.2 | ) | |
| (73.1 | ) | |
| (68.0 | ) |
| Total operating expenses | |
$ | (235.0 | ) | |
$ | (241.6 | ) | |
$ | (225.0 | ) | |
$ | (476.6 | ) | |
$ | (458.5 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| | |
June 30, | |
March 31, | |
December 31, | |
June 30, | |
| | |
| | |
2015* | |
2015 | |
2014 | |
2014 | |
| | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| INVESTMENT SECURITIES | |
| | | |
| | | |
| | | |
| | | |
| | |
| Short-term investments | |
$ | 800.0 | | |
$ | 500.0 | | |
$ | 1,104.2 | | |
$ | 344.3 | | |
| | |
| Other debt and equity investments | |
| 892.9 | | |
| 847.4 | | |
| 446.1 | | |
| 478.8 | | |
| | |
| Total investment securities | |
$ | 1,692.9 | | |
$ | 1,347.4 | | |
$ | 1,550.3 | | |
$ | 823.1 | | |
| | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| OTHER ASSETS | |
| | | |
| | | |
| | | |
| | | |
| | |
| Deposits on commercial aerospace equipment | |
$ | 816.9 | | |
$ | 750.6 | | |
$ | 736.3 | | |
$ | 667.2 | | |
| | |
| Deferred federal and state tax assets | |
| 376.5 | | |
| 398.8 | | |
| 422.5 | | |
| 38.9 | | |
| | |
| Furniture and fixtures | |
| 144.4 | | |
| 123.4 | | |
| 126.4 | | |
| 83.0 | | |
| | |
| Deferred costs, including debt related costs | |
| 126.8 | | |
| 155.5 | | |
| 148.1 | | |
| 153.4 | | |
| | |
| Tax receivables, other than income taxes | |
| 103.0 | | |
| 101.9 | | |
| 102.0 | | |
| 118.7 | | |
| | |
| Fair value of derivative financial instruments | |
| 101.5 | | |
| 199.4 | | |
| 168.0 | | |
| 36.4 | | |
| | |
| Executive retirement plan and deferred compensation | |
| 95.9 | | |
| 97.0 | | |
| 96.7 | | |
| 98.8 | | |
| | |
| Other | |
| 385.1 | | |
| 371.9 | | |
| 332.4 | | |
| 355.1 | | |
| | |
| Total other assets | |
$ | 2,150.1 | | |
$ | 2,198.5 | | |
$ | 2,132.4 | | |
$ | 1,551.5 | | |
| | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| OTHER LIABILITIES | |
| | | |
| | | |
| | | |
| | | |
| | |
| Equipment maintenance reserves | |
$ | 982.5 | | |
$ | 965.2 | | |
$ | 960.4 | | |
$ | 942.3 | | |
| | |
| Accrued expenses and accounts payable | |
| 439.2 | | |
| 385.6 | | |
| 478.3 | | |
| 379.3 | | |
| | |
| Current taxes payable and deferred taxes | |
| 345.6 | | |
| 340.9 | | |
| 319.1 | | |
| 320.0 | | |
| | |
| Security and other deposits | |
| 265.9 | | |
| 379.7 | | |
| 368.0 | | |
| 228.0 | | |
| | |
| Accrued interest payable | |
| 221.2 | | |
| 171.7 | | |
| 243.7 | | |
| 249.7 | | |
| | |
| Valuation adjustment relating to aerospace commitments | |
| 117.1 | | |
| 117.1 | | |
| 121.2 | | |
| 121.9 | | |
| | |
| Other liabilities | |
| 395.4 | | |
| 375.0 | | |
| 398.1 | | |
| 500.3 | | |
| | |
| Total other liabilities | |
$ | 2,766.9 | | |
$ | 2,735.2 | | |
$ | 2,888.8 | | |
$ | 2,741.5 | | |
| | |
| * Preliminary | |
| | | |
| | | |
| | | |
| | | |
| | |
CIT GROUP INC. AND SUBSIDIARIES
Financing and Leasing Assets
(dollars in millions)
| | |
June 30, | |
March 31, | |
December 31, | |
June 30, |
| | |
2015 | |
2015 | |
2014 | |
2014 |
| Transportation & International Finance | |
| | | |
| | | |
| | | |
| | |
| Aerospace | |
| | | |
| | | |
| | | |
| | |
| Loans | |
$ | 1,739.6 | | |
$ | 1,750.8 | | |
$ | 1,796.5 | | |
$ | 1,432.2 | |
| Operating lease equipment, net | |
| 8,816.7 | | |
| 8,822.7 | | |
| 8,949.5 | | |
| 8,912.8 | |
| Assets held for sale | |
| 243.8 | | |
| 234.5 | | |
| 391.6 | | |
| 191.8 | |
| Financing and leasing assets | |
| 10,800.1 | | |
| 10,808.0 | | |
| 11,137.6 | | |
| 10,536.8 | |
| Rail | |
| | | |
| | | |
| | | |
| | |
| Loans | |
| 124.7 | | |
| 126.7 | | |
| 130.0 | | |
| 121.4 | |
| Operating lease equipment, net | |
| 6,010.8 | | |
| 5,800.1 | | |
| 5,715.2 | | |
| 5,593.4 | |
| Assets held for sale | |
| 0.9 | | |
| 1.0 | | |
| 1.2 | | |
| 0.7 | |
| Financing and leasing assets | |
| 6,136.4 | | |
| 5,927.8 | | |
| 5,846.4 | | |
| 5,715.5 | |
| Maritime Finance | |
| | | |
| | | |
| | | |
| | |
| Loans | |
| 1,274.4 | | |
| 1,066.6 | | |
| 1,006.7 | | |
| 566.4 | |
| Assets held for sale | |
| 56.4 | | |
| 19.1 | | |
| 19.7 | | |
| 21.2 | |
| Financing and leasing assets | |
| 1,330.8 | | |
| 1,085.7 | | |
| 1,026.4 | | |
| 587.6 | |
| International Finance | |
| | | |
| | | |
| | | |
| | |
| Loans | |
| 578.4 | | |
| 624.4 | | |
| 625.7 | | |
| 1,108.3 | |
| Operating lease equipment, net | |
| 0.4 | | |
| 0.5 | | |
| 0.5 | | |
| 6.7 | |
| Assets held for sale | |
| 404.4 | | |
| 379.9 | | |
| 402.7 | | |
| 458.0 | |
| Financing and leasing assets | |
| 983.2 | | |
| 1,004.8 | | |
| 1,028.9 | | |
| 1,573.0 | |
| Total Segment | |
| | | |
| | | |
| | | |
| | |
| Loans | |
| 3,717.1 | | |
| 3,568.5 | | |
| 3,558.9 | | |
| 3,228.3 | |
| Operating lease equipment, net | |
| 14,827.9 | | |
| 14,623.3 | | |
| 14,665.2 | | |
| 14,512.9 | |
| Assets held for sale | |
| 705.5 | | |
| 634.5 | | |
| 815.2 | | |
| 671.7 | |
| Financing and leasing assets | |
| 19,250.5 | | |
| 18,826.3 | | |
| 19,039.3 | | |
| 18,412.9 | |
| North American Commercial Finance | |
| | | |
| | | |
| | | |
| | |
| Real Estate Finance | |
| | | |
| | | |
| | | |
| | |
| Loans | |
| 1,941.4 | | |
| 1,813.9 | | |
| 1,768.6 | | |
| 1,737.6 | |
| Corporate Finance | |
| | | |
| | | |
| | | |
| | |
| Loans | |
| 6,978.2 | | |
| 6,798.1 | | |
| 6,889.9 | | |
| 7,295.3 | |
| Operating lease equipment, net | |
| - | | |
| - | | |
| - | | |
| 10.0 | |
| Assets held for sale | |
| 88.3 | | |
| 87.5 | | |
| 22.8 | | |
| 33.7 | |
| Financing and leasing assets | |
| 7,066.5 | | |
| 6,885.6 | | |
| 6,912.7 | | |
| 7,339.0 | |
| Equipment Finance | |
| | | |
| | | |
| | | |
| | |
| Loans | |
| 4,810.8 | | |
| 4,706.1 | | |
| 4,717.3 | | |
| 4,094.7 | |
| Operating lease equipment, net | |
| 281.7 | | |
| 264.5 | | |
| 265.2 | | |
| 230.2 | |
| Financing and leasing assets | |
| 5,092.5 | | |
| 4,970.6 | | |
| 4,982.5 | | |
| 4,324.9 | |
| Commercial Services | |
| | | |
| | | |
| | | |
| | |
| Loans - factoring receivables | |
| 2,201.8 | | |
| 2,542.7 | | |
| 2,560.2 | | |
| 2,248.5 | |
| Total Segment | |
| | | |
| | | |
| | | |
| | |
| Loans | |
| 15,932.2 | | |
| 15,860.8 | | |
| 15,936.0 | | |
| 15,376.1 | |
| Operating lease equipment, net | |
| 281.7 | | |
| 264.5 | | |
| 265.2 | | |
| 240.2 | |
| Assets held for sale | |
| 88.3 | | |
| 87.5 | | |
| 22.8 | | |
| 33.7 | |
| Financing and leasing assets | |
| 16,302.2 | | |
| 16,212.8 | | |
| 16,224.0 | | |
| 15,650.0 | |
| Non-Strategic Portfolios | |
| | | |
| | | |
| | | |
| | |
| Loans | |
| - | | |
| - | | |
| 0.1 | | |
| - | |
| Operating lease equipment, net | |
| - | | |
| - | | |
| - | | |
| 35.2 | |
| Assets held for sale | |
| 293.0 | | |
| 329.9 | | |
| 380.1 | | |
| 623.5 | |
| Financing and leasing assets | |
| 293.0 | | |
| 329.9 | | |
| 380.2 | | |
| 658.7 | |
| Total financing and leasing assets | |
$ | 35,845.7 | | |
$ | 35,369.0 | | |
$ | 35,643.5 | | |
$ | 34,721.6 | |
CIT GROUP INC. AND SUBSIDIARIES
Credit Metrics
(dollars in millions)
| | |
Quarters Ended | |
| |
|
| | |
June 30, 2015 | |
March 31, 2015 | |
June 30, 2014 | |
| |
|
| Gross Charge-offs to Average Finance Receivables | |
| |
| |
| |
| |
| |
| |
| |
|
| Transportation & International Finance(1) | |
$ | 2.9 | | |
| 0.32 | % | |
$ | 3.2 | | |
| 0.36 | % | |
$ | 15.9 | | |
| 1.79 | % | |
| | | |
| | |
| North American Commercial Finance(2) | |
| 31.3 | | |
| 0.79 | % | |
| 23.4 | | |
| 0.59 | % | |
| 13.2 | | |
| 0.35 | % | |
| | | |
| | |
| Total CIT | |
$ | 34.2 | | |
| 0.70 | % | |
$ | 26.6 | | |
| 0.55 | % | |
$ | 29.1 | | |
| 0.62 | % | |
| | | |
| | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| | |
Six Months Ended June 30, |
| | |
2015 | |
2014 |
| Transportation & International Finance(1) | |
$ | 6.1 | | |
| 0.34 | % | |
$ | 30.2 | | |
| 1.70 | % |
| North American Commercial Finance(2) | |
| 54.7 | | |
| 0.69 | % | |
| 35.8 | | |
| 0.48 | % |
| Non-Strategic Portfolios(3) | |
| - | | |
| - | | |
| 7.5 | | |
| 5.29 | % |
| Total CIT | |
$ | 60.8 | | |
| 0.63 | % | |
$ | 73.5 | | |
| 0.78 | % |
| | |
| | | |
| | | |
| | | |
| | |
| | |
Quarters Ended |
| | |
June 30, 2015 | |
March 31, 2015 | |
June 30, 2014 |
| Net Charge-offs to Average Finance Receivables | |
| |
| |
| |
| |
| |
|
| Transportation & International Finance(1) | |
$ | (2.7 | ) | |
| (0.29 | %) | |
$ | 1.5 | | |
| 0.17 | % | |
$ | 13.1 | | |
| 1.48 | % |
| North American Commercial Finance(2) | |
| 26.2 | | |
| 0.66 | % | |
| 19.4 | | |
| 0.49 | % | |
| 8.8 | | |
| 0.23 | % |
| Non-Strategic Portfolios(3) | |
| - | | |
| - | | |
| - | | |
| - | | |
| (0.7 | ) | |
| (3.16 | )% |
| Total CIT | |
$ | 23.5 | | |
| 0.48 | % | |
$ | 20.9 | | |
| 0.43 | % | |
$ | 21.2 | | |
| 0.45 | % |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| | |
Six Months Ended June 30, |
| | |
2015 | |
2014 |
| Transportation & International Finance(1) | |
$ | (1.2 | ) | |
| (0.07 | %) | |
$ | 26.1 | | |
| 1.47 | % |
| North American Commercial Finance(2) | |
| 45.6 | | |
| 0.58 | % | |
| 24.8 | | |
| 0.33 | % |
| Non-Strategic Portfolios(3) | |
| - | | |
| | | |
| 5.9 | | |
| 4.22 | % |
| Total CIT | |
$ | 44.4 | | |
| 0.46 | % | |
$ | 56.8 | | |
| 0.60 | % |
| | |
| | | |
| | | |
| | | |
| | |
| Non-accruing Loans to Finance Receivables(4) | |
June 30, 2015 | |
March 31, 2015 | |
December 31, 2014 | |
June 30, 2014 |
| Transportation & International Finance | |
$ | 57.8 | | |
| 1.55 | % | |
$ | 39.2 | | |
| 1.10 | % | |
$ | 37.2 | | |
| 1.05 | % | |
$ | 40.8 | | |
| 1.26 | % |
| North American Commercial Finance | |
| 111.0 | | |
| 0.70 | % | |
| 115.6 | | |
| 0.73 | % | |
| 100.9 | | |
| 0.63 | % | |
| 132.3 | | |
| 0.86 | % |
| Non-Strategic Portfolios | |
| 29.2 | | |
| (4) | | |
| 28.7 | | |
| (4) | | |
| 22.4 | | |
| (4) | | |
| 17.3 | | |
| (4) | |
| Total CIT | |
$ | 198.0 | | |
| 1.01 | % | |
$ | 183.5 | | |
| 0.94 | % | |
$ | 160.5 | | |
| 0.82 | % | |
$ | 190.4 | | |
| 1.02 | % |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| PROVISION AND ALLOWANCE COMPONENTS |
| | |
Provision for Credit Losses | |
| |
|
| | |
Quarters Ended | |
Six Months Ended |
| | |
June 30, | |
March 31, | |
June 30, | |
June 30, |
| | |
2015 | |
2015 | |
2014 | |
2015 | |
2014 |
| Specific allowance - impaired loans | |
$ | 2.7 | | |
$ | 2.4 | | |
$ | (3.5 | ) | |
$ | 5.1 | | |
$ | (8.2 | ) |
| Non-specific allowance | |
| (7.8 | ) | |
| 11.3 | | |
| (7.5 | ) | |
| 3.5 | | |
| (1.7 | ) |
| Net charge-offs | |
| 23.5 | | |
| 20.9 | | |
| 21.2 | | |
| 44.4 | | |
| 56.8 | |
| Totals | |
$ | 18.4 | | |
$ | 34.6 | | |
$ | 10.2 | | |
$ | 53.0 | | |
$ | 46.9 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| | |
Allowance for Loan Losses |
| | |
June 30, | |
March 31, | |
December 31, | |
June 30, |
| | |
2015 | |
2015 | |
2014 | |
2014 |
| Specific allowance - impaired loans | |
$ | 17.5 | | |
$ | 14.8 | | |
$ | 12.4 | | |
$ | 22.2 | |
| Non-specific allowance | |
| 333.4 | | |
| 341.7 | | |
| 334.0 | | |
| 318.8 | |
| Totals | |
$ | 350.9 | | |
$ | 356.5 | | |
$ | 346.4 | | |
$ | 341.0 | |
| | |
| | | |
| | | |
| | | |
| | |
| Allowance for loan losses as a percentage of total loans | |
| 1.79 | % | |
| 1.83 | % | |
| 1.78 | % | |
| 1.83 | % |
1) TIF charge-offs related to the transfer of receivables to assets held for sale for the 2015 periods were less than $1 million each. TIF charge-offs for the quarter and six months ended June 30, 2014 included $9 million and $12 million, respectively, related to the transfer of receivables to assets held for sale.
2) NACF charge-offs for the quarters ended June 30, 2015 and March 31, 2015 included $1 million and $11 million, respectively, related to the transfer of receivables to assets held for sale. For the quarter and six months ended June 30, 2014, the respective amounts were $3 million and $7 million.
3) NSP charge-offs for the six months ended June 30, 2014 included $7 million related to the transfer of receivables to assets held for sale.
4) 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, |
| | |
2015 | |
2015 | |
2014 | |
2015 | |
2014 |
| Transportation & International Finance | |
| | | |
| | | |
| | | |
| | | |
| | |
| Total interest income | |
$ | 69.9 | | |
$ | 68.4 | | |
$ | 72.2 | | |
$ | 138.3 | | |
$ | 148.9 | |
| Total interest expense | |
| (164.9 | ) | |
| (168.6 | ) | |
| (155.1 | ) | |
| (333.5 | ) | |
| (315.8 | ) |
| Provision for credit losses | |
| 0.4 | | |
| (10.6 | ) | |
| (8.3 | ) | |
| (10.2 | ) | |
| (20.7 | ) |
| Rental income on operating leases | |
| 498.6 | | |
| 497.5 | | |
| 485.1 | | |
| 996.1 | | |
| 944.7 | |
| Other income | |
| 16.6 | | |
| 34.3 | | |
| 10.4 | | |
| 50.9 | | |
| 17.6 | |
| Depreciation on operating lease equipment | |
| (136.7 | ) | |
| (136.1 | ) | |
| (131.6 | ) | |
| (272.8 | ) | |
| (253.3 | ) |
| Maintenance and other operating lease expenses | |
| (49.4 | ) | |
| (46.1 | ) | |
| (49.0 | ) | |
| (95.5 | ) | |
| (100.6 | ) |
| Operating expenses | |
| (77.6 | ) | |
| (81.8 | ) | |
| (75.5 | ) | |
| (159.4 | ) | |
| (155.0 | ) |
| Income before provision for income taxes | |
$ | 156.9 | | |
$ | 157.0 | | |
$ | 148.2 | | |
$ | 313.9 | | |
$ | 265.8 | |
| Funded new business volume | |
$ | 825.8 | | |
$ | 525.3 | | |
$ | 1,404.7 | | |
$ | 1,351.1 | | |
$ | 2,459.3 | |
| Average Earning Assets | |
$ | 19,045.1 | | |
$ | 18,821.7 | | |
$ | 18,066.2 | | |
$ | 18,952.8 | | |
$ | 17,624.8 | |
| Average Finance Receivables | |
$ | 3,657.3 | | |
$ | 3,546.0 | | |
$ | 3,547.0 | | |
$ | 3,606.4 | | |
$ | 3,550.8 | |
| North American Commercial Finance | |
| | | |
| | | |
| | | |
| | | |
| | |
| Total interest income | |
$ | 199.0 | | |
$ | 196.1 | | |
$ | 208.8 | | |
$ | 395.1 | | |
$ | 402.2 | |
| Total interest expense | |
| (73.3 | ) | |
| (74.1 | ) | |
| (68.1 | ) | |
| (147.4 | ) | |
| (137.0 | ) |
| Provision for credit losses | |
| (18.8 | ) | |
| (24.0 | ) | |
| (2.6 | ) | |
| (42.8 | ) | |
| (25.8 | ) |
| Rental income on operating leases | |
| 27.9 | | |
| 27.2 | | |
| 25.1 | | |
| 55.1 | | |
| 47.9 | |
| Other income | |
| 69.2 | | |
| 66.3 | | |
| 69.7 | | |
| 135.5 | | |
| 131.5 | |
| Depreciation on operating lease equipment | |
| (21.1 | ) | |
| (20.7 | ) | |
| (20.0 | ) | |
| (41.8 | ) | |
| (41.9 | ) |
| Operating expenses | |
| (135.4 | ) | |
| (134.7 | ) | |
| (120.2 | ) | |
| (270.1 | ) | |
| (241.7 | ) |
| Income before provision for income taxes | |
$ | 47.5 | | |
$ | 36.1 | | |
$ | 92.7 | | |
$ | 83.6 | | |
$ | 135.2 | |
| Funded new business volume | |
$ | 1,630.5 | | |
$ | 1,354.1 | | |
$ | 1,600.1 | | |
$ | 2,984.6 | | |
$ | 2,973.0 | |
| Average Earning Assets | |
$ | 14,737.1 | | |
$ | 14,590.3 | | |
$ | 14,132.4 | | |
$ | 14,675.3 | | |
$ | 13,962.1 | |
| Average Finance Receivables | |
$ | 15,854.4 | | |
$ | 15,825.9 | | |
$ | 15,181.0 | | |
$ | 15,837.2 | | |
$ | 14,952.2 | |
| Non-Strategic Portfolios | |
| | | |
| | | |
| | | |
| | | |
| | |
| Total interest income | |
$ | 10.2 | | |
$ | 12.3 | | |
$ | 25.6 | | |
$ | 22.5 | | |
$ | 54.0 | |
| Total interest expense | |
| (9.2 | ) | |
| (10.8 | ) | |
| (23.0 | ) | |
| (20.0 | ) | |
| (47.9 | ) |
| Provision for credit losses | |
| - | | |
| - | | |
| 0.7 | | |
| - | | |
| (0.3 | ) |
| Rental income on operating leases | |
| 5.2 | | |
| 5.9 | | |
| 9.4 | | |
| 11.1 | | |
| 18.9 | |
| Other income | |
| (5.7 | ) | |
| (7.8 | ) | |
| 3.9 | | |
| (13.5 | ) | |
| 8.3 | |
| Depreciation on operating lease equipment | |
| - | | |
| - | | |
| (5.7 | ) | |
| - | | |
| (10.9 | ) |
| Operating expenses | |
| (10.9 | ) | |
| (12.4 | ) | |
| (20.5 | ) | |
| (23.3 | ) | |
| (39.7 | ) |
| Loss before provision for income taxes | |
$ | (10.4 | ) | |
$ | (12.8 | ) | |
$ | (9.6 | ) | |
$ | (23.2 | ) | |
$ | (17.6 | ) |
| Funded new business volume | |
$ | 26.4 | | |
$ | 37.7 | | |
$ | 64.1 | | |
$ | 64.1 | | |
$ | 115.9 | |
| Average Earning Assets | |
$ | 315.3 | | |
$ | 360.0 | | |
$ | 988.1 | | |
$ | 338.8 | | |
$ | 1,082.1 | |
| Average Finance Receivables | |
$ | - | | |
$ | 0.1 | | |
$ | 83.9 | | |
$ | - | | |
$ | 280.7 | |
| Corporate and Other | |
| | | |
| | | |
| | | |
| | | |
| | |
| Total interest income | |
$ | 4.7 | | |
$ | 4.2 | | |
$ | 3.2 | | |
$ | 8.9 | | |
$ | 6.9 | |
| Total interest expense | |
| (17.8 | ) | |
| (17.8 | ) | |
| (16.0 | ) | |
| (35.6 | ) | |
| (33.4 | ) |
| Provision for credit losses | |
| - | | |
| - | | |
| - | | |
| - | | |
| (0.1 | ) |
| Other income | |
| (16.6 | ) | |
| (6.4 | ) | |
| 9.7 | | |
| (23.0 | ) | |
| 7.4 | |
| Operating expenses / loss on debt extinguishment | |
| (11.2 | ) | |
| (12.7 | ) | |
| (9.2 | ) | |
| (23.9 | ) | |
| (22.5 | ) |
| Loss before provision for income taxes | |
$ | (40.9 | ) | |
$ | (32.7 | ) | |
$ | (12.3 | ) | |
$ | (73.6 | ) | |
$ | (41.7 | ) |
| Total CIT | |
| | | |
| | | |
| | | |
| | | |
| | |
| Total interest income | |
$ | 283.8 | | |
$ | 281.0 | | |
$ | 309.8 | | |
$ | 564.8 | | |
$ | 612.0 | |
| Total interest expense | |
| (265.2 | ) | |
| (271.3 | ) | |
| (262.2 | ) | |
| (536.5 | ) | |
| (534.1 | ) |
| Provision for credit losses | |
| (18.4 | ) | |
| (34.6 | ) | |
| (10.2 | ) | |
| (53.0 | ) | |
| (46.9 | ) |
| Rental income on operating leases | |
| 531.7 | | |
| 530.6 | | |
| 519.6 | | |
| 1,062.3 | | |
| 1,011.5 | |
| Other income | |
| 63.5 | | |
| 86.4 | | |
| 93.7 | | |
| 149.9 | | |
| 164.8 | |
| Depreciation on operating lease equipment | |
| (157.8 | ) | |
| (156.8 | ) | |
| (157.3 | ) | |
| (314.6 | ) | |
| (306.1 | ) |
| Maintenance and other operating lease expenses | |
| (49.4 | ) | |
| (46.1 | ) | |
| (49.0 | ) | |
| (95.5 | ) | |
| (100.6 | ) |
| Operating expenses / loss on debt extinguishment | |
| (235.1 | ) | |
| (241.6 | ) | |
| (225.4 | ) | |
| (476.7 | ) | |
| (458.9 | ) |
| Income from continuing operations before provision for income taxes | |
$ | 153.1 | | |
$ | 147.6 | | |
$ | 219.0 | | |
$ | 300.7 | | |
$ | 341.7 | |
| Funded new business volume | |
$ | 2,482.7 | | |
$ | 1,917.1 | | |
$ | 3,068.9 | | |
$ | 4,399.8 | | |
$ | 5,548.2 | |
| Average Earning Assets | |
$ | 34,097.5 | | |
$ | 33,772.0 | | |
$ | 33,186.7 | | |
$ | 33,966.9 | | |
$ | 32,669.0 | |
| Average Finance Receivables | |
$ | 19,511.7 | | |
$ | 19,372.0 | | |
$ | 18,811.9 | | |
$ | 19,443.6 | | |
$ | 18,783.7 | |
CIT GROUP INC. AND SUBSIDIARIES
Segment Margin
(dollars in millions)
| | |
Quarters Ended | |
Six Months Ended |
| | |
June 30, | |
March 31, | |
June 30, | |
June 30, |
| | |
2015 | |
2015 | |
2014 | |
2015 | |
2014 |
| Transportation & International Finance | |
| | | |
| | | |
| | | |
| | | |
| | |
| Average Earning Assets (AEA) | |
| | | |
| | | |
| | | |
| | | |
| | |
| Aerospace | |
$ | 10,803.8 | | |
$ | 10,911.0 | | |
$ | 10,260.7 | | |
$ | 10,864.4 | | |
$ | 10,038.7 | |
| Rail | |
| 6,039.9 | | |
| 5,854.2 | | |
| 5,578.0 | | |
| 5,953.9 | | |
| 5,373.8 | |
| Maritime Finance | |
| 1,198.4 | | |
| 1,049.2 | | |
| 576.2 | | |
| 1,129.3 | | |
| 524.4 | |
| International Finance | |
| 1,003.0 | | |
| 1,007.3 | | |
| 1,651.3 | | |
| 1,005.2 | | |
| 1,687.9 | |
| Gross yield | |
| | | |
| | | |
| | | |
| | | |
| | |
| Aerospace | |
| 11.22 | % | |
| 11.36 | % | |
| 12.18 | % | |
| 11.28 | % | |
| 12.34 | % |
| Rail | |
| 14.83 | % | |
| 14.81 | % | |
| 14.44 | % | |
| 14.80 | % | |
| 14.46 | % |
| Maritime Finance | |
| 5.12 | % | |
| 5.00 | % | |
| 5.58 | % | |
| 5.04 | % | |
| 5.27 | % |
| International Finance | |
| 10.48 | % | |
| 10.51 | % | |
| 8.59 | % | |
| 10.49 | % | |
| 8.55 | % |
| Total | |
| | | |
| | | |
| | | |
| | | |
| | |
| AEA | |
$ | 19,045.1 | | |
$ | 18,821.7 | | |
$ | 18,066.2 | | |
$ | 18,952.8 | | |
$ | 17,624.8 | |
| Gross yield | |
| 11.94 | % | |
| 12.03 | % | |
| 12.34 | % | |
| 11.97 | % | |
| 12.41 | % |
| Net Finance Margin | |
| 4.57 | % | |
| 4.57 | % | |
| 4.91 | % | |
| 4.57 | % | |
| 4.81 | % |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| North American Commercial Finance | |
| | | |
| | | |
| | | |
| | | |
| | |
| Average Earning Assets (AEA) | |
| | | |
| | | |
| | | |
| | | |
| | |
| Real Estate Finance | |
$ | 1,860.6 | | |
$ | 1,777.7 | | |
$ | 1,668.5 | | |
$ | 1,819.9 | | |
$ | 1,632.9 | |
| Corporate Finance | |
| 6,979.9 | | |
| 6,910.7 | | |
| 7,220.8 | | |
| 6,953.8 | | |
| 7,113.8 | |
| Equipment Finance | |
| 5,015.1 | | |
| 4,962.7 | | |
| 4,269.2 | | |
| 4,991.6 | | |
| 4,258.0 | |
| Commercial Services | |
| 881.5 | | |
| 939.2 | | |
| 973.9 | | |
| 910.0 | | |
| 957.4 | |
| Gross yield | |
| | | |
| | | |
| | | |
| | | |
| | |
| Real Estate Finance | |
| 4.00 | % | |
| 3.94 | % | |
| 4.10 | % | |
| 3.97 | % | |
| 4.04 | % |
| Corporate Finance | |
| 4.46 | % | |
| 4.50 | % | |
| 5.71 | % | |
| 4.48 | % | |
| 5.37 | % |
| Equipment Finance | |
| 9.56 | % | |
| 9.45 | % | |
| 9.52 | % | |
| 9.50 | % | |
| 9.52 | % |
| Commercial Services | |
| 4.81 | % | |
| 4.56 | % | |
| 4.99 | % | |
| 4.68 | % | |
| 4.93 | % |
| Total | |
| | | |
| | | |
| | | |
| | | |
| | |
| AEA | |
$ | 14,737.1 | | |
$ | 14,590.3 | | |
$ | 14,132.4 | | |
$ | 14,675.3 | | |
$ | 13,962.1 | |
| Gross yield | |
| 6.16 | % | |
| 6.12 | % | |
| 6.62 | % | |
| 6.14 | % | |
| 6.45 | % |
| Net Finance Margin | |
| 3.60 | % | |
| 3.52 | % | |
| 4.13 | % | |
| 3.56 | % | |
| 3.88 | % |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
Gross
Yield includes interest income and rental income as a % of AEA.
Net Finance Margin (NFM) reflects Net Finance Revenue divided by AEA. Adjusted Net Finance Margin is NFM increased by accelerated fresh start accounting net discount/(premium) on debt extinguishments and repurchases and debt related prepayment costs, reduced by accelerated original issue discount accretion.
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) | |
2015 | |
2015 | |
2014 | |
2015 | |
2014 |
| Interest income | |
$ | 283.8 | | |
$ | 281.0 | | |
$ | 309.8 | | |
$ | 564.8 | | |
$ | 612.0 | |
| Rental income on operating leases | |
| 531.7 | | |
| 530.6 | | |
| 519.6 | | |
| 1,062.3 | | |
| 1,011.5 | |
| Finance revenue | |
| 815.5 | | |
| 811.6 | | |
| 829.4 | | |
| 1,627.1 | | |
| 1,623.5 | |
| Interest expense | |
| (265.2 | ) | |
| (271.3 | ) | |
| (262.2 | ) | |
| (536.5 | ) | |
| (534.1 | ) |
| Depreciation on operating lease equipment | |
| (157.8 | ) | |
| (156.8 | ) | |
| (157.3 | ) | |
| (314.6 | ) | |
| (306.1 | ) |
| Maintenance and other operating lease expenses | |
| (49.4 | ) | |
| (46.1 | ) | |
| (49.0 | ) | |
| (95.5 | ) | |
| (100.6 | ) |
| Net finance revenue (NFR) | |
| 343.1 | | |
| 337.4 | | |
| 360.9 | | |
| 680.5 | | |
| 682.7 | |
| Other income | |
| 63.5 | | |
| 86.4 | | |
| 93.7 | | |
| 149.9 | | |
| 164.8 | |
| Total net revenues | |
$ | 406.6 | | |
$ | 423.8 | | |
$ | 454.6 | | |
$ | 830.4 | | |
$ | 847.5 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| NFR as a % of AEA | |
| 4.02 | % | |
| 4.00 | % | |
| 4.35 | % | |
| 4.01 | % | |
| 4.18 | % |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net Operating Lease Revenues(2) | |
| | | |
| | | |
| | | |
| | | |
| | |
| Rental income on operating leases | |
$ | 531.7 | | |
$ | 530.6 | | |
$ | 519.6 | | |
$ | 1,062.3 | | |
$ | 1,011.5 | |
| Depreciation on operating lease equipment | |
| (157.8 | ) | |
| (156.8 | ) | |
| (157.3 | ) | |
| (314.6 | ) | |
| (306.1 | ) |
| Maintenance and other operating lease expenses | |
| (49.4 | ) | |
| (46.1 | ) | |
| (49.0 | ) | |
| (95.5 | ) | |
| (100.6 | ) |
| Net operating lease revenue | |
$ | 324.5 | | |
$ | 327.7 | | |
$ | 313.3 | | |
$ | 652.2 | | |
$ | 604.8 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| | |
June 30, | |
March 31, | |
December 31, | |
June 30, |
| Earning Assets(3) | |
2015 | |
2015 | |
2014 | |
2014 |
| Loans | |
$ | 19,649.3 | | |
$ | 19,429.3 | | |
$ | 19,495.0 | | |
$ | 18,604.4 | |
| Operating lease equipment, net | |
| 15,109.6 | | |
| 14,887.8 | | |
| 14,930.4 | | |
| 14,788.3 | |
| Assets held for sale | |
| 1,086.8 | | |
| 1,051.9 | | |
| 1,218.1 | | |
| 1,328.9 | |
| Credit balances of factoring clients | |
| (1,373.3 | ) | |
| (1,505.3 | ) | |
| (1,622.1 | ) | |
| (1,296.5 | ) |
| Total earning assets | |
$ | 34,472.4 | | |
$ | 33,863.7 | | |
$ | 34,021.4 | | |
$ | 33,425.1 | |
| | |
| | | |
| | | |
| | | |
| | |
| | |
Quarters Ended | |
Six Months Ended |
| | |
June 30, | |
March 31, | |
June 30, | |
June 30, |
| Operating Expenses | |
|
2015 |
| |
2015 | |
2014 | |
2015 | |
2014 |
| Operating expenses | |
$ | (235.0 | ) | |
$ | (241.6 | ) | |
$ | (225.0 | ) | |
$ | (476.6 | ) | |
$ | (458.5 | ) |
| Provision for severance and facilities exiting activities | |
| 1.1 | | |
| (1.0 | ) | |
| 5.6 | | |
| 0.1 | | |
| 15.5 | |
| Operating expenses excluding restructuring costs(4) | |
$ | (233.9 | ) | |
$ | (242.6 | ) | |
$ | (219.4 | ) | |
$ | (476.5 | ) | |
$ | (443.0 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Operating expenses excluding restructuring costs as a % of AEA | |
| (2.74 | %) | |
| (2.87 | %) | |
| (2.64 | %) | |
| (2.81 | %) | |
| (2.71 | %) |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| | |
June 30, | |
March 31, | |
December 31, | |
June 30, |
| | |
|
2015 |
| |
2015 | |
2014 | |
2014 |
| Continuing Operations Total Assets | |
| | | |
| | | |
| | | |
| | |
| Total Assets | |
$ | 46,657.2 | | |
$ | 46,416.0 | | |
$ | 47,880.0 | | |
$ | 44,152.7 | |
| Assets of discontinued operation | |
| - | | |
| - | | |
| - | | |
| (1.0 | ) |
| Continuing operations total assets | |
$ | 46,657.2 | | |
$ | 46,416.0 | | |
$ | 47,880.0 | | |
$ | 44,151.7 | |
| | |
| | | |
| | | |
| | | |
| | |
| | |
|
June 30, |
| |
|
March 31, |
| |
December 31, | |
June 30, |
| Tangible Book Value(5) | |
|
2015 |
| |
|
2015 |
| |
|
2014 |
| |
|
2014 |
|
| Total common stockholders' equity | |
$ | 8,807.1 | | |
$ | 8,758.6 | | |
$ | 9,068.9 | | |
$ | 8,617.6 | |
| Less: Goodwill | |
| (565.9 | ) | |
| (563.6 | ) | |
| (571.3 | ) | |
| (403.1 | ) |
| Intangible assets | |
| (21.4 | ) | |
| (23.2 | ) | |
| (25.7 | ) | |
| (16.6 | ) |
| Tangible book value | |
$ | 8,219.8 | | |
$ | 8,171.8 | | |
$ | 8,471.9 | | |
$ | 8,197.9 | |
(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 excluding restructuring costs is a non-GAAP measure used by management to compare period over period expenses.
(5) 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.
Exhibit 99.2
® CIT Second Quarter 2015 Financial Results July 28, 2015
1 Important Notices This presentation 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,” and “continue,” or the negative of any of those words or similar expressions are intended to identify forward - looking statements . All statements contained in this presentation, 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 1 A, “Risk Factors,” of our latest Annual Report on Form 10 - K for the year ended December 31 , 2014 , which was filed with the Securities and Exchange Commission . Accordingly, you should not place undue reliance on the forward - looking statements contained in this presentation . 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 . This presentation is to be used solely as part of CIT management’s continuing investor communications program . This presentation shall not constitute an offer or solicitation in connection with any securities .
2 Executing on O ur Priorities ▪ Received regulatory approval for OneWest acquisition; expected to close on August 3, 2015 ▪ Stable credit metrics; credit reserve 1.8 % of average finance receivables ▪ Assets in Commercial franchises grew 4% from a year ago and 1% from prior quarter; over 50% of financing and leasing assets in the bank ▪ Deposits exceed 50% of total funding; interest cost down 10 bps ▪ Cash and investment portfolio positioned to benefit from a rise in interest rates ▪ Returned over $87 million of capital to shareholders through dividends and the repurchase of 1.3 million shares in 2Q Expand Commercial Banking Franchise Maintain Strong Risk Management Practices Grow Business Franchises Realize Embedded Value Return Excess Capital 2 Q15 Earnings Call
3 Pre - Tax ROA Near - term Target of 2% 2 Q15 Earnings Call (1) Includes Transportation & International Finance (TIF) and North American Commercial Finance (NACF). (2) CIT Corporate excludes restructuring expenses . (3) Includes Non - Strategic Portfolios, Discontinued Ops, and restructuring expenses . Totals may not tie due to rounding ($ Millions) Commercial Franchises (1) + CIT Corporate (2) Portfolio Repositioning (3) Total CIT Year - to - date Pre - tax income: ~$324 Pre - tax ROAEA: ~1.9% Year - to - date Pre - tax Income Non - Strategic Portfolios: ($23) Restructuring Expenses: $0 Year - to - date Pre - tax income: ~$301 Pre - tax ROAEA: ~1.8% 2Q ’15 Pre - tax income: ~$165 Pre - tax ROAEA: ~1.9% Non - Strategic Portfolios: ($10) Restructuring Expenses: ($1) Pre - tax income: ~$153 Pre - tax ROAEA: ~1.8%
4 2Q ’15 Activity Highlights ▪ ~ 20 bps – Lower non - specific reserves (Credit Provision) ▪ ~ 10 bps – Lower compensation costs (Operating Expenses) ▪ ~ (10) bps – Lower asset sales (Other Income) ▪ ~ (10) bps – Tax - related charge (Other Income) fully offset in tax provision ▪ ~ ( 6 ) bps – TRS mark - to - market (Other Income ) Commercial Franchises 2Q’15 Pre - tax Return on Average Earning Assets 2 Q15 Earnings Call ~1.9 % 1Q '15 2Q '15 ~1.9% Credit Provision & Opex ~ 30 bps Other Income ~ (30) bps
5 ▪ Asset trend reflects organic and new initiative growth offset by asset sales ▪ Net finance revenue trend reflects funding cost benefits offset by lower interest recoveries and re - pricing ▪ NACF pre - tax income volatility driven by discrete items impacting other income and credit provision ▪ TIF pre - tax income reflects portfolio growth and impact of strategic portfolio initiatives 215 226 233 215 218 146 146 145 129 132 (13) (14) (14) (14) (13) 348 358 365 330 337 2Q '14 3Q '14 4Q '14 1Q '15 2Q '15 TIF NACF Corporate Commercial Franchises (1) Trends 18.1 18.7 19.1 18.8 19.1 14.1 15.0 14.8 14.6 14.7 32.2 33.7 33.9 33.4 33.8 2Q '14 3Q '14 4Q '14 1Q '15 2Q '15 TIF NACF 2 Q15 Earnings Call Average Earning Assets Net Finance Revenue 141 162 185 157 157 85 62 122 36 48 (7) (41) (50) (33) (40) 219 182 258 160 165 2Q '14 3Q '14 4Q '14 1Q '15 2Q '15 TIF NACF Corporate Pre - Tax Income ($ Millions) ($ Millions) ($ Billions) NFM ROA 4.3% 4.3% 4.3% 4.0% 2.7% 2.2% 3.0% 1.9% (1) Includes Transportation & International Finance (TIF) and North American Commercial Finance ( NACF) and Corporate. (2) $15 million benefit from TRS debt restructuring impacting TIF’s and NACF’s net finance margin by $7 million and other income by $8 million in 2Q’14 is reflected in portfolio repositioning. (3) Corporate excludes restructuring expenses. (2) (2) (3) (3) 1.9% 4.0%
6 ($ Millions, except per share data) Noteworthy Items in 2Q ’15 on Portfolios we are Exiting Items in 2Q ’15 Results Reported Diluted EPS $0.66 Impact Segment Item Line Item Total Pre - tax After tax Per share NSP AHFS - Impairments Other Income ($5) ($4) ($0.02) Corporate Restructuring Operating Expenses ($1) ($1) ($0.01) EPS based on 174.9 million average diluted shares outstanding. $ impacts are rounded 2 Q15 Earnings Call
7 OneWest Transaction Remains Accretive to CIT 2 Q15 Earnings Call ($ Millions, except per share data) $ Millions Millions of Shares $ per Share CIT Standalone Mean of 2016E Analyst Pre-Tax Income Estimates $919 Expected Tax Rate 30% CIT 2016E After-Tax Earnings $643 172 $3.73 Pro Forma CIT 2016E After-Tax Earnings $643 172 $3.73 $500 Million Incremental Share Repurchase Prior to Close (2) (10) OneWest Net Income Contribution 243 31 Combined Net Income $885 194 After-Tax Adjustments Synergies $24 Cost of Cash Consideration Funding (54) Other Adjustments 15 Pro Forma CIT Net Income $870 194 $4.49 $ Accretion to CIT $0.76 % Accretion to CIT 20% CIT’s standalone profitability impacted by: • Lower asset growth and profitability in NACF • Persistence of low interest rates delayed expected benefit of asset sensitivity Repurchased more shares than expected OWB current year performance is trending slightly above 2014 full year net income of ~$200 million Working on achieving additional revenue and expense synergies Acquisition to be funded with cash from platform exits and other bank holding company initiatives Actual adjustment dependent on final purchase accounting July 2015 Update July 2014 Deal Announcement (1) (1) For full assumption details, please refer to page 22 of the “Acquisition of OneWest ” presentation dated July 22, 2014. (2) Net Income before Extraordinary Items & Adjustments in 2013 Regulatory Filings. 1 2 3 4 5 1 2 3 4 5 (2) 2016 Pro Forma 6 6 TBD
8 APPENDIX 2 Q15 Earnings Call
9 (1) Includes International VA reversal impact of $4 4 million, $0.24 diluted EPS in 4Q14 and U.S. VA reversal impact of $375 million, $2.01 diluted EPS in 3Q14. (2) Average earning assets (AEA) is computed using month end balances and is the average of finance receivables, operating lease equ ipment and financing and leasing assets held for sale less the credit balances of factoring clients. (3) Excluding accelerated FSA net discount / premium and other charges on debt redemptions and accelerated OID (original issue discount) on debt extinguishment related to the TRS facility. Adjusted net finance margin is a non - GAAP measure ; please see the non - GAAP disclosures in our second quarter press release for a reconciliation of non - GAAP to GAAP financial information. (4) Operating expenses in 4Q14 includes loss on extinguishment of debt of $3.1 million. (5) Average finance receivables (AFR) is computed using month end balances and is the average of finance receivables (as defined be low). It excludes operating lease equipment.. (6) Finance receivables (FR) include loans, direct financing lease and leverage lease receivables and factoring receivables. (7) Capital ratios are preliminary as of 6/30/15 and based on fully phased - in Basel III estimates. At or For the Period Ended 2Q ’15 1Q ’15 4Q ’14 3Q ’14 2Q ’14 FY ’ 14 FY ’ 13 EPS (Diluted) – Total (1) $0.66 $0.59 $1.37 $2.76 $1.29 $5.96 $3.35 EPS (Diluted) – Continuing Ops. (1) $0.66 $0.59 $1.37 $2.76 $1.02 $5.69 $3.19 EPS (Diluted) impact from VA Reversal - - $0.24 $2.01 - $2.21 - Book Value Per Share $50.91 $50.26 $50.13 $49.10 $46.42 $50.13 $44.78 Tangible Book Value Per Share $47.51 $46.89 $46.83 $45.87 $44.16 $46.83 $42.98 Continuing Ops. Profitability Metrics as a % of AEA (2) Net Finance Margin 4.02% 4.00% 4.34% 4.26% 4.35% 4.25% 4.61% Adjusted Net Finance Margin (3) 4.02% 4.00% 4.34% 4.26% 4.26% 4.23% 4.71% Provision for Credit Losses (0.22%) (0.41%) (0.17%) (0.45%) (0.12%) (0.30%) (0.22%) Other Income 0.74% 1.02% 1.36% 0.28% 1.13% 0.91% 1.27% Operating Expenses (4) (2.76%) (2.86%) (2.93%) (2.74%) (2.71%) (2.83%) (3.22%) Pre - tax Income 1.80% 1.75% 2.59% 1.36% 2.64% 2.04% 2.44% Effective Tax Rate 25% 30% (13%) (344%) 8% (58%) 11% Net Charge - offs (% of AFR (5) ) 0.48% 0.43% 0.47% 0.39% 0.45% 0.52% 0.44% Non - accrual Loans (% of FR (6) ) 1.01% 0.92% 0.82% 1.02% 1.02% 0.82% 1.29% Total Capital Ratio (7) 15.1% 14.8% 15.2% 15.0% 16.7% 15.2% 17.4% Tier 1 Capital Ratio/Tier 1 Common (7) 14.4% 14.1% 14.5% 14.3% 16.0% 14.5% 16.7% Performance Highlights & Trends 2 Q15 Earnings Call
10 GAAP Tax vs. Economic Tax – (Continuing Operations ) 2Q ’15 1Q ’15 FY ’14 Pre - tax Income $153 $148 $681 2 Q15 Earnings Call (1) GAAP tax provision includes discrete tax items of $7 million, $2 million and $445 million for 2Q’15, 1Q’15 and FY’14 , respectively. (2) Net income includes $0 million, $0 million and $1 million of losses attributable to non - controlling interests for 2Q’15, 1Q’15 and FY’14 , respectively. (3) EPS based on 174.9 million, 177.1 million and 189.5 million average diluted shares outstanding for 2Q’15, 1Q’15 and FY’14 , respectively. $ impacts are rounded ($ Millions, except per share data) GAAP Tax Provision (1) ($38) ($44) $398 Net Income (2) $115 $104 $1,078 Reported EPS (3) $0.66 $0.59 $5.69 Effective Tax Rate 25% 30% (58%) Cash Taxes ($4) ($14) ($22) Pro Forma Net Income (2) $149 $134 $658 Pro Forma EPS (3) $0.85 $0.76 $3.47 Effective Tax Rate (Cash) 2% 9% 3% ▪ Reset of GAAP effective tax rate in 2015 due to prior year partial valuation allowance reversal ▪ GAAP earnings reflect $ 38 million tax provision, which included a benefit of $9 million (fully offset in other income) ▪ C ash taxes were significantly lower at $ 4 million
11 ($ Billions ) Financing and Leasing Assets Portfolio Trends – (Continuing Operations) 25.9 26.2 26.8 25.0 24.8 18.3 20.3 21.1 21.4 21.9 44.2 46.5 47.9 46.4 46.7 15% 20% 25% 30% 35% 40% 45% 50% 0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 2Q '14 3Q '14 4Q '14 1Q '15 2Q '15 Total Assets Total Assets All Other Assets CIT Bank Assets CIT Bank Assets % of Total Assets CIT Bank Assets % to Total Assets 18.4 19.1 19.0 18.8 19.3 15.7 16.4 16.2 16.2 16.3 34.7 36.1 35.6 35.4 35.8 0.0 10.0 20.0 30.0 40.0 2Q '14 3Q '14 4Q '14 1Q '15 2Q '15 TIF NACF NSP 2 Q15 Earnings Call
12 Adjusted Net Finance Margin (1) Trend and Change 4.00% 4.06% 4.04% 3.90% 3.92% 4.26% 4.26% 4.34% 4.00% 4.02% 0% 1% 2% 3% 4% 5% 6% 2Q '14 3Q '14 4Q '14 1Q '15 2Q '15 As % of AEA Net Finance Margin Less Other Items Other Items (2) ( 1 ) Adjusted Net Finance Margin is reported net finance revenue increased by accelerated FSA net discount/(premium) on debt extinguishment s a nd repurchases and debt related prepayment costs, reduced by accelerated OID accretion; as a % of average earning assets. (2) Other items include suspended depreciation, interest recoveries / prepayments and other loan and debt FSA. ▪ Adjusted net finance margin less other items within near - term outlook range ▪ 2Q’15 other items flat at 10 bps 2 Q15 Earnings Call 3.90% 3.92% 1Q '15 2Q '15 ▪ 2 Q ’15 was impacted by: ▪ Benefit from debt actions offset b y; ▪ Portfolio re - pricing and other items Re - pricing & Other ~ (8) bps Debt Actions ~ 10 bps
13 Asset Quality Trends – ( Continuing Operations) ($ Millions) 190 201 161 184 198 0.5% 0.4% 0.5% 0.4% 0.5% 0.0% 0.3% 0.6% 0.9% 1.2% 1.5% 0 50 100 150 200 250 2Q '14 3Q '14 4Q '14 1Q '15 2Q '15 Net Charge - offs % to AFR Non – accrual Loans Non - accrual Loans & Net Charge - offs Non - accrual Loans Net Charge - offs % to AFR 341 358 346 357 351 1.8% 1.8% 1.8% 1.8% 1.8% 1.5% 1.7% 1.9% 2.1% 2.3% 2.5% 2.7% 2.9% 0 50 100 150 200 250 300 350 400 450 500 2Q '14 3Q '14 4Q '14 1Q '15 2Q '15 Allowance for Loan Losses % to FR Allowance for Loan Losses Allowance for Loan Losses Allowance for Loan Losses Allowance for Loan Losses % to FR (1) (1) 2Q’15, 1Q’15,4Q’14, 3Q’14 and 2Q’14 include approximately $ 2 million, $11 million, $7 million, $11 million and $12 million respectively, of charge - offs related to the transfer of loans to held for sale; exclusive of these charge - offs, net charge - offs as a % to AFR would have been 44 bps, 20 bps , 34 bps, 17 bps and 21 bps respectively. 2 Q15 Earnings Call
14 Other Income Trends – Components (Continuing Operations) - 0.5% 0.0% 0.5% 1.0% 1.5% - 55 - 30 - 5 20 45 70 95 120 145 $ 94 $ 2 4 $116 Factoring commissions Fee revenues Gains on sales of leasing equipment All other income Factoring commissions & Fee revenues % of AEA Factoring commissions, Fee revenues & Gains on sales of leasing equipment % of AEA Other Income Line Item Key Drivers Factoring Commissions ▪ Factoring Volume and Mix ▪ Commission Rates Fee Revenues ▪ Market Pricing ▪ M&A Market Gain on Sales of Leasing Equipment ▪ Residual Realization ▪ Portfolio Management of Operating Equipment All Other Income ▪ Gains (Losses) on Loan & Portfolio Sales ▪ Gains (Losses) on Investments ▪ Impairment on Assets Held for Sale ▪ Recoveries of Loans Charged off Pre - Emergence and Loans Charged off Prior to Transfer to Held for Sale ▪ Counterparty Receivable Accretion ▪ Gains (Losses) on derivatives and foreign currency exchange ▪ Other revenues ($ Millions) 2 Q ’14 4 Q ’14 1 Q ’14 2 Q ’15 3 Q ’14 $86 Total Reported: 2 Q15 Earnings Call $64
15 205 209 222 223 214 225 235 252 242 235 2.64% 2.63% 2.86% 2.87% 2.74% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 0 50 100 150 200 250 300 350 400 2Q '14 3Q '14 4Q '14 1Q '15 2Q '15 Operating Expenses Operating Expenses Trends – (Continuing Operations) ($ Millions) % to AEA ex. Restructuring Charges Restructuring Charges All Other Operating Expenses Costs Related to pending OneWest Acquisition Deposit Related & Debt Extinguishment Costs % of AEA ex. Restructuring Charges (1) 4Q’14 included debt extinguishment costs of $3.1 million. (2) 2Q’15, 1Q’15,4Q’14,and 3Q’14 include approximately $7 million, $ 5 million, $4 million, and $ 2 million, respectively, of costs related to pending OneWest acquisition. (1) 2 Q15 Earnings Call (2) P latform exits will benefit operating expense ratio by ~20 bps
16 Platform Exits In Progress 2 Q15 Earnings Call Estimated CTA Brazil Expected Timing Transaction Size ~$ 1 00 ~$50 ($ Millions) Other international platforms; $350 million of UK CF and $180 million of NSP assets already sold but will have trailing CTA c ha rges of ~$5 million. Mexico ~$200 ~ $20 3Q ’15 2H ’15 UK Equipment Finance ~$400 ~ $5 2H ’15
17 Other $ 19.1 Oil & Gas Extraction Svcs . ~$0.5 Exposure to Oil 2 Q15 Earnings Call Loans ($ Billions) Total Loans: $19.6 Billion ▪ ~$0.5 billion of loans ▪ ~ 3% of total loans ▪ ~ 65% Energy Services and ~35% in Exploration & Production (E&P) ▪ Less than 20% are Cash Flow Loans ▪ Majority of portfolio is secured by working capital assets, long lived fixed assets and traditional reserve based lending assets Other ~89,000 In - service to Oil Sector ~23,000 North American Railcars Total Cars: ~112,000 ▪ Approximately 23,000 railcars that service the oil sector ▪ Leased to a mix of E&P, midstream, and refining customers as well as diversified shippers ▪ ~13,000 tank cars are leased directly to customers for the transportation of crude ▪ ~10,000 sand cars that support crude oil and natural gas drilling ▪ Fewer than 1,000 rail cars that service the oil sector expire this year ▪ Impact: Utilization and Net Finance Margin ▪ Impact: Credit Provision
18 Providing Financial Solutions to Small and Middle Market Companies and the Transportation Sector (1) Financing and Leasing assets include loans, operating lease equipment and assets held for sale; data as of 6/30/15. (2) Remaining UK assets are in held for sale. Financing and Leasing Assets (1 ) Total $ 36 Billion Leasing and financing solutions for commercial airlines worldwide and business jet operators Aerospace $16 $19 Less than $1 North American Commercial Finance Non - Strategic Portfolios Transportation & International Finance Transportation & International Finance Leasing and financing solutions to freight shippers and carriers Rail Financing solutions to owners and operators of oceangoing cargo vessels Maritime Finance Lending and equipment leasing to small and middle market businesses in the UK (2) and China International Finance Senior secured commercial real estate loans to developers and other commercial real estate professionals Real Estate Finance North American Commercial Finance Lending, leasing, and other financial and advisory services to the middle market Corporate Finance Leasing and equipment loan solutions to small businesses and middle market companies Equipment Finance Leading provider of factoring and financing to consumer product companies Commercial Services 2 Q15 Earnings Call
19 North American Commercial Finance 2 Q15 Earnings Call New Business Segment Structure – Post Acquisition Transportation & International Finance Aerospace Rail Maritime Finance International Finance North America Banking Commercial Banking Commercial Real Estate Equipment Finance Commercial Services Consumer Banking New Division Expanded Division Legacy Consumer Mortgages Single Family Residential Mortgages Reverse Mortgages Other Segments Include : ▪ Non - Strategic Portfolios ▪ Corporate & Other Legend:
20 North American Commercial Finance 2 Q15 Earnings Call Business Segment Description – Post Acquisition SEGMENT DIVISIONS MARKETS AND SERVICES Transportation & International Finance • Aerospace Leasing and financing solutions for commercial airlines worldwide and business jet operators. • Rail Leasing and financing solutions to freight shippers and carriers. • Maritime Finance Financing solutions to owners and operators of oceangoing cargo vessels. • International Finance Lending and equipment leasing to small and middle market businesses in the UK and China. North America Banking • Commercial Banking New name, includes the former Corporate Finance, and the new Corporate & Specialty Banking lending functions, offering a full suite of deposit products. The division also originates qualified Small Business Administration (“SBA”) loans. • Commercial Real Estate Former name – Real Estate Finance and includes certain assets from the acquisition. • Equipment Finance Provides lending, leasing and other financial and advisory services to small and middle - market companies across select industries. • Commercial Services Factoring, receivables management products and secured financing to retail supply chain companies . • Consumer Banking New division, includes retail banking, mortgage lending and private banking. Retail banking is the primary deposit gathering business and operates through three primary channels: retail branches, online direct channel, and private bankers. Mortgage lending offers jumbo residential mortgage loans and conforming residential mortgage loans. Private banking offers highly personalized relationship - based banking services to high net worth individuals and professional partnerships. Legacy Consumer Mortgages • Single Family Residential Mortgages • Reverse Mortgages New segment, contains single - family residential (“SFR”) mortgages and reverse mortgages, which are covered by loss sharing agreements with the FDIC. Non - Strategic Portfolios Consists of portfolios that we do not consider strategic (Mexico and Brazil portfolios). Corporate and Other Consists of certain items not allocated to operating segments.
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