NEW YORK--()--CIT Group Inc. (NYSE: CIT), today reported a diluted loss per share of $0.70 for the 2007 quarter, versus $1.16 of earnings per share for the 2006 quarter. The net loss attributable to common shareholders was $134.5 million for the current quarter, versus $236.0 million income for the prior year quarter.
The net loss included noteworthy items related to executing active portfolio management and other operating initiatives as follows:
- a pretax charge of $765 million (net of pre-existing credit reserves of $228 million, but including unamortized origination costs) relating to a fair value adjustment on $10.6 billion of receivables transferred to assets held for sale in connection with the planned exit of our home lending business ($495.3 million after tax, $2.58 per share loss);
- a pretax gain of $228.7 million, from the sale of our $2.6 billion U.S. construction portfolio ($136.9 million after tax, $0.71 per share gain); and
- a pretax charge of $34.9 million for employee termination benefits in conjunction with non-home lending work force reductions ($21.1 million after tax, $0.11 per share loss).
"Although we made progress executing on our business strategy, it was a challenging quarter where we had to make some tough decisions," said Jeffrey M. Peek, Chairman and Chief Executive Officer of CIT. “All CIT's businesses must meet rigorous return standards. As a result, we decided to exit home lending and construction enabling us to redeploy resources to higher returning businesses. While we believe exiting home lending is the right decision, it significantly impacted our current results.”
“In terms of strategic progress, we advanced our business through active portfolio management and asset manager initiatives. We acquired Citigroup's $2 billion U.S. Business Technology Finance unit and Edgeview Partners, further building our core franchise. The completion of our CLO and a healthcare REIT reflect solid progress in building an asset manager model. We have also decided to pursue a public offering option for a portion of our Aerospace portfolio. We are confident that our actions in this difficult quarter will deliver long-term shareholder value.”
Excluding the noteworthy items described above, quarterly earnings improved over the prior year on higher finance revenue, due to higher earning assets, a lower effective tax rate and strong year over year volume growth. The current quarter was also negatively impacted by a $22.5 million charge ($0.07 EPS) in non-spread revenue relating to the disposition of a waste-to-energy plant previously acquired in a loan workout and $14.6 million of home lending operating losses ($0.04 EPS).
Consolidated Financial Highlights:
Net Finance Revenue
- Net finance revenue was up 17% from last year and 9% from last quarter on higher assets and spread expansion from last quarter.
- Net finance revenue as a percentage of average earning assets was 2.89%, versus 2.83% last quarter and 3.16% last year. The decline from last year is primarily due to competitive pricing, capital initiatives, and lower yield-related fees, while benefits from refinancing debt earlier this year contributed to the sequential increase.
- Operating lease net revenue, driven primarily by aerospace and rail equipment rentals, was 7.24% of average operating leases, up from 6.48% last year and 6.82% last quarter.
Other Revenue
- Other revenue increased over last year and last quarter, driven by the previously-mentioned construction sale gain. Excluding this item, non-spread revenue declined from both periods, as higher syndication fees and gains from receivable sales were offset by lower fees and other income during the quarter. The year over year decline in fee income primarily reflected a Transportation Finance commercial aircraft insurance recovery in the prior year, while the sequential decrease reflected lower joint venture profits and reduced structuring fees.
- Excluding the construction sale, during the quarter we sold or syndicated receivables of $3.1 billion (28% of origination volume), compared to $2.2 billion (22%) last year.
Credit Quality
- Net charge-offs as a percentage of average finance receivables were up from last quarter and last year, due to home lending and lower commercial recoveries. Excluding home lending, charge-offs were 0.34% and 0.24% for the current and prior year quarters.
- Second quarter home lending net charge-offs were $38.4 million (1.37% of average finance receivables), up from $30.8 million (1.20%) and $18.8 million (0.84%) last quarter and last year.
- Total 60+ day owned delinquencies as a percentage of finance receivables were up from last quarter and a year ago, primarily due to home lending. Excluding both home lending and student lending, delinquencies were 1.16%, versus 1.15% last quarter and 1.47% last year.
- Non-performing assets (non-accrual loans plus repossessed assets) were up from last quarter and last year on higher home lending trends. Excluding both home lending and student lending, non-performing assets were 0.83%, unchanged from last quarter and down from 1.31% last year.
- The provision for credit losses increased $25 million over last year reflecting higher net charge-offs and additional reserves, both of which were driven by home lending.
- The reserve for credit losses declined $196 million from last quarter, reflecting the transfer of $210 million in home lending reserves into the carrying value of assets held for sale. Excluding specific reserves and U.S. Government guaranteed student loans, the reserve was 1.22% of finance receivables, flat with last quarter (excluding home lending).
Expenses
- For the quarter, salaries and general operating expenses were up from a year ago and last quarter. Sequentially, lower employee costs were offset by increases related to the acquisition of Citigroup's U.S. Business Technology Finance unit, along with higher legal and settlement costs. During the quarter, we entered into a Cooperation Agreement and Assurance of Discontinuance with the New York Attorney General’s Office pursuant to which we made a $3 million contribution to a national fund for educating students and their families about the financial aid process. The increase from last year primarily reflects higher employee costs on increased headcount, as well as incremental costs associated with acquisitions.
- The provision for severance and real estate exit activities totaled $35 million for the quarter for cost saving actions across the Company, which covered the elimination of approximately 300 positions.
- Employee headcount totaled approximately 7,310, down from 7,500 at March 31, 2007.
- The efficiency ratios were 40.0% for the current quarter, 46.0% last year and 44.0% last quarter. The improvement is due to the previously stated noteworthy items. Excluding the noteworthy items, the efficiency ratio was 48.3%.
Volume and Assets
- Origination volume for the quarter, excluding factoring, was $10.9 billion, up 9% over last year, on higher results in Corporate Finance and Vendor Finance. Excluding home lending, origination volume increased 15% over last year.
- Managed assets were up 19% over last year, driven by the combination of higher origination volume and acquisitions.
- Significant asset transactions during the quarter included: the purchase of approximately $2.0 billion of Citigroup’s U.S. business technology finance unit, the sale of approximately $2.6 billion of assets of our U.S. construction portfolio, the $765 million fair value adjustment to home lending assets, and a total of $500 million of assets sold into the newly established healthcare REIT and the CLO.
Capitalization
- The ratio of total tangible equity to managed assets at June 30, 2007 was 8.27%, compared to 8.65% last quarter and 9.59% last year.
Segment Results:
Corporate Finance
- Excluding the construction sale, total net revenues before provision for credit losses increased 12%. Net finance revenue after depreciation was up on higher assets. In addition to the gain, other revenue was driven by strong syndication fees, which were offset by the charge on an energy plant asset. During the quarter, we syndicated or sold $1.5 billion of receivables, compared to $0.7 billion last year.
- As a percentage of average earning assets, net finance revenue decreased from last year on tighter spreads reflecting market liquidity.
- Net charge-offs increased from last year on lower recoveries. Delinquencies were up and non-performing assets were down slightly from last quarter.
- Volume was up 17% from last year and was broad-based.
- Return on risk adjusted capital was 37.4%, up from 13.5% last year due to the construction portfolio gain. Excluding the construction gain, return on risk adjusted capital was 12.4%.
Transportation Finance
- Total net revenues were up from last year on an increase in net finance revenue after depreciation, partially offset by a decrease in other revenue due to the previously mentioned insurance recovery last year.
- As a percentage of average earning assets, net finance revenue after depreciation increased 51 bps from last year on stronger operating lease margins in both aerospace and rail. Sequentially, aerospace utilization and lease rates were stable, while rail utilization and lease rates declined slightly.
- Delinquencies and non-performing accounts were down slightly from last quarter.
- Volume for the quarter was down from last year, as the decrease in aircraft deliveries offset an increase in rail volume.
- Return on risk-adjusted capital declined to 15.4% from 18.5% last year.
Trade Finance
- Total net revenues were up slightly from last year primarily due to an increase in net finance revenue, partially offset by a decrease in other revenue due to lower commission rates.
- As a percentage of average earning assets, net finance revenue decreased 22 bps from the prior year reflecting high market liquidity and competitive pricing.
- Net charge-offs were up 24 basis points from last year, while delinquencies and non-performing accounts were down from last quarter.
- Factored volumes were essentially flat compared to last year.
- Return on risk adjusted capital declined to 16.5% from 18.5% last year.
Vendor Finance
- Total net revenues were up modestly from last year, as growth in net finance revenues on higher asset balances was offset by lower other revenue, reflecting lower joint venture earnings and reduced end of lease revenue in international businesses.
- As a percentage of average earning assets, net finance revenue after depreciation was down from last year, primarily due to thinner spreads in recent acquisitions.
- Credit metrics remained strong as net charge-offs of 0.59% for the quarter were down from last year; delinquencies improved from last quarter and non-performing accounts were flat.
- Total new business volume grew 20% over last year as both international and domestic volumes increased with the addition of recent acquisitions. Excluding Dell in the U.S. and recent acquisitions, volumes were up 14%.
- Return on risk-adjusted capital of 15.4% was down from 19.7% and 25.8% last quarter and last year. The decline reflects acquisition goodwill and unrealized cost synergies.
Consumer and Small Business Lending
- Total net revenues improved, driven by an increase in net finance revenue on higher assets but partially offset by a decline in other revenue (lower asset gains).
- Net finance revenue as a percentage of average earning assets was down 26 bps from last year primarily due to lower lending spreads and portfolio mix.
- During the quarter, $1.3 billion (including $0.4 billion of home lending) was sold, versus $1.2 billion ($0.8 billion) last year.
- Net charge-offs were up from last year on higher home lending charge-offs, which increased to 1.37% this quarter from 0.84% last year. Excluding home lending, net charge-offs were 0.34%, up from 0.26% last year. Increases in home lending delinquencies (6.50% from 2.88%) and non-performing accounts (6.58% from 2.70%) reflect the negative impact of economic conditions in this portfolio. Excluding home lending, delinquencies increased to 4.78% from 3.24% last year due to student lending (U.S. government guaranteed), while non-performing accounts were flat. See page 14 for selected home lending portfolio statistics.
- Results include the pretax charge of $765 million relating to the fair value adjustment on $10.6 billion of receivables transferred to assets held for sale in connection with the planned exit of our home lending business.
- Results include a $25 million home lending credit reserve increase that was recorded prior to the transfer of the receivables into assets held for sale.
- New business volume increases in student and small business lending were offset by a decrease in home lending business volume.
- Return on risk-adjusted capital declined to a loss from 7.7% last year reflecting the exit related fair value adjustment, higher home lending charge-offs and the reserve increase. Excluding the fair value adjustment, return on risk adjusted capital was 2.4%.
Corporate and Other
- Corporate and other expenses dampened return on equity by approximately 200 bps this quarter and last year.
Earnings Guidance
Due to the weakness in home lending operations, we are providing second half guidance of $2.60 to $2.70 per share, a $0.25 reduction from our original estimate. We are also reaffirming our target of 15% return on common equity.
Conference Call and Webcast:
We will discuss this quarter’s results, as well as ongoing strategy, on a conference call and audio webcast today at 11:00 am (EDT). Interested parties may access the conference call live today 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 webcast at the following website: http://ir.cit.com. An audio replay of the call will be available beginning shortly after the conclusion of the call until 11:59 pm (EDT) July 25, 2007, by dialing 888-286-8010 for U.S. and Canadian callers or 617-801-6888 for international callers with the access code 13791892, or at the following website: http://ir.cit.com.
About CIT:
CIT Group Inc. (NYSE: CIT), a leading commercial and consumer finance company, provides clients with financing and leasing products and advisory services. Founded in 1908, CIT has approximately $80 billion in managed assets and possesses the financial resources, industry expertise and product knowledge to serve the needs of clients across approximately 30 industries worldwide. CIT, a Fortune 500 company and a member of the S&P 500 Index, holds leading positions in cash flow lending, vendor financing, factoring, equipment and transportation financing, Small Business Administration loans, and asset-based lending. With its global headquarters in New York City, CIT has approximately 7,300 employees in locations throughout North America, Europe, Latin America and Asia Pacific. www.cit.com
Forward-Looking Statements:
This release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All forward-looking statements (including statements regarding future financial and operating results) involve risks, uncertainties and contingencies, many of which are beyond CIT’s control, which may cause actual results, performance, or achievements to differ materially from anticipated results, performance, or achievements. All statements contained in this release that are not clearly historical in nature are forward-looking, and the words “anticipate,” “believe,” “expect,” “estimate,” “plan,” “target,” and similar expressions are generally intended to identify forward-looking statements. Economic, business, funding market, competitive and/or regulatory factors, among others, affecting CIT’s businesses are examples of factors that could cause actual results to differ materially from those described in the forward-looking statements. More detailed information about these factors are described in CIT’s filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2006. CIT is under no obligation to (and expressly disclaims any such obligation to) update or alter its forward-looking statements, whether as a result of new information, future events or otherwise. This release includes certain non-GAAP financial measures as defined under SEC rules. As required by SEC rules, we have provided a reconciliation of those measures to the most directly comparable GAAP measures, which is available with this release and on our website at http://ir.cit.com.
Individuals interested in receiving future updates on CIT via e-mail can register at http://newsalerts.cit.com
| CIT GROUP INC. AND SUBSIDIARIES | ||||||||||||||||||||
| UNAUDITED CONSOLIDATED INCOME STATEMENTS | ||||||||||||||||||||
| (dollars in millions, except per share data) | ||||||||||||||||||||
| Quarters Ended | ||||||||||||||||||||
| June 30, | March 31, | June 30, | Six Months Ended June 30, | |||||||||||||||||
| 2007 | 2007 | 2006 | 2007 | 2006 | ||||||||||||||||
| Finance revenue | $ | 1,758.1 | $ | 1,617.1 | $ | 1,379.3 | $ | 3,375.2 | $ | 2,673.9 | ||||||||||
| Interest expense | 942.6 | 873.6 | 677.7 | 1,816.2 | 1,276.0 | |||||||||||||||
| Depreciation on operating lease equipment | 292.3 | 263.6 | 256.2 | 555.9 | 505.6 | |||||||||||||||
| Net finance revenue | 523.2 | 479.9 | 445.4 | 1,003.1 | 892.3 | |||||||||||||||
| Provision for credit losses | 73.0 | 71.1 | 48.2 | 144.1 | 81.5 | |||||||||||||||
| Net finance revenue, after credit provision | 450.2 | 408.8 | 397.2 | 859.0 | 810.8 | |||||||||||||||
| Other revenue |
509.1 |
328.6 | 303.5 |
837.7 |
563.6 | |||||||||||||||
| Total net revenue, after credit provision |
959.3 |
737.4 | 700.7 |
1,696.7 |
1,374.4 | |||||||||||||||
| Salaries and general operating expenses |
378.0 |
355.8 | 344.8 | 733.8 | 667.9 | |||||||||||||||
|
Provision for severance and real estate exit activities |
34.9 | - | - | 34.9 | 11.1 | |||||||||||||||
|
Loss on planned asset dispositions |
787.9 |
- | - |
787.9 |
- | |||||||||||||||
| Loss on early extinguishments of debt | - | 139.3 | - | 139.3 | - | |||||||||||||||
| Income before provision for income taxes |
(241.5 |
) | 242.3 | 355.9 |
0.8 |
695.4 | ||||||||||||||
| Provision for income taxes |
114.7 |
(34.1 | ) | (111.9 | ) |
80.6 |
(213.2 | ) | ||||||||||||
| Minority interest, after tax | (0.2 | ) | (0.1 | ) | (0.5 | ) | (0.3 | ) | (1.3 | ) | ||||||||||
| Net income before preferred stock dividends |
(127.0 |
) | 208.1 | 243.5 |
81.1 |
480.9 | ||||||||||||||
| Preferred stock dividends | (7.5 | ) | (7.5 | ) | (7.5 | ) | (15.0 | ) | (15.2 | ) | ||||||||||
| Net income available to common stockholders | $ |
(134.5 |
) | $ | 200.6 | $ | 236.0 | $ |
66.1 |
$ | 465.7 | |||||||||
| Per common share data | ||||||||||||||||||||
| Basic earnings per share | $ |
(0.70 |
) | $ | 1.03 | $ | 1.18 | $ |
0.34 |
$ | 2.34 | |||||||||
| Diluted earnings per share | $ |
(0.70 |
) | $ | 1.01 | $ | 1.16 | $ |
0.34 |
$ | 2.28 | |||||||||
| Number of shares - basic (thousands) | 191,808 | 194,099 | 199,189 | 192,953 | 199,308 | |||||||||||||||
| Number of shares - diluted (thousands) | 195,349 | 197,922 | 203,923 | 196,635 | 204,172 | |||||||||||||||
| Other Revenue | ||||||||||||||||||||
| Fees and other income(1) | $ | 108.2 | $ | 185.5 | $ | 144.8 | $ | 293.7 | $ | 273.5 | ||||||||||
| Gains on receivable sales and syndication fees |
76.4 |
53.6 | 63.1 |
130.0 |
103.7 | |||||||||||||||
| Factoring commissions | 52.5 | 52.4 | 55.9 | 104.9 | 111.7 | |||||||||||||||
| Gains on sales of leasing equipment | 33.6 | 29.5 | 33.2 | 63.1 | 54.6 | |||||||||||||||
| Gains on securitizations | 7.8 | 7.6 | 6.5 | 15.4 | 20.1 | |||||||||||||||
| Net gain on U.S. construction and U.K. trucking sales |
230.6 |
- | - |
230.6 |
- |
|||||||||||||||
| Total other revenue | $ |
509.1 |
$ | 328.6 | $ | 303.5 | $ |
837.7 |
$ | 563.6 | ||||||||||
|
(1) Fees and other income primarily includes servicing fees and structuring and advisory fees.
Note: Loss on planned asset dispositions includes a $765.4 million fair value adjustment relating to the planned home lendig exit and a $22.5 million energy plant asset charge. |
||||||||||||||||||||
| CIT GROUP INC. AND SUBSIDIARIES | |||||||
| UNAUDITED CONSOLIDATED BALANCE SHEETS | |||||||
| (dollars in millions) | |||||||
| June 30, | December 31, | ||||||
| 2007 | 2006 | ||||||
| ASSETS | |||||||
| Financing and leasing assets held for investment: | |||||||
| Finance receivables | $ | 49,100.1 | $ | 55,064.9 | |||
| Reserve for credit losses | (508.1 | ) | (659.3 | ) | |||
| Net finance receivables | 48,592.0 | 54,405.6 | |||||
| Operating lease equipment, net | 11,932.5 | 11,017.9 | |||||
| Financing and leasing assets held for sale | 2,463.9 | 1,553.7 | |||||
| Home lending finance receivables held for sale |
10,383.8 |
240.0 | |||||
| Cash and cash equivalents | 5,433.4 | 4,458.4 | |||||
| Retained interests in securitizations and other investments | 1,204.5 | 1,059.4 | |||||
| Goodwill and intangible assets, net | 1,382.1 | 1,008.4 | |||||
| Other assets | 3,771.0 | 3,324.5 | |||||
| Total Assets | $ |
85,163.2 |
$ | 77,067.9 | |||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
| Debt: | |||||||
| Commercial paper | $ | 6,195.4 | $ | 5,365.0 | |||
| Deposits | 3,352.3 | 2,399.6 | |||||
| Non-recourse, secured borrowings | 6,253.6 | 4,398.5 | |||||
| Variable-rate senior unsecured notes | 24,095.5 | 19,184.3 | |||||
| Fixed-rate senior unsecured notes | 28,600.2 | 29,107.1 | |||||
| Junior subordinated notes | 750.0 | - | |||||
| Preferred capital securities | - | 250.3 | |||||
| Total debt | 69,247.0 | 60,704.8 | |||||
| Credit balances of factoring clients | 3,911.0 | 4,131.3 | |||||
| Accrued liabilities and payables |
4,644.2 |
4,440.8 | |||||
| Total Liabilities |
77,802.2 |
69,276.9 | |||||
| Minority interest | 47.2 | 39.9 | |||||
| Stockholders' Equity: | |||||||
| Preferred stock | 500.0 | 500.0 | |||||
| Common stock | 2.1 | 2.1 | |||||
| Paid-in capital | 10,689.2 | 10,678.9 | |||||
| Accumulated deficit |
(2,872.6 |
) | (2,838.9 | ) | |||
| Accumulated other comprehensive income |
217.0 |
129.6 | |||||
| Less: treasury stock, at cost | (1,221.9 | ) | (720.6 | ) | |||
| Total Common Stockholders' Equity |
6,813.8 |
7,251.1 | |||||
| Total Stockholders' Equity |
7,313.8 |
7,751.1 | |||||
| Total Liabilities and Stockholders' Equity | $ |
85,163.2 |
$ | 77,067.9 | |||
| Other Assets | |||||||
| Deposits on commercial aerospace flight equipment | $ | 817.9 | $ | 719.0 | |||
| Accrued interest and receivables from derivative counterparties | 682.2 | 643.6 | |||||
| Investments in and receivables from non-consolidated subsidiaries | 294.2 | 535.7 | |||||
| Repossessed assets and off-lease equipment | 220.4 | 124.1 | |||||
| Prepaid expenses | 118.2 | 99.2 | |||||
| Furniture and fixtures, miscellaneous receivables and other assets | 1,638.1 | 1,202.9 | |||||
| $ | 3,771.0 | $ | 3,324.5 | ||||
| CIT GROUP INC. AND SUBSIDIARIES | |||||||||||
| OWNED AND MANAGED ASSET COMPOSITION | |||||||||||
| (dollars in millions) | |||||||||||
| June 30, | March 31, | June 30, | |||||||||
| 2007 | 2007 | 2006 | |||||||||
| Commercial Finance Group | |||||||||||
| Corporate Finance | |||||||||||
| Finance receivables | $ | 17,791.0 | $ | 19,421.8 | $ | 16,178.6 | |||||
| Operating lease equipment, net | 160.9 | 185.5 | 167.3 | ||||||||
| Financing and leasing assets held for sale | 769.3 | 921.9 | 211.8 | ||||||||
| Owned assets | 18,721.2 | 20,529.2 | 16,557.7 | ||||||||
| Finance receivables securitized and managed by CIT | 1,090.7 | 1,436.6 | 2,121.3 | ||||||||
| Managed assets | 19,811.9 | 21,965.8 | 18,679.0 | ||||||||
| Transportation Finance | |||||||||||
| Finance receivables | 2,163.8 | 2,186.7 | 1,474.4 | ||||||||
| Operating lease equipment, net | 10,513.6 | 10,174.7 | 9,377.9 | ||||||||
| Financing and leasing assets held for sale | 4.6 | 71.1 | 67.6 | ||||||||
| Owned assets | 12,682.0 | 12,432.5 | 10,919.9 | ||||||||
| Trade Finance | |||||||||||
| Finance receivables | 6,900.5 | 6,889.2 | 6,439.5 | ||||||||
| Financing and leasing assets held for sale | - | - | 29.0 | ||||||||
| Owned assets | 6,900.5 | 6,889.2 | 6,468.5 | ||||||||
| Specialty Finance Group | |||||||||||
| Vendor Finance | |||||||||||
| Finance receivables | 10,512.8 | 9,452.0 | 7,322.3 | ||||||||
| Operating lease equipment, net | 1,258.0 | 934.2 | 1,038.4 | ||||||||
| Financing and leasing assets held for sale | 911.7 | 351.4 | 527.2 | ||||||||
| Owned assets | 12,682.5 | 10,737.6 | 8,887.9 | ||||||||
| Finance receivables securitized and managed by CIT | 4,267.1 | 4,277.5 | 3,840.8 | ||||||||
| Managed assets | 16,949.6 | 15,015.1 | 12,728.7 | ||||||||
| Consumer and Small Business Lending | |||||||||||
| Finance receivables - home lending | - | 10,837.1 | 9,263.2 | ||||||||
| Finance receivables - student lending | 9,695.4 | 9,493.4 | 6,929.3 | ||||||||
| Finance receivables - small business lending | 1,251.0 | 1,257.7 | 1,262.4 | ||||||||
| Finance receivables - other | 785.6 | 588.6 | 436.4 | ||||||||
| Home lending finance receivables held for sale |
10,383.8 |
115.0 | 240.0 | ||||||||
| Financing and leasing assets held for sale | 778.3 | 495.5 | 265.0 | ||||||||
| Owned assets |
22,894.1 |
22,787.3 | 18,396.3 | ||||||||
| Home lending finance receivables securitized and managed by CIT | 569.4 | 600.5 | 723.8 | ||||||||
| Managed assets |
23,463.5 |
23,387.8 | 19,120.1 | ||||||||
| Other - Equity Investments | 151.9 | 21.2 | 27.8 | ||||||||
| Total | |||||||||||
| Finance receivables | $ | 49,100.1 | $ | 60,126.5 | $ | 49,306.1 | |||||
| Operating lease equipment, net | 11,932.5 | 11,294.4 | 10,583.6 | ||||||||
| Home lending finance receivables held for sale |
10,383.8 |
115.0 | 240.0 | ||||||||
| Financing and leasing assets held for sale | 2,463.9 | 1,839.9 | 1,100.6 | ||||||||
| Financing and leasing assets excl. equity investments |
73,880.3 |
73,375.8 | 61,230.3 | ||||||||
| Equity investments (included in other assets) | 151.9 | 21.2 | 27.8 | ||||||||
| Owned assets |
74,032.2 |
73,397.0 | 61,258.1 | ||||||||
| Finance receivables securitized and managed by CIT | 5,927.2 | 6,314.6 | 6,685.9 | ||||||||
| Managed assets | $ |
79,959.4 |
$ | 79,711.6 | $ | 67,944.0 | |||||
| Managed assets, excluding home lending | $ | 69,575.6 | $ | 68,759.5 | $ | 58,440.8 | |||||
| CIT GROUP INC. AND SUBSIDIARIES | |||||||||||||||
| SEGMENT DATA | |||||||||||||||
| (dollars in millions) | |||||||||||||||
| Quarters Ended | |||||||||||||||
| June 30, | March 31, | June 30, | Six Months Ended June 30, | ||||||||||||
| 2007 | 2007 | 2006 | 2007 | 2006 | |||||||||||
| Commercial Finance Group | |||||||||||||||
| Corporate Finance | |||||||||||||||
| Net finance revenue, before depreciation | $ | 175.1 | $ | 158.5 | $ | 145.5 | $ | 333.6 | $ | 272.5 | |||||
| Depreciation on operating lease equipment | 10.6 | 9.8 | 7.8 | 20.4 | 16.5 | ||||||||||
| Provision for credit losses | 7.9 | 16.8 | (0.6) | 24.7 | (3.2) | ||||||||||
| Other revenue* |
311.8 |
87.7 | 58.4 |
399.5 |
118.4 | ||||||||||
| Total net revenue, after credit provision |
468.4 |
219.6 | 196.7 |
688.0 |
377.6 | ||||||||||
| Provision for income taxes | (126.3) | (39.8) | (31.1) | (166.1) | (63.0) | ||||||||||
| Net income | 209.8 | 72.4 | 64.7 | 282.2 | 119.0 | ||||||||||
| Return on risk-adjusted capital | 37.4% | 13.2% | 13.5% | 25.6% | 12.9% | ||||||||||
| New business volume | $ | 4,279.0 | $ | 3,318.0 | $ | 3,654.7 | $ | 7,597.0 | $ | 6,092.7 | |||||
| Transportation Finance | |||||||||||||||
| Net finance revenue, before depreciation | $ | 226.9 | $ | 210.9 | $ | 174.2 | $ | 437.8 | $ | 359.1 | |||||
| Depreciation on operating lease equipment | 137.0 | 133.5 | 110.9 | 270.5 | 215.2 | ||||||||||
| Provision for credit losses | 0.3 | (22.5) | 1.3 | (22.2) | 0.9 | ||||||||||
| Other revenue | 19.4 | 17.7 | 33.2 | 37.1 | 39.3 | ||||||||||
| Total net revenue, after credit provision |
109.0 |
117.6 | 95.2 |
226.6 |
182.3 | ||||||||||
| Provision for income taxes | (10.8) | (7.7) | 1.1 | (18.5) | (3.1) | ||||||||||
| Net income | 62.9 | 76.3 | 64.6 | 139.2 | 114.1 | ||||||||||
| Return on risk-adjusted capital | 15.4% | 19.3% | 18.5% | 17.3% | 16.6% | ||||||||||
| New business volume | $ | 696.3 | $ | 686.2 | $ | 785.7 | $ | 1,382.5 | $ | 1,282.8 | |||||
| Trade Finance | |||||||||||||||
| Net finance revenue, before depreciation | $ | 42.0 | $ | 41.3 | $ | 38.6 | $ | 83.3 | $ | 77.1 | |||||
| Provision for credit losses | 10.3 | 7.9 | 5.4 | 18.2 | 12.4 | ||||||||||
| Other revenue | 66.5 | 67.7 | 69.7 | 134.2 | 139.4 | ||||||||||
| Total net revenue, after credit provision | 98.2 | 101.1 | 102.9 | 199.3 | 204.1 | ||||||||||
| Provision for income taxes | (21.7) | (23.3) | (23.4) | (45.0) | (47.0) | ||||||||||
| Net income | 36.1 | 36.6 | 39.3 | 72.7 | 79.1 | ||||||||||
| Return on risk-adjusted capital | 16.5% | 17.0% | 18.5% | 16.8% | 18.8% | ||||||||||
| Total Commercial Finance Group | |||||||||||||||
| Net finance revenue, before depreciation | $ | 444.0 | $ | 410.7 | $ | 358.3 | $ | 854.7 | $ | 708.7 | |||||
| Depreciation on operating lease equipment | 147.6 | 143.3 | 118.7 | 290.9 | 231.7 | ||||||||||
| Provision for credit losses | 18.5 | 2.2 | 6.1 | 20.7 | 10.1 | ||||||||||
| Other revenue | 375.2 | 173.1 | 161.3 | 548.3 | 297.1 | ||||||||||
| Total net revenue, after credit provision |
653.1 |
438.3 | 394.8 |
1,091.4 |
764.0 | ||||||||||
| Provision for income taxes | (158.8) | (70.8) | (53.4) | (229.6) | (113.1) | ||||||||||
| Net income | 308.8 | 185.3 | 168.6 | 494.1 | 312.2 | ||||||||||
| Return on risk-adjusted capital | 26.0% | 15.9% | 16.2% | 21.1% | 15.4% | ||||||||||
| New business volume, excluding factoring | $ | 4,975.3 | $ | 4,004.2 | $ | 4,440.4 | $ | 8,979.5 | $ | 7,375.5 | |||||
| * |
The June 2007 balance includes the $235.0 million gain on sale of construction portfolio. |
||||||||||||||
| CIT GROUP INC. AND SUBSIDIARIES | |||||||||||||||||||||
| SEGMENT DATA | |||||||||||||||||||||
| (dollars in millions) | |||||||||||||||||||||
| Quarters Ended | |||||||||||||||||||||
| June 30, | March 31, | June 30, |
Six Months Ended June 30, |
||||||||||||||||||
| 2007 | 2007 | 2006 | 2007 | 2006 | |||||||||||||||||
| Specialty Finance Group | |||||||||||||||||||||
| Vendor Finance | |||||||||||||||||||||
| Net finance revenue, before depreciation | $ | 292.8 | $ | 252.5 | $ | 265.2 | $ | 545.3 | $ | 532.0 | |||||||||||
| Depreciation on operating lease equipment | 144.8 | 120.4 | 137.4 | 265.2 | 273.9 | ||||||||||||||||
| Provision for credit losses | 8.8 | 13.5 | 17.8 |
22.3 |
35.3 | ||||||||||||||||
|
Other revenue |
81.6 |
112.8 | 98.8 | 160.0 | 183.6 | ||||||||||||||||
| Total net revenue, after credit provision |
220.8 |
231.4 | 208.8 |
17.8 |
406.4 | ||||||||||||||||
|
Provision for income taxes |
(28.9 |
) | (37.9 | ) | (35.1 | ) |
(66.8 |
) | (70.4 | ) | |||||||||||
| Net income |
67.9 |
73.5 | 70.3 |
141.4 |
132.4 | ||||||||||||||||
| Return on risk-adjusted capital |
15.4 |
% | 19.7 | % | 25.8 | % |
16.5 |
% | 24.1 | % | |||||||||||
| New business volume | $ | 2,470.1 | $ | 2,317.6 | $ | 2,063.9 | $ | 4,787.7 | $ | 4,012.9 | |||||||||||
|
Consumer and Small Business Lending* |
|||||||||||||||||||||
| Net finance revenue, before depreciation | $ | 103.4 | $ | 93.9 | $ | 88.5 | $ | 197.3 | $ | 173.2 | |||||||||||
| Provision for credit losses | 68.7 | 43.7 | 18.8 | 112.4 | 39.4 | ||||||||||||||||
| Other revenue | 40.4 | 42.3 | 42.4 | 82.7 | 81.6 | ||||||||||||||||
| Total net revenue, after credit provision | 75.1 | 92.5 | 112.1 | 167.6 | 215.4 | ||||||||||||||||
| Provision for income taxes |
271.8 |
(9.8 | ) | (13.9 | ) |
262.0 |
(26.1 | ) | |||||||||||||
| Net income |
(486.3 |
) | 20.3 | 24.9 |
(466.0 |
) | 46.5 | ||||||||||||||
| Return on risk-adjusted capital |
(127.7)% |
5.7 | % | 7.7 | % |
(63.1)% |
7.3 | % | |||||||||||||
| New business volume | $ | 3,492.5 | $ | 4,457.4 | $ | 3,486.7 | $ | 7,949.9 | $ | 7,318.2 | |||||||||||
| Total Specialty Finance Group | |||||||||||||||||||||
| Net finance revenue, before depreciation | $ | 396.2 | $ | 346.4 | $ | 353.7 | $ | 742.6 | $ | 705.2 | |||||||||||
| Depreciation on operating lease equipment | 144.8 | 120.4 | 137.4 | 265.2 | 273.9 | ||||||||||||||||
| Provision for credit losses | 77.5 | 57.2 | 36.6 |
134.7 |
74.7 | ||||||||||||||||
| Other revenue |
122.0 |
155.1 | 141.2 |
277.1 |
265.2 | ||||||||||||||||
| Total net revenue, after credit provision |
295.9 |
323.9 | 320.9 |
619.8 |
621.8 | ||||||||||||||||
| Provision for income taxes |
242.9 |
(47.7 | ) | (49.0 | ) |
195.2 |
(96.5 | ) | |||||||||||||
| Net income |
(418.4 |
) | 93.8 | 95.2 |
(324.6 |
) | 178.9 | ||||||||||||||
| Return on risk-adjusted capital |
(50.9) |
% | 12.8 | % | 15.9 | % |
(20.3) |
% | 15.0 | % | |||||||||||
| New business volume | $ | 5,962.6 | $ | 6,775.0 | $ | 5,550.6 | $ | 12,737.6 | $ | 11,331.1 | |||||||||||
| Corporate and Other | |||||||||||||||||||||
| Net finance revenue, before depreciation | $ | (24.7 | ) | $ | (13.6 | ) | $ | (10.4 | ) | $ | (38.3 | ) | $ | (16.0 | ) | ||||||
| Provision for credit losses | (23.0 | ) | 11.7 | 5.5 |
(11.3 |
) | (3.3 | ) | |||||||||||||
| Other revenue | (10.6 | ) | 0.4 | 1.0 | (10.2 | ) | 1.3 | ||||||||||||||
| Total net revenue, after credit provision |
(12.2 |
) | (24.8 | ) | (15.0 | ) |
(37.0 |
) | (11.4 | ) | |||||||||||
| Provision for income taxes |
30.6 |
84.4 | (9.5 | ) |
115.0 |
(3.6 | ) | ||||||||||||||
| Net (loss) income |
(24.9 |
) | (78.5 | ) | (27.8 | ) |
(103.4 |
) | (25.4 | ) | |||||||||||
| Return on risk-adjusted capital |
(2.3) |
% | -3.0 | % | -2.0 | % |
(2.4) |
% | -1.1 | % | |||||||||||
|
|
|
||||||||||||||||||||
|
* |
The June 2007 results include a $765 million pretax fair value adjustment relating to the planned exit of the home lending portfolio. |
||||||||||||||||||||
| CIT GROUP INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||||||||||
| CREDIT METRICS | |||||||||||||||||||||||||||||||||||
| (dollars in millions) | |||||||||||||||||||||||||||||||||||
| Quarters Ended | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||
| June 30, 2007 | March 31, 2007 | June 30, 2006 | 2007 | 2006 | |||||||||||||||||||||||||||||||
| Net Credit Losses - Owned as a Percentage of Average Finance Receivables | |||||||||||||||||||||||||||||||||||
| Corporate Finance | $ | 6.5 | 0.13 | % | $ | 17.8 | 0.37 | % | $ | (5.4 | ) | (0.14 | )% | $ | 24.3 | 0.25 | % | $ | (5.2 | ) | (0.07 | )% | |||||||||||||
| Transportation Finance | 0.4 | 0.08 | % | (22.5 | ) | (4.15 | )% | 1.4 | 0.36 | % | (22.1 | ) | (2.02 | )% | 1.4 | 0.17 | % | ||||||||||||||||||
| Trade Finance | 10.0 | 0.59 | % | 7.0 | 0.42 | % | 5.8 | 0.35 | % | 17.0 | 0.51 | % | 12.5 | 0.39 | % | ||||||||||||||||||||
| Total Commercial Finance Group | 16.9 | 0.23 | % | 2.3 | 0.03 | % | 1.8 | 0.03 | % | 19.2 | 0.13 | % | 8.7 | 0.08 | % | ||||||||||||||||||||
| Vendor Finance | 15.8 | 0.59 | % | 13.7 | 0.57 | % | 16.7 | 0.89 | % | 29.5 | 0.58 | % | 30.5 | 0.82 | % | ||||||||||||||||||||
| Consumer and Small Business Lending | 49.4 | 0.87 | % | 41.2 | 0.78 | % | 24.1 | 0.56 | % | 90.6 | 0.83 | % | 45.7 | 0.55 | % | ||||||||||||||||||||
| Total Specialty Finance Group | 65.2 | 0.78 | % | 54.9 | 0.72 | % | 40.8 | 0.66 | % | 120.1 | 0.75 | % | 76.2 | 0.64 | % | ||||||||||||||||||||
| Total | $ | 82.1 | 0.53 | % | $ | 57.2 | 0.39 | % | $ | 42.6 | 0.35 | % | $ | 139.3 | 0.46 | % | $ | 84.9 | 0.36 | % | |||||||||||||||
| Total, excluding student loans | $ | 82.1 | 0.62 | % | $ | 57.2 | 0.46 | % | $ | 42.6 | 0.41 | % | $ | 139.3 | 0.54 | % | $ | 84.9 | 0.42 | % | |||||||||||||||
| Net Credit Losses - Managed as a Percentage of Average Managed Finance Receivables | |||||||||||||||||||||||||||||||||||
| Corporate Finance | $ | 9.6 | 0.18 | % | $ | 19.8 | 0.38 | % | $ | (2.9 | ) | (0.06 | )% | $ | 29.4 | 0.28 | % | $ | (1.6 | ) | (0.02 | )% | |||||||||||||
| Transportation Finance | 0.4 | 0.08 | % | (22.5 | ) | (4.15 | )% | 1.4 | 0.36 | % | (22.1 | ) | (2.02 | )% | 1.4 | 0.17 | % | ||||||||||||||||||
| Trade Finance | 10.0 | 0.59 | % | 7.0 | 0.42 | % | 5.8 | 0.35 | % | 17.0 | 0.51 | % | 12.5 | 0.38 | % | ||||||||||||||||||||
| Total Commercial Finance Group | 20.0 | 0.26 | % | 4.3 | 0.06 | % | 4.3 | 0.07 | % | 24.3 | 0.16 | % | 12.3 | 0.10 | % | ||||||||||||||||||||
| Vendor Finance | 24.6 | 0.66 | % | 20.0 | 0.59 | % | 25.6 | 0.91 | % | 44.6 | 0.62 | % | 47.3 | 0.84 | % | ||||||||||||||||||||
| Consumer and Small Business Lending | 53.1 | 0.91 | % | 45.7 | 0.84 | % | 31.1 | 0.70 | % | 98.9 | 0.88 | % | 59.3 | 0.69 | % | ||||||||||||||||||||
| Total Specialty Finance Group | 77.7 | 0.81 | % | 65.7 | 0.74 | % | 56.7 | 0.78 | % | 143.5 | 0.78 | % | 106.6 | 0.75 | % | ||||||||||||||||||||
| Total | $ | 97.7 | 0.57 | % | $ | 70.0 | 0.43 | % | $ | 61.0 | 0.44 | % | $ | 167.8 | 0.50 | % | $ | 118.9 | 0.44 | % | |||||||||||||||
| Total, excluding student loans | $ | 97.7 | 0.66 | % | $ | 70.0 | 0.50 | % | $ | 61.0 | 0.50 | % | $ | 167.8 | 0.58 | % | $ | 118.9 | 0.50 | % | |||||||||||||||
| Finance Receivables Past Due 60 days or more - Owned as a Percentage of Finance Receivables | June 30, 2007 | March 31, 2007 | June 30, 2006 | ||||||||||||||||
| Corporate Finance | $ | 73.6 | 0.41 | % | $ | 59.9 | 0.31 | % | $ | 87.0 | 0.54 | % | |||||||
| Transportation Finance | 12.5 | 0.58 | % | 16.3 | 0.75 | % | 18.7 | 1.27 | % | ||||||||||
| Trade Finance | 87.2 | 1.26 | % | 94.9 | 1.38 | % | 117.5 | 1.82 | % | ||||||||||
| Total Commercial Finance Group | 173.3 | 0.65 | % | 171.1 | 0.60 | % | 223.2 | 0.93 | % | ||||||||||
| Vendor Finance | 211.7 | 2.02 | % | 226.8 | 2.40 | % | 213.3 | 2.91 | % | ||||||||||
| Consumer and Small Business Lending | 1,296.7 | 5.62 | % | 1,056.9 | 4.77 | % | 546.2 | 3.05 | % | ||||||||||
| Total Specialty Finance Group | 1,508.4 | 4.50 | % | 1,283.7 | 4.06 | % | 759.5 | 3.01 | % | ||||||||||
| Total | $ | 1,681.7 | 2.78 | % | $ | 1,454.8 | 2.42 | % | $ | 982.7 | 1.99 | % | |||||||
| Total, excluding student loans | $ | 1,193.9 | 2.35 | % | $ | 1,001.9 | 1.98 | % | $ | 754.0 | 1.78 | % | |||||||
| Non-performing Assets - Owned as a Percentage of Finance Receivables | |||||||||||||||||||
| Corporate Finance | $ | 84.9 | 0.48 | % | $ | 99.0 | 0.51 | % | $ | 196.9 | 1.22 | % | |||||||
| Transportation Finance | 5.0 | 0.23 | % | 7.6 | 0.35 | % | |||||||||||||