- Progress on Strategic
Initiatives –
- Signed definitive agreement to sell CIT
Commercial Air for $10.0 billion, which represents a 6.7% premium
to net assets;
- Received non-objection from Federal
Reserve Bank of New York to return up to $3.3 billion of capital to
shareholders;
- Closed sale of Canadian Equipment and
Corporate Finance Businesses;
- Stable Operating Trends – Net
Finance Revenue1 as a percent of Average Earning Assets of 3.63%,
and credit metrics remain stable; Income from continuing operations
negatively impacted by $28 million, net of tax, $0.14 per diluted
share, in discrete items related to our strategic initiatives;
- Maintained Strong Capital
Ratios – Common Equity Tier 1 of 13.7% and Total Capital
Ratio of 14.4%; Grew book value to $55.62 per common share and
tangible book value to $49.02 per common share at September 30,
2016, each up 1% from the prior quarter.
CIT Group Inc. (NYSE:CIT), cit.com, today reported net income of
$133 million, $0.65 per diluted share, for the quarter ended
September 30, 2016, compared to net income of $693 million, $3.61
per diluted share for the year-ago quarter, which included $647
million, $3.37 per diluted share, of income tax benefits associated
with the reversal of the valuation allowance related to the U.S.
federal deferred tax asset (“Valuation Allowance”). Income from
continuing operations for the third quarter was $148 million, $0.73
per diluted share compared to $697 million, $3.63 per diluted share
in the year-ago quarter, which included $647 million, $3.37 per
diluted share, of income tax benefits associated with the reversal
of the Valuation Allowance.
Net income for the nine month period ended September 30, 2016
was $294 million, $1.45 per diluted share, compared to $912
million, $5.03 per diluted share, for the nine month period ended
September 30, 2015, which included $647 million, $3.57 per diluted
share, of income tax benefits associated with the previously
mentioned reversal of the Valuation Allowance. Income from
continuing operations for the nine month period ended September 30,
2016 was $481 million, $2.38 per diluted share, compared to $916
million, $5.05 per diluted share for the nine month period ended
September 30, 2015, which included $647 million, $3.57 per diluted
share, of income tax benefits associated with the previously
mentioned reversal of the Valuation Allowance.
“I am pleased with the solid financial results we achieved this
quarter in what continues to be a highly-competitive operating
environment,” said Ellen Alemany, Chief Executive Officer. “We
continue to focus on the execution of our strategic initiatives as
demonstrated by the agreement to sell our Commercial Air business
and the closing of the sale of our Canadian Equipment and Corporate
Finance Businesses. Our recent actions will simplify our business,
improve our overall financial profile and allow us to return
significant capital to our shareholders.”
Summary of Third Quarter Financial
Results from Continuing Operations
All references in this section relate to continuing operations
and therefore do not include any of the assets or results of
operations of the discontinued operations related to Financial
Freedom.
On August 3, 2015, CIT acquired IMB HoldCo LLC, the parent
company of OneWest Bank, which impacts the comparability of current
results to prior periods. The three-month and nine-month results
for 2016 include full period results of OneWest Bank’s operations
while the three-month and nine-month results for 2015 include only
the results of OneWest Bank’s operations for a partial period in
the third quarter of 2015.
Selected
Financial Highlights (Continuing Operations):
Change from: 3Q16 2Q16 3Q15 Prior Quarter*
Prior Year* ($ in millions, except per share data) Pre-tax income
from continuing operations $ 225 $ 275 $ 137 $ (50 ) $ 89 Income
from continuing operations $ 148 $ 181 $ 697 $ (33 ) $ (548 )
Diluted earnings per share (EPS) $ 0.73 $ 0.90 $ 3.63 $ (0.16 ) $
(2.90 ) Pre-tax return on average earning assets
(ROAEA) 1.53 % 1.86 % 1.04 % -0.33 % 0.48 % Return on average
earning assets (ROAEA) 1.01 % 1.22 % 5.31 % -0.22 % -4.31 %
Adjusted return on tangible common equity (ROTCE)(1) 7.45 % 8.27 %
2.56 % -0.82 % 4.89 % Net finance margin(1) 3.63 % 3.65 % 3.67 %
-0.03 % -0.05 % Net efficiency ratio(1) 53.1 % 49.8 % 62.2 % -3.3 %
9.0 % Tangible book value per share (TBVPS)(1) $ 49.02 $ 48.45 $
47.09 $ 0.58 $ 1.94 CET 1 Ratio(2) 13.7 % 13.4 % 12.5 % 0.3
% 1.2 % Total Capital Ratio(2) 14.4 % 14.1 % 13.0 % 0.3 % 1.4 %
Net charge-offs as % of AFR 0.31 % 0.53 % 0.86 % -0.22 %
-0.55 % Allowance for loan losses as % of finance receivables 1.41
% 1.31 % 1.03 % 0.10 % 0.38 % Average earning assets $
59,005 $ 59,229 $ 52,448 $ (224 ) $ 6,557 Financing and leasing
assets $ 49,335 $ 49,725 $ 50,099 $ (390 ) $ (764 ) * Certain
balances may not sum due to rounding.
(1)See "Non-GAAP Measurements" at the end
of this press release and page 24 for reconciliation of non-GAAP to
GAAP financial information.
(2)Ratios based on the fully phased-in basis.
Income from continuing operations of $148 million included net
after-tax charges of $28 million from discrete items related to our
strategic initiatives. Discrete items included charges related to
an impairment on the business aircraft assets in held for sale, a
tax provision to establish a valuation allowance on the deferred
tax asset related to our operations in China, and a restructuring
charge resulting from operating expense reduction initiatives. In
addition to these items, income this quarter included a
mark-to-market charge on the total return swap (“TRS”) partially
offset by gains related to our mortgage-backed securities
portfolio.
Tangible book value per share2 increased to $49.02. Preliminary
Common Equity Tier 1 and Total Capital ratios at September 30, 2016
increased to 13.7% and 14.4%, respectively, as calculated under the
fully phased-in Regulatory Capital Rules. Average earning assets3
for the September 30, 2016 quarter decreased slightly to $59.0
billion, reflecting a reduction in Commercial Banking and run-off
in the liquidating portfolios. The ROTCE4 of 7.45% decreased from
the prior quarter, reflecting both the decline in earnings from
continuing operations and the increase in adjusted tangible common
equity. ROTCE in the year-ago quarter of 2.56% reflects transaction
costs related to the OneWest Bank acquisition and other discrete
items that negatively impacted earnings, as well as the reversal of
the Valuation Allowance, which benefited income but is excluded
from the calculation.
Income Statement
Highlights:
Net Finance Revenue*
Change from: ($ in millions)
3Q16 2Q16 3Q15 Prior Quarter Prior Year
Interest income $ 490 $ 495 $ 438 $ (5 ) $ 52 Rental income on
operating leases 564 569 539
(6 ) 24 Finance revenue 1,054 1,065 977
(11 ) 77 Interest expense (279 ) (283 ) (280 ) 3 1 Depreciation on
operating lease equipment (179 ) (176 ) (159 ) (3 ) (20 )
Maintenance and other operating lease expenses (60 )
(65 ) (56 ) 5 (5 ) Net finance revenue
$ 535 $ 541 $ 482 $ (6 ) $ 53
Average earning assets $ 59,005 $ 59,229 $ 52,448 $ (224 ) $ 6,557
Net finance margin 3.63 % 3.65 % 3.67 % -0.03 % -0.05 % * Certain
balances may not sum due to rounding.
Net finance revenue5 was $535 million in the current quarter,
compared to $541 million in the prior quarter and $482 million in
the year-ago quarter. Net finance revenue as a percentage of
average earning assets (“net finance margin”) was down slightly
from the prior quarter and from the year-ago quarter. The decreases
in net finance revenue and net finance margin from the prior
quarter were driven by Commercial Banking, which was down slightly
due to a prior quarter interest recovery, and by Rail, which had
lower rental revenue.
Average earning assets decreased slightly compared to the prior
quarter reflecting prepayments and asset sales in Commercial
Finance and run-off in the liquidating portfolios, partially offset
by seasonal growth in factored receivables in Business Capital as
well as growth in Rail and in Other Consumer Banking.
The increases in net finance revenue and average earning assets
from the year-ago quarter reflect the benefits of a full quarter
from the OneWest Bank acquisition.
Other Income* Change from: ($ in millions) 3Q16 2Q16 3Q15
Prior Quarter Prior Year Fee revenues $ 32 $
28 $ 30 $ 4 $ 2 Factoring commissions 29 24 31 5 (2 ) Gains on
sales of leasing equipment 22 28 31 (6 ) (8 ) Gains on investments
10 6 2 4 8 Gain (loss) on OREO sales 4 4 (3 ) 0 7 Gains (losses) on
loan and portfolio sales 3 8 (15 ) (4 ) 18 Net (losses) gains on
derivatives and foreign currency exchange (16 ) 10 (20 ) (26 ) 4
Impairment on assets held for sale (22 ) (17 ) (24 ) (5 ) 2 Other
revenues 12 13 8
(2 ) 4 Total other income $ 74 $ 104
$ 39 $ (30 ) $ 35 * Certain balances
may not sum due to rounding.
Other income includes fee revenues, factoring commissions and
gains, losses or valuation adjustments. Total other income in the
third quarter of 2016 was $74 million. While both fee revenues and
factoring commissions increased from the prior quarter, total other
income declined from $104 million in the prior quarter due to a
decline in net gains on various assets and a decline in other
revenues. Other Income was $39 million in the year-ago quarter.
Other income in the third quarter of 2016 included $10 million
in gains from the mortgage-backed securities portfolio, offset by
an $18 million impairment charge related to Business Air and a $20
million mark-to-market charge on the TRS. Other Income in the prior
quarter included gains on asset sales, primarily in Rail, mostly
offset by impairment charges on certain rail assets when
transferred to held for sale, and a $4 million impairment on the
business aircraft assets also transferred to assets held for sale.
The prior quarter also included a $9 million mark-to-market benefit
on the TRS and $5 million in gains on the mortgage-backed
securities. Other Income in the year-ago quarter included a $24
million charge on the TRS, a $19 million charge related to a
currency translation adjustment and a $15 million impairment
related to our non-strategic portfolios.
Operating Expenses* Change from: ($ in millions) 3Q16 2Q16
3Q15 Prior Quarter Prior Year Compensation and
benefits $ (158 ) $ (156 ) $ (160 ) $ (2 ) $ 3 Professional fees
(47 ) (40 ) (57 ) (8 ) 10 Technology (33 ) (31 ) (30 ) (1 ) (3 )
Net occupancy expense (18 ) (17 ) (15 ) (0 ) (3 ) Advertising and
marketing (5 ) (4 ) (7 ) (0 ) 3 Other expenses (63 )
(73 ) (54 ) 10 (9 )
Operating expenses before provision for
severance andfacilities exiting and intangible asset
amortization
(323 ) (321 ) (324 ) (2 ) 0 Intangible asset amortization (6 ) (6 )
(5 ) - (1 ) Provision for severance and facilities exiting
activities (2 ) (10 ) (5 ) 7
3 Total operating expenses $ (332 ) $ (338 )
$ (334 ) $ 5 $ 2 Net efficiency ratio 53.1 %
49.8 % 62.2 % -3.3 % 9.0 % * Certain balances may not sum due to
rounding.
Operating expenses excluding restructuring costs and intangible
asset amortization6 of $323 million were up slightly compared to
the prior quarter of $321 million, reflecting higher legal and
sales tax expense in Business Capital, partially offset by lower
expenses on Real Estate Owned (“REO”) in Consumer & Community
Banking. The slight decrease from the year-ago quarter result
reflects one-time integration expenses in the year-ago quarter and
lower employee expenses. The net efficiency ratio6 of 53% increased
compared to the prior quarter, and improvement from the year-ago
quarter reflects the addition of OneWest Bank. Headcount at
September 30, 2016 was 4,650, unchanged from the prior quarter and
down from 4,960 a year-ago primarily from strategic initiatives.
Restructuring costs in this quarter and the prior quarter continue
to reflect our strategic initiatives to reduce operating expenses,
while the amortization of intangibles was primarily due to the
OneWest Bank acquisition.
Income Taxes
The provision for income taxes of $77 million for the quarter
included $16 million of net discrete tax expense for the recording
of a valuation allowance against the international deferred tax
asset related to our operations in China. The provision in the
prior quarter was $94 million, including $4 million of net discrete
tax expense. The year-ago quarter provision was a $560 million
benefit, which included a $647 million reversal of the Valuation
Allowance, partially offset by $56 million in discrete charges
related to our international business.
Excluding discrete items, the effective tax rate for the current
and prior quarters was 27% and 33%, respectively, compared to 24%
in the year-ago quarter, reflecting the relatively higher domestic
earnings. Cash taxes were a net refund of $56 million compared to a
net payment of $6 million in the prior quarter and $9 million in
the year-ago quarter. The current quarter includes receipt of a tax
refund of $45 million from the closing of a prior year income tax
audit.
Balance Sheet
Highlights:
Earning Assets*
Change from: ($ in millions) 3Q16 2Q16
3Q15 Prior Quarter Prior Year Loans (including
assets held for sale) $ 32,294 $ 32,700 $ 34,395 $ (406) $ (2,101)
Operating lease equipment, net (including assets held for sale)
17,041 17,025 15,704 16 1,338 Financing and Leasing Assets
49,335 49,725 50,099 (390) (764) Interest bearing cash 6,513 7,083
6,606 (570) (93) Investment securities 3,592 3,229 3,619 363 (26)
Indemnification asset 362 376 465 (13) (103) Securities purchased
under agreements to resell - - 100 - (100) Credit balances of
factoring clients (1,229) (1,215) (1,609) (14) 380 Total Earning
Assets $ 58,574 $ 59,197 $ 59,280 $ (623) $ (706) * Certain
balances may not sum due to rounding.
Earning assets at September 30, 2016 declined from the prior
quarter, as collections and sales of loans offset $2.6 billion in
new originations. The decline in financing and leasing assets
resulted from prepayments and asset sales primarily in the
Commercial Finance division of Commercial Banking.
Interest bearing cash and investment securities were $10.1
billion at September 30, 2016, and consisted of $6.5 billion of
cash ($0.6 billion of which was restricted cash), and $3.6
billion of investment securities. The increase in investment
securities from the prior quarter reflects the continued initiative
to deploy cash into liquid investments. In addition, there was $0.9
billion of non-interest bearing cash and other restricted
balances.
Of the total cash and investment securities, $0.7 billion of the
interest bearing cash and investment securities was at the
financial holding company, $8.5 billion was at CIT Bank and the
remaining $0.9 billion included amounts at the operating
subsidiaries and restricted balances. The $0.9 billion of
non-interest bearing cash, including restricted balances was
comprised of $0.5 billion at the financial holding company and $0.4
billion at CIT Bank and the operating subsidiaries.
Deposits and Borrowings* Change from: ($ in millions) 3Q16
2Q16 3Q15 Prior Quarter Prior Year Total Deposits $
32,854 $ 32,879 $ 32,329 $ (25 ) $ 525 Unsecured borrowings
$ 10,595 $ 10,591 $ 10,680 $ 4 $ (85 ) Secured borrowings
5,954 6,919 8,534 (965 ) (2,580 ) Total
Borrowings $ 16,549 $ 17,510 $ 19,214 $ (961 ) $ (2,665 ) * Certain
balances may not sum due to rounding.
Deposits were essentially flat from the prior quarter and
represented approximately 66% of CIT’s funding at September 30,
2016, up from 65% at the end of the prior quarter. The weighted
average coupon on outstanding deposits declined to 1.22% at
September 30, 2016, from 1.25% at June 30, 2016, as we continue to
shift towards lower cost deposit products.
Unsecured and secured borrowings comprised 22% and 12% of the
funding mix, respectively, at September 30, 2016, compared to 21%
and 14%, respectively, in the prior quarter. The decline in secured
borrowings from the prior and year-ago quarters was primarily
related to redemptions and maturities of structured financings and
FHLB advances.
The overall weighted average coupon rate on outstanding deposits
and total borrowings was 2.21% at September 30, 2016, essentially
unchanged from the June 30, 2016 and September 30, 2015 levels.
Capital* Change from: ($ in millions, except per share data)
3Q16 2Q16 3Q15 Prior Quarter Prior Year Common
Stockholders' Equity $ 11,237 $ 11,124 $ 10,799 $ 113 $ 438
Tangible Common Equity $ 9,905 $ 9,786 $ 9,462 $ 120 $ 443 Total
risk-based capital(1) $ 9,719 $ 9,539 $ 9,157 $ 180 $ 562
Risk-weighted assets(1) $ 67,350 $ 67,816 $ 70,302 $ (466 ) $
(2,952 ) Book value per share (BVPS) $ 55.62 $ 55.07 $ 53.74
$ 0.54 $ 1.88 Tangible book value per share (TBVPS) $ 49.02 $ 48.45
$ 47.09 $ 0.58 $ 1.94 CET 1 Ratio(1) 13.7 % 13.4 % 12.5 % 0.3 % 1.2
% Total Capital Ratio(1) 14.4 % 14.1 % 13.0 % 0.3 % 1.4 % Tier 1
Leverage Ratio(1) 14.2 % 13.9 % 15.1 % 0.3 % -0.9 % * Certain
balances may not sum due to rounding. (1)Balances and ratios based
on the fully phased-in basis.
Common stockholders’ equity and tangible common equity increased
from the prior quarter and the year-ago quarter, primarily
reflecting retained earnings. Book value per share and tangible
book value per share increased in the quarter due to growth in
common stockholders’ equity while the share count remained stable.
All regulatory capital ratios increased from the prior quarter,
reflecting an increase in capital while risk weighted assets
declined slightly, primarily driven by a decline in loans and
leases. The ratios presented are estimated Common Equity Tier 1 and
Total Capital ratios under the fully phased-in Regulatory Capital
Rules.
In October 2016, the Board of Directors declared a quarterly
cash dividend of $0.15 per common share on its outstanding common
stock. The common stock dividend is payable on November 25, 2016 to
common shareholders of record as of November 11, 2016.
Asset
Quality:
Asset Quality*
Change from: ($ in millions) 3Q16 2Q16
3Q15 Prior Quarter Prior Year Net charge-offs
(NCO) $ 23 $ 41 $ 61 $ (18 ) $ (38 ) NCO % of AFR 0.31 % 0.53 %
0.86 % -0.22 % -0.55 % Non-accrual $ 289 $ 283 $ 215 $ 6 $ 74 OREO
$ 86 $ 90 $ 127 $ (4 ) $ (41 ) Provision for credit losses $ 46 $
28 $ 50 $ 18 $ (4 ) Total Portfolio Allowance as a % of Finance
Receivables (FR) 1.41 % 1.31 % 1.03 % 0.10 % 0.38 %
Allowance for loan losses plus principal
loss discount as %of FR (before principal loss discount) /
Commercial
1.93 % 1.83 % 1.78 % 0.10 % 0.15 % * Certain balances may not sum
due to rounding.
Excluding the impact relating to assets transferred to held for
sale in all periods, net charge-offs were $15 million (0.20% of
average finance receivables), compared to $16 million (0.21%) in
the prior quarter and $21 million (0.29%) in the year-ago quarter.
The current quarter net charge-offs includes $7 million in the
energy (oil and gas) portfolio, of which $1 million related to
loans that were sold or transferred to assets held for sale. Prior
quarter net charge-offs included $17 million in the energy (oil and
gas) portfolio.
Non-accrual loans of $289 million (0.96% of finance receivables)
increased from $283 million (0.93%) in the prior quarter primarily
due to $49 million from one account in the maritime portfolio
partially offset by accounts returned to accrual, repayments and
charge-offs. The increase compared to the year-ago quarter is
primarily due to increases in the energy and maritime portfolios.
The provision for credit losses of $46 million increased from the
prior quarter primarily due to reserve build in Commercial Banking
and Maritime.
The allowance for loan losses was $422 million (1.41% of finance
receivables, 1.66% excluding loans subject to loss sharing
agreements with the FDIC) at September 30, 2016, compared to $399
million (1.31% of finance receivables, 1.55% excluding loans
subject to loss sharing agreements with the FDIC) at June 30, 2016
and $335 million (1.03% of finance receivables, 1.23% excluding
loans subject to loss sharing agreements with the FDIC) at
September 30, 2015. The increase in allowance for loan losses from
the prior quarter was primarily due to reserve builds across the
divisions of Commercial Banking, as well as $5 million related to
Maritime Finance. The increase from the year-ago quarter was
concentrated in the energy and maritime portfolios. Including the
impact of the principal loss discount on credit impaired loans,
which is essentially a reserve for credit losses on the discounted
loans, the commercial loan allowance to finance receivables was
1.93% compared to 1.83% at June 30, 2016 and 1.78% at September 30,
2015. The consumer loans ratio was 6.73% at September 30, 2016
compared to 7.20% at June 30, 2016 and 9.84% at September 30, 2015,
as most of the consumer loans purchased were credit impaired and
are partially covered by loss sharing agreements with the FDIC. The
decrease was driven by the shift in asset mix as new originations
offset the run-off of the purchased credit impaired portfolio.
CIT’s loans to the oil and gas industry totaled $0.7 billion or
2.4% of total loans at September 30, 2016, of which 39% were
criticized. The decline of $0.1 billion in oil and gas loans was
driven by loan sales and pay downs. The portfolio has loss coverage
of about 11.7% of the principal balance, reflecting the purchase
accounting discount for loans acquired from OneWest Bank and the
allowance for loan losses.
Commercial
Banking:
Earnings Summary*
Change from: ($ in millions) 3Q16 2Q16
3Q15 Prior Quarter Prior Year Interest income
$ 285 $ 289 $ 252 $ (4 ) $ 34 Rental income on operating leases 32
29 25 3 7 Interest expense (76 ) (75 ) (67 ) (2 ) (9 ) Depreciation
on operating lease equipment (24 ) (22 ) (18 )
(3 ) (6 ) Net finance revenue 216 222 191 (5 ) 26
Other income 66 61 71 5 (5 ) Provision for credit losses (39 ) (11
) (43 ) (28 ) 4 Operating expenses (161 ) (149 )
(147 ) (12 ) (15 ) Income before income taxes
$ 82 $ 122 $ 72 $ (41 ) $ 10
Select Average Balances Average finance receivables $ 20,691
$ 21,041 $ 19,357 $ (350 ) $ 1,334 Average earning assets $ 20,385
$ 20,575 $ 18,724 $ (190 ) $ 1,661
Statistical Data Pre-tax
ROAEA 1.61 % 2.38 % 1.53 % -0.77 % 0.07 % Net finance margin 4.24 %
4.31 % 4.07 % -0.07 % 0.17 % New business volume $ 1,889 $ 2,048 $
1,960 $ (159 ) $ (71 ) Net efficiency ratio 56.6 % 52.1 % 55.4 %
-4.5 % -1.2 % * Certain balances may not sum due to rounding.
Commercial Banking pre-tax earnings decreased from the prior
quarter as credit costs returned to a more normalized level and
operating expenses in Equipment Finance were elevated from higher
sales and local taxes. Comparisons to the year-ago quarter are
impacted by the timing of the acquisition of OneWest Bank in August
2015.
Financing and leasing assets, which comprise the vast majority
of earning assets, were $21.2 billion at September 30, 2016, down
from $21.5 billion at June 30, 2016, and from $22.3 billion a
year-ago, mostly driven by decreases in Commercial Finance due to
higher prepayments and asset sales. New lending and leasing volume
of $1.9 billion declined $0.2 billion compared to the prior
quarter, reflecting a reduction in volume in Real Estate Finance,
which was particularly strong in the prior quarter, partially
offset by increased volume in Commercial Finance. Factored volume
was up from the prior quarter due to seasonal trends, and
essentially flat with the year-ago quarter.
Both net finance revenue and net finance margin were down from
the prior quarter, which included an interest recovery on a loan
previously charged off.
Other income increased from the prior quarter, primarily due to
seasonally higher factoring commissions, and stronger capital
market fees, partially offset by lower gains on asset sales. The
decline from the year-ago quarter reflected lower gains on asset
sales, partially offset by higher fees and other revenues.
Operating expenses increased from the prior quarter and reflects
higher sales and local taxes in Equipment Finance.
The provision for credit losses was $39 million in the current
quarter, compared to $11 million in the prior quarter, and $43
million in the year-ago quarter. The increase in provision from the
prior quarter resulted in an increase in the allowance for loan
losses due to modest increases across divisions. Net charge-offs
were $22 million (0.42% of average finance receivables), compared
to $35 million (0.66%) in the prior quarter and $18 million (0.38%)
in the year-ago quarter. Excluding assets transferred to held for
sale in all periods, net charge-offs were $15 million in the
current quarter, compared to $16 million in the prior quarter and
$18 million in the year-ago quarter. Non-accrual loans were $180
million (0.87% of finance receivables), compared to $208 million
(1.00%) at June 30, 2016, and $147 million (0.67%) a year-ago.
The decrease from the prior quarter was related to loans in the
energy sector. The increase in balances from the year-ago quarter
was primarily related to loans in the energy sector, partially
offset by lower non-accrual balances in Business Capital.
Transportation
Finance:
Earnings Summary*
Change from: ($ in millions) 3Q16 2Q16
3Q15 Prior Quarter Prior Year Interest income
$ 51 $ 50 $ 50 $ 1 $ 1 Rental income on operating leases 528 537
506 (9 ) 22 Interest expense (147 ) (147 ) (140 ) (0 ) (7 )
Depreciation on operating lease equipment (155 ) (155 ) (138 ) 0
(17 ) Maintenance and other operating lease expenses (60 )
(65 ) (56 ) 5 (5 ) Net
finance revenue 217 220 223 (3 ) (5 ) Other income 7 12 23 (5 ) (17
) Provision for credit losses (6 ) (16 ) 2 10 (7 ) Operating
expenses (62 ) (62 ) (54 ) 0
(8 ) Income before income taxes $ 157 $ 154
$ 194 $ 2 $ (37 )
Select
Average Balances Average finance receivables $ 2,527 $ 2,726 $
3,246 $ (199 ) $ (719 ) Average operating leases $ 16,581 $ 16,477
$ 14,978 $ 104 $ 1,603 Average earning assets $ 20,953 $ 20,946 $
19,009 $ 7 $ 1,944
Statistical Data Pre-tax ROAEA 2.99 %
2.94 % 4.08 % 0.05 % -1.09 % Net finance margin 4.15 % 4.21 % 4.69
% -0.05 % -0.54 % New business volume $ 372 $ 461 $ 1,144 $ (89 ) $
(772 ) Net efficiency ratio 27.6 % 26.1 % 21.8 % -1.5 % -5.8 % *
Certain balances may not sum due to rounding.
Transportation Finance pre-tax earnings increased slightly from
the prior quarter primarily reflecting lower credit costs. Pre-tax
earnings decreased from the year-ago quarter, driven by lower other
income and higher credit and Commercial Air separation costs.
Transportation Finance includes the Commercial Air and Business Air
businesses, which will be reclassified to discontinued operations
in the fourth quarter.
Financing and leasing assets totaled $19.9 billion at September
30, 2016, compared to $20.0 billion at June 30, 2016 and $18.7
billion at September 30, 2015. Assets grew sequentially in Rail,
but were down in Aerospace and Maritime. Assets grew in all three
divisions from a year ago. Assets held for sale of $1.1 billion
principally included $0.6 billion in the Business Air portfolio and
$0.5 billion of commercial aerospace loans (due to the announced
sale agreement). New business volume for the quarter totaled $0.4
billion, down from the prior and year-ago quarters reflecting fewer
aircraft deliveries.
Net finance revenue decreased slightly from the prior quarter on
lower rental revenue in Rail and from the year-ago quarter as the
benefit of higher average earning assets was offset by a lower
average yield. Net finance margin was down from the prior and
year-ago quarters reflecting the net finance revenue trends
described above and relatively stable funding costs. Gross yields
compared to the prior quarter increased slightly in Aerospace to
11.0% and declined in Rail to 12.4%, reflecting lower rental
rates.
Other income primarily consists of gains on asset sales and is
net of impairment charges on assets held for sale. Other income
decreased from the prior quarter on lower asset sales gains, while
the decline from the year-ago quarter largely reflected higher
impairments. Gains on asset sales totaled $20 million, $25 million
and $22 million for the current, prior and year-ago quarters,
respectively. Impairment charges totaled $18 million in the current
quarter related to the Business Air portfolio, $18 million in the
prior quarter, largely related to the scrapping of rail cars, and
$2 million in the year-ago quarter.
Operating expenses were flat with the prior quarter. The current
and prior quarter included $10 million and $9 million of costs
related to the Commercial Air separation initiative,
respectively. The increase compared to the year-ago quarter
reflected the higher separation initiative costs.
Net charge-offs, excluding assets transferred to held for sale,
were negligible for the current and prior quarters. Non-accrual
loans of $54 million (2.45% of finance receivables), increased from
$18 million (0.70%) at June 30, 2016 and from $5 million (0.14%) a
year-ago. The current quarter increase was due to an increase in
Maritime Finance, while the other period balances principally
consisted of Business Air loans. The provision for credit losses
decreased from the prior quarter, but continued to reflect reserve
increases in Maritime. The prior quarter also included charge-offs
in the Business Air portfolio related to the assets transferred to
held for sale.
All but two aircraft were on lease or under a commitment at
quarter-end resulting in 99% utilization in Commercial Air
(compared to 100% last quarter), while Rail utilization remained at
94% this quarter. All of the aircraft scheduled for delivery in the
next twelve months and 41% of the total railcar order-book have
lease commitments.
Consumer and
Community Banking:
Earnings Summary*
Change from: ($ in millions) 3Q16 2Q16
3Q15 Prior Quarter Prior Year Interest income
$ 103 $ 105 $ 74 $ (3 ) $ 29 Interest expense (2 ) (6
) (14 ) 4 12 Net finance
revenue 101 100 60 2 41 Other income 7 12 0 (5 ) 7 Provision for
credit losses (2 ) (1 ) (5 ) (1 ) 4 Operating expenses (88 )
(93 ) (59 ) 6 (29 )
Income (loss) before income taxes $ 19 $ 17 $
(4 ) $ 2 $ 23
Select Average Balances
Average finance receivables $ 7,116 $ 7,156 $ 4,705 $ (40 ) $ 2,411
Average earning assets $ 7,658 $ 7,729 $ 5,128 $ (71 ) $ 2,531
Statistical Data Pre-tax ROAEA 0.98 % 0.87 % -0.30 % 0.11 %
1.29 % Net finance margin 5.28 % 5.15 % 4.69 % 0.13 % 0.59 % New
business volume $ 289 $ 261 $ 30 $ 28 $ 259 Net efficiency ratio
76.8 % 79.6 % 92.7 % 2.8 % 15.9 % * Certain balances may not sum
due to rounding.
Consumer and Community Banking pre-tax earnings increased
slightly from the prior quarter, driven primarily by lower
operating expenses offset by lower other income. Compared to the
year-ago quarter, the current quarter benefited from higher other
income due to gains on REO. Comparisons to the year-ago quarter are
impacted by the timing of the acquisition of OneWest Bank in August
of 2015.
Financing and leasing assets totaled $7.2 billion at September
30, 2016, essentially flat compared to June 30, 2016, as new volume
offset run-off of the Legacy Consumer Mortgage (“LCM”) portfolios.
The LCM portfolios make up $5.0 billion of the current quarter
balance, with a significant portion covered by loss sharing
agreements with the FDIC. The benefit of these agreements is
recorded within the indemnification asset.
Non-accrual loans were $14 million (0.20% of finance
receivables) at September 30, 2016, up from $12 million (0.16%) at
June 30, 2016 and $2 million (0.02%) at September 30, 2015,
reflecting the increase in the LCM portfolios.
Non-Strategic
Portfolios (NSP):
Earnings Summary*
Change from: ($ in millions) 3Q16 2Q16
3Q15 Prior Quarter Prior Year Interest income
$ 23 $ 23 $ 44 $ (1 ) $ (21 ) Rental income on operating leases 4 4
9 (0 ) (5 ) Interest expense (13 ) (14 ) (27 ) 1 15 Depreciation on
operating lease equipment - -
(4 ) - 4 Net finance revenue 14
14 22 0 (8 ) Other income 5 7 (35 ) (2 ) 40 Provision for credit
losses 0 - (3 ) 0 3 Operating expenses (11 ) (12 )
(26 ) 1 15 Income (loss)
before income taxes $ 8 $ 8 $ (43 ) $ (0 ) $
50
Select Average Balances Average earning
assets $ 1,284 $ 1,385 $ 2,284 $ (101 ) $ (1,001 )
Statistical
Data Pre-tax ROAEA 2.40 % 2.34 % -7.48 % 0.06 % 9.88 % Net
finance margin 4.27 % 3.90 % 3.83 % 0.37 % 0.43 % New business
volume $ 46 $ 61 $ 184 $ 15 $ 139 * Certain balances may not sum
due to rounding.
NSP pre-tax earnings for the quarter reflected operations in
Canada and China. The year-ago pre-tax loss reflected a charge in
other income from the recognition of currency translation
adjustments and an impairment on the international businesses and
higher levels of both operating expenses and net finance revenue,
reflective of the remaining businesses at that time.
Financing and leasing assets at September 30, 2016 totaled $1.0
billion, all of which are classified as held for sale, down from
$1.1 billion at June 30, 2016 and from $1.8 billion at September
30, 2015. On October 1, 2016, we closed the sale of the Canadian
Equipment and Corporate Finance businesses (approximately $700
million in financing and leasing assets).
Corporate &
Other:
Earnings Summary*
Change from: ($ in millions) 3Q16 2Q16
3Q15 Prior Quarter Prior Year Interest income
$ 28 $ 28 $ 18 $ 1 $ 10 Interest expense (42) (42) (32) (0)
(10) Net finance revenue (14) (14) (14) 1 0 Other income (11) 13
(19) (24) 9 Operating expenses (15) (25) (49) 10 34 Loss
before income taxes $ (40) $ (26) $ (82) $ (13) $ 43
Select Average Balances Average earning assets $ 8,725 $
8,595 $ 7,303 $ 130 $ 1,422
Statistical Data Pre-tax ROAEA
-1.81% -1.21% -4.50% -0.60% 2.69% Net finance margin -0.62% -0.66%
-0.76% 0.03% 0.13% * Certain balances may not sum due to rounding.
Certain items are not allocated to operating segments and are
included in Corporate and Other, including interest expense
primarily related to corporate liquidity costs, mark-to-market on
certain derivatives, restructuring charges, certain legal costs and
other operating expenses. Interest income was unchanged from the
prior quarter and is up from a year-ago quarter, primarily related
to income generated from the investment portfolio. Other income
activity is driven by mark-to-market charges on the TRS and gains
or losses on mortgage-backed securities. The current quarter
included a $20 million mark-to-market charge on the TRS and $10
million of gains on mortgage-backed securities, compared to a $9
million benefit on the TRS and a $5 million gain on mortgage-backed
securities in the prior quarter. The year-ago quarter included a
$24 million charge on the TRS. Operating expenses for the quarter
reflected restructuring charges of $2 million, compared to $10
million in the prior quarter and $5 million in the year-ago
quarter. The prior-year quarter also included transaction costs
associated with closing the OneWest Bank acquisition.
Discontinued Operations
Loss from discontinued operations, net of taxes, was $16
million, which included a $19 million pre-tax impairment charge on
the servicing liability related to our reverse mortgage servicing
operations. This compares to a loss from discontinued operations of
$167 million in the prior quarter, which included a $230 million
pre-tax charge related to an increase in the interest curtailment
reserve associated with our third-party reverse mortgage servicing
business, known as Financial Freedom, that we acquired in the
OneWest Bank acquisition.
Conference Call and Webcast
Chairwoman and Chief Executive Officer Ellen Alemany and Chief
Financial Officer Carol Hayles will discuss these results on a
conference call and audio webcast today, October 25, at 8:00 a.m.
(EDT). Interested parties may access the conference call live by
dialing 888-317-6003 for U.S. callers, 866-284-3684 for Canadian
callers or 412-317-6061 for international callers and reference
access code “3277369” 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 November 29, 2016, by dialing
877-344-7529 for U.S. callers, 855-669-9658 for Canadian callers or
412-317-0088 for international callers with the access code
“10094143”, or at cit.com/investor.
About CIT
Founded in 1908, CIT (NYSE: CIT) is a financial holding company
with more than $65 billion in assets. Its principal bank
subsidiary, CIT Bank, N.A., (Member FDIC, Equal Housing Lender) has
more than $30 billion of deposits and more than $40 billion of
assets. It provides financing, leasing and advisory services
principally to middle market companies across a wide variety of
industries primarily in North America, and equipment financing and
leasing solutions to the transportation sector. It also offers
products and services to consumers through its Internet bank
franchise and a network of retail branches in Southern California,
operating as OneWest Bank, a division of CIT Bank, N.A. cit.com
Forward-Looking Statements
This press release contains forward-looking statements
within the meaning of applicable federal securities laws that are
based upon our current expectations and assumptions concerning
future events, which are subject to a number of risks and
uncertainties that could cause actual results to differ materially
from those anticipated. The words “expect,” “anticipate,”
“estimate,” “forecast,” “initiative,” “objective,” “plan,” “goal,”
“project,” “outlook,” “priorities,” “target,” “intend,” “evaluate,”
“pursue,” “commence,” “seek,” “may,” “would,” “could,” “should,”
“believe,” “potential,” “continue,” or the negative of any of those
words or similar expressions is intended to identify
forward-looking statements. All statements contained in this press
release, other than statements of historical fact, including
without limitation, statements about our plans, strategies,
prospects and expectations regarding future events and our
financial performance, are forward-looking statements that involve
certain risks and uncertainties. While these statements represent
our current judgment on what the future may hold, and we believe
these judgments are reasonable, these statements are not guarantees
of any events or financial results, and our actual results may
differ materially. Important factors that could cause our actual
results to be materially different from our expectations include,
among others, the risk that (i) Bohai shareholders do not approve
the transaction or that CIT does not receive or satisfy regulatory
or other approvals and conditions on a timely basis or approvals
are subject to conditions that are not anticipated, (ii)
modifications to the terms of the transaction may be required in
order to obtain or satisfy such approvals or conditions, (iii) the
risk that the transaction does not close or that there are changes
in the anticipated timing for closing the transaction, (iv) there
are difficulties, delays or unexpected costs in separating
Commercial Air from CIT or in implementing the transaction, (v)
business disruption during the pendency of or following the
transaction, including diversion of management time, (vi) the risk
that CIT is unsuccessful in implementing its Amended Capital Plan
on the timing and terms contemplated, (vii) the risk that CIT is
unsuccessful in implementing its strategy and business plan, (viii)
the risk that CIT is unable to react to and address key business
and regulatory issues, (ix) 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
(x) the risk that CIT becomes subject to liquidity constraints and
higher funding costs. We describe these and other risks that could
affect our results in Item 1A, “Risk Factors,” of our latest Annual
Report on Form 10-K for the year ended December 31, 2015, which was
filed with the Securities and Exchange Commission. Accordingly, you
should not place undue reliance on the forward-looking statements
contained in this press release. These forward-looking statements
speak only as of the date on which the statements were made. CIT
undertakes no obligation to update publicly or otherwise revise any
forward-looking statements, except where expressly required by
law.
Non-GAAP Measurements
Net finance revenue, net operating lease revenue and average
earning assets are non-GAAP measurements used by management to
gauge portfolio performance. Operating expenses excluding
restructuring costs and intangible amortization is a non-GAAP
measurement used by management to compare period over period
expenses. Net efficiency ratio measures operating expenses (net of
restructuring costs and intangible amortization) to our level of
total net revenues. Total assets from continuing operations is a
non-GAAP measurement used by management to analyze the total asset
change on a more consistent basis. Tangible book value and tangible
book value per share are non-GAAP metrics used to analyze
banks.
________________________
1 Net finance revenue, net finance margin and net operating
lease revenue are non-GAAP measures. See “Non-GAAP Measurements” at
the end of this press release and page 24 for reconciliation of
non-GAAP to GAAP financial information.
2 Adjusted ROTCE, 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 24 for reconciliation of
non-GAAP to GAAP financial information.
3 Average earning asset components include interest earning
cash, investments, securities and indemnification assets. See
“Non-GAAP Measurements” at the end of this press release and page
24 for reconciliation of Earning Assets non-GAAP to GAAP financial
information.
4 Adjusted Return on Tangible Common Equity, which adjusts
tangible common equity for the reversal of the valuation allowance
and the amortization of intangibles in the numerator and the
disallowed deferred tax asset related to regulatory capital in the
denominator, is a non-GAAP measure. See “Non-GAAP Measurements” at
the end of this press release and page 24 for reconciliation of
non-GAAP to GAAP financial information.
5 Net finance revenue, net finance margin and net operating
lease revenue are non-GAAP measures. See “Non-GAAP Measurements” at
the end of this press release and page 24 for reconciliation of
non-GAAP to GAAP financial information.
6 Operating expenses excluding restructuring costs and
intangible asset amortization and Net efficiency ratio are non-GAAP
measures. See “Non-GAAP Measurements” at the end of this press
release and page 24 for reconciliation of non-GAAP to GAAP
financial information.
CIT GROUP INC. AND SUBSIDIARIES Unaudited Consolidated
Statements of Income (dollars in millions, except per share
data) Quarters
Ended Nine Months Ended September 30, June
30, September 30, September 30, 2016
2016 2015 2016 2015 Interest
income Interest and fees on loans $ 457.6 $ 463.6 $ 414.2 $ 1,385.7
$ 961.4 Other Interest and dividends 32.5 31.7
23.5 95.1 41.1
Total interest income 490.1 495.3
437.7 1,480.8 1,002.5
Interest expense Interest on borrowings (180.0 ) (183.1 ) (190.6 )
(550.0 ) (585.9 ) Interest on deposits (99.4 ) (99.4
) (89.7 ) (298.3 ) (230.9 ) Total interest
expense (279.4 ) (282.5 ) (280.3 )
(848.3 ) (816.8 ) Net interest revenue 210.7 212.8 157.4
632.5 185.7 Provision for credit losses (46.2 ) (28.1
) (49.9 ) (173.6 ) (102.9 ) Net interest
revenue, after credit provision 164.5 184.7
107.5 458.9 82.8
Non-interest income Rental income on operating leases 563.6 569.3
539.3 1,708.3 1,601.6 Other income 73.9 104.3
39.2 279.1 189.1
Total non-interest income 637.5 673.6
578.5 1,987.4 1,790.7
Non-interest expenses Depreciation on operating lease equipment
(179.1 ) (176.4 ) (159.1 ) (530.8 ) (473.7 ) Maintenance and other
operating lease expenses (60.4 ) (64.9 ) (55.9 ) (181.5 ) (151.4 )
Operating expenses (332.0 ) (337.5 ) (333.9 ) (1,018.0 ) (810.5 )
Loss on debt extinguishment and deposit redemption (5.1 )
(4.1 ) (0.3 ) (10.8 ) (0.4 ) Total
other expenses (576.6 ) (582.9 ) (549.2 )
(1,741.1 ) (1,436.0 ) Income from continuing
operations before provision for income taxes 225.4 275.4 136.8
705.2 437.5 (Provision) benefit for income taxes (77.0 )
(94.3 ) 560.0 (224.0 ) 478.2
Income from continuing operations, before attribution of
noncontrolling interests 148.4 181.1 696.8 481.2 915.7 Net loss
attributable to noncontrolling interests, after tax -
- - - 0.1
Income from continuing operations 148.4 181.1
696.8 481.2 915.8
Discontinued operation Loss from discontinued operation (24.9 )
(236.3 ) (5.8 ) (268.6 ) (5.8 ) Benefit for income taxes 9.3
69.3 2.1 81.2
2.1 Loss from discontinued operation, net of taxes
(15.6 ) (167.0 ) (3.7 ) (187.4 )
(3.7 ) Net income $ 132.8 $ 14.1 $ 693.1 $
293.8 $ 912.1 Basic income per common share
Income from continuing operations $ 0.74 $ 0.90 $ 3.66 $ 2.39 $
5.08 Loss from discontinued operation, net of taxes (0.08 )
(0.83 ) (0.02 ) (0.93 ) (0.02 ) Basic
income per common share $ 0.66 $ 0.07 $ 3.64 $
1.46 $ 5.06 Average number of common shares - basic
(thousands) 202,036 201,893 190,557 201,775 180,300 Diluted
income per common share Income from continuing operations $ 0.73 $
0.90 $ 3.63 $ 2.38 $ 5.05 Loss from discontinued operation, net of
taxes (0.08 ) (0.83 ) (0.02 ) (0.93 )
(0.02 ) Diluted income per common share $ 0.65 $ 0.07
$ 3.61 $ 1.45 $ 5.03 Average number of
common shares - diluted (thousands) 202,755 202,275 191,803
202,388
181,350 * Preliminary
CIT GROUP INC. AND SUBSIDIARIES
Unaudited Consolidated Balance Sheets (dollars in
millions, except per share data) September 30,
June 30, December 31, September 30,
2016 2016 2015 2015
Assets Total cash and deposits $ 7,433.6 $ 8,103.9 $ 8,301.5
$ 8,259.9 Securities purchased under agreements to resell - - -
100.0 Investment securities 3,592.4 3,229.1 2,953.8 3,618.8 Assets
held for sale 2,462.1 2,403.3 2,092.4 2,154.3 Loans 29,918.2
30,456.8 31,671.7 32,406.2 Allowance for loan losses (421.7
) (399.4 ) (360.2 ) (335.0 ) Loans, net of
allowance for loan losses 29,496.5 30,057.4 31,311.5 32,071.2
Operating lease equipment, net 16,954.8 16,864.6 16,617.0
15,538.2 Indemnification assets 362.2 375.5 414.8 465.0 Goodwill
1,170.5 1,169.7 1,198.3 1,135.1 Intangible assets 161.3 168.9 176.3
201.3 Unsecured counterparty receivable 560.2 570.2 537.8 529.5
Other assets 3,319.0 3,288.6 3,297.6 3,431.9 Assets of discontinued
operation 452.9 469.1 500.5
513.8 Total assets $ 65,965.5 $
66,700.3 $ 67,401.5 $ 68,019.0
Liabilities Deposits $ 32,854.3 $ 32,879.1 $ 32,782.2 $
32,328.9 Credit balances of factoring clients 1,228.9 1,215.2
1,344.0 1,609.3 Other liabilities 3,168.3 3,054.2 3,158.7 3,395.7
Borrowings Unsecured borrowings 10,595.1 10,591.2 10,636.3 10,680.2
Structured financings 3,515.4 3,923.8 4,687.9 5,314.8 FHLB advances
2,438.2 2,995.1 3,117.6
3,219.0 Total borrowings 16,548.7
17,510.1 18,441.8 19,214.0
Liabilities of discontinued operation 927.8
917.1 696.2 671.9 Total
liabilities 54,728.0 55,575.7
56,422.9 57,219.8
Equity Stockholders'
equity Common stock 2.1 2.1 2.0 2.0 Paid-in capital 8,758.2 8,749.8
8,718.1 8,683.5 Retained earnings 2,758.9 2,656.9 2,557.4 2,443.4
Accumulated other comprehensive loss (104.2 ) (107.7 ) (142.1 )
(174.3 ) Treasury stock, at cost (178.0 ) (177.0 )
(157.3 ) (155.9 ) Total common stockholders' equity
11,237.0 11,124.1 10,978.1 10,798.7 Noncontrolling interests
0.5 0.5 0.5 0.5
Total equity 11,237.5 11,124.6
10,978.6 10,799.2 Total liabilities and equity
$ 65,965.5 $ 66,700.3 $ 67,401.5 $ 68,019.0
Book Value Per Common Share Book value per
common share $ 55.62 $ 55.07 $ 54.61 $ 53.74 Tangible book value
per common share $ 49.02 $ 48.45 $ 47.77 $ 47.09 Outstanding common
shares (in thousands) 202,047 201,990 201,022 200,952 *
Preliminary
CIT GROUP
INC. AND SUBSIDIARIES Average Balances and Rates
(dollars in millions) Quarters Ended
September 30, 2016 June 30, 2016 September 30,
2015
AverageBalance
Rate
AverageBalance
Rate
AverageBalance
Rate Assets Interest bearing deposits $ 6,916.0 0.55
% $ 7,113.5 0.50 % $ 5,812.4 0.31 % Securities purchased under
agreements to resell - - - - 387.5 0.62 % Investments 3,411.1
2.70
% 3,130.6 2.91 % 2,663.2 2.76 % Loans (including held for sale)
U.S. 31,383.7 5.79 % 31,784.4 5.87 % 27,320.5 5.72 % Non-U.S.
1,122.7 9.05 % 1,160.2 8.41 %
1,971.6 8.91 % Total Loans 32,506.4 5.91 %
32,944.6 5.96 % 29,292.1 5.95 % Total
interest earning assets / interest income 42,833.5
4.75 % 43,188.7 4.81 % 38,155.2 4.77 %
Operating lease equipment, net (including held for sale) U.S.
9,010.1 7.31 % 8,922.0 7.57 % 8,114.8 8.75 % Non-U.S.
8,026.5 7.94 % 8,003.5 7.95 % 7,330.3
8.01 % Total operating lease equipment, net 17,036.6 7.61 %
16,925.5 7.75 % 15,445.1 8.40 % Indemnification assets 366.3
-4.59 % 379.8 -9.06 % 305.6 0.39
% Total earning assets 60,236.4 5.52 %
60,494.0 5.56 % 53,905.9 5.81 % Non-interest
earning assets Cash and due from banks 952.0 1,051.4 1,902.6
Allowance for loan losses (404.4 ) (398.9 ) (347.9 ) All other
non-interest bearing assets 5,273.4 5,278.8 4,323.5 Assets of
discontinued operation 461.0 479.9
333.8
Total Average Assets $ 66,518.4 $
66,905.2 $ 60,117.9
Liabilities Borrowings
Deposits $ 31,732.9 1.25 % $ 31,643.5 1.26 % $ 26,220.3 1.37 %
Borrowings 17,117.2 4.21 % 17,853.7
4.10 % 18,148.4 4.20 % Total interest-bearing
liabilities 48,850.1 2.29 % 49,497.2
2.28 % 44,368.7 2.53 % Non-interest bearing deposits
1,197.4 1,124.9 739.8 Credit balances of factoring clients 1,234.1
1,264.9 1,457.8 Other non-interest bearing liabilities 3,109.7
3,093.3 3,054.0 Liabilities of discontinued operation 916.1 738.1
432.0 Noncontrolling interests 0.5 0.5 0.5 Stockholders' equity
11,210.5 11,186.3 10,065.1
Total Average Liabilities and Stockholders' Equity $
66,518.4 $ 66,905.2 $ 60,117.9
Nine
Months Ended September 30, 2016 September 30,
2015 Assets Interest bearing deposits $ 7,035.6 0.51 % $
5,499.0 0.29 % Securities purchased under agreements to resell - -
535.0 0.57 % Investments 3,173.5 2.87 % 1,911.3 1.88 % Loans
(including held for sale) U.S. 31,713.2 5.81 % 21,133.6 5.53 %
Non-U.S. 1,199.3 8.47 % 2,118.3 9.13 %
Total Loans 32,912.5 5.91 % 23,251.9
5.88 % Total interest earning assets / interest income
43,121.6 4.77 % 31,197.2 4.49 % Operating
lease equipment, net (including held for sale) U.S. 8,919.5 7.76 %
7,923.0 8.93 % Non-U.S. 7,970.3 7.98 % 7,386.9
8.05 % Total operating lease equipment, net 16,889.8 7.86 %
15,309.9 8.50 % Indemnification assets 382.6 -5.54 %
103.0 0.39 % Total earning assets 60,394.0
5.59 % 46,610.1 5.85 % Non-interest earning
assets Cash and due from banks 1,131.1 1,282.5 Allowance for loan
losses (389.5 ) (350.4 ) All other non-interest bearing assets
5,294.1 3,608.2 Assets of discontinued operation 478.5
112.5
Total Average Assets $ 66,908.2
$ 51,262.9
Liabilities Borrowings Deposits $
31,725.2 1.25 % $ 19,799.1 1.55 % Borrowings 17,720.2
4.14 % 17,409.8 4.49 % Total interest-bearing
liabilities 49,445.4 2.29 % 37,208.9
2.93 % Non-interest bearing deposits 1,140.8 315.6 Credit balances
of factoring clients 1,277.0 1,467.2 Other non-interest bearing
liabilities 3,099.3 2,916.4 Liabilities of discontinued operation
777.6 145.6 Noncontrolling interests 0.5 (1.3 ) Stockholders'
equity 11,167.6 9,210.5
Total
Average Liabilities and Stockholders' Equity $ 66,908.2
$ 51,262.9
CIT GROUP
INC. AND SUBSIDIARIES Select Accounts (dollars in
millions) Quarters Ended Nine Months Ended
September 30, June 30, September 30,
September 30, 2016 2016 2015
2016 2015 OTHER INCOME Fee revenues $ 31.6 $
28.0 $ 29.6 $ 92.3 $ 77.5 Factoring commissions 28.8 24.1 30.9 79.3
87.4 Gains on sales of leasing equipment 22.4 28.0 30.7 61.6 84.2
Gains on investments 10.3 6.3 2.0 12.5 6.5 Gain (loss) on OREO
sales 3.6 3.5 (3.2 ) 8.8 (3.2 ) Gains (losses) on loan and
portfolio sales 3.4 7.7 (14.7 ) 11.4 (6.0 ) Net (losses) gains on
derivatives and foreign currency exchange (15.7 ) 10.4 (20.0 ) 4.0
(34.7 ) Impairment on assets held for sale (22.0 ) (17.0 ) (23.6 )
(61.1 ) (44.7 ) Other revenues 11.5 13.3
7.5 70.3 22.1
Total other income $ 73.9 $ 104.3 $ 39.2 $
279.1 $ 189.1
OPERATING EXPENSES
Compensation and benefits $ (157.8 ) $ (155.9 ) $ (160.4 ) $ (485.9
) $ (442.5 ) Professional fees (47.2 ) (39.5 ) (57.3 ) (125.5 )
(97.6 ) Technology (32.6 ) (31.3 ) (29.9 ) (94.3 ) (77.1 ) Net
occupancy expense (17.8 ) (17.4 ) (14.8 ) (53.6 ) (32.8 )
Advertising and marketing (4.8 ) (4.4 ) (7.4 ) (14.6 ) (23.2 )
Other expenses (63.1 ) (72.9 ) (54.0 )
(192.6 ) (126.0 )
Operating expenses, before provision for
severance and facilitiesexiting and intangible asset
amortization
(323.3 ) (321.4 ) (323.8 ) (966.5 )
(799.2 ) Intangible asset amortization (6.4 ) (6.4 ) (5.0 )
(19.2 ) (6.1 ) Provision for severance and facilities exiting
activities (2.3 ) (9.7 ) (5.1 ) (32.3 )
(5.2 ) Total operating expenses $ (332.0 ) $ (337.5 ) $
(333.9 ) $ (1,018.0 ) $ (810.5 )
September 30,
June 30, December 31, September 30,
2016 2016 2015 2015 TOTAL
CASH AND INVESTMENT SECURITIES Total cash and deposits $
7,433.6 $ 8,103.9 $ 8,301.5 $ 8,259.9 Securities purchased under
agreements to resell - - - 100.0 Investment securities
3,592.4 3,229.1 2,953.8
3,618.8 Total cash and investment securities $
11,026.0 $ 11,333.0 $ 11,255.3 $
11,978.7
OTHER ASSETS Current and deferred
federal and state tax assets $ 1,087.2 $ 1,180.9 $ 1,252.5 $
1,216.7 Deposits on commercial aerospace equipment 934.1 764.6
696.0 810.7 Tax credit investments and investments in
unconsolidated subsidiaries 242.9 238.1 223.9 224.6 Property,
furniture and fixtures 186.1 191.6 197.2 200.2 Other counterparty
receivables 139.9 146.7 59.0 66.5 Fair value of derivative
financial instruments 124.1 134.0 140.7 166.9 Other real estate
owned and repossessed assets 88.7 91.6 127.3 127.9 Tax receivables,
other than income taxes 71.0 82.1 98.2 102.2 Other 445.0
459.0 502.8 516.2
Total other assets $ 3,319.0 $ 3,288.6
$ 3,297.6 $ 3,431.9
OTHER LIABILITIES
Equipment maintenance reserves $ 1,076.2 $ 1,067.2 $ 1,012.4 $
968.4 Accrued expenses and accounts payable 553.0 542.8 628.1 602.7
Current and deferred taxes payable 399.5 364.1 363.1 384.9 Security
and other deposits 198.8 197.6 263.0 296.8 Fair value of derivative
financial instruments 154.6 154.6 103.0 128.9 Accrued interest
payable 148.5 200.4 209.6 171.4 Valuation adjustment relating to
aerospace commitments 68.9 73.1 73.1 98.4 Other liabilities
568.8 454.4 506.4
744.2 Total other liabilities $ 3,168.3 $ 3,054.2
$ 3,158.7 $ 3,395.7 * Preliminary
CIT GROUP INC. AND
SUBSIDIARIES Financing and Leasing Assets (dollars in
millions) September 30, June 30,
December 31, September 30, 2016 2016
2015 2015 Commercial Banking Commercial
Finance Loans $ 8,257.2 $ 8,512.9 $ 9,118.6 $ 9,916.6 Assets
held for sale 322.8 461.3 313.6 174.4
Financing and leasing assets 8,580.0 8,974.2
9,432.2 10,091.0
Real Estate Finance Loans 5,413.9
5,566.1 5,300.6 5,086.6 Assets held for sale - -
57.0 - Financing and leasing assets 5,413.9
5,566.1 5,357.6 5,086.6
Business
Capital Loans 6,893.6 6,630.8 6,510.0 6,846.3 Operating lease
equipment, net 348.6 314.8 259.0 250.9 Assets held for sale
8.9 10.4 44.3 - Financing and leasing assets
7,251.1 6,956.0 6,813.3 7,097.2
Total Segment Loans 20,564.7 20,709.8 20,929.2 21,849.5
Operating lease equipment, net 348.6 314.8 259.0 250.9 Assets held
for sale 331.7 471.7 414.9 174.4
Financing and leasing assets 21,245.0 21,496.3
21,603.1 22,274.8
Transportation Finance
Aerospace Loans 585.3 904.4 1,762.3 1,705.6 Operating lease
equipment, net 9,571.7 9,685.6 9,765.2 9,045.2 Assets held for sale
1,055.4 764.1 34.7 102.3 Financing and
leasing assets 11,212.4 11,354.1 11,562.2
10,853.1
Rail Loans 106.3 106.9 120.9 129.0 Operating
lease equipment, net 7,034.5 6,864.2 6,592.8 6,242.1 Assets held
for sale 0.4 6.9 0.7 1.0 Financing and
leasing assets 7,141.2 6,978.0 6,714.4
6,372.1
Maritime Finance Loans 1,532.6 1,601.8 1,658.9
1,470.9 Assets held for sale 28.8 29.6 19.5
39.0 Financing and leasing assets 1,561.4
1,631.4 1,678.4 1,509.9
Total Segment Loans
2,224.2 2,613.1 3,542.1 3,305.5 Operating lease equipment, net
16,606.2 16,549.8 16,358.0 15,287.3 Assets held for sale
1,084.6 800.6 54.9 142.3 Financing and leasing
assets 19,915.0 19,963.5 19,955.0
18,735.1
Consumer and Community Banking Other Consumer
Banking Loans 2,121.3 1,977.1 1,770.0 1,649.3 Assets held for
sale 8.9 3.3 3.9 8.8 Financing and
leasing assets 2,130.2 1,980.4 1,773.9
1,658.1
Legacy Consumer Mortgages Loans 5,008.0 5,156.8
5,430.4 5,601.9 Assets held for sale 32.8 34.6
41.2 37.0 Financing and leasing assets 5,040.8
5,191.4 5,471.6 5,638.9
Total Segment Loans
7,129.3 7,133.9 7,200.4 7,251.2 Assets held for sale 41.7
37.9 45.1 45.8 Financing and leasing assets
7,171.0 7,171.8 7,245.5 7,297.0
Non-Strategic Portfolios Loans - - - - Operating lease
equipment, net - - - - Assets held for sale 1,004.1
1,093.1 1,577.5 1,791.8 Financing and leasing assets
1,004.1 1,093.1 1,577.5 1,791.8
Total financing and leasing assets $ 49,335.1 $ 49,724.7 $
50,381.1 $ 50,098.7
CIT GROUP INC. AND SUBSIDIARIES Credit Metrics
(dollars in millions) Quarters Ended
September 30, 2016 June 30, 2016 September 30,
2015 Gross Charge-offs to Average Finance Receivables
Commercial Banking(2) $ 27.7 0.54 % $ 38.0 0.72 % 22.8 0.47 %
Transportation Finance(1) 2.1 0.33 % 6.6 0.97 % 0.1 0.01 % Consumer
and Community Banking 0.7 0.04 % 0.5 0.03 % 1.6 0.14 %
Non-Strategic Portfolios(3) - - - -
42.9 12.81 %
Total CIT $ 30.5 0.40 % $ 45.1
0.58 % $ 67.4 0.94 %
Nine Months Ended September
30 2016 2015 Commercial Banking(2) $ 101.5 0.65 %
$ 75.2 0.61 % Transportation Finance(1) 28.3 1.30 % 0.8 0.03 %
Consumer and Community Banking 1.9 0.04 % 1.6 0.13 % Non-Strategic
Portfolios(3) - - 50.6 5.28 %
Total
CIT $ 131.7 0.57 % $ 128.2 0.76 %
Quarters Ended September 30, 2016 June 30,
2016 September 30, 2015 Net Charge-offs to Average
Finance Receivables Commercial Banking(2) 21.5 0.42 % $ 34.7
0.66 % $ 18.5 0.38 % Transportation Finance(1) 2.1 0.33 % 6.6 0.97
% 0.1 0.01 % Consumer and Community Banking (0.1 ) -0.01 % (0.3 )
-0.02 % 1.1 0.09 % Non-Strategic Portfolios(3) (0.1 ) -
- - 41.6 12.43 %
Total CIT $ 23.4
0.31 % $ 41.0 0.53 % $ 61.3 0.86 %
Nine Months Ended September 30
2016 2015 Commercial Banking(2) $ 88.0 0.56 % $ 63.0
0.51 % Transportation Finance(1) 28.3 1.30 % 0.7 0.03 % Consumer
and Community Banking (0.5 ) -0.01 % 1.1 0.09 % Non-Strategic
Portfolios(3) (0.1 ) - 40.9 4.27 %
Total
CIT $ 115.7 0.50 % $ 105.7 0.63 %
Non-accruing Loans to Finance
Receivables(4) September 30, 2016 June 30,
2016 December 31, 2015 September 30, 2015
Commercial Banking $ 179.9 0.87 % $ 207.8 1.00 % $ 191.1 0.91 % $
146.9 0.67 % Transportation Finance 54.4 2.45 % 18.2 0.70 % 15.4
0.43 % 4.7 0.14 % Consumer and Community Banking 14.2 0.20 % 11.7
0.16 % 5.2 0.07 % 1.8 0.02 % Non-Strategic Portfolios(4)
40.0
(4)
45.1
(4)
56.0
(4)
61.3
(4)
Total CIT $ 288.5 0.96 % $ 282.8 0.93 % $
267.7 0.85 % $ 214.7 0.66 %
PROVISION AND ALLOWANCE
COMPONENTS Provision for Credit Losses Quarters
Ended Nine Months Ended September 30, June
30, September 30, September 30, September
30, 2016 2016 2015 2016
2015 Specific allowance - impaired loans $ 9.9 $ (0.5
) $ 9.5 $ 22.7 $ 17.6 Non-specific allowance 36.3
28.6 40.4 150.9
85.3 Totals $ 46.2 $ 28.1 $ 49.9
$ 173.6 $ 102.9
Allowance for Loan Losses
September 30, June 30, December 31,
September 30, 2016 2016 2015
2015 Specific allowance - impaired loans $ 33.8 $ 29.4 $
27.8 $ 18.3 Non-specific allowance 387.9
370.0 332.4 316.7
Totals $ 421.7 $ 399.4 $ 360.2 $
335.0 Allowance for loan losses as a percentage of
total finance receivables 1.41 % 1.31 % 1.14 % 1.03 % Allowance for
loan losses as a percent of finance receivables/Commercial 1.74 %
1.62 % 1.43 % 1.31 % Allowance for loan losses plus principal loss
discount as a percent of finance receivables (before the principal
loss discount)/Commercial 1.93 % 1.83 % 1.79 % 1.78 % Allowance for
loan losses plus principal loss discount as a percent of finance
receivables (before the principal loss discount)/Consumer 6.73 %
7.20 % 8.62 % 9.84 % In certain instances, we use the term
finance receivables synonymously with “Loans”, as presented on the
balance sheet. 1) Transportation Finance charge-offs related to the
transfer of receivables to assets held for sale for the quarters
ended September 30, 2016 and June 30, 2016, totaled $2 million and
$7 million, respectively. Year to date, charge-offs related to the
transfer of receivables to assets held for sale totaled $16 million
and $1 million for 2016 and 2015, respectively. 2) Commercial
Banking charge-offs related to the transfer of receivables to
assets held for sale for the quarters ended September 30, 2016,
June 30, 2016, and September 30, 2015 totaled $6 million, $19
million, and $1 million, respectively. Year to date, charge-offs
related to the transfer of receivables to assets held for sale
totaled $27 million and $13 million for 2016 and 2015,
respectively.
3) NSP charge-offs related to the transfer
of receivables to assets held for sale totaled $39 million for the
quarter and nine months ended September 30, 2015, respectively.
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 Nine Months Ended September 30, June
30, September 30, September 30, 2016
2016 2015 2016 2015 Commercial
Banking Total interest income $ 285.0 $ 289.2 $ 251.5 $ 861.3 $
618.7 Total interest expense (76.2 ) (74.7 ) (67.3 ) (224.5 )
(196.8 ) Provision for credit losses (39.2 ) (11.4 ) (43.2 ) (124.1
) (85.6 ) Rental income on operating leases 31.9 28.7 24.6 87.7
71.5 Other income 65.9 60.9 70.7 182.3 201.6 Depreciation on
operating lease equipment (24.4 ) (21.5 ) (18.1 ) (65.9 ) (52.8 )
Operating expenses (161.2 ) (148.8 ) (146.5 )
(468.3 ) (410.5 ) Income before provision for income
taxes $ 81.8 $ 122.4 $ 71.7 $ 248.5 $
146.1 Funded new business volume $ 1,889.4 $ 2,048.4 $
1,960.2 $ 5,519.2 $ 4,779.8 Average Earning Assets $ 20,385.1 $
20,575.1 $ 18,724.0 $ 20,526.5 $ 15,846.5 Average Finance
Receivables $ 20,691.1 $ 21,040.7 $ 19,356.9 $ 20,930.4 $ 16,490.1
Transportation Finance Total interest income $ 51.3 $ 49.9 $
50.2 $ 153.9 $ 137.3 Total interest expense (146.7 ) (146.5 )
(139.7 ) (441.3 ) (439.0 ) Provision for credit losses (5.5 ) (15.6
) 1.6 (43.8 ) (5.9 ) Rental income on operating leases 527.9 536.6
505.7 1,609.0 1,500.3 Other income 6.5 11.7 23.0 37.0 72.2
Depreciation on operating lease equipment (154.7 ) (154.9 ) (137.5
) (464.9 ) (410.1 ) Maintenance and other operating lease expenses
(60.4 ) (64.9 ) (55.9 ) (181.5 ) (151.4 ) Operating expenses / loss
on debt extinguishment (61.8 ) (62.2 ) (53.6 )
(184.7 ) (184.6 ) Income before provision for income
taxes $ 156.6 $ 154.1 $ 193.8 $ 483.7 $
518.8 Funded new business volume $ 372.0 $ 461.0 $ 1,144.0 $
1,078.9 $ 2,307.3 Average Earning Assets $ 20,953.0 $ 20,945.7 $
19,009.2 $ 20,818.5 $ 18,972.2 Average Finance Receivables $
2,526.6 $ 2,726.0 $ 3,246.0 $ 2,894.4 $ 3,080.6
Consumer and
Community Banking Total interest income $ 102.9 $ 105.4 $ 73.9
$ 311.5 $ 73.9 Total interest expense (1.9 ) (5.9 ) (13.8 ) (16.7 )
(13.8 ) Provision for credit losses (1.6 ) (1.1 ) (5.1 ) (5.8 )
(5.1 ) Other income 7.1 11.7 0.1 26.9 0.1 Operating expenses
(87.7 ) (93.2 ) (59.0 ) (263.2 ) (59.0
) Income (loss) before provision for income taxes $ 18.8 $
16.9 $ (3.9 ) $ 52.7 $ (3.9 ) Funded new business
volume $ 289.0 $ 261.3 $ 29.6 $ 764.7 $ 29.6 Average Earning Assets
$ 7,658.1 $ 7,728.6 $ 5,127.5 $ 7,711.9 $ 1,728.5 Average Finance
Receivables $ 7,115.9 $ 7,155.6 $ 4,705.4 $ 7,140.9 $ 1,586.3
Non-Strategic Portfolios Total interest income $ 22.6 $ 23.2
$ 43.7 $ 70.8 $ 145.3 Total interest expense (12.7 ) (13.7 ) (27.3
) (40.9 ) (99.3 ) Provision for credit losses 0.1 - (3.2 ) 0.1 (6.3
) Rental income on operating leases 3.8 4.0 9.0 11.6 29.8 Other
income 4.9 6.7 (35.4 ) 26.1 (42.6 ) Depreciation on operating lease
equipment - - (3.5 ) - (10.8 ) Operating expenses / loss on debt
extinguishment (11.0 ) (12.1 ) (26.0 )
(35.2 ) (97.6 ) Income (loss) before provision for income
taxes $ 7.7 $ 8.1 $ (42.7 ) $ 32.5 $ (81.5 )
Funded new business volume $ 45.7 $ 61.1 $ 184.4 $ 151.1 $ 601.3
Average Earning Assets $ 1,283.8 $ 1,384.5 $ 2,284.3 $ 1,398.7 $
2,514.6 Average Finance Receivables $ - $ - $ 1,339.1 $ - $ 1,276.6
Corporate and Other Total interest income $ 28.3 $ 27.6 $
18.4 $ 83.3 $ 27.3 Total interest expense (41.9 ) (41.7 ) (32.2 )
(124.9 ) (67.9 ) Other income (10.5 ) 13.3 (19.2 ) 6.8 (42.2 )
Operating expenses / loss on debt extinguishment and deposit
redemption (15.4 ) (25.3 ) (49.1 )
(77.4 ) (59.2 ) Loss before provision for income taxes $
(39.5 ) $ (26.1 ) $ (82.1 ) $ (112.2 ) $ (142.0 ) Average Earning
Assets $ 8,725.4 $ 8,595.3 $ 7,303.1 $ 8,662.6 $ 6,081.1
Total
CIT Total interest income $ 490.1 $ 495.3 $ 437.7 $ 1,480.8 $
1,002.5 Total interest expense (279.4 ) (282.5 ) (280.3 ) (848.3 )
(816.8 ) Provision for credit losses (46.2 ) (28.1 ) (49.9 ) (173.6
) (102.9 ) Rental income on operating leases 563.6 569.3 539.3
1,708.3 1,601.6 Other income 73.9 104.3 39.2 279.1 189.1
Depreciation on operating lease equipment (179.1 ) (176.4 ) (159.1
) (530.8 ) (473.7 ) Maintenance and other operating lease expenses
(60.4 ) (64.9 ) (55.9 ) (181.5 ) (151.4 ) Operating expenses / loss
on debt extinguishment (337.1 ) (341.6 )
(334.2 ) (1,028.8 ) (810.9 ) Income from continuing
operations before provision for income taxes $ 225.4 $ 275.4
$ 136.8 $ 705.2 $ 437.5 Funded new
business volume $ 2,596.1 $ 2,831.8 $ 3,318.2 $ 7,513.9 $ 7,718.0
Average Earning Assets $ 59,005.4 $ 59,229.2 $ 52,448.1 $ 59,118.2
$ 45,142.9 Average Finance Receivables $ 30,333.6 $ 30,922.3 $
28,647.4 $ 30,965.7 $ 22,433.6
CIT GROUP INC. AND SUBSIDIARIES Segment Margin
(dollars in millions) Quarters Ended Nine
Months Ended September June 30, September
30, September 30, 2016 2016 2015
2016 2015 Commercial Banking Total
Segment AEA $ 20,385.1 $ 20,575.1 $ 18,724.0 $ 20,526.5 $
15,846.5 Net Finance Revenue 216.3 221.7 190.7 658.6 440.6 Gross
yield 6.22 % 6.18 % 5.90 % 6.16 % 5.81 % Net Finance Margin 4.24 %
4.31 % 4.07 % 4.28 % 3.71 %
Average Earning Assets (AEA)
Commercial Finance $ 8,861.0 $ 9,260.5 $ 8,906.7 $ 9,212.2 $
7,480.2 Real Estate Finance 5,503.2 5,453.8 3,991.0 5,423.7 2,551.8
Business Capital 6,020.9 5,860.8 5,826.3 5,890.6 5,814.5
Net
Finance Revenue Commercial Finance $ 88.5 $ 94.5 $ 79.9 $ 273.6
$ 169.0 Real Estate Finance 51.5 51.6 37.1 157.5 58.2 Business
Capital 76.3 75.6 73.7 227.5 213.4
Gross yield Commercial
Finance 5.31 % 5.38 % 4.87 % 5.24 % 4.58 % Real Estate Finance 5.13
% 5.18 % 5.08 % 5.26 % 4.54 % Business Capital 8.54 % 8.38 % 8.03 %
8.44 % 7.94 %
Net Finance Margin Commercial Finance 4.00 %
4.08 % 3.59 % 3.96 % 3.01 % Real Estate Finance 3.74 % 3.78 % 3.72
% 3.87 % 3.04 % Business Capital 5.07 % 5.16 % 5.06 % 5.15 % 4.89 %
Transportation Finance AEA $ 20,953.0 $ 20,945.7 $
19,009.2 $ 20,818.5 $ 18,972.2 Net Finance Revenue 217.4 220.2
222.8 675.2 637.1 Gross yield 11.06 % 11.20 % 11.70 % 11.29 % 11.51
% Net Finance Margin 4.15 % 4.21 % 4.69 % 4.32 % 4.48 %
Average
Earning Assets (AEA) Aerospace $ 12,180.5 $ 12,255.8 $ 11,251.2
$ 12,143.7 $ 11,614.2 Rail 7,164.1 7,036.7 6,314.7 7,025.5 6,123.3
Maritime Finance 1,608.4 1,653.2 1,443.3 1,649.3 1,234.7
Net
Finance Revenue Aerospace $ 124.8 $ 110.6 $ 111.2 $ 355.0 $
311.9 Rail 77.5 94.0 98.7 271.7 293.0 Maritime Finance 15.1 15.6
12.9 48.5 32.2
Gross yield Aerospace 11.04 % 10.87 % 10.98 %
11.04 % 10.58 % Rail 12.38 % 13.16 % 14.50 % 13.08 % 14.58 %
Maritime Finance 5.30 % 5.30 % 5.04 % 5.45 % 5.04 %
Net Finance
Margin Aerospace 4.10 % 3.61 % 3.95 % 3.90 % 3.58 % Rail 4.33 %
5.34 % 6.25 % 5.16 % 6.38 % Maritime Finance 3.76 % 3.77 % 3.58 %
3.92 % 3.48 %
Consumer and Community Banking Total
Segment AEA $ 7,658.1 $ 7,728.6 $ 5,127.5 $ 7,711.9 $ 1,728.5
Net Finance Revenue 101.0 99.5 60.1 294.8 60.1 Gross yield 5.37 %
5.46 % 5.76 % 5.39 % 5.70 % Net Finance Margin 5.28 % 5.15 % 4.69 %
5.10 % 4.64 %
Average Earning Assets (AEA) Other Consumer
Banking $ 2,175.1 $ 2,071.7 $ 1,170.0 $ 2,060.5 $ 394.8 Legacy
Consumer Mortgages 5,483.0 5,656.9 3,957.5 5,651.4 1,333.7
Net
Finance Revenue Other Consumer Banking $ 40.5 $ 37.1 $ 13.3 $
111.6 $ 13.3 Legacy Consumer Mortgages 60.5 62.4 46.8 183.2 46.8
Gross yield Other Consumer Banking 3.52 % 3.58 % 3.48 % 3.59
% 3.44 % Legacy Consumer Mortgages 6.11 % 6.15 % 6.44 % 6.04 % 6.37
%
Net Finance Margin Other Consumer Banking 7.45 % 7.16 %
4.56 % 7.22 % 4.49 % Legacy Consumer Mortgages 4.41 % 4.41 % 4.73 %
4.32 % 4.68 %
Non-Strategic Portfolios AEA $ 1,283.8
$ 1,384.5 $ 2,284.3 $ 1,398.7 $ 2,514.6 Net Finance Revenue 13.7
13.5 21.9 41.5 65.0 Gross yield 8.23 % 7.86 % 9.23 % 7.85 % 9.28 %
Net Finance Margin 4.27 % 3.90 % 3.83 % 3.96 % 3.45 % Gross
Yield includes interest income and rental income as a % of AEA. Net
Finance Margin (NFM) reflects Net Finance Revenue divided by AEA.
CIT GROUP INC. AND
SUBSIDIARIES Non-GAAP Disclosures (dollars in
millions)
Non-GAAP financial measures disclosed by
management are meant to provide additional information and insight
relative to business trends to investors and, in certain cases, to
present financial information as measured by rating agencies and
other users of financial information. These measures are not in
accordance with, or a substitute for, GAAP and may be different
from, or inconsistent with, non-GAAP financial measures used by
other companies.
Quarters Ended Nine Months Ended September
30, June 30, September 30,
September 30,
Total Net Revenues(1) 2016 2016
2015 2016 2015 Interest income $ 490.1 $ 495.3
$ 437.7 $ 1,480.8 $ 1,002.5 Rental income on operating leases
563.6 569.3 539.3
1,708.3 1,601.6 Finance revenue 1,053.7
1,064.6 977.0 3,189.1 2,604.1 Interest expense (279.4 ) (282.5 )
(280.3 ) (848.3 ) (816.8 ) Depreciation on operating lease
equipment (179.1 ) (176.4 ) (159.1 ) (530.8 ) (473.7 ) Maintenance
and other operating lease expenses (60.4 ) (64.9 )
(55.9 ) (181.5 ) (151.4 )
Net
finance revenue (NFR) 534.8 540.8 481.7 1,628.5 1,162.2 Other
income 73.9 104.3 39.2
279.1 189.1
Total net
revenues $ 608.7 $ 645.1 $ 520.9 $ 1,907.6
$ 1,351.3
NFR as a % of AEA
3.63 % 3.65 % 3.67 % 3.67 %
3.43 %
Net Operating Lease Revenues(2)
Rental income on operating leases $ 563.6 $ 569.3 $ 539.3 $ 1,708.3
$ 1,601.6 Depreciation on operating lease equipment (179.1 ) (176.4
) (159.1 ) $ (530.8 ) $ (473.7 ) Maintenance and other operating
lease expenses (60.4 ) (64.9 ) (55.9 ) $
(181.5 ) $ (151.4 )
Net operating lease revenue $
324.1 $ 328.0 $ 324.3 $ 996.0 $
976.5
September 30, June 30,
December 31, September 30, Earning
Assets(3) 2016 2016 2015
2015 Loans $ 29,918.2 $ 30,456.8 $ 31,671.7 $ 32,406.2
Operating lease equipment, net 16,954.8 16,864.6 16,617.0 15,538.2
Assets held for sale 2,462.1 2,403.3 2,092.4 2,154.3 Credit
balances of factoring clients (1,228.9 ) (1,215.2 ) (1,344.0 )
(1,609.3 ) Interest bearing cash 6,513.1 7,082.8 6,820.3 6,606.3
Investment securities 3,592.4 3,229.1 2,953.8 3,618.8 Securities
purchased under agreements to resell - - - 100.0 Indemnification
assets 362.2 375.5 414.8
465.0 Total earning assets $ 58,573.9 $
59,196.9 $ 59,226.0 $ 59,279.5
Average Earning Assets (for the respective quarters) $
59,005.4 $ 59,229.2 $ 59,141.5 $
52,448.1
Quarters Ended Nine Months
Ended September 30, June 30, September 30,
September 30,
Adjusted Operating Expenses 2016 2016
2015 2016 2015 Operating expenses $ (332.0 ) $
(337.5 ) $ (333.9 ) $ (1,018.0 ) $ (810.5 ) Intangible asset
amortization 6.4 6.4 5.0 19.2 6.1 Provision for severance and
facilities exiting activities 2.3 9.7
5.1 32.3 5.2
Operating expenses exclusive of restructuring costs and intangible
assets amortization(4) $ (323.3 ) $ (321.4 ) $ (323.8 ) $ (966.5 )
$ (799.2 ) Operating expenses (exclusive of
restructuring costs and intangible assets amortization) as a % of
AEA (2.19 %) (2.17 %) (2.47 %)
(2.18 %) (2.36 %)
Total Net Revenue $
608.7 $ 645.1 $ 520.9 $ 1,907.6 $ 1,351.3 Operating expenses
exclusive of restructuring costs and intangible assets
amortization(4) $ (323.3 ) $ (321.4 ) $ (323.8 ) $ (966.5 ) $
(799.2 ) Net Efficiency Ratio(5) 53.1 % 49.8 % 62.2 % 50.7 % 59.1 %
September 30, June 30, December 31,
September 30, 2016 2016 2015
2015 Continuing Operations Total Assets(6)
Total Assets $ 65,965.5 $ 66,700.3 $ 67,401.5 $ 68,019.0 Assets of
discontinued operation (452.9 ) (469.1 )
(500.5 ) (513.8 ) Continuing operations total assets $
65,512.6 $ 66,231.2 $ 66,901.0 $ 67,505.2
September 30, June 30,
December 31, September 30, Tangible Book
Value(7) 2016 2016 2015 2015
Total common stockholders' equity $ 11,237.0 $ 11,124.1 $ 10,978.1
$ 10,798.7 Less: Goodwill (1,170.5 ) (1,169.7 ) (1,198.3 ) (1,135.1
) Intangible assets (161.3 ) (168.9 ) (176.3 )
(201.3 ) Tangible book value 9,905.2 9,785.5 9,603.5 9,462.3
Less: Disallowed deferred tax asset (804.5 ) (842.4 )
(904.5 ) (867.4 ) Adjusted tangible common equity(8)
$ 9,100.7 $ 8,943.1 $ 8,699.0 $ 8,594.9
Average adjusted tangible common equity $ 9,051.9 $ 8,971.5
$ 8,675.5 $ 8,387.4 (1) Total net revenues are
the combination of net finance revenue and other income and is an
aggregation of all sources of revenue for the Company. Total net
revenues are used by management to monitor business performance.
(2) Total net operating lease revenues are the combination of
rental income on operating leases less depreciation on operating
lease equipment and maintenance and other operating lease expenses.
Total net operating lease revenues are used by management to
monitor portfolio performance. (3) Earning assets are utilized in
certain revenue and earnings ratios. Earning assets are net of
credit balances of factoring clients. This net amount represents
the amounts we fund. (4) Operating expenses exclusive of
restructuring costs and intangible amortization is a non-GAAP
measure used by management to compare period over period expenses.
(5) Net efficiency ratio is a non-GAAP measurement used by
management to measure operating expenses (before restructuring
costs and intangible amortization) to the level of total net
revenues. (6) Total assets from continuing operations is a non-GAAP
measurement used by management to analyze the total asset change on
a more consistent basis. (7) Tangible book value is a non-GAAP
measure, which represents an adjusted common shareholders’ equity
balance that has been reduced by goodwill and intangible assets.
Tangible book value is used to compute a per common share amount,
which is used to evaluate our use of equity. (8) Return on average
tangible common equity is adjusted to remove the impact of
intangible amortization, goodwill impairment and the impact from
valuation allowance reversals from income from continuing
operations, while the average tangible common equity is reduced for
disallowed deferred tax assets. Return on average tangible common
equity is another metric used to evaluate our use of equity.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20161025005560/en/
CIT MEDIA RELATIONS:Matt Klein,
973-597-2020DirectorMatt.Klein@cit.comorCIT INVESTOR
RELATIONS:Barbara Callahan, 973-740-5058Senior Vice
PresidentBarbara.Callahan@cit.com
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