CIT Group Inc. said profit in its latest quarter slid as
noninterest income fell and expenses rose.
Still, per-share earnings came in a penny ahead of Wall Street
expectations.
The lender, based in Livingston, N.J., reported a profit of
$115.3 million, down from $246.9 million a year earlier. On a
per-share basis, earnings dropped to 66 cents from $1.29. Revenue
declined 4.1% to $406.6 million.
Analysts projected 65 cents in per-share profit on $435 million
in revenue, according to Thomson Reuters.
Chief Executive John Thain noted a "continuing competitive
environment, particularly for middle-market lending."
CIT, which operates in 12 states plus the District of Columbia,
has about 13 international locations and lends to the small
business, middle market and transportation sectors. Under Mr.
Thain, CIT has pushed to expand its commercial businesses and
earlier this month won regulatory approval for its $3.4 billion
acquisition of OneWest Bank and its parent company. The bank
expects to close the deal Aug. 3.
During the quarter, noninterest income, which for CIT mainly
comes from rent charged on operating leases, fell 3%. The bank
recorded a $6 million accounting charge related to a swap, and it
was up against a tough comparison in the year-before period.
Financing and leasing assets in North American commercial finance
rose 4% from a year earlier, thanks to last year's purchase of
Direct Capital.
Net finance margin, a key measure of lending profitability that
is largely tied to interest rates, fell to 4.57% from 4.91% a year
earlier but was flat from the first quarter. The metric has been
pinched at many lenders facing low interest rates, but some have
recently signaled that it is stabilizing. On Tuesday, CIT said
lower yields in aerospace, partially offset by higher yields in
rail, were behind the year-over-year decline.
Total loans grew 2.2% to $20.3 billion as an 11% rise in
domestic lending offset set a sharp decline in international
lending.
Operating expenses rose 4.4%. Restructuring costs were minimal
during the quarter, CIT said, but compensation costs rose.
Shares in the bank, down about 2.5% this year, were inactive
premarket.
Write to Lisa Beilfuss at lisa.beilfuss@wsj.com
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