CIT Group Inc. (NYSE: CIT), a leading provider of financing to small businesses and middle market companies, today reported net income for the quarter ended June 30, 2010 of $142.1 million, $0.71 per diluted share, up from $97.3 million and $0.49 per diluted share last quarter.
“During the second quarter we continued to advance our key corporate initiatives,” said John A. Thain, Chairman and Chief Executive Officer. “We improved our funding flexibility, repaid higher cost debt, streamlined our portfolio and largely completed the build-out of our senior management team. We remain committed to increasing the value of our commercial franchises and supporting the small business and middle market sectors that are vital to the U.S. economy.”
Summary of Financial Results
Net income increased from the quarter ended March 31, 2010, as gains on sales of assets and recoveries of pre-FSA charged-off receivables more than offset a higher provision for credit losses and costs for an employee retention program announced last quarter. The second quarter results include pre-tax net accretion and lower depreciation of $407 million resulting from fresh start accounting (“FSA”) balance sheet adjustments recorded in December 2009.
Net interest revenue declined $31 million on lower financing assets and less net FSA accretion. However, total net revenues1 increased 28% sequentially as an increase in other income offset the decline in net interest revenue.
Net finance revenue1 (which includes operating lease rentals and depreciation) as a percentage of average earning assets was 4.03% compared to 4.09% last quarter and includes a 3.72% benefit from FSA. Excluding the impacts from FSA and prepayment penalty fees on high cost debt, margin was 0.68% up slightly from the first quarter.
Other income (excluding operating lease rentals) increased from last quarter due to gains on receivable sales and recoveries on receivables charged-off prior to the adoption of FSA. The prior quarter included losses on foreign currency exposures that were largely hedged during the second quarter.
Operating expenses increased from the first quarter as costs related to an employee retention program established last quarter more than offset declines in all other expense categories.
Continued focus on balance sheet optimization resulted in total assets declining $3.1 billion to $54.9 billion. Strategic asset sales, net portfolio collections and $800 million in new financings, enabled the paydown of $3 billion of debt. New business volume of over $1 billion was up 14% from last quarter. Assets held for sale declined during the quarter as the Company completed the sales of its Australia and New Zealand vendor business and approximately $580 million of student lending receivables.
Preliminary Tier 1 and Total Capital ratios improved to 17.2% and 17.9%, respectively, from 15.5% and 15.9% at March 31, 2010, benefiting from both growth in common equity and a decline in risk-weighted assets.
Credit
Reported net charge-offs of $106 million were up $64 million from the first quarter. Non-accrual loans of $2.1 billion increased $120 million from the first quarter, driven primarily by Corporate Finance. These credit metrics, which are after the application of fresh start accounting (post-FSA), include asset marks and other FSA-related items. However, net charge-offs do not reflect recoveries of pre-FSA charge-offs recorded in other income, which were $98 million in the second quarter and $44 million in the first quarter. In aggregate, the charge-offs, net of recoveries recorded in other income, were at levels similar to the first quarter.
Management also evaluates credit performance using credit metrics that exclude the impact of fresh start accounting (pre-FSA). On this basis, gross charge-offs were $252 million, up $16 million from last quarter, driven by certain real estate and energy-related loans. Non-accrual loans of $3.0 billion decreased $54 million from the first quarter.
The provision for credit losses increased from the first quarter, reflecting the recording of non-specific reserves and some incremental deterioration on loans previously discounted in FSA.
Operating Highlights
The sequential quarter improvement in Corporate Finance earnings was driven by higher gains on asset sales and recoveries on pre-FSA loan balances. Corporate Finance completed sales of a joint venture and other assets totaling approximately $890 million, proceeds of which were used to pay down debt. Corporate Finance new business volume increased from the first quarter. Net charge-offs both pre- and post-FSA increased from last quarter due to real estate and energy-related loans. However, net of recoveries recorded in other income, charge-offs were at similar levels to the first quarter. Post-FSA, non-accrual loans increased from March 31, 2010 due to the addition of loans in communications and media industries. On a pre-FSA basis, non-accrual loans were flat.
The improvement in Transportation Finance results reflects higher operating lease margins. The aerospace fleet remained fully utilized. During the quarter 6 new aircraft valued at $0.3 billion were delivered. Lease commitments are in place for all 19 aircraft to be delivered over the next twelve months. Rail revenue increased as utilization improved from 90% to 93% on modest increases in activity across most major car types, and rents improved on usage-based contracts. Non-accrual loans declined and no charge-offs were recorded.
Trade Finance narrowed its loss, which is being driven by high cost of funds. At the end of the quarter the business closed a new committed conduit facility, which will reduce the future cost of funds. The existing client base stabilized and the rate of attrition subsided. Factoring volume totaled $6.3 billion, flat with the first quarter, contributing to level factoring commissions. Credit metrics remained comparable with the first quarter as charge-offs and non-accrual loans remain at relatively low levels.
The decline in Vendor Finance earnings from last quarter reflected reserve strengthening related to a liquidating consumer portfolio, lower asset levels and higher allocated interest costs. Vendor Finance completed the sale of its Australia and New Zealand business on June 30, 2010, and established a committed funding facility for U.K. assets. New business volume was flat with last quarter. Post-FSA, net charge-offs increased from last quarter, but on a pre-FSA basis, net charge-offs declined. Recoveries recorded in other income totaled approximately $15 million in the second quarter and approximately $20 million in the first quarter. On both a pre- and post-FSA basis, non-accrual loans decreased from March 31, 2010.
CIT Bank remains well capitalized and liquid. The preliminary total capital ratio was 59.4% and the leverage ratio was 20.7%. Total deposits were $4.7 billion, down slightly from last quarter. The bank closed several new commercial loans this quarter. New committed loan volume rose to approximately $180 million from approximately $35 million in the first quarter, of which approximately $85 million was funded.
Liquidity and Financing
Total cash at June 30, 2010 was $10.7 billion, up from last quarter, and consisted of $6.1 billion of cash at the bank holding company, $1.7 billion at CIT Bank, $1.7 billion at operating subsidiaries and $1.2 billion in other restricted cash.
During the second quarter, the Company completed a new $650 million committed conduit facility for Trade Finance and a £100 million committed U.K. Vendor Finance conduit facility. These transactions, when combined with first quarter financings, aggregate over $2.5 billion and highlight the Company's success in re-accessing more cost-efficient funding sources.
We continued to prepay high cost first lien debt during the quarter. $2.3 billion was pre-paid during the quarter and approximately $450 million just after quarter-end. $750 million was pre-paid in the first quarter, leaving $4 billion of the original $7.5 billion first lien debt outstanding. Subject to market conditions, we intend to further pay down and/or refinance the remaining first lien debt.
See attached tables for financial statements and supplemental financial information.
Conference Call and Web cast
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 Web cast today, July 27, 2010, at 8:00 a.m. (EDT). Interested parties may access the conference call live by dialing 866-831-6272 for U.S. and Canadian callers or 617-213-8859 for international callers and reference access code “CIT Group” or access the audio web cast at the following website: http://ir.cit.com. An audio replay of the call will be available until 11:59 p.m. (EDT) August 10, 2010, by dialing 888-286-8010 for U.S. and Canadian callers or 617-801-6888 for international callers with the access code 81354530, or at the following website: http://ir.cit.com.
Individuals interested in receiving future updates on CIT via e-mail can register at http://newsalerts.cit.com
About CIT
Founded in 1908, CIT (NYSE: CIT) is a bank holding company with more than $40 billion in finance and leasing assets. It provides financing and leasing capital to its more than one million small business and middle market clients and their customers across more than 30 industries. CIT maintains leadership positions in small business and middle market lending, factoring, retail finance, aerospace, equipment and rail leasing, and global vendor finance. www.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 refining and implementing its strategy and business plan, the risk that CIT's changes in its senior management team affects CIT's ability to react to and address key business and regulatory issues, the risk that CIT is delayed in transitioning certain business platforms to CIT Bank and may not succeed in developing a stable, long-term source of funding, and the risk that CIT continues to be subject to liquidity constraints and higher funding costs. We describe these and other risks that could affect our actual results in Item 1A, “Risk Factors”, of our latest Annual Report on Form 10-K 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 is a non-GAAP measurement used by management to gauge portfolio performance. ‘Pre FSA’ is non-GAAP and provides the user with additional data that is more comparable to historical and peer disclosures.
1 Total net revenue and net finance revenue are non-GAAP measures, see page 10 for reconciliation of non-GAAP to GAAP financial information.
| CIT GROUP INC. AND SUBSIDIARIES | ||||||||||||||
| UNAUDITED CONSOLIDATED INCOME STATEMENT | ||||||||||||||
| (dollars in millions, except per share data) | ||||||||||||||
| Quarter Ended | Six Months Ended | |||||||||||||
| June 30, | March 31, | June 30, | ||||||||||||
| 2010 | 2010 | 2010 | ||||||||||||
| Interest income | ||||||||||||||
| Interest and fees on loans | $ | 987.2 | $ | 1,043.5 | $ | 2,030.7 | ||||||||
| Interest and dividends on investments | 6.3 | 5.5 | 11.8 | |||||||||||
| Total interest income | 993.5 | 1,049.0 | 2,042.5 | |||||||||||
| Interest expense | ||||||||||||||
| Interest on long-term borrowings | (784.7 | ) | (807.7 | ) | (1,592.4 | ) | ||||||||
| Interest on deposits | (28.9 | ) | (30.1 | ) | (59.0 | ) | ||||||||
| Total interest expense | (813.6 | ) | (837.8 | ) | (1,651.4 | ) | ||||||||
| Net interest revenue | 179.9 | 211.2 | 391.1 | |||||||||||
| Provision for credit losses | (260.7 | ) | (186.6 | ) | (447.3 | ) | ||||||||
| Net interest revenue, after credit provision | (80.8 | ) | 24.6 | (56.2 | ) | |||||||||
| Other income | ||||||||||||||
| Rental income on operating leases | 419.7 | 418.2 | 837.9 | |||||||||||
| Other | 330.6 | 132.2 | 462.8 | |||||||||||
| Total other income | 750.3 | 550.4 | 1,300.7 | |||||||||||
| Other expenses | ||||||||||||||
| Depreciation on operating lease equipment | (179.0 | ) | (173.5 | ) | (352.5 | ) | ||||||||
| Operating expenses | (277.0 | ) | (261.9 | ) | (538.9 | ) | ||||||||
| Total other expenses | (456.0 | ) | (435.4 | ) | (891.4 | ) | ||||||||
| Income before provision for income taxes | 213.5 | 139.6 | 353.1 | |||||||||||
| Provision for income taxes | (71.1 | ) | (42.5 | ) | (113.6 | ) | ||||||||
| Net income before attribution of noncontrolling interests | 142.4 | 97.1 | 239.5 | |||||||||||
| Net (income) loss attributable to noncontrolling interests, after tax | (0.3 | ) | 0.2 | (0.1 | ) | |||||||||
| Net income | $ | 142.1 | $ | 97.3 | $ | 239.4 | ||||||||
| Basic earnings per common share | $ | 0.71 | $ | 0.49 | $ | 1.20 | ||||||||
| Average number of common shares - basic (thousands) | 200,075 | 200,040 | 200,057 | |||||||||||
| Diluted earnings per common share | $ | 0.71 | $ | 0.49 | $ | 1.19 | ||||||||
| Average number of common shares - diluted (thousands) | 200,644 | 200,076 | 200,359 | |||||||||||
| CIT GROUP INC. AND SUBSIDIARIES | |||||||||||
| UNAUDITED CONSOLIDATED BALANCE SHEETS | |||||||||||
| (dollars in millions, except per share data) | |||||||||||
| At June 30, | At March 31, | At December 31, | |||||||||
| 2010 | 2010 | 2009 | |||||||||
| Assets | |||||||||||
| Total cash and deposits | $ | 10,666.4 | $ | 10,015.6 | $ | 9,825.9 | |||||
| Trading assets at fair value - derivatives | 216.1 | 93.5 | 44.1 | ||||||||
| Assets held for sale | 572.5 | 1,368.8 | 343.8 | ||||||||
| Loans | 28,883.2 | 32,025.7 | 34,865.8 | ||||||||
| Allowance for loan losses | (337.8 | ) | (180.8 | ) | - | ||||||
| Total loans, net of allowance for loan losses | 28,545.4 | 31,844.9 | 34,865.8 | ||||||||
| Operating lease equipment, net | 10,950.7 | 10,931.0 | 10,910.0 | ||||||||
| Goodwill and intangible assets, net | 407.9 | 440.9 | 464.5 | ||||||||
| Unsecured counterparty receivable | 818.7 | 914.6 | 1,094.5 | ||||||||
| Other assets | 2,739.1 | 2,451.2 | 2,480.5 | ||||||||
| Total assets | $ | 54,916.8 | $ | 58,060.5 | $ | 60,029.1 | |||||
| Liabilities | |||||||||||
| Deposits | $ | 4,708.9 | $ | 4,853.6 | $ | 5,218.6 | |||||
| Trading liabilities at fair value - derivatives | 46.9 | 55.7 | 41.9 | ||||||||
| Credit balances of factoring clients | 877.3 | 881.1 | 892.9 | ||||||||
| Other liabilities | 2,373.3 | 2,246.8 | 2,211.3 | ||||||||
| Long-term borrowings | |||||||||||
| Secured borrowings | 12,403.1 | 13,326.2 | 14,346.5 | ||||||||
| Secured credit facility and expansion facility | 4,596.9 | 6,931.9 | 7,716.6 | ||||||||
| Series A notes | 18,882.2 | 18,807.0 | 18,733.6 | ||||||||
| Series B notes | 2,194.7 | 2,196.5 | 2,198.2 | ||||||||
| Senior unsecured notes | 199.6 | 232.7 | 268.1 | ||||||||
| Total long-term borrowings | 38,276.5 | 41,494.3 | 43,263.0 | ||||||||
| Total liabilities | 46,282.9 | 49,531.5 | 51,627.7 | ||||||||
| Equity | |||||||||||
| Stockholders' equity | |||||||||||
| Common stock | 2.0 | 2.0 | 2.0 | ||||||||
| Paid-in capital | 8,419.1 | 8,403.8 | 8,398.0 | ||||||||
| Accumulated earnings | 225.0 | 82.9 | - | ||||||||
| Accumulated other comprehensive (loss) income | (9.7 | ) | 39.2 | - | |||||||
| Treasury stock, at cost | (4.0 | ) | (0.1 | ) | - | ||||||
| Total common stockholders' equity | 8,632.4 | 8,527.8 | 8,400.0 | ||||||||
| Noncontrolling interests | 1.5 | 1.2 | 1.4 | ||||||||
| Total equity | 8,633.9 | 8,529.0 | 8,401.4 | ||||||||
| Total liabilities and equity | $ | 54,916.8 | $ | 58,060.5 | $ | 60,029.1 | |||||
| Book Value Per Common Share | |||||||||||
| Book value per common share | $ | 43.11 | $ | 42.63 | $ | 41.99 | |||||
| Tangible book value per common share | $ | 41.07 | $ | 40.43 | $ | 39.67 | |||||
| CIT GROUP INC. AND SUBSIDIARIES | |||||||||||||||||||||||||
| SELECT BALANCES | |||||||||||||||||||||||||
| (dollars in millions) | |||||||||||||||||||||||||
| BALANCE SHEET | |||||||||||||||||||||||||
| Fresh Start Accounting: | At June 30, 2010 | At March 31, 2010 | At December 31, 2009 | ||||||||||||||||||||||
| (Discount) / Premium | Accretable | Non-accretable | Accretable | Non-accretable | Accretable | Non-accretable | |||||||||||||||||||
Loans and assets held for sale | $ | (2,585.5 | ) | $ | (1,225.4 | ) | $ | (3,030.0 | ) | $ | (1,566.0 | ) | $ | (3,507.3 | ) | $ | (1,755.1 | ) | |||||||
| Operating lease equipment, net | (3,109.3 | ) | - | (3,153.4 | ) | - | (3,239.7 | ) | - | ||||||||||||||||
Goodwill and intangible assets | 168.5 | 239.4 | 201.5 | 239.4 | 225.1 | 239.4 | |||||||||||||||||||
| Other assets | (261.2 | ) | - | (285.2 | ) | - | (321.0 | ) | - | ||||||||||||||||
| Total assets | $ | (5,787.5 | ) | $ | (986.0 | ) | $ | (6,267.1 | ) | $ | (1,326.6 | ) | $ | (6,842.9 | ) | $ | (1,515.7 | ) | |||||||
| Deposits | $ | 112.3 | $ | - | $ | 121.6 | $ | - | $ | 131.4 | $ | - | |||||||||||||
| Long-term borrowings | (3,195.0 | ) | - | (3,284.9 | ) | - | (3,394.4 | ) | - | ||||||||||||||||
| Other liabilities | - | 285.4 | - | 306.7 | - | 336.6 | |||||||||||||||||||
| Total liabilities | $ | (3,082.7 | ) | $ | 285.4 | $ | (3,163.3 | ) | $ | 306.7 | $ | (3,263.0 | ) | $ | 336.6 | ||||||||||
| Other Assets | At June 30, | At March 31, | At December 31, | ||||||||||||||||||||||
| 2010 | 2010 | 2009 | |||||||||||||||||||||||
| Deposits on commercial aerospace equipment | $ | 619.8 | $ | 647.7 | $ | 635.9 | |||||||||||||||||||
| Equity and debt investments | 344.7 | 338.4 | 373.6 | ||||||||||||||||||||||
| Accrued interest and dividend receivables | 172.2 | 206.9 | 214.7 | ||||||||||||||||||||||
| Prepaid expenses | 114.0 | 104.9 | 111.3 | ||||||||||||||||||||||
| Furniture and fixtures | 91.8 | 93.8 | 102.8 | ||||||||||||||||||||||
| Retained interests in securitizations | - | - | 139.7 | ||||||||||||||||||||||
| Miscellaneous receivables and other assets | 1,396.6 | 1,059.5 | 902.5 | ||||||||||||||||||||||
| Total other assets | $ | 2,739.1 | $ | 2,451.2 | $ | 2,480.5 | |||||||||||||||||||
| INCOME STATEMENT | Quarters Ended | Six Months Ended | |||||||||||||||||||||||
| Fresh Start Accounting: | June 30, 2010 | March 31, 2010 | June 30, 2010 | ||||||||||||||||||||||
| Accretion / (Amortization) | |||||||||||||||||||||||||
| Interest income | $ | 417.8 | $ | 451.6 | $ | 869.4 | |||||||||||||||||||
| Interest expense | (80.1 | ) | (100.7 | ) | (180.8 | ) | |||||||||||||||||||
| Rental income on operating leases | (24.8 | ) | (33.8 | ) | (58.6 | ) | |||||||||||||||||||
| Other income | 23.9 | 35.8 | 59.7 | ||||||||||||||||||||||
| Depreciation expense | 70.1 | 67.8 | 137.9 | ||||||||||||||||||||||
| Total | $ | 406.9 | $ | 420.7 | $ | 827.6 | |||||||||||||||||||
| Other Income (Non-spread revenue) | |||||||||||||||||||||||||
| Fees and commissions | $ | 20.4 | $ | 31.2 | $ | 51.6 | |||||||||||||||||||
| Factoring commissions | 34.9 | 36.2 | 71.1 | ||||||||||||||||||||||
| Gain on loan and portfolio sales | 94.4 | 33.4 | 127.8 | ||||||||||||||||||||||
| Gains on sales of leasing equipment | 51.7 | 29.0 | 80.7 | ||||||||||||||||||||||
| Gain (loss) on non-qualifying hedge derivatives and foreign currency exchange | 7.8 | (77.2 | ) | (69.4 | ) | ||||||||||||||||||||
| Recoveries of pre-FSA charge-offs | 97.5 | 43.8 | 141.3 | ||||||||||||||||||||||
| GSI receivable accretion | 23.9 | 35.8 | 59.7 | ||||||||||||||||||||||
| Total other income | $ | 330.6 | $ | 132.2 | $ | 462.8 | |||||||||||||||||||
| Operating Expenses | |||||||||||||||||||||||||
| Salaries and general operating expenses: | |||||||||||||||||||||||||
| Compensation and benefits | $ | 179.3 | $ | 140.1 | $ | 319.4 | |||||||||||||||||||
| Professional fees | 25.6 | 29.7 | 55.3 | ||||||||||||||||||||||
| Technology | 18.2 | 19.2 | 37.4 | ||||||||||||||||||||||
| Occupancy expense | 11.3 | 14.9 | 26.2 | ||||||||||||||||||||||
| Provision for severance and facilities exiting activities | 2.6 | 11.9 | 14.5 | ||||||||||||||||||||||
| Other expenses | 40.0 | 46.1 | 86.1 | ||||||||||||||||||||||
| Total operating expenses | $ | 277.0 | $ | 261.9 | $ | 538.9 | |||||||||||||||||||
| CIT GROUP INC. AND SUBSIDIARIES | ||||||||||||||||||||||
| (dollars in millions) | ||||||||||||||||||||||
| CREDIT METRICS - AFTER FRESH START ACCOUNTING | Quarter Ended | Quarter Ended | Six Months Ended | |||||||||||||||||||
Gross Charge-offs To Average Finance Receivables | June 30, 2010 | March 31, 2010 | June 30, 2010 | |||||||||||||||||||
| Corporate Finance | $ | 53.2 | 1.88 | % | $ | 26.9 | 0.89 | % | $ | 80.1 | 1.36 | % | ||||||||||
| Transportation Finance | - | - | - | - | - | - | ||||||||||||||||
| Trade Finance | 12.5 | 1.90 | % | 2.7 | 0.38 | % | 15.2 | 1.12 | % | |||||||||||||
| Vendor Finance | 38.2 | 2.38 | % | 10.3 | 0.53 | % | 48.5 | 1.36 | % | |||||||||||||
| Commercial Segments | 103.9 | 1.88 | % | 39.9 | 0.65 | % | 143.8 | 1.23 | % | |||||||||||||
| Consumer | 9.4 | 0.42 | % | 4.5 | 0.19 | % | 13.9 | 0.30 | % | |||||||||||||
| Total | $ | 113.3 | 1.46 | % | $ | 44.4 | 0.52 | % | $ | 157.7 | 0.97 | % | ||||||||||
Net Charge-offs To Average Finance Receivables* | ||||||||||||||||||||||
| Corporate Finance | $ | 51.9 | 1.84 | % | $ | 25.6 | 0.84 | % | $ | 77.5 | 1.32 | % | ||||||||||
| Transportation Finance | - | - | - | - | - | - | ||||||||||||||||
| Trade Finance | 12.4 | 1.89 | % | 2.7 | 0.38 | % | 15.1 | 1.11 | % | |||||||||||||
| Vendor Finance | 32.7 | 2.04 | % | 9.5 | 0.49 | % | 42.2 | 1.18 | % | |||||||||||||
| Commercial Segments | 97.0 | 1.76 | % | 37.8 | 0.61 | % | 134.8 | 1.15 | % | |||||||||||||
| Consumer | 9.3 | 0.42 | % | 4.5 | 0.19 | % | 13.8 | 0.30 | % | |||||||||||||
| Total | $ | 106.3 | 1.37 | % | $ | 42.3 | 0.49 | % | $ | 148.6 | 0.91 | % | ||||||||||
| Non-accruing Loans To Finance Receivables | June 30, 2010 | March 31, 2010 | December 31, 2009 | |||||||||||||||||||
| Corporate Finance | $ | 1,646.2 | 16.72 | % | $ | 1,488.6 | 12.73 | % | $ | 1,374.8 | 11.31 | % | ||||||||||
| Transportation Finance | 160.5 | 9.60 | % | 172.8 | 9.51 | % | 6.8 | 0.37 | % | |||||||||||||
| Trade Finance | 96.0 | 3.82 | % | 90.5 | 3.24 | % | 90.5 | 3.02 | % | |||||||||||||
| Vendor Finance | 149.2 | 2.46 | % | 179.4 | 2.65 | % | 102.2 | 1.25 | % | |||||||||||||
| Commercial Segments | 2,051.9 | 10.21 | % | 1,931.3 | 8.37 | % | 1,574.3 | 6.25 | % | |||||||||||||
| Consumer | 0.5 | 0.01 | % | 0.7 | 0.01 | % | 0.1 | - | ||||||||||||||
| Total | $ | 2,052.4 | 7.11 | % | $ | 1,932.0 | 6.03 | % | $ | 1,574.4 | 4.52 | % | ||||||||||
| * Net charge-offs do not include recoveries of $97.5 million and $43.8 million recorded in Other Income for the quarters ended June 30 and March 31, 2010. | ||||||||||||||||||||||
| CREDIT METRICS - BEFORE FRESH START ACCOUNTING** | Quarter Ended | Quarter Ended | Six Months Ended | |||||||||||||||||||
Gross Charge-offs To Average Finance Receivables | June 30, 2010 | March 31, 2010 | June 30, 2010 | |||||||||||||||||||
| Corporate Finance | $ | 164.2 | 4.91 | % | $ | 134.1 | 3.58 | % | $ | 298.3 | 4.22 | % | ||||||||||
| Transportation Finance | - | - | - | - | - | - | ||||||||||||||||
| Trade Finance | 12.5 | 1.90 | % | 4.7 | 0.66 | % | 17.2 | 1.26 | % | |||||||||||||
| Vendor Finance | 55.1 | 3.19 | % | 67.9 | 3.23 | % | 123.0 | 3.19 | % | |||||||||||||
| Commercial Segments | 231.8 | 3.73 | % | 206.7 | 2.93 | % | 438.5 | 3.30 | % | |||||||||||||
| Consumer | 19.8 | 0.79 | % | 28.6 | 1.08 | % | 48.4 | 0.94 | % | |||||||||||||
| Total | $ | 251.6 | 2.89 | % | $ | 235.3 | 2.42 | % | $ | 486.9 | 2.64 | % | ||||||||||
| Non-accruing Loans To Finance Receivables | June 30, 2010 | March 31, 2010 | December 31, 2009 | |||||||||||||||||||
| Corporate Finance | $ | 2,290.7 | 19.57 | % | $ | 2,280.2 | 15.85 | % | $ | 2,226.1 | 14.64 | % | ||||||||||
| Transportation Finance | 175.2 | 9.44 | % | 185.3 | 9.18 | % | 8.4 | 0.38 | % | |||||||||||||
| Trade Finance | 96.0 | 3.81 | % | 90.5 | 3.23 | % | 97.3 | 3.24 | % | |||||||||||||
| Vendor Finance | 267.7 | 4.13 | % | 324.6 | 4.43 | % | 295.9 | 3.14 | % | |||||||||||||
| Commercial Segments | 2,829.6 | 12.53 | % | 2,880.6 | 10.86 | % | 2,627.7 | 8.80 | % | |||||||||||||
| Consumer | 197.2 | 2.00 | % | 200.6 | 1.99 | % | 197.7 | 1.74 | % | |||||||||||||
| Total | $ | 3,026.8 | 9.33 | % | $ | 3,081.2 | 8.41 | % | $ | 2,825.4 | 6.86 | % | ||||||||||
| **Credit metrics before fresh start accounting are used by management for credit trend analysis. | ||||||||||||||||||||||
| FINANCING AND LEASING ASSETS - AFTER FRESH START ACCOUNTING | ||||||||||||||||||||||
| At June 30, | At March 31, | At December 31, | ||||||||||||||||||||
| 2010 | 2010 | 2009 | ||||||||||||||||||||
| Corporate Finance | ||||||||||||||||||||||
| Finance receivables | $ | 9,845.7 | $ | 11,690.3 | $ | 12,150.3 | ||||||||||||||||
| Operating lease equipment, net | 104.2 | 134.9 | 137.3 | |||||||||||||||||||
| Assets held for sale | 514.8 | 287.8 | 292.6 | |||||||||||||||||||
| Financing and leasing assets | 10,464.7 | 12,113.0 | 12,580.2 | |||||||||||||||||||
| Transportation Finance | ||||||||||||||||||||||
| Finance receivables | 1,671.3 | 1,817.1 | 1,853.0 | |||||||||||||||||||
| Operating lease equipment, net | 10,296.9 | 10,177.5 | 10,089.2 | |||||||||||||||||||
| Assets held for sale | 10.4 | 11.5 | 17.2 | |||||||||||||||||||
| Financing and leasing assets | 11,978.6 | 12,006.1 | 11,959.4 | |||||||||||||||||||
| Trade Finance | ||||||||||||||||||||||
| Finance receivables | 2,514.6 | 2,794.1 | 2,991.0 | |||||||||||||||||||
| Vendor Finance | ||||||||||||||||||||||
| Finance receivables | 6,066.1 | 6,781.2 | 8,187.8 | |||||||||||||||||||
| Operating lease equipment, net | 549.6 | 618.6 | 683.5 | |||||||||||||||||||
| Assets held for sale | 18.8 | 479.9 | - | |||||||||||||||||||
| Financing and leasing assets | 6,634.5 | 7,879.7 | 8,871.3 | |||||||||||||||||||
| Consumer | ||||||||||||||||||||||
| Finance receivables - student lending | 8,721.9 | 8,863.6 | 9,584.2 | |||||||||||||||||||
| Finance receivables - other | 63.6 | 79.4 | 99.5 | |||||||||||||||||||
| Assets held for sale | 28.5 | 589.6 | 34.0 | |||||||||||||||||||
| Financing and leasing assets | 8,814.0 | 9,532.6 | 9,717.7 | |||||||||||||||||||
| Total financing and leasing assets | $ | 40,406.4 | $ | 44,325.5 | $ | 46,119.6 | ||||||||||||||||
| CIT GROUP INC. AND SUBSIDIARIES | ||||||||||||||||||||||||||||||||
| (dollars in millions) | ||||||||||||||||||||||||||||||||
| SEGMENT RESULTS | ||||||||||||||||||||||||||||||||
| Corporate | Transportation | Trade | Vendor | Commercial | Corporate | |||||||||||||||||||||||||||
| Finance | Finance | Finance | Finance | Segments | Consumer | and Other | Consolidated | |||||||||||||||||||||||||
| Quarter ended June 30, 2010 | ||||||||||||||||||||||||||||||||
| Total interest income | $ | 481.7 | $ | 53.4 | $ | 24.4 | $ | 333.2 | $ | 892.7 | $ | 95.8 | $ | 5.0 | $ | 993.5 | ||||||||||||||||
| Total interest expense | (273.6 | ) | (234.6 | ) | (45.1 | ) | (190.4 | ) | (743.7 | ) | (64.2 | ) | (5.7 | ) | (813.6 | ) | ||||||||||||||||
| Provision for credit losses | (109.2 | ) | (3.0 | ) | (12.3 | ) | (111.9 | ) | (236.4 | ) | (9.3 | ) | (15.0 | ) | (260.7 | ) | ||||||||||||||||
| Rental income on operating leases | 7.3 | 316.8 | - | 96.1 | 420.2 | - | (0.5 | ) | 419.7 | |||||||||||||||||||||||
| Other income, excluding rental income | 205.9 | 18.2 | 47.0 | 26.2 | 297.3 | 18.3 | 15.0 | 330.6 | ||||||||||||||||||||||||
| Depreciation on operating lease equipment | (5.6 | ) | (85.9 | ) | - | (87.8 | ) | (179.3 | ) | - | 0.3 | (179.0 | ) | |||||||||||||||||||
| Other expenses | (89.7 | ) | (45.5 | ) | (33.0 | ) | (86.3 | ) | (254.5 | ) | (22.7 | ) | 0.2 | (277.0 | ) | |||||||||||||||||
| Income before provision for income taxes and noncontrolling interests | $ | 216.8 | $ | 19.4 | $ | (19.0 | ) | $ | (20.9 | ) | $ | 196.3 | $ | 17.9 | $ | (0.7 | ) | $ | 213.5 | |||||||||||||
| Net income (loss) | $ | 206.4 | $ | 25.1 | $ | (16.0 | ) | $ | (62.1 | ) | $ | 153.4 | $ | 14.2 | $ | (25.5 | ) | $ | 142.1 | |||||||||||||
| Quarter ended March 31, 2010 | ||||||||||||||||||||||||||||||||
| Total interest income | $ | 504.0 | $ | 57.5 | $ | 30.5 | $ | 359.6 | $ | 951.6 | $ | 92.8 | $ | 4.6 | $ | 1,049.0 | ||||||||||||||||
| Total interest expense | (297.0 | ) | (258.5 | ) | (38.5 | ) | (167.9 | ) | (761.9 | ) | (70.9 | ) | (5.0 | ) | (837.8 | ) | ||||||||||||||||
| Provision for credit losses | (94.4 | ) | (1.3 | ) | (33.9 | ) | (52.5 | ) | (182.1 | ) | (4.5 | ) | - | (186.6 | ) | |||||||||||||||||
| Rental income on operating leases | 8.8 | 299.2 | - | 110.8 | 418.8 | - | (0.6 | ) | 418.2 | |||||||||||||||||||||||
| Other income, excluding rental income | 103.1 | 22.2 | 46.1 | 27.2 | 198.6 | 5.8 | (72.2 | ) | 132.2 | |||||||||||||||||||||||
| Depreciation on operating lease equipment | (4.4 | ) | (78.6 | ) | - | (90.7 | ) | (173.7 | ) | - | 0.2 | (173.5 | ) | |||||||||||||||||||
| Other expenses | (79.4 | ) | (39.6 | ) | (32.0 | ) | (86.9 | ) | (237.9 | ) | (21.5 | ) | (2.5 | ) | (261.9 | ) | ||||||||||||||||
| Income before provision for income taxes and noncontrolling interests | $ | 140.7 | $ | 0.9 | $ | (27.8 | ) | $ | 99.6 | $ | 213.4 | $ | 1.7 | $ | (75.5 | ) | $ | 139.6 | ||||||||||||||
| Net income (loss) | $ | 128.3 | $ | (7.8 | ) | $ | (27.8 | ) | $ | 96.6 | $ | 189.3 | $ | 5.2 | $ | (97.2 | ) | $ | 97.3 | |||||||||||||
| Six months ended June 30, 2010 | ||||||||||||||||||||||||||||||||
| Total interest income | $ | 985.7 | $ | 110.9 | $ | 54.9 | $ | 692.8 | $ | 1,844.3 | $ | 188.6 | $ | 9.6 | $ | 2,042.5 | ||||||||||||||||
| Total interest expense | (570.6 | ) | (493.1 | ) | (83.6 | ) | (358.3 | ) | (1,505.6 | ) | (135.1 | ) | (10.7 | ) | (1,651.4 | ) | ||||||||||||||||
| Provision for credit losses | (203.6 | ) | (4.3 | ) | (46.2 | ) | (164.4 | ) | (418.5 | ) | (13.8 | ) | (15.0 | ) | (447.3 | ) | ||||||||||||||||
| Rental income on operating leases | 16.1 | 616.0 | - | 206.9 | 839.0 | - | (1.1 | ) | 837.9 | |||||||||||||||||||||||
| Other income, excluding rental income | 309.0 | 40.4 | 93.1 | 53.4 | 495.9 | 24.1 | (57.2 | ) | 462.8 | |||||||||||||||||||||||
| Depreciation on operating lease equipment | (10.0 | ) | (164.5 | ) | - | (178.5 | ) | (353.0 | ) | - | 0.5 | (352.5 | ) | |||||||||||||||||||
| Other expenses | (169.1 | ) | (85.1 | ) | (65.0 | ) | (173.2 | ) | (492.4 | ) | (44.2 | ) | (2.3 | ) | (538.9 | ) | ||||||||||||||||
| Income before provision for income taxes and noncontrolling interests | $ | 357.5 | $ | 20.3 | $ | (46.8 | ) | $ | 78.7 | $ | 409.7 | $ | 19.6 | $ | (76.2 | ) | $ | 353.1 | ||||||||||||||
| Net income (loss) | $ | 334.7 | $ | 17.3 | $ | (43.8 | ) | $ | 34.5 | $ | 342.7 | $ | 19.4 | $ | (122.7 | ) | $ | 239.4 | ||||||||||||||
| AVERAGE BALANCES AND RATES | ||||||||||||||||||||||||||||||||
| Quarter Ended June 30, 2010 | Quarter Ended March 31, 2010 | |||||||||||||||||||||||||||||||
| Assets | Average | Rate | Average | Rate | ||||||||||||||||||||||||||||
| Deposits with banks | $ | 9,814.5 | 0.2% | $ | 9,498.6 | 0.2% | ||||||||||||||||||||||||||
| Investments | 348.5 | 2.0% | 348.3 | 2.0% | ||||||||||||||||||||||||||||
| Loans (including held for sale assets) | 31,448.3 | 12.9% | 34,534.7 | 12.4% | ||||||||||||||||||||||||||||
| Total interest earning assets / interest income | 41,611.3 | 9.8% | 44,381.6 | 9.6% | ||||||||||||||||||||||||||||
| Operating lease equipment, net | 10,973.5 | 8.8% | 10,945.2 | 8.9% | ||||||||||||||||||||||||||||
| Other | 3,560.7 | 3,889.1 | ||||||||||||||||||||||||||||||
| Total average assets | $ | 56,145.5 | $ | 59,215.9 | ||||||||||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||||||||
| Deposits | $ | 4,635.3 | 2.5% | $ | 4,921.3 | 2.4% | ||||||||||||||||||||||||||
| Long-term borrowings | 39,595.0 | 7.9% | 42,588.9 | 7.6% | ||||||||||||||||||||||||||||
| Total interest-bearing liabilities | 44,230.3 | 7.4% | 47,510.2 | 7.0% | ||||||||||||||||||||||||||||
| Credit balances of factoring clients | 867.7 | 866.8 | ||||||||||||||||||||||||||||||
| Other | 11,047.5 | 10,838.9 | ||||||||||||||||||||||||||||||
| Total average liabilities and equity | $ | 56,145.5 | $ | 59,215.9 | ||||||||||||||||||||||||||||
| NON-GAAP DISCLOSURES | ||||||||||||||||||||||||||||||||
| 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 | ||||||||||||||||||||||||||||||||
| June 30, | March 31, | |||||||||||||||||||||||||||||||
| Total net revenues(1) | 2010 | 2010 | ||||||||||||||||||||||||||||||
| Interest income | $ | 993.5 | $ | 1,049.0 | ||||||||||||||||||||||||||||
| Rental income on operating leases | 419.7 | 418.2 | ||||||||||||||||||||||||||||||
| Finance revenue | 1,413.2 | 1,467.2 | ||||||||||||||||||||||||||||||
| Interest expense | (813.6 | ) | (837.8 | ) | ||||||||||||||||||||||||||||
| Depreciation on operating lease equipment | (179.0 | ) | (173.5 | ) | ||||||||||||||||||||||||||||
| Net finance revenue | 420.6 | 455.9 | ||||||||||||||||||||||||||||||
| Other income | 330.6 | 132.2 | ||||||||||||||||||||||||||||||
| Total net revenues | $ | 751.2 | $ | 588.1 | ||||||||||||||||||||||||||||
| 1) Total net revenues are combination of net finance revenues after depreciation on operating leases and other income. | ||||||||||||||||||||||||||||||||
Contacts:
C. Curtis Ritter, 212-461-7711
Vice
President
Director of External Communications & Media Relations
Curt.Ritter@cit.com
or
CIT
INVESTOR RELATIONS:
Ken Brause, 212-771-9650
Executive
Vice President
Ken.Brause@cit.com
